To the Editor of the "Norra-Carxa Datty News."
Sin,—As considerable space in your valuable journal has been devoted of late to the difeussion of the Chinese Engincering and Mining Company's position, it may haps be aswell That the public should enlightened as to the actual position of affairs; this seems more particularly necessary as Mr. Hoover has recently published a letter which, while containing certain correct statements, is nevertheless misleading, inasmuch as he deals with the question from the point of view of the party which was concerned in the flotation of the Kaiping Company in Belgium and London. The history of the old Company need not hero be gone into; suffice it to say that. it was a paying concern and that its affairs progressed satisfactorily enough until the early part of 1900. In July of that year reliable news was received that certain foreign troops had orders to seize the Mines; the only means of saving the situation was to interest foreign capital in the concern, and thus to give it a foreign status. Accordingly, Mr. Hoover, representing Messrs. Bewick, Moreing and Ca., was engaged to proceed to London immediately and to form an English Company with a capital of £1,000,000. 7 To enable Mr. Hoover to perform his mission, a provisional deed of sale was signed on 30th July, 1900. By this deed the property was landed over to Messrs. Bewick, Morcine and Ca., London, as trustees for the present Company in the event of such being successful floated. If the flotation failed. the deed mutual consent, void. Tt was stipul that, out of the capital of £1,000,000, the interest of the former Chinese Company should be £375,000.
'The remuneration of Mes Moreing and Ca. was not stib' value of their services could not then be estimated. The deed further expressly stipulated that all shareholders should have equal rights and privileges, and that an instalment of £100,000 in cash or securities should be available by 28th February, 1901, to meet immediate requirements. This money was never actually used. It appears, however, that Messrs. Bewick, Moreinz and Ca. could not raise the £100,000 in England, largely owing to the fact that the public in London were naturally not disposed to take up China ventures at that time. Accordingly the firm had recourse to Belgium, where the property was known, and there the first £100,000 is said to have been obtained. A Company was legally formed, and seven names were registered, subscribing £1 each. Mr. Hoover returned and reported that the conditions of the provisional agreement had been fulfilled, and the final deed of transfer from the old to the new Company was accordingly signed on 19th February, 1901; simultaneously therewith, an agreement was signed setting forth the conditions of the transaction and agreeing to certain terms for working the new Company. These terms are eminently reasonable, and are designed to harmonixe the Chinese and foreign interests. They provide, inter alia, that the Company's property should' be managed in China, and that China shareholders should have a voice in the election of the Board.
This agreement has been systematically ignored by the London soard, who appear to be a law unto themselves. The Articles of Association, registered on the Sist December, 1900, give the Directors most extraordinary powers, in regard to which, by obvious design, the Chinese who " pay the piper" are deliberately excluded. The charter of the Company is the transfer and agreement of 19th February, 1901, and the Articles of Association registered on the 2ist december, 1900, two months before, are in obvious contravention of this charter. Moreover, no copy of these Articles appeared in China till the autumn of 1901
In June, 1901, £500,000 worth of 6 per cent debentures were issued at par, without cost to the Company, according to the chairman's speech, and half a share for every £1 subscribed was given as the consideration and inducement to take up this issue.* This absorbed £250,000 worth of scrip. On the face of it, this issue looks uncommonly like a " job," but it is not in reality as bad as it looks.
There was an old Joan to the Company, with 15 years to run at 12 per cent, and the holders of these bonds were offered the first option of taking up the new loan, on condition that they would waive the old. This was agreed to, and the new issue was, for the most part, placed with the former bondholders, who thereupon surrendered their old bonds. The fact that the old Company was entirely owned and managed by Chinese, accounts for the high rate of interest it had formerly to pay for a foreign loan. The power to effect such a transaction, however, without consulting the shareholders, obviously points to the need of the Chinese insisting on their to have something to say in the Directorate.
Looking now at the Company's capital, avo the following figures Chinese shareholders 000 Debenture benus... 250,000
Text read from the printed page and cleaned; old type leaves the occasional error.