The increased costs of operation during 1998 were substantial and ur precedented, preponderantly due to the increase in the cost of coal and to the depreciation inthe exchange value of the Chinese dollar. Follow ing the outbreak of hostilities August 13, 1937, it became increasing ly evident that increased costs of operation were inevitable; coal of Chinese origin became increasingly dificult to secure, while the cost of its transportation, including the necessary war risk insurance and handling charges, was abnormal. The effect of the hostilities upon the managed euro Feney of China was adverse.
Pending some clarification of the political, finaneiat and economic fa tors following the opening of the 1937 hostilities, the Company. carried ssu increased costs and made no attempt to secure any of the relief provided refer under its franchise. "in May, the exchange value of the Chi nese dollar began to fall to unprecedented lows and simultaneously the supply of coal of Chinese origin wax limited to the point where it became necessary to purchase approximately 50 per cent. of our coal requirements in foreign markets and in foreign evs reueles. Moreover. even. the coal from Chinese sources is now priced in Sterling. Virtually all materials and supplies utilized by the Compan fare of foreign origin and are in purchasable only. in foreign currer les, at resultant greatly: prices, while with coal costing ap proximately 200 per cent. more before the hostilities, the Company was foreed to seek relief in its rates Pending more complete clarification fof the causes and hopeful that some alleviation of such costs might develop, the Company. proposed and the Shanghai Municipal Council agreed to a formula of surcharges to existing rates based upon the exchange value of the Chinese dollar.
The surcharge became effective upon bills rendered by the Company for consumption periods ending on or ter September I, 1931 The US. dollar exchange value of the Chinese dollar fell in July. fro!
relatively stable rate of ChS! U.S8029 to Ch$1=USS016 and has since remained relatively stable at that point. Except for brief period, adequate exchange has been available for our requirement
Text read from the printed page and cleaned; old type leaves the occasional error.