1930-03-04 — Page 7

RIFT IN STEAMBOAT COMPANY.

(Continued from Page 1.) Like a rugged finger to heaven. We shall descend into the valleys again, but as long as the men and .women of this generation last, they will carry in their hearts the Image of these mighty peaks whose foundations are not shaken, though Europe rock and sway in the convulsions of a great war."

THE HONGKONG TELEGRAPH,

TUESDAY, MARCH 4, 1930.

were affected by strikes and boy for farming the Chinese Freight strikes or boycotta...

cott.

of the

The Financial Result. The improvement effected in the Company's earning power by the Farming introduction System is evident also from a comparison of dividends paid. For the 5 years previous to the adoption of the system, dividenda were respectively 50 cents, $1, "Kicks Lying Down."

$1:25, 50 conts and $1 per share, Even in commercial life may while for the 6 following years there not be some everlasting they were respectively $2:50 things that matter for a company? $2:75, $2:75, $3:25 and $4 per Are there, too, not the great peaks share. During the latter five of Courage and Independence, years transfers to Business, Capacity to endure, and if need be, to suffer, and above all, Refusal to be bullied and to take kicks lying down? (Loud Applause).

various Reserves, Pension Funds, and amounts written, off for depreciation totalled $641,370 as against $160,000 only for the five years 1914 to 1918.

Gentlemen, this occasion will be historic in the annals of this com- pany. For good or evil, your de cision to-day will have a far-reach- ing effect upon the company's des- tiny. I know I need not ask you to think hard, to deliberate calmly, and to vote in accordance with your own convictions (Applause).

I now beg to move- (a) That the policy of the rene-steamers on wal of the farming-out of the Chi- nese freight and passage business of the company's steamers to the sume farmer, in view of the fact Fetitor of the company's business, is prejudicial to the interests of the company, and

new

I

tion, viz:-"Why do the Directors Farming Syndicate there is every kong whose complete confidence ho consider it is in the interests assurance that there will be pro- enjoys, of the Company to continue to gressive improvement in results The majority group is led by the employ the present Farming during the next three years under Chairman of directors, who, until Syndicate?"

normal working conditions, and the return of Mr. C. Gordon no further Mackie, was Mr. M. T. Johnson, Two tenders have been received provided there are

His associates are Messrs J. P. and passenger business

Warren, R. E. Coxon, J. M. Alves, this

The Only Policy.

J. II. Little and P. K. Batchelor. year, one of which is from our

Both ten- It is the carefully considered It will therefore be seen that the present Contractors, ders contain the usual stipulation opinion of your Directors that the contending parties pitted against for reduction in hire money should only sound progressive policy open each other can have no other motive additional outside steamers come to this Company at the present to serve than that of the well-being. on the Company's trading routes time is to work for still closer co of the Company of whose destiny other than those vessels at present operation with the principal estab. in Sir Robert's own word, they are operating thereon, and after mak-lished Interests on the Canton placed in the position of "masters." ing as favourable an allowance River.

Cause of Split.. I have said enough I think to for this in the case of the sible, his offer would yield a mind that the policy advocated by phasize is that the "split" arose in Tenderer, as is reasonably pos- convince anyone with an open The point I would like to, em-

than that of our present Contrac- would be nothing less than suici- renewal of the farming out of the smaller return to the Company the Requisitionists of this Meeting counexion with the policy of the dal for the Company under present Chinese freight and passage busi- tors.

Your Directors have however conditions. While the wishes of ness of the Company's steamers. further and even stronger reasons holders of so large a number of ask you to keep well in mind that shares, as expressed by the con-it is the Chinese side of the Com- for recommending a continuance of friendly co-operation with the veners of the Meeting, have been pany's business with which we are considered and discussed in every concerned at the moment. Can the Farming Syndicate who have car reasonable way possible, it must European section of the Board ried out the work most efficiently be borne in mind that the Board hope to appreciate Chinese paycho- and have honourably discharged are representative of the whole logy and interpret Chinese montal- all their obligations to the Com- body of shareholders and that they ity with the same degree of under- pany for a period of 11 years and have, by that same representation, standing that their Chinese collea whose organisation, which has close knowledge and experience of gues on the Board do? I am afraid served the Company so well, could what they consider best in the not. The lack of direct personal also, and under changed cir- interests of the Company, and they contact, a complete absence of the cumstances undoubtedly would, be look upon the proposals which knowledge of the language and im- a factor resulting in unnecessary have been made as threatening the perfect acquaintance with Chinese competition. The Board are cri- successful continuance of the business methods must necessarily ticised for employing Farmers Company, and have Do choice place the European members in a who control a considerable feet therefore but to treat these proposition of disadvantage. as com- of steamers themselves, but this posals with the most definite and pared with co-operation with this Syndicate their power to offer.

their Chinese is one of the facts which makes explicit opposition which it is in freres. The opinion of the latter fs, therefore, entitled to greater of value to the Company. By this

consideration and must carry means a number of vessels which

greater weight and influence would otherwise. be free to trade

in all matters appertaining to between Hongkong and Canton

Chinese business. are kept off the berth, and two at least of these were actually pur- chased by the Syndicate in order to ensure her removal from the the

Canton River.

this

Hard to Understand. “ Objection to a policy which brought about such results is hard to understand. It is based, the the Farming Syndicate are Board are told, on the fact that In- terested in a Company owning two the Canton berth, which it is claimed would never have been acquired had it not been for the profits made from the Syndicate's contract with Company. Let us consider the position. At the time the Farm- ing Contract was given to these people the Company were not in a (b) That accordingly the direc-position to build or purchase new tors be and are hereby notified that tonnage themselves. No profits it is the wish of the shareholders of were being made and the Dividend this company that the directors was being paid out of Reserves. should abandon the said policy and should adopt a new policy of either giving preference as far as possible, to a non-competitive tenderer for the farming contract,

that the farmer is himself a com

ar run its

steamers on its own account.(AP plouse).

Mr. Man Pan seconded the re- solutions.

CHAIRMAN'S REPLY. History of the System Outlined.

The Chairman, replying, said:-

The Board consented to these steamers being placed on berth which the Company could not at that time serve sufficiently themselves, because it was better to have the vessels of a friendly competitor who would support the Company's policy rather than steamers operated by outsiders, competition with whom the Com- pany had learned from bitter experience could so seriously affect their earnings. It was as much in the interests of the Company as of

two vessels should be be, thed.

Other Benefits.

Other benefits derived from as-

The attitude of the China Navi- gation Company was outlined by Mr. T. H. R. Shaw as being against the resolutions proposed by Sir Robert Ho Tung.

Mr. Paul Lauder urged share holders to vote against the resolu- tions.

MR. BRAGA'S SPEECH. No Personal Feeling Involved.

соп

The Chinese advice to us is that;: if the present Chinese farmer were continued in his present strong position, it would be so impregn- able with the lapse of years that the Company's independent ex- istence would be placed at the mercy of their own farmer. This ociation with this organisation Speaking in support of the mo- fear is not imaginary. It is very are that they own a Wharf in tinn, the Hon. Mr. J. P. Braga | real indeed. It has transpired in Hongkong, three in Canton and said: Mr. Chairman and Gentle-one of the later stages of the re- two in Macao, which means that men.-I beg leave to address the cent negotiations for a compromise these wharves are not available to meeting in support of the resolu- between the conflicting views of the outside steamers, and the Syndition. A careful perusal of Sir Ro- Directors that "although the cate further has an arrangement bert Ho Tung's circular letter of Board

was willing to run its with two other Companies with the 20th February last reveals the steamers on its own account, under co-operation feelings" do not enter into the Company from being in a worse between

the Company and the discussion of the question under position than if the existing farm- Syndicate, the latter have

consideration between himself and ing agreement had been adhered to, several occasions made arrange-

Your Directors were asked to call the Farming Syndicate that the regard to their Wharves. During outstanding fact that "personal conditions which amply protect the

this meeting of Shareholders on their own initiative but declined, as in their opinion public discussion of the questions which have been raisi

Overhead Savings.

the II years of

ed is not in the best interests of the Farming system arises from a regard to their spheres of operfectly certain, are. "personal feel.tinue the system of farming out to! A further advantage of the ments with outside atcamers with Mr. Woo Hay-tong, nor, I feel per- the Company now proposes to con-

Company and these questions are moreover of a purely domestic na- ture requiring for just appreciation an intimate knowledge of the rami- fications of the Company's business and their relations with competi- tors which it is impossible for the general body of shareholders. to possess.

Mr. Woo."

ed.

Warning Ignored.

Some time ago Sir Robert Ho Tung sounded a note of warning of what might happen: he was ignor

Impending danger now threatens the Company in a very real sense. Sir Robert is very an- xious to ward it off. His is not

considerable saving in overhead tion, in order that rates

responsible for keeping expenses, but with a view to meet Canton and Macao Lines might be apart the two groups of differing

on the ings" ing the wishes as far as possible maintained at a fair level and the directors. We meet therefore in of the shareholders who have re-trades might yield a moderate an atmosphere unvitiated by ran quisitioned this meeting, and at margin of profit.

cour or personal animus. Where the same time safeguarding the

You will appreciate that were neither passion not caprice and Company's position on the Canton the Company now either to revert mates the spirit of either party, River, your Directors

have to the practice of operating the to-day's discussion can be con- into As however, the Meeting thoroughly examined has been requisitioned, the Board other proposal that has been put business themselves, without ade- the question in dispute.

the Chinese Freight and Passenger ducted entirely on the merits of desire to lay before you the fullest forward, that the Company quate safeguards, which system has

I am not blind to the fact that possible explanation of their policy, should operate the Chinese Freight been proved uneconomical, or were the unfortunate for which they ask your approval and Passenger business them they to hand this business over to has arisen is one of vital intereat Sir Robert, Mr. Li Tee-fong and So are those of his associates. and support.

selves, appointing a Compradore some other party, they would lose to shareholders. 1 feel confident Mr. M. K. Lo hold between them working under the control of a all the benefits I have just enumer that Sir Robert Ho Tung and his more than one-third the total capi- Sub-committee formed of Chinese ated and the Company, either alone Chinese associates, until recently tal of the Company. They, as men Directors,

or with the assistance of the new on the Board of Directors, have of business, of mature judgment Farmer, would have to meet the resorted to a tribunal of share and cool deliberation, are not like- competition not only of new comers holders for a decision as a lastly to trifle with their prepondera- on the River but that of the pre-resort and after they had exhaust-ting interest in the Company out.

If the Company were to operate the Chinese Freight and Passenger business themselves, it would be

Rate War Inevitable.

The Board are convinced that a

difference that

pany: it is a very substantial one. negligible interest in the Com-

Directors' Policy, It will be observed that the re- solution before you asserts that the Directors' policy of farming out, or in other words chartering, certain cargo space and passenger accom- necessary to employ a larger sent Contractors organisation as ed all means for a settlement. In- of spite. Theirs is a large interest modation on the Company's vessels clerical staff in the office well. to a Farmer, or Contractor, who is and. in addition, to employ himself engaged in the same line of and pay in the case of each business is prejudicial to the in- | steamer Compradores, their staffs. terests of the Company and you are cargo brokers, passage brokers asked to notify your Directors, that and cargo coolies, all of whom are that should abandon this policy and at present supplied, guaranteed and adopt one of two alternatives, viz: paid by the Farmers. The saving (1) Give preference to A Farmer here is estimated roughly who is not engaged in the same about $170,000 per annum. trade; (2) Operate the Chinese freight and passenger business on the Company's own account.

Willing To Experiment,

at

deed, in the considered statement and they are not going to stake it submitted by Mr. M. K. Lo at a on the cast of the die. Their ad- meeting of the Board on the 19th vice is deliberate and calculating November last, he made it clear and it would be folly on the part on behalf of himself, Sir Robert of the shareholders to contemptu- Ho Tung and Mr. Li Tse-fong, ously throw it aside as of little mo that "any difference amongst them ment and unworthy of considera- should be referred to the views of tien and acceptance. the shareholders." It is with the definite purpose of obtaining a mandate from shareholders that we are met here to-day. That mandate should, in my opinion, determine the action of Board. Any other action the would be opposed to the wishes of shareholders.

humble

Directors in Two Camps.

rate war would be inevitable, and heavy losses for an indefinite period would be incurred. It has been suggested that these losses would be borne by the new Farmer, but the

Through Sir Robert's action, for suggestion can hardly be taken seriously.

which he was thanked by the Board, As soon as the strain became

the present farmer's last tender In order to make clear to you how All loss in exchange and in sub-severe, he would naturally forfeit

was increased by $10,000. It was he who secured a tender from an- the present position has arisen i sidiary coinage is also borne by his security and the Company would will be necessary to go back some the Farming Contractors. It is then have to choose between the

other prospective farmer whose in- itial offer for the business was the present way in the Company's history and impossible to say exactly what this continuance of this competition, or, it will, I think, be easier for you saves the Company, but probably if it were then possible, come to

slightly better than farmer's tender for the first year, to follow if I take the two questions at a conservative estimate, not less some agreement with other lines

and $12,000, better for the second raised by the resolution in the re- than a further $140,000 per annum. similar to that which we have ́at

and third years. Compare the re- present. verse order viz:-(1) Why do the However, your Directors were

spective values of the security of- Furthermore we must bear in Company form out any part of willing to make the experiment mind the effect of open competition As a result of an honest and fered by the two rival tenderers. their business?; (2) Why do the and give the system a fair trial, Directors consider it is in the in- provided all parties interested on our Foreign Freight and Passen. conscientious divergence of views. In the case of the present farmer it ger business which is no concern

the nine directors have ranged is only $200,000. In the case of terests of the Company to continue would agree to work on the of the Farmers at all and the whole themselves into two camps, made his competitor it is five times as

(1) not to compete in rates, and loss in this respect would fall on up of there in one camp and six large, viz., $1,000,000!

the Company. Judging by past ex-in the other, each tenaciously for no convincing reason, the ma- perience the loss in Foreign Freight holding its own ground and ap- jority directors decided to ignore (2) that the present Chinese and Passage Money would probably parently irreconcilable in their the new tender with all its greater staffs would not lese their amount to about $20,000 per month, respective attitudes. Both feel advantages to shareholders and to positions:

The Company has worked in they are right; both eager to safe afford the present farmer a fresh would agree not to increase their China

13 that the Farming Syndicate friendly co-operation with, the guard the best interests of the opportunity to increase his offer so Navigation Co. Ltd., Company. Tu both, therefore, as to enable the directors to award tonnage over and above what they for the last 51 years

and shareholders are indebted for their the new contract to him. Pertin- have at present:

ently Sir Robert Ho Tung remarks, the Farming Agreement. em-earnestness of purpose.

"the principle underlying the ad- vantage of sealed tenders is defeat- ed."

Playing Fast and Loose.

to employ the present Furming | following basis: Syndicate?

Past Experience. With regard to (1), I would remark that the Company operate that part of the traffle known as the "Foreign" Freight and Passen- ger business themselves and have always done 30. It is only the

traffic which is farmed out.

had been made, your Board decid-

ed to give a few months' trial to

to agree rates

of mutually approved:

And yet,

Chinese Freight and Passenger (4) that the Farming Syndicate braces their steamer "Fatshan", Let me digress for a moment and

In the year 1918, following on control

would continue to exercise their as well as the "Kinahan," in which examine the composition of the over certain outside steamer they are interested as part membership of the opposing a period of five very bad years

'steamers so' long as they are in a owners, and is a joint contract, camps. In one, let us call the during which no trading profit position to do so:

signed by both Companies. "minority directors", are the (5) that the Farming Syndicate Messrs: Butterfield and Swire have three Chinese directors: in tha I can only attribute to a con- would continue existing arrange-informed the Board that they are other (and it will be styled the siderate moderation the absence of ⚫the Farming system and the im- ments with regard to Wharves and of the opinion that departure "majority directors") are the six an outburst of indignation against

provement in earnings was so

Moorings:

from the present policy would be European members. satisfactory that a contract was

Both groups a deliberate policy of playing fast fixed for the whole of the follow- (6) the Compradore to be a man a grave mistake, and that if the are made up of men of substance and loose with the minority direc ing year with the present Farm working whole time in the in- decision of the Directors arrived in this Colony: men who enjoy a tors in the vacillation that has made and for itself felt as such a pronounced ing Syndicate. Results have justi-terests of the Company and to beat after the fullest consideration, commercial reputation fied the periodical renewal

to renew the agreement with the whose opiniona respect is claimed. feature of the conduct of negotia- present Farming Syndicate on the Sir Robert Ho Tung is the leader tions by the majority directors, and this contract up to the present

(7) that the Company to assur-best terms possible is not con- of the "minority" group. He has which must be decidedly annoying, time and a striking illustration ed an income at least equal to firmed, they will entertain other given 14 years of service to the to put it mildly, to the minority of how beneficial it has been to that obtainable from the Farming farming arrangements themselves. Company as director. This length group. There was patient endur- the Company is the fact that for Syndicate.

This would create an unworkable of service places him in the unique ance when the minority agreed to the 10 years prior to introduction So far it has not been possible position and might lead to the position of an intimate personal consent to a postponement of this of the farming system gross to arrive at mutual understanding soverance of the friendly mutual owledge of, and acquaintance meeting from the 3rd Deceraber last earnings averaged only $749,387 on these important points, al-relations which have existed for so with, the working of the Company till to-day order that negotiations per annum as compared with an though every possible avenue has many years.

in all its branches and of its pre- for a compromise might take place. average of $1,072,108'per annum | been explored by your Directors, Conducted on present lines sent and future requirements. Mr. The counsel of moderation on the for the 7 normal years under the with a view to bringing the in- there are prospects of steady pro: Li Tse-fong is a large shareholder part of the minority, directors farming system, an increase of terests concerned into agreement.gress for the Company. With

and has extensive business con- was rewarded in the end with the nearly 50 per cent. In making

economies in working which have nextons with the Chinese Mr. intimation, on the 6th February, this comparison the years 1922,

This Year's Tenders,

recently been planned, and the M, R. Lo is a leading member of that "any change in the present 1926 and 1926 have been omitted With regard to the other advantage of increased rates of the Chinese community of Hong-system of farming of the Steam as resulta during these years question raised by the Resolu- hire money offered by the present

(Continued on Page:6.)

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London, W. A

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(Other Quality $11.60)

INSPECTION INVITED

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(Incorporated in Hongkong.)

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RAIN LATER.

- ༞ ༔ རྩྭ་ཨེ ་

Tokyo. The southern depression la moving E.S.E. toward Hainan. The Royal Observatory reports The forecast till noon to-morrow that an anticyclone is central over is-East winds, moderate; gen- North Chins. The northern de-erally, overcast with fog: rain pression. Has passed to the east of later.