The cotton industry in China during the past few years has enjoyed such exceptional prosperity that many new mills have been projected, and we must be prepared for very keen competition in the near future, to meet which we cannot, to my mind, adopt a sounder course than consolidate our interests with those of the Kung Yik and Yangtszepoo Mills.
You are of course aware that, in addition to building up - strong financial positions for the -Companies managed by my firm, 2 progressive policy has been followed and weaving and other processes incidental to cotton manufacturing embarked upon. Instead of the three concerns being in friendly rivalry amalgamation will mean concentration upon certain specialities at each mill, thus ensuring better quality and greater production at more economical cost of production, which I can assure you will be of paramount importance when margins of profit are very bare, The advantages from the point of view of purchasing and selling, and also of staff arrangements etc.. are so apparent as not to need enlarging upon.
Great care has been taken in the merging of interests not to permit the shareholders in any one of the three Companies to gain at the expense of the others, and I have no hesitation in stating that the proposition now before you cannot hurt the earning capacity of the money invested in the Ewo Mill and for which you are to receive shares in the new company.
On the other hand, the new company commences with a moderate capital compared with its resources; it will also enjoy the enormous benefit of having donated to it all the Reserves of the three old Companies, as well as their profits from January 1, last to the date of the incorporation of the new company.
The amalgamation will meet the wishes of a large number of shareholders, who recently petitioned that the shares of your Company should be split up into shares of jess value than Tls. 50.
Preference shareholders—wi] doubtless appreciate the treatment that is to be accorded to them, especially as the security of their investment will be greatly enhanced by the amalgamation.
The draft of the proposed agreement of sale of this Company to the new company, and the draft of the Memorandum and Articles of Association of the new company are on the table and open to the inspection of shareholders.
Text read from the printed page and cleaned; old type leaves the occasional error.