Mr. Wray expressed the opinion that with the flat rate system the company made its profit on the small user. It lest money on the large ser. "Any gain it made must be out of the pocket of the small users. who were incidentally paying part of the cost of the service which was being enjoyed by the large user. A further point also arose: if the flat rate sche. due were increased, the number of telephones in use would be reduced, and the value of the service generally would be correspondingly less. This was not a good thing from the point of view of the economic and. social life of Shanghai. The adoption of a measured schedule, in which the small user got a fair chance, facility ated exactly the opposite tendency: he was encouraged to take the service: the number of telephones was thereby increased; and the service as a whole was made more valuable. That in short was the philosophy of the measured service.
'A member asearted that the majority of small users, who were stated to be the beneficiaries of the message ate, were in favour of the flat rate. The'fat rate, it was also argued, provided easier means of controlling income; a 10 per cent. return was Guaranteed the company, and it was easier to give neither more nor less {han 10 per cent. by means of the flat ra Major Brown ssid that the Telephone Special Committee did not retand that the estimated shrinkage of calls, which it had reckoned at '37% per cent, was an exact figure. It was a compromise between the 50 per cent. decrease experienced in Japan and the 25 per cent. decrease in Great Britain. In Great Britain there was not a high calling rate when the message rate system was introduced. "In Shanghai there was high calling rate, and so there was realer possibility and likelihood of reduction. The possibility of curtaliment was very great It would certainly be more than 25 per cent, and hight be more than 37% per cent.
Mr. Wray observed that in the United States, telephone companies Were limited to what was considered to be a fair return on the value of the property. That was the law; but
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