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of petrol has been reduced by ten cents a gallon, but in view of the fact that the Hong Kong dollar has been rising steadily for the past six months we do not feel that this reduction should be regarded as more than a step in the right direction. We appreciate that daily fluctuations in prices are not practicable or desirable, but we do consider that a somewhat less conservative policy might be pursued with advan- tage in the light of a rising exchange.
("c") HONG KONG, CANTON AND MACAO STEAMBOAT COMPANY, LIMITED.
1. A comprehensive Memorandum was received from the Hong Kong, Canton and Macao Steamboat Company, Limited, setting out various problems and difficulties with which this Company is forced to contend. Most of these problems are not capable of solution in this Colony and we feel that we can take no useful action be- yond transinitting them to Government for sympathetic consideration.
2. There is, however, one complaint that must be referred to here. It is alleged that during the past three years, and especially during 1934, the Steamboat Com- pany has suffered heavy losses in respect of its passenger traffic owing to steadily increasing competition by the Kowloon-Canton Railway.
3. This competition is described as "unfair" on the grounds that the Railway is a Government subsidised concern supported by the revenues of the Colony to which the Steamboat Company as a taxpayer is forced to contribute.
4. A railway, whether Government or privately owned, is a public utility con- cern and as such cannot help but compete with businesses of a similar nature. The Kowloon-Canton Railway for a period of eighteen years failed to cover its working expenses, not through maladministration but owing to circumstances in China, etc. If the Hong Kong taxpayer is to be regarded as a Railway shareholder then in equity he should be entitled to recover his losses when the opportunity to do so occurs.
5. Moreover, in our opinion, competition in transport stimulates trade provided that the rates charged are compatible with business efficiency. The criterion of tran- sport efficiency is the "Operating Ratio", i.e., the ratio between working expenditure and gross receipts. So long as a decrease in rates and fares leads to an increase in revenue it is a benefit both to the public and the transportation company. Any decrease which did not produce this result might, if maintained, be open to the ac- cusation of unfair competition, but we have evidence that the Railway administration has always aimed at decreasing the ratio and any experimental reductions in fares which have proved unremunerative have been altered without delay.
6. In these circumstances we find ourselves unable to endorse the complaint of the Steamboat Company that they are suffering from unfair competition by the Rail- way, or to recommend that any steps be taken to eliminate this competition which we regard as beneficial to the Colony as a whole.
Chapter XVI.
CONCLUDING CHAPTER.
1. The Commission soon shed any illusions which they may have entertained regarding the possibility of discovering any easy road to recovery and approached their task free from any economic bias. It became obvious from the outset that factors beyond the Colony's control dominated the situation. In fact, the task from a practical point of view resolved itself into a modest enquiry into the Colony's activities, and resources, and the problem of their conservation. There is little
scope in a Colony like Hong Kong, having no natural raw products and but a small domestic consumption, for the ambitious schemes of economic reconstruction or national planning which have become the modern fashion.