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could from time to time be spared, were made available for the miscellaneous require- ments of the Coast which were normally served by a much larger number of ships. The S.S. Upolu continued to carry coal for the Kailan Mining Administration. Every run was most carefully watched, sub-chartering was not permitted, and charters, while binding the charterer for a fixed period, reserved to the Hongkong Government the right to terminate the contract at a month's notice.

17. Although the Hongkong Control Scheme was proving of immense benefit to the Colony, the tonnage was not nearly sufficient to meet requirements, and every endeavour was made to supplement it. The S.S. Glenfalloch, of Singapore Registry, was lying at the Taikoo Dockyard awaiting repairs, which the owners were unwilling to carry out, and the Hongkong Government asked permission of the Straits Settlements Government to repair the vessel and run her under the Hongkong Scheme, but that Government was unable to accept the proposal. The Government of the Straits Settlements were further approached, but without success, for permission for the S.S. Hock Lee and Will o' the Wisp to be run under the Hongkong Scheme. These vessels had been purchased by Hongkong owners but had remained on the Singapore Register. Colonel Thomson arranged for the placing of the S.S. Kolya at the disposal of the Hongkong Government for the purpose of carrying coal for the Naval Yard, but at the last moment the vessel could not be made available. Negotiations were entered into regarding the S.S. Sui Kai under the Chinese flag, which had for a long time been lying idle in the har- bour owing to a complicated law-suit. An offer was made to repair and run the ship for the account of whoever might be concerned, but the vessel was so fast entangled in the meshes of the law that it was impossible to extricate her. An attempt was made to arrange for the salving at the expense of the Hongkong Government of a steamer which had been stranded on the Siberian coast, but the project was found to be impracticable. In August, 1918, three small and old British vessels, the Amherst, Cornelia, and Hok Canion, of 241, 214, and 288 tons register respectively, were requisitioned by the Naval Authorities and were placed under the orders of the Shipping Control Committee.

18. The relations between the Hongkong Government and the Shipowners were throughout of a most cordial nature. All owners co-operated in a most patriotic manner and did their utmost to make the Control Scheme work smoothly and successfully. Shipowners Protection Association was formed under the Chairmanship of Mr. S. T. Williamson, of Messrs. Moller and Company, and his services, placed freely at the disposal of the Government, were of the greatest assistance. There was one request pressed by the Association to which the Government could not see its way to accede. The Associa- tion wished to be represented upon the Shipping Control Committee, and this was refused, for the reason that the Committee had been chosen, as an independent body having no connection with the requisitioned ships, to advise the Government on technical matters connected with the ships. Mr. Sutherland and Mr. Young sat as representatives of Colonel Thomson, Agent to the Shipping Controller, who was in constant communication with the Colony with regard to controlled ships. The Committee worked in close and constant touch with the Vital Requirements Committee, which advised as to the employ- ment of the ships for the needs of the Colony, and Mr. H. P. White, representing the controlled vessels of the Douglas Steamship Company, took his seat upon the latter body.

19. The question of the remuneration to be paid to owners was one of cousi- derable difficulty. The Shipping Controller's instructions were that the remuneration was not to be appreciably higher or lower than that of competing vessels, the vessels most directly concerned being those of the Indo-China and China Navigation fleets. The Hongkong Government urged the Shipping Controller in London that in view of the increase in prices and the rise in exchange the remuneration should be payable at exchange half 1/9 and half rate of day. This was refused, it being again pointed out that the payments to owners under the local scheme must not be more favourable than payments to owners under the Imperial scheme. Further representations were made in the following terms:- "it must be remembered that the vessels brought under local requisi- tion are mostly old and in more or less had condition, having been discarded, at periods more or less remote, from the regular lines; with the result that the cost of repair and upkeep is proportionately heavier than in the case of vessels, such as those of the Indo- China and China Navigation Companies, on the regular lines. I was aware, when I sent my telegram of the 9th March, that expenses connected with repairing and running were on owners' risk, if the owners were prepared to run the vessels; and, in order to offer the owners a sufficient inducement to do so, I accepted the advice of the Control Com- mittee to grant the terms stated in the telegram which I addressed to you on the 17th