In no country in the world has state ownership of merchant vessels; proved a profitable venture. Many countries have dabbled in this form of business and have abandoned it, of.are in processs of so doing. And now, after two and a half years of Government supervision the China Merchants Steam Navigation Ca., Ltd, is to be taken over by the National Government. pany. a Prixate enterprise subject 18 ipewraed tat the Company, soa be' operated in ecordan Tinted companies; that mes imperial Comercial Law eerring for al The present unfortunate condition of this remarkable enterprise is notorious. It is a private enterprise] without the right to control its own. affairs. Its directors, except quis Li, Kuo-Chi, chairman of the Board, ' have been suspended, its shareholders are powerless, and now are faced with the compulsory surrender of the entire business to their Government. As Chinese company This was the first Charter, super-soded on July 31, 1928, by that granted by the National Government, reaffirming the private status Jot the Company and recognizing the! Marquis Lias chairman of the Board of Directors. Incidentally it may be remarked that this Charter twas issued after the establishment fof Government control under the fate Mr. Chao Ti-chao, greatest interest to this' community of merchants and a startling instance of the almost despotic power of the present Government. Very Aittle is known to the general public of the history of the China Merchants Steam Navigation Ca., Ltd. and a better understanding of the facts is necessary in order to appreciate the full significance of the Government's action.
The conversion of the Company to a state enterprise is no. new project. In 1011 rumours were pre aleut that some such scheme was fon foot, and the Ministry of Postal Administration was constrained point out, in answer to the Board' lot Directors' enquiry, that the Company had successfully operated for 140 years as a private concern and that in view of the merit of com mercial competition the Government would not countenance State owner-
In 1872 the then Viceroy of Chihli, Li Hung-chang was ordered to make an investigation into the shipbuilding conditions in South China, a to ascertain whether the Government, by any form of encoun ment, could facilitate the establish ment of a Chinese company owning and operating its own ships. The Viceroy acted through the Commis-loner of Transport for Chekiang, Br. Chu Chi-hong, who came to Shanghai and established an offic primarily for the purpose of ca vassing for Chinese merchants interested in shipping. From this it derived the name: "China Merchants" Steam Navigation Ca.
Imperial sanction was obtained to appropriate about $200,000 from the public treasuries of Chili the initial working capital of the new company. This appropriation was treated as a loan, at 7 per cent. and was eventually completely turned, it being distinctly specified that the Gorernniont would not participate in the profits or losses of the, Company.
About 1876 the Company purchased the assets of Andrew Wright Maitland for a sum of Tls. 2,000,000, of which the Government advanced Tls. 1,000,000 at a reasonable rate of interest. This provoked keen competition from foreign shipping companies and consequent reduction in freights, and therefore depression, and the Company became involved in difficulties which necessitated Government forbearance in the pa} ment of interest, Imperial sanction was obtained to redoom this loan by instalments pa; able from the freight due to the the transportation of n stuffs.
In 1883 the Government made further loan of Tls. 360,000, By 1801, however, the Government loan had been completely paid, this being nade possible by the exemption of interest, The Company suffered a severe Joss in that year, in the death of Li Hung-chang, and his strong championship of the shipping industry was not continued in the policy of his successors.—Nevertheless, the Company prospered. It played its part in contribution to Imperial purposes and also to education; for'
years it contributed a yearly 20,000 to the Peiyang' University and Tls. 60,000 to: the Nanyang University, founded by Sheng Kung Pao The China Merchants'~-Coy ah though a private company, had been subject t0 the contract of the 'Governor General of Peiyang, and in 1909 this control came under the Ministry of Postal Administration, Which promulgated" the so-called "chariered constitution": to govern' of the Company's {li affairs,- which stipulated. amo the cent other things, that" merle chien Hondkasts State Ths. tite of the Chinpeny. a fell into the hands of the Revolutionary Government, the latter mort~ razed the Company's assets for large sums of money and precipitted the' resignation of the Boat fof Directors. A. settlement reached by the company lending Tis. }500,000 to the Government, a loan which had to be effected by' borrowing from other sources, At the end lof the year the Company, at 24 hours' notice, was ordered to supply' the Government with a loan of Tls. 10,000,000 for military expenditure. The Directors when taking steps to comply with this demand received Jan intimation from Dr. Sun Yat-sen that the money had been obtained Buy Joan elsewhere, with the Com-Jpany's assets as security, for which service the Government offered to} protect the Company's interests and to assist in the development of its business. To what extent this pledge has been carried out is a matter of public knowledge. In the vicissitudes of the next ten years there is little of importance to re-Jcord. Several abortive attempts the Government to intervene in the:
JCompany's affairs were successfully resisted. vestigation and reorganization Jon the ground that the management, Jof the Company had been usurped by "*Mandarins and profiteers" in its y stages and Ey nominees of the tarists in more recent years.
'This committee issued two volumes Jot reports upon the Company' position, but did not interfere in the management of it.
Meanwhile, the supervisor, an ofice which had been created by} President Yuan Shih-kai in 1913, bat, owing to opposition of sharehold-Jers, had remained in abeyance, commenced to supersede the original management, and his: authority was reinforedd by the decision of the Second. Plenary Session of the Central Executive Committee of the jomintang Party, which, in May ordered a Reorganization Committee and a Special Commissioner {to be created. In November, 1929, therefore, a mandate was issued as Jo temporary measure appointing the supervisor to act for the Reorganization Comunittce, and Mr. Chao 10 to act for the Special Com-
'This. action of the Government, alying the appointment of a body' independent of and controlling the jsharehotders, is open to obvious criticism, and is in direct conflict with the principles of private ownership enunciated in the Regulations promulgated on December 21, 1929, governing private enterprises with ited liability and also those promulgated:. on December 21, 1929, governing public utilities. "These latter include" shipping companies, land the regulations clearly stipulate
Text read from the printed page and cleaned; old type leaves the occasional error.