City's Failure to Find Credit Deposit: Breach of Faith with American Company: Alleged Saving of $200,000
A sharp controversy has arisen in Canton over the cancellation of the contract signed by Mr. Sun Fo on} behalf of the Canton Municipal Government in 1926 with the Automatic Electric, Me, of Chicago, for the installation of an automatic telephone service in Canton, states the "Hongkong Daily Press." The Canton Municipality alleged that there was an unwarranted delay of 19 months and, in consequence, they have signed a new contract, at much more reasonable rates, with the China Electric Ca. The original contractors dispute this view of the matter and contend that the delay due to Canton's failure to provide the stipulated guarantee.
Mr. Harry S. Janes, Far Eastern manager of the Automatic Electric, Me, has lodged a strong protest against the Canton Municipal Government regarding the matter. He has pointed out that Mayor Lin's contentions do not warrant abrupt and unc{nditional cancellation of the contract with his company. He then went on to answer the Mayor's four points. As regards the first one, he said:—"The value of a telephone plant, like a motor-ear, is not determined by the price which the seller asks. It is necessary to compare the detailed specification of each in order to determine their real value. The old contract includes a detailed specification of the automa-tie apparatus which is to be furni ished. The new contract does not sive the detail As regards the second point Mr. Janes explained:—"The old contract: does not require any initial Payment to the contractor whatsoever. It stipular wat the Municipality must deposit in a foreign Bank G.$232,000 to show good faith, but the contractor cannot draw out one penny of it until the plant is completed and in operation. Even the accrued interest remains the, funds of the Municipality, and is to be applied to future payments.
The new contract requires a payment of G.$50,000 on the day of signing the contract (March 17, 1928), and beginning three months thereafter (June 17, 1928), the Municipality must pay G.630,000 per month. Also the new contract includes a special clause to the effect that, if any payments are delayed, the seller shall correspondingly delay the delivery or deliveries of the materials and equipment. In other words, the Municipality will pay advance before they can receive any material or equipment In refutation of the point Mr. Janes said detailed ispecificati the old contract, the Municipality is assured that full value will be received in the equipment and Way to prove it, materials which the contractor) agreed to furnish."
Finally, in answer to the Mayor's Mr, Janes said:—"Both ipality and the Automatic Electric, Me, commenced work on the contract the day it was signed, the Municipality on its financial arrangements and the contractor on the engineering work. The Mur cipality collected—_approximi $180,000 Canton currency, but, instead of placing it in a foreign bank, the money was used for other purposes, "The contractor sent an engineer to Canton in February, 1927, and he remained until September, 1927, during which time he made a complete survey of the city and made complete plans for the underground and aerial plants. The contractor has always been and still is ready and willing to continue the work and satisfactorily fulfil his obligations under the old contract. Up to date, however, he has been pre-from doing so because the ality has, for 19 months, failed to establish the credit."
Arbitration Committee Appointed The Canton Municipal Government has attached considerable importance to the protest of the Automatic Electric, Me, and hay asked three expert lawyers to form an arbitration committee to arrange for a settlement. The members of the committee consist of Mr, Ti Chi-ti; Mr, Chiang Hsun, Chair man of the Land Arbitration Bureau of Canton; and Mr. Ho Chieh Professor of Law at Sun Yat-sen University. At the first meeting of the Arbitration Committee, Mr. Fung Wai, Chief of the Bureau o? Public Utilities, made a lengthy report, in which he said:— worked in the Telephone Administration for several months but never heard of any scheme for solving the question. This year the Utilities Office found the telephone system very bad, so the matter was taken up again, " As this ly a public necessity and the representative of that company had returned to the United States without any scheme for solving the matter, I made a new contract with the new company (China Electric Ca.) because we want to see the telephone system improved quickly. The difference between the new contract and the old contract is about $200,000."
Text read from the printed page and cleaned; old type leaves the occasional error.