The Annual General Meeting of the shove Company was held at 22, Kiangs: Road, on the 16th inst., at 4 p.m. There were present: Mr. F. Anderson (Chairman), Messrs. A. Korff, J. M. Young, Chung Liang-yue (Directors), E. ©. Pearce (Secretary), C. D. Kerr, Archibald Little, W. D. Little, Austen Murphine, N.S. Perry, R. Spunt, A. B. Rosenfeld, Yuh Ping-ur, Luk Foh-kee, Ta Chin, and Tun Lung-shing, represent. ing 1,925 shares.
The Secretary read the notice convening the meeting.
The Chairman—Gentlemon,—The Report and Accounts have been in your possession for about ten days, and with your permission I will take them as read. The last year was a peculiar. ly difficult and anxious one for cotton. spinners in the Far East. At the beginning of the year prices of yarn were practically at the highest point on record, but by the Segening ct April a considerable fall took place, and the low values ablished continued until September, when there was a partial recovery. Throughout all this time cotton remained at very high prices; all during the summer business was more or less unprofitable; in April and May, and later on in August and Beptembor, at the rates then current for cotton, we were not getting enough for our yarn to cover the cost of produc. tion.
We have, however, made nearly Tls. 30,000 on the whole year, and con. sidering the very difficult time through which we have passed, I trust that the shareholders will consider the result not very unsatisfactory. We have often boon asked for some pared with the shadowed in all the original prospectuses if you will boar with me for a fow minutes I will try to account for the unfortunate state of affaire which Wo have all first time given to foreigners; at that time raw cotton was plentiful and cheap; the price was about Tls. 10 to Tls. 11 per picul, and there was a great and in-teasing demand for yarn. Under the circumstances there was s general desire to take advantage of the opportunity of participating in the industrial development of China, and as a consequence malls containing fully 200,000 spindles wore projected in Shanghai and perhaps 100,000 spindles more were erected in the surrounding country.
Simultaneously, however, the Japanese increased their import duty on yarn, which bore heavily upon the large trade which India did with that country, There was no rotalistion from Iudis. and as the Japanese have a protected market to themselves many new mills wore erected there;.ina year or two the protected mills were able to completely kill the trade in yarn between India and Japan. But owing to the increasing demand for yarn in the early Binoties new mills were also being erect-in India, 20 tha} in India, in Japan, and in China there was simultaneously a rapid increase in production, brought about partly by increased demand for yarn, but also partly by legislative and fiscal changes, and this increased supply very soon more than satisfied the demand for yarn.
To make matters worse the supply of cotton did not keep pace with the increase in machinery, and the consequence was that there arose a scarcity of cotton, accompanied by high prices, whilst an oversupply of yarn was thrown on the Eastern markets. We in Chi: have not been alone in suffering from bad times; there has been great depression in India, and o certain amount also in Japan, although perhaps not to the same extent there, as spinners have the benefit of protection as r their own market, whilst they have free access to ours. We have also to bear the disadvantages of the antiquated and singularly short-sighted fiscal system of China; native cotton is subject to taxation before it reaches our doors; if we buy cotton in Hankow, Ningpo, or other, have to pay to the Maritime times the export duty in addition to any levies which may have been imposed upon the cotton bo-fore it reaches the point of shipment, while if we import cotton from Ind America we have to pay import duty under the now tariff, which is 50 cent more than it was under the id tariff.
When the new tariff was under discussion at the Board of Trade I drow the attention of the authorities there to the injustice which would be done to the cotton mills in Shanghai by incre: ing the import duty on cotton, but I was told that this was an internal question for the Chinese Government, and that it could be dealt with by a rebate on raw materi for manufacturing purposes if the native authorit so desired. We appealed to the Custom on the matter, but were told that Poking would not listen to any reduction of taxation, We have some slight advantages in that the daty on our yarn remains the same as the old import duty, and for purely local consumption we duty, whilst on Jocal cotton we have not to pay export duty, but the balance of disadvantages is against us. Another point of importance ig in Shanghaiis expensive, and that our wages are higher than in the country, or than in hor India or Japan; all attempts at combined action with either the other foreign or native mills which might have affected this question have ended in failure.
But the greatest drawback we hare had to suffer hes been an insufficient supply of the raw material and the scandalous adulteration of cotton by t! process of watering it. The native a thorities could stop the practice in a week if they were in earnest, but although ropeatedly appealed to all their action has been the merest pretence. The Taota: proclamation against this practice is a hardy annual, which, for reasons into which we need not enter, is regarded merely asa matter of form. One wou think that when the Chinese were get! more than double the former pri their cotton they would be satisfied wit! the great prosperity suddenly thrust ups them and deliver their produce free fro: adulteration, but on the contrary the y adopted, as is natural to some of thei, the ways that are dark; asthe market advanced they added more and more water to their cotton, damaging excellent raw material in order to reap a temporary advantage at the expense of their good name. It is only now when prices have declined and they are being shorn of some of their huge profits that they are beginning to realise that honesty is the best policy.
Well, gentlemen, wehavo passed through the period of scarcity; there are at last prospects of an ample supply of raw material, and indications that demand is overtaking supply in yarn; very fow new mills have been built in the East in recent years, whilst the consumption of yarn has been increasing, doubtless partly owing to the increase of population; cotton spinners and enjoying great prosperity in the West, and perhaps we may have some share in this brighter state of things out here.
As regards the position of our Company a few figures may not be uninteresting to the shareholders. As you are aware we have all along been urder-capitalised, and this has been a continued drag upon us. One mill cost altogether Tls. 910,000, whereas our total paid-up capital is only 'Tls. 715,000, leaving a deficiency of Tls. 195,000; in a little over seven years' working we have made profits amounting ito Tls. 225,000, out of which we have paid one dividend of Tis, 24,000; the remainder has supplied the amount of capital of which we were short, and leaves us to-day with our mill and property quite clear of debt, and a working capital of about Tis, We have only worked our jory during the day and besides it in good repair, have written it down out of profits to the extent of 25 per cent and have in addition written down our other property also out of profite by about Tls. 35,000.
I need hardly explain to you that depreciation is a fund from which machinery can be replaced when it is worn out, oF if it ie not replaced its value can be repaid from this fund to the to do either of the those two things, it oan only be provided out of profits.
Our payments for interest from the start of the mill to the present time amount to about Tls. 150,000, so that if been fully capitalised our total profits would have been about Tis, 375,000, including the Boxer year, when we actually lost about Tls. 20,000, Gentlemen, it has been a long uphill pull, but every year we are gradually improving our position; it may be ov guide to hope that after our sev. years we are about to enter upon seven years of plenty, yet we as good a financial pos day, and I can only hope that patience and perseverance will eventually meet with some reward. li that can be said about the New Year is that it has opened factorily. As regards the accounts one entry under the heading of repairs and renewals calls for some remarks. From the start of the mill we have only had to spend a little under Tls. 13,000 on repairs and renewals of the machinery, which is absolute proof of the excellent quality of the plant supplied by Messrs. Tweedales and Smalley; but under }this heading hi expended several thousand taels in substituting concrete for the wooden i This work involves con! every carding machine, slubbing, intermediate, and roving frame in the mill will have to be taken to pieces and re-erected; the work was necessary, as we found that owing to faulty vent dry rot had set in under the flooring out Manager is doing the work himself; about one-third of it has already been done, and the cost defrayed out of works
Text read from the printed page and cleaned; old type leaves the occasional error.