Shanghai, Nov. 28. FTER lengthy deliberation, the Shanghai Municipal Council 'a communique issued yesterday approved with modification proposals of the Shanghai Teloph one Company for an increase in the existing charges for telephone and the application of a surcharge, The surcharge calls for a reduction in call allowances from 100 {0 65 calls monthly for resi business subscribers; an increase dents and 150 to 100 calls for from three to seven cents for excess calls; application of a 30 per cent. surcharge on all bills for local telephone service; increase in service connection and removal charges from 100 to 150 subscribers of a deposit equal to the basic rate applicable.
The proposals of the company, it was slated, were considered over a ong period and while it was agreed that the other proposals were justified, great dimeulty was experienced Feconeiting divergent opinions expressed on the question of basing de-Dreciation on replacement cost plant. A. compromise proposal was devised whereby the Council should concede to the company as a tem= porary measure, that the depreciation may be calculated for tariff purposes Under certain conditions. 'The later provide inter aria, that in the event of a sale of the company the differ fence "between depreciation based fon replacement cost and. original book values will, after satisfaction of all Habilities and' shareholders" equity, be paid or credited to the Council for the benefit of subscribers, -acceptance of the conditions "to be without prejudice to the "rights of either the company or the Cowell under the franchise.
To give effect to the proposal it per cent. and payment by new two years' rental calculated at charges on the schedule approved in 1036, It' was regarded as natural that}. telephone service" should appear cheap when compared. with prices now charged in Shaghai for other services and for commodities, and it was felt that this factor, combined with unusual business activity and acknowledged overcrowding, which may not be permanent, may' account for 9 substantial part of the current service demand. Moreover, analysis he service applications ' received ig Fecent months indicated that, 4 large number may originate with individuals and businesses which did not subscribe to telephone service when charges bore a more normal relation to genera} price levels in this area, For some time, the company's application stated. it was possible to meet this demand at reasonably low capital cost by utilizing equipment rendered idle through service can-ocellations during the latter months of 1937. and by. rearranging spare was agreed that the surcharge. on) equipment' inialled' during. esrlee anonthiy' bills should be 30 per cent. sears subject' to review at any time and Fecognized _ineiples of economic
operation, in ay ovant after ceive Tonth' panning" th addition, comment ita stated, as mediaed by the com equipment" were eaxersd st average The company's. proposals for foreign currency, purchases
promise, were considered and_apexchange rates substantially more proved by the Public Uuilities Com-favourable than those now obtaining. mittee and the Council and have been The point has now been reached. formally accepted by the company, however. where greatly increased Councit Communique humane, by subscribers already con The full {ext of the Council's com-|Homeng Meare Aiquem has created unique on the subject giving among aaman additional switeking other things the reasons advanced by mon by all subscribers, where rela-the company for its proposals follows: tively. fow additional telephones can The Municipal Council has had connected to the system on a under consideration proposals suibpermanent has without first me mitted "by the Shanghai Tele= sialling certain expensive equip-phone Company for revision of the ment. for the sole purpose of me existing. charges for telephone ser= (reducing sixediatt numbers. and viees and has approved increases in where, each telephone added to the charges and the application of a system, Fequires greater capital surcharge is follow outlay, largely for equipment which 11) Reduction in, the existing: call a.) must "be obtained from abroad. mon than was the ease when important for genidgnce pubseriers and ram 96 items were still avail-erthers: trid any inevease inthe. charge 8 Tee eatly" In "excess ey" ich yecuces the 7 cents per alt existing call allowances and increase The" estado! ace vomatchhrwes 16 remain unaltered per cent sur. andthe in the charge for calls in excess of the reduced allowances should, the company's opinion, reduce the ied by the thereby both improve to art Se flea tebosit teal I ull i ie sere the aske vote. Spplieabie thereto, a Side Wu sear an proper tional telephones to existing "switehime "equipment ut relatively low capital cost. The increase inthe, service connection and removal arues is required partially fo offset ned Jor a lesser period increased costs of Iibour and ma-chores and sur- terial, while the approval of the French Muni-|.°tesigned to sitard the company became measure of pro titeetive. from December, 1040. he from that date "the increased" in= coven at eat toe those installation the new and prove te be transient
are wil be enol ely 8 rental that the
commence ike "a tale include bills Fendered oh December 7 and ad property val fice that iter nes, the the. reduc ceil mal calls and surcharge theres in, weed charta for for depreel Mebrcejation sumlcient 10, replace ident to replace wi periods ly urine the year to. rend December fact" that provisie rendered m currently made i= not suigfent ty replace as muck as 30 per cent, ut the. estimated! to be ted up a year, Tt supper the was explained that the rate of preciation employed by the com= rusty concerned sith the abnor= pany. which ately that 1 demand perienced for telephones indicated each of the Sears TMU sad 19H}, as eon! and approved by the International Committee of Experts Appointed by the Council in 1993 is applied to the Chinese dollar book value of "6 de. pre setup the vers Tased ott ae. this the merely The ea posed that Pel charges voterred 0 above, a vari able suvel urge be applied to monthly Bille for local telephone service £0 that the basic tariff changes _proposed. plus such surcharge, would bbe adequate to produce each month, total revenues which would "cover all charges, including real depreciation in plant. and provide the company's Franchise return on invested capital plus the reasonable "recoup ment against the existing deficiencies in the depreciation and tariff revision accounts, The proposed tariff changes were estimated to produce an overall increase in the company's revenue of approximately 70. per cent. and would, it was oped, provide the company with some. surplus cash from. operations which would be available 0 finance a certain amount Local Axis Relations A Little Strained Shanghai, Nov. 29.
For the past several months, Jocal Germans and Italians have met together at the German Schoo! in Great Western Road every 'Thursday night. Last night, however, only Germans were' present. Apparently, invitations were not sent to Italians.
It was also learned yesterday that the Italian flag painted on the side of the s. Conte Verde, the large Hatian passenger boat which sought refuge here when Italy declared war on Great Britain and France, was being painted out yesterda plant extension, nder exist= the Company had impracticable to. do any ant amount of outside finaneconsiderable agreed that sale were expressed un the question basing depreciation on replace-lant, Doubt wax tone hand as to vwheconditions the method depreciation charges the combat hand the vie depreciation should be it ort since the compan wut raising new cape which might not be possible, have soiieient funds it depreciation is bacedl on book value to Feplace major plant items when they ear out. The sell be that ser= view would suffer of anisht even hava However, a compromise wat devised under" which claim to bine an replacement cut Scuuld not be admitted, the Coun should, as practice! solution to the peculiar difficulties now confronting the company, concede as a temper ry measure, that for tariff purposes depreciation may be so calculated Subject to certain conditions. These Conditions provide, inter alla, that the event of a sale of the company difference between depreciation acceptance 0 either the BY sapajou H. Kemp, Bombed ashore and afloat
Text read from the printed page and cleaned; old type leaves the occasional error.