Meeting of the: above-named Corporation, held atthe Gity Hsll,- Hongkong at Noon, on che-20th August, 1892.
Present, were:—Messrs. T. EH. Da (Chairman), H.-Hoppius, J.J. Bell-Ieving, J. Holliday, C. Jantzen, J. Kramer, DicConackie, J. 8. Moses, D. R. Sassoon Directors). de Bovis (Chief Manager), Hunter, J, McLennan, Adam Lind, C. J. Gonsalves, T.. I. Hon. ©. P. Chater, Hon. E. R. Belilios, H. N. Mody, V. A.C. Hawkins, K. A. Chinoy, EH: Georg, G. Murray Bain, Paul Jordsn, G. Morris, S. A, Joseph, S. E. Levy, J. S. Lapral J. H. Gox, W. HI Wallice, K. Inck. Rose, J. M.'G. Manuk, J. Michael, 8. Ashton, Courts, G, Stewart, 8. Coxon, W. 8, Bamsey, 1. Jones Hughes, Veitch, T. F. Hough, W. Legge,
Layton, G. H. Joseph, G. de Champeaux, Ed. F. Alford, B. J. Scott, H. H. Joseph, 3. Grant, A. G. Stokes, E. 8. Ezekiel, J. Coxon, Hart Buck, G. 8. Purvis, C. Guinness, J. C. Peter, 'D. Landale, 8. L. Darby, W. H. Gaskell, O: von der Heyde Mr. de Bovis read the notice calling the meeting, and the Chairman read the balfyearly Report.
the Chairman said—Gentlemen, the Report which I have just now read to you appertwins to-a periud which I have no hesitation in characterising as one of the most trying ever experienced by Banks and Financial Institutions generally throughout the East. As has been stated, it is with regret that we have to recommend the withdrawal of so large a sum as $3,000,000 frow the Reserve Fund; but we must hold firmly to the policy of fully providing for everything bad and doubtful immediately and without any delay; so long as this course is followed and no attempt is made to spread out losses over some indefi period, thus long must " Bank' be one of absolute strength, and sheet a sure guide to shareholders and depositors alike. his policy, gentlemen, has been closely followed in the accounts' now presented to you, and ini so doing your Directors have been fortunate in the fuct that Mr. John Walter has just now completed thorough of the Head Ottice and andies, and I may say that Mr. Walter is probably well known to every shareholder present to-day us @ caus tious man of great' experience, who has been for twenty-five years in-the service of the Bank, Throughout Mr, Walter's spection, every single provision that he has recommended has been made to the full, and we may fairly claim that we have no known Losses to act as. drag and a clog upon us in the future. Your Directors have the fullest confidence it the present Chief Manager; Mr..de Bovis, as a thoroughly good man' of. business, holding the soundest Banking views, whilst affairs in London are in the hands of a strong Committee with Mr. T. Jackson and' Me. E.-Cameron as Managers," both of these latter gentlemen having' been intimately associated with former successes of this Bank. In fact, with the executive management and staff generally your Directors would express themselves as fully satisfied. And now, gentlemen, I would say " word as to the Tosses which "have led to the necessity of writing off the heavy sum I have already mentioned, whids losses way for convenience be divided tinder three heads, viz.,, losses by the Head Office compradore, trade Josses, and losses on advances on stocks and other securities. To refer to the first, the loss through. our Hongkong compra-dare, which was of course ® case. of fraud by an employe holding an important. posi-This.man, Lo Hop Hing, had held the "post: of compradore since 1876; when he succeeded his falter; who for many years had filled. the same: place..:: Fromrvixis: posi-his chief duties having been to advies our Manager as to the standing of Chinese. Banks and Hongs, and native bills were bought from our Chinese. constituents under his guarantee as to the value of the paper. For years he was a man of considerable wealth, standing well with natives, and being much respected by them. However, come nine months ago, our Chief Manager, being dissatisfied with the position of our Chinese advances, commenced to largely curtail facilities, refusing to purchase many bills the compradore wished to guarantee, and requiring assurances from native banks that such bills as were bought, were trade bills, representing shipments or rral_securities. Following this course steadily for some months, a lot of money was naturally gathered in, but, unfortunately, the man was unable to bear the continued strain, he could get-no further assistance, and breaking point was reached on the 27th March, when he absconded. It was impossible to tell at once how many of our native accaptances would be met, and at first we hoped that five or six lakhs would cover the loss; later on we had reason to expect that it would not exceed nine lakhs, but as time went on one failure brought on another in ever widening circles, till in the end the enormous deficit of $1,200,000 resulted. I need hardly say that the system of large clean advances on the compradore's guarantee has been discontinued; in fact, our Chief Manager having decided to alter it in any case, his action in shutting down on facilities merely hastened the finale; this might perhaps have been postponed' for some little time but by no means could it have been ultimately avoided. I am glad to say that our present compradore gives entire satisfaction to the management; he is a man of wealth and good position, and has handed over to us securities to the amount of between $4 and $5 lakhs, which, especially under our new system of Chinese business, is very ample. In referring to trade losses, I need not speak at much length. These have been spread over China and Japan, chiefly in the latter country, and were caused primati'y by over importations glutting the markets for the time being. Interest and charges of course mounted up, and goods decreased in value, ending in losses which merchants often could not make good to us, However, surplus stocks may now be said to be worked off, and the markets are in 8 more normal and healthy condition, which, we trust, will continue; possibly a little more: con: servetism by Exchange Banks in the purchase of outward bills, may, without unduly checking business, keep the various lines within reasonable limits. And next as touching advances on stocks. During the past six months, as the reaction following inflation progressed, the shrinkages became so enormous that many were unable to keep up the margins, and provisions on various accounts base had. to be wade. I should mention that we have only allowed credit in our advance account,' for sound dividend-paying stocks, and such sound stocks have been put at the present depressed. market, values, at which, as you know, they should return-a:-high rate of interest in-dividends. Under these circumstances, we venture to think that this department has been put upon a thoroughly solid basis. And now, mntlemen, I will refer to an item in the lance Sheet, viz,, Deposits, which you will observe stands at $100,562,863.65, some 13} millions of dollars less than on the 31st December last. Towards the end of 1891 it was considered -that, -by our constantly increasing deposits; we were getting more money.than re could..prafitably. employ, and the.consequent -loss of -interest: was a heavy drag on our earnings. ° It: was, there: fore, decided to' attempt to -leason the amount of London: deposits by reducing our rate of interest there from 44%to.4%, and the result was quite: falling Off-in. just' the expected and wished a Jy, thet cate our, Compra ist Use Tatars of the New. Ona distrust: prevailing Koglaud of ailicinds ing Corporation 5. the consequent
of Eastern finance. cai deposits to be withdrawn more rpidly"than liked, and.we thought it prudent to our rate of interest tu 44% once niore, which has recently been done, We venture event, and for your information I would state that, even in the case of large' withdrawal, we should still be ina position, to carry on our business profitably; in fact, we Anticipate that our earnings would be somewhat increased thereby owing to: the great saving of interest. From the Bal"nco Sheet you will see that wehave £250,000. in Consols and'4 % Indian Sterling Loans as_a-special "London: Reserve; but_I-ma: tell' you thet we now hate a Further £630,000 also mostly in Console which does not yet appear in the accounts.
Furthermore, heavy remittances the way to London, making the position there impregnable, in"all directions we are keeping our assets in a liquid state. A word next as to ofr Exchange policy. There seems to be a mistaken iden thnt sterling deposits are remitted to the Hast for investment there, and I may tell you, gentlemen, plainly and at once that thi is not the case. We have to-day some millions of sterling deposits, which are exclusively employed for the' purchase of outward mercantile bills, silver bullion, Mexican dollars or council bills for ship: ment to the East, pending the arrival of homeward bills purchased simultaneously by the Eastern branches, both operations being legitimate Banking'transactions. will be easily understood that by following this policy, large atening deposits can be used without the price of silver' affecting the position in the least, the money deposited having in reality never left London, The nianagement has taken and will take particular care that the Bank keeps on an evenkeel with regard to both gold andailver beyond the comparatively trifling differ: ences of the day-to-day business, neither rise nor fall in the dollar exch jure or benefit us to any appreciable extent. It will be of intereat to shareholders to hear the latest news xs to the Baring guarantee; from a telegram recently to hand from London we learn that it is most improbable that any call will be made upon the guarantors, which is satisfactory intelligence. " T have now only to refer to our long-pending lawsuit in Manila. You will remember that on the day of our last. meeting we had a wire from our Manila agent to the effect that the first embargo had been removed, and thi i at the time, perfectly correct j 1 regret say, however, that the.same embargo wa: subsequently reimposed, and we hud' to return to the Manila' government: the $300,000: that had: been refunded: to- us under guarantee, I must say that it seems very hard on us that our property should be thus lucked up; no one can dispute our ability to pay the amount; and.we have never attempted, and never should attempt. to escape our liabilities under.the laws of Spain or of any cther country: where.we have carried on our banking business, The case is slow and tedious, bus. having. already lasted so long a final decision ay, we should. think, Ee looked: for within a reasonable period, and.as.to the ultimate result.we have every confidence. Be assured, gentlemen, that we shall spare no" endeavour to bring' this "a -wouldeay -that.the subjeotiof the xecom-. mendation-as to the paymeitt or: passing.
Text read from the printed page and cleaned; old type leaves the occasional error.