Hongkong Land Ltd: The Growth of a Giant

Paul Mark Onslow kindly sent me a manuscript of The Hongkong Land Company’s 90th Anniversary 1889-1979. This contains information about a number of Hong Kong companies. Here I am incorporating the main article about Hongkong Land subtitled The Growth of a Giant written by Nigel Cameron.

HF: I have retyped the article to increase legibility and aid searches on the site.

Please note the images shown here do not come from the original article.

Thanks to SCT for proofreading the retyped copy of the original article.

The Growth of a Giant

In the late nineteenth century when The Hongkong Land Company was founded, it was by no means a small venture measured by standards of Hong Kong companies of that time. It had definite assets of no mean scope. Hence the words of the eighteenth century poet, “Mighty things from small beginnings grow,” cannot precisely be said to apply. Yet, looked at in another light, the Company on its formation was indeed tiny in comparison to the present-day giant which it has become in the course of ninety years.

Unlike the parentage of Hong Kong, there was nothing dubious about that of the Company.  Hong Kong was annexed without authority and only legitimized later, the company was formed on March 2, 1889 by two prominent businessmen and styled The Hongkong Land Investment and Agency Company Limited. Essentially it was an association between Mr Catchick Paul Chater, an Armenian Christian born of an old commercial family in Calcutta, who operated a highly successful bill and brokerage business, with Mr James Johnstone Keswick, a collateral relative of the founder of Jardine, Matheson & Company, and partner in that company.

Mr (later Sir Paul) Chater was to lead the Company, first as Joint Permanent and Managing Director until the retiral of Mr Keswick in 1896, and later as sole occupant of the position until his death in 1926. It was under his guidance, not only in strictly day to day matters but also with his sense of what Hong Kong and the Company might become, and his drive to make the future a concrete fact, that the Company formed a solid foundation on which it built wisely.

When the Company was formed Hong Kong was scarcely 50 years old. Government revenue about that time amounted to less than the share capital of the Company which stood at $5 million in 50,000 shares of $100 each. Half the number of shares were issued and half of each share price was called up, yielding a working capital of $1,250,000.

In the nineties of last century Hong Kong was a smallish place, the waters of the harbour lapping the sea wall at Des Voeux Road. Already however, reclamation had taken place along the old shoreline just north of Queen’s Road – the first road constructed along what had probably been a shore-side path – and the land up to Des Voeux Road (called the Old Praya) held substantial rows of three and four storey offices and other business premises. The Peak Tram had opened in 1888, but locomotion was mainly by means of sedan chair and the recently invented rickshaw. Since 1870 the Colony had been “moored to England by the electric cable,” as one Victorian female traveller remarked with irony, so that it was by no means isolated from the Western world of commerce.

The first Board meeting of the Company in 1889 decided to admit Chinese shareholders in a fifty-fifty ratio with others, and to invite two eminent Chinese businessmen to sit on the Board. The offer of 25,000 new shares was immediately taken up, thus doubling the working capital to $2.5 million with a reserve fund of $1.25 million.

In January 1890, the Company’s first Annual General Meeting was held, revealing a net profit of $117,000 in the first nine months of operation. The shareholders were hugely disappointed, and the 7 percent dividend on paid-up capital did not reassure them. Nor did the fact that a large sum of the Company’s capital had remained unemployed despite the purchase of some real estate during the period. There was considerable quarrelsome exchange centering on the other business activities of Chater which caused him to offer his resignation to the Board – a request they rejected. The heart of the shareholders’ disappointment lay most probably in the fact that many of them had thought the new company would be a “get-rich-quick” operation and had foolishly borrowed money to invest in the Company at high rates of interest only to discover Chater’s plan was for controlled steady growth.

Chater was far-sighted. A mere six days after the Company was formed he had at last succeeded in persuading the Government to permit the start of a new Central Reclamation, which was to add 65 acres of building land right in the heart of the city of Victoria. By 1904, not only was this complete but many a building already stood on it. On this reclamation as on the previous one, and on a much later one, the Company’s principal Central District properties mostly stand.

With the Central Reclamation complete and the New Praya running along Connaught Road the period June 1904 to December 1905 saw no fewer than five major new Company buildings open in Central District. These were King’s and York Buildings occupying part of the site on which present day Swire House stands, and Alexandra and Royal Building on what is now the triangular site of Alexandra House. St. George’s Building was also completed. All of these were four to six storeys, impressive in terms of business accommodation then. These buildings were to remain in full use until varying dates in the 1950s, when they were demolished in favour of modern structures.

The following year saw the end of the last dynasty in China triggering an even more chaotic internal situation there. The result, as Hong Kong had come to expect, was an influx of refugees whose presence in various ways (such as demand for housing and food) stimulated the economy. Thus began a decade of comparatively calm commercial life. The outbreak of World War 1 had much less effect on Hong Kong than might be supposed, a shipping shortage being one of the principal problems. The Company’s directors were preoccupied with another reclamation scheme that was to form new land east from the naval dockyard into Wanchai (still at that time as its name indicates, a “little bay”.

At this time the Company’s principal source of revenue derived from its buildings, not only in Central but in the residential sectors of mid-levels and elsewhere. The Chairman of the 1915 A.G.M. reminded those present that even if there was a surplus of office accommodation it would not occur in the Central District “where ours is situated,” but rather in outlying or fringe districts. And in the following year the Company did not own a single vacant structure.

The Praya East Reclamation at long last began in 1921, and from then on, for several years, there was another land boom. The Company disposed of large areas of its land (which had accrued as a result of Chater’s holding on to his godowns and the consequent rights to reclamation areas on their seaward aspect), making a handsome profit of the transactions. St. George’s Building was also sold – doubtless a matter of regret in much later times – bringing the net capital profit in the years 1921-24 to almost $8 million. Delighted shareholders received a bonus, but prudent management put the bulk of this sum into Company reserves.

The year 1926 brought the death of Sir Paul Chater. With him it may truly be said that an era in the Company’s history had ended. Without his talents in guiding the trajectory of the Company it would certainly have been less successful. With his death there were few left who who could recall the heady days of 1889, who could trace from personal memory the fluctuations in fortunes as successive Asian convulsions washed like giant waves over the commercial life of Hong Kong.

Between that time and the years of the Depression in the early 1930s, the Company continued its dynamic policies of purchase in Central District. Prince’s Building was bought in 1927, Lane Crawford House (now demolished) in 1928, and the northern part of the old Hong Kong Hotel which had been gutted by fire – this last site later developed as Gloucester Building – was completed in 1932. Finally, in the 1930s, the Company completed its ownership of the whole triangular site of Alexandra House, and of the buildings on which the present Marina House stands.

During the Depression, a policy of gradual depreciation of the value of properties was instituted in order to make provision for their eventual replacement at what was rightly expected to be much higher costs. This policy ran in conjunction with another, that of the judicious sale of tenements and other outlying lots in order to finance development in Central District. The financial picture was strengthened in 1934 by the issue of $2 million worth of 4 percent debentures.

By 1938, even in the threatening international climate, the St. Francis Hotel was acquired – destined to be redeveloped after World War 11 as Edinburgh House, the site having been extended right to Ice House Street by purchase of the corner building. Despite the outbreak of the war in Europe, the Company pressed on and completed Windsor House in 1940 before war in the East engulfed Hong Kong and the Colony surrendered on Christmas Day 1941.

Business was suspended during the war for three years and eight months. When peace came, although residential premises had severely suffered “very little looting was found to have taken place in Central District – The Company’s offices were all intact.” These were transferred to Gloucester Building. But not before, in the words of a Company executive who recalled the combination of the strong room lock and opened it. “We found share registers, account books, and piles of vouchers… looking as though they had been put there only the day before.” They still do today.

This article was first posted on 12th September 2022.

Related Indhhk articles:

1. Sir Paul Chater – connected to several major Hong Kong companies
2. John Bell-Irving, Jardines’ Hong Kong taipan 1886 and business partner of Sir Paul Chater