COMPANY MEETING

KAMUNING (PERAK) RUBBER AND TIN COMPANY

HIGHLY SATISFACTORY YEAR'S WORKING

MR. CHARLES EMERSON AND SIR JOHN HAY'S SPEECHES

THE thirty-first annual general meeting of the Kamuning (Perak) Rubber and Tin Company, Limited, was held on December 31st, 1940, at " Lotus," Tower Hill, Dorking, Surrey.

Mr. Charles Emerson (the chairman), who presided, said: Gentle- men,—Following the precedent set when last I had the pleasure of addressing you, I shall confine myself to the briefest possible summary of the operations of the year under review.

SIR JOHN HAY'S RETURN FROM IMPORTANT MISSION

An added reason for this convenient practice upon the present occa- sion is that we have to extend a welcome to my colleague Sir John Hay upon his return from the U.S.A., where he has been engaged upon a mission of first importance to our industry. The successful accomplishment of the task which Sir John undertook called for a considerable measure not merely of ability and knowledge, but of tact and discretion, and it is widely felt that he is to be warmly congratulated upon the result of his labours.

I have invited Sir John to make some observations upon his mission and the agreement to which he came in Washington, and I am glad to say he finds it possible to respond to that invitation when he seconds the motion for the adoption of the report and accounts. He will, I am sure, have some interesting matter to place before you.

FACTORS CONTRIBUTING TO RECORD PROFIT

For the yeir ended June 30th, 1940, we have to record a profit of £41,981, which contrasts well with the comparatively modest. £18,367 which we earned in the preceding year. The factors which are responsible for this more favourable balance are that we were working on a release averaging 71i per cent., as against 464- per cent., which, of course, implies a concomitant reduction in costs of production, and also that we were obtaining an improved price for our larger crop- to.13d., as against 8.52d. If we add to the year's profit the sum of £24,127 brought in from the last account we have £66,108 with which to deal, and of this provision has been made for depreciation of buildings and machinery asoo, and we have transferred to estates reserve £5,000 and to taxation reserve (necessarily just now an abnormally heavy sum) £12,500, making in all £19,000. We now recommend payment of a dividend of to per cent., less tax, which if you approve will leave us with £27,008, subject to directors' special remuneration under the articles, to go forward to the next account.

FIRST-CLASS CONDITION OF ESTATES

As to the condition of your estates it is only necessary for me once more to assure you they are upkept in first-class condition, and that the yields we continue to obtain from them are on a generous scale. I might perhaps also point out, as I did not do so last year, that the policy of your board is a progressive one and that we have been gradually reinforcing our older areas with a considerable acreage of young rubber either budgrafted or planted from clonal seed. We have 820 acres of this rubber already mature and, including replant- ings and extensions, we have also at present 748 acres of similar plantings which have not yet reached maturity. Thus you get in all 1,568 acres of rubber which is all young and which should give you even heavier crops than those older plantings which have stood your company in such excellent stead. To complete the picture a glance at the balance-sheet discloses the sum of £86,054 in gilt-edged securities and cash, so that our financial position is one of considerable su eng th.

GOOD CURRENT YEAR'S PROSPECTS

Without being unduly optimistic, one may fairly say that the prospects for the current year are good. We are working as from tomorrow on a too per cent. exportable allowance less a 21 per cent. local cut for the first quarter of 1941, and as all indications suggest that•the release for the second quarter will also be on a liberal scale it is probable that we shall have satisfactory figures to place before you when we next meet. The position later in the year is admittedly less readily predictable, and it is possible that supplies may be found to outstrip demand. Should this prove the case I think, however, we may rest assured that the indicated corrective will be applied by the International Committee and that exportable allowances will be reduced until equilibrium is again attained.

TRIBUTE TO EXECUTIVES AND STAFF

Your manager, Mr. Chrystal, was unfortunately taken ill some months ago and was compelled to go to Australia for special treat- ment. I am very glad to say that reports received quite recently tend to show that he is making a good recovery. During his absence Mr. Hembry, the senior assistant, took over the management, and I should like to say a special word of appreciation on the manner in which he has acquitted himself in this highly important charge.

I cannot sit down without expressing the board's warm appreciation for the services of the planting staff, the visiting agent, and the Eastern agents, all of whom contributed in their respective spheres to a highly satisfactory year's working, and I would add you have been also exceedingly well served by your secretaries at this end.

I now move: " That the report of the directors and statement of accounts for the year ended June 30th, 1940, now presented to this meeting, be and they are herely received and adopted, and that a dividend at the rate of to per cent. (less tax) be and it is hereby declared in respect of the year ended June 30th, 1940, payable on January 16th, 1941, to stockholders on the registers as at the close of transfer hours on November 29th, 1940."

SIR JOHN HAY ON THE AMERICAN AGREEMENTS

Sir John Hay, in seconding the motion, said: In seconding the resolution for the adoption of the report and accounts, which I now do, I am given an opportunity, which I welcome, of saying something regarding the agreements entered into in June and August last with America for the acquisition of a rubber reserve stock.

These agreements have three main provisions: first, that the quan- tity to be accumulated should be in total 330,000 tons and should be produced and shipped before the end of 1941 ; second, that during the period of its accumulation producers should be willing sellers and consumers ready buyers within the price range of 18 to 20 American dollar cents per pound c.i.f., or its equivalent, for the first 150,000 tons, and 17 to 181 cents per pound f.o.b., or its equivalent, for the balance of 180,000 tons ; thirdly, that unless an emergency arises the stock shall be held intact separate from ordinary trade stocks until December 31st, 1943, and thereafter may be liquidated at a rate not greater than roo,000 tons per annum.

That quantity, I may add, is equivalent to about one-sixth of America's consumption of plantation rubber for one year at the rate now current. Moreover, it is not unreasonable to hope that by the time this liquidation has to be undertaken we shall have resumed trade with the Continental countries now closed to us, and that the accumulated demand from those quarters will far exceed the rate of liquidation in America.

FREEDOM OF MARKETS UNIMPAIRED

In view of the misapprehensions which appear to have arisen in some quarters, it would seem necessary that I should emphasise that the agreements of June and August are not contracts for the sale and purchase of rubber—they merely embody the terms upon which the International Committee have agreed with America as to the con- ditions which should govern the releases of rubber necessary for the purpose.

The rubber is to be acquired by purchase in the market within the stipulated price ranges, and buyers and sellers are left free to deal with each other as heretofore, each transaction being a matter of bargain to be carried out in whatever market the parties concerned may consider best suits their interests. The business of buying and selling necessary for the accumulation of this special stock, as well as for ordinary trade demands, is left to be conducted through the ordinary channels. The business of market intermediaries, therefore, is by these agreements not diminished but increased, and the freedom of all markets is preserved unimpaired.

JUSTIFICATION FOR RESERVE STOCK

With the increasing hazards of overseas transport, with recurring threats of the spread of hostilities, and with all the grave uncertainties of a war-time future, America's decision to acquire with all reasonable speed a reserve stock of a commodity so essential to them as rubber was a natural and prudent one, and, subject to agreements, to the main provisions of which I have just referred, the International Committee decided to co-operate and undertook to permit exports to the full extent necessary for all requirements.

Although we are protected under the agreements from the serious consequences that would arise in the future from an unregulated liquidation of such a large stock, even a gradual, regulated, and planned disposal may not be without some influence on future markets and must certainly be a subtraction from demand on future supplies. But the future for the industry would not have been improved by the International Committee refusing to co-operate in the accumulation of this stock. To have followed such a course would have been not only unreasonable but, in the circumstances, extremely short-sighted.

The acquisition of a rubber reserve stock is regarded in America as a necessary defence measure, and refusal to meet their needs in the form of plantation rubber would not have led to the abandonment of such a measure. Failure to reach agreement for the supply of plantation rubber would have provided the strongest incentive to a vigorous and resourceful research for alternative sources of supply, accompanied by resort to large-scale production of synthetic rubber, not improbably under State aid and protection. If the occasion had been given for embarking on such a policy and accepted as a measure of defence, then that policy would not have been halted by considera- tions of cost, and it might well have developed to a stage detrimental to the economic interests both of the consumer and the producer, and in the course of time the plantation industry would have been con- fronted with a problem which would have dwarfed the relatively smaller difficulties incidental to the accumulation and liquidation of the agreed stock

REGULATION SCHEME VINDICATED

Happily, under the agreements reached, America is now assured of adequate supplies of plantation rubber for all purposes, at a price which is reasonable and which offers little incentive to a resort to other measures. • Since the June agreement exportable percentage has been raised by rapid stages up to the full, and this should permit of the very rapid

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KAMUNING (PERAK) RUBBER AND TIN COMPANY

(Continued from page 46) accumulation of all the rubber we have agreed to supply. That our industry should be able to meet, without serious dislocation, such rapidly changing demands is a fine example of its adaptability under regulation, the flexibility of which has been demonstrated clearly and its existence and administration amply vindicated.

VALUE OF RUBBER EXPORTS FOR DOLLAR EXCHANGE

Rubber exports, even on the basis of normal consumption, are a most valuable medium for producing dollar exchange. At the present abnormal rate of exports their value far outstrips any commodity, other than gold, exported either from this country or any part of the Empire. Moreover, its production does not divert labour from the manufacture of war equipment in this country, and its bulk in relation to value makes it a particularly suitable cargo at a time when shipping space has to be used to the utmost advantage. The rubber plantation industry may take a legitimate pride in the important part it is playing

m providing this most valuable medium for dollar exchange which is so urgently needed for the purchase in America of the weapons of war so vital for the security of our country and for the successful prosecution of the war for freedom in which we are at present engaged.

CO-OPERATION OF INDUSTRY ASSURED

I am too intimately associated with rubber production to fail to appreciate fully the difficulties that may arise in our Eastern producing territories consequent on the steep fall from abnormal to subnormal production which must occur when the needs of the reserve stock have been met fully and when we have to rely on demand for current requirements limited to the few countries which are now left open to us for trade. Nor do I overlook the fact that during the short period of high production companies domiciled in this country will be deprived of all extra profit under the operations of the excess profits tax. But, notwithstanding future difficulties and present burdens, with all their inequalities, I am confident that the industry will respond to the claims that are now made upon it and meet adequately the requirements of its best customers and render a timely service to this country and her Allies. That the agreements will be carried out by the parties to them in fairness and with fidelity I have no doubt. By performances dis- charged in that spirit we shall be helping to win in an increasing measure from America that good will and co-operation of which we have already had much practical evidence and upon the continuation of which we are so vitally dependent.

The report and accounts were unanimously adopted, the retiring director and the auditors were re-elected, and a vote of thanks to the staff m the East concluded the proceedings