THE
TELEPHONE COMMITTEE'S
REPORT.
IMPORTANT, RECOMMENDATIONS.
CONDITIONS ON WEICH THE LICENSE SHOULD BE
EXTENDED.
PROPOSED NEW SUBSCRIPTION RATES TOO HIGH AND SHOULD
BE GRADUATED:
Example-
1,111 steel poles stated to have physical life of 5 years are estimated to cost £15,547 ànji niter 10 years use are valued at £13,700, which works out at less than 1 per cent, per annum, whereas under the new agreement the public will be required to find 8 per· cent. per annum depreciation."
HONGKONG DAILY PRESS, TUESDAY, AUGUST ^92ND, .... 1929.
The assumed charge of 19 pen cent, per annum for interest, or dividend, varies according to the method of arriving at the value of the plant as the following figures showi—..
The estimated Construction Cost at 31st December, 1993, of the Company's Plant is
e. similar Plant
but new actual cost per
Cox B/Sheet actual cost per Co's. B,Sheet
241,058
115,008
28.
pa
would be
*
THE "SUI YIK" PIRACY;" WHERE THE PIRATES GOT THEIR
.. ARMS;
What is believed to be a further con necting link in the recent piracy, which occurred on foard the 5.8. Sei Yik, came to light yeforday, at the Magistracy, when two Chinese were charged before Atro Lindsell with being in possession of & revolver o automatic pistols and 331 rounds of nonunition. The revolver was fully loaded The police believed that the defendags supplied the arms which 749,009 $9,8st enabled the piracy to be carried out.
addition the police are now on the track of the other members of the gang who up to now lave: evaded arrest and it is preciation)... 195,340, 1,569,572 197,944 quite likely that further, arrests will be
if depreciated
at Mr. Cook's rates.
913,620..
Mr. Cook values
the
present plant (less de
ME Ešie values
6:27,664 117,319
#
In
We have received from the Colonial Secretary' a copy of the report, of the Committee of the Joint Chambers, of
made the present
The seizure of the arms and ammunition Commerce appointed to consider the pro
plant (less de-
was diade Sub-Inspector Shaftain at posed new agreement with the China and
preciation)... 141,594, 4,152.754 434001 No. 180, Saranho, which is in the same Japan Telephone and Electric Co., Ltd. :
() Messrs. Cook and Cole's district whee four of the alleged pirates GENTLEMEN,This Committee was ap
The Grst valuations had been based on the lines have alread been arrested.
the National Telephone Company defendant inthe present ease is the head pointed to invesigate the terms of the 8-Although there is a difference in
Awari, both would have been much of a Resevient Association formed for proposed new agreement between the estimated values, Mr. Cole and Mr. Cook
lower.
the welfare of the poor in the district. He is alsardescribed as being a No. 1) Government and The China and Japan (appear to have agreed to the proposed 4.-The difference between depreciation blacksmith the Taikoo Dockyard. The Telephone and Electric Co., Ltd. Various increased rate, viz., $151 for business and used by the Company when making their second defeant is a poor man employed papers in "connection with the telephone $140 for private telephones, in place of valuation and when compiling their as a boardig house runner.
estimates of future expenditure indicates Mr. H. BL. Dennys appeared" for the i negotiations have been supplied us by the the Company's claim of 8175.
considerable over-valuation of their plant, secund defedant and put in a plea of Colonial Secretary's Office: and Mr." The Company, however, think the in- The Company have only allowed guilty." his plea he understood the Packer Ness, Vice-Chairman of the Com-creased rates should start forthwith (x,£18,000 depreciation on their plan, police were repfred to accept.
whereas they require "over £20,000 per pany, gave his views on the question at before the projectral improvements have annum to cover future depreciation and a meeting called for that purpose, but he been started), but Mr. Cole mubsequently renewals, which leads one to assume that refused to discuss lowering the terms o
to the publication by the Company of the the plant could only be about 25 years
jold. the, licence renewal.
proposed new rates, suggested that they The Company's estimated depreciation should only start from the completion of is as follows:- the proposed new switchboard (possibly) two or three years hence).
PART I
Our investigations"lead us to the con- clusion that the "following ten fäcts are well establisher]:-
The existing licence expires January aist, 1930, until when the Company is under an obligation to provide a good and ficient wlephone service, with approved and modern appliances at a (charge not excreding £10 per annum for lines within a radius of 1 mile from any exchange.
巾
-No provision is made in the existing honnce for continuing the telephone service after January 31st, 1930.
4
9.-The Company is able with present subscription rates to earn a good return on the money invested in the undertaking. In 1991 with a £10 rate (equal to 873.33) { they made a profit in Hongkong of 23.000 on a paid-up share capital of j 39,701 and loan capital of £12.500.
grasping."
PART II.
Estimated
1221
1929
!
1023 1024
amount of Land, Birikl ings Plant and Stores. £300,000 397,000 478,000 338,000
1925 TONG
600.300
843,300
Depn," and Re- placements re- “e quired da justify"
$150 rate: £20,301.90 24.100 6.0 28,350 - 5.39%, 1 29,300 3.40% 31,160 5.11% 32,707, 5.07
€0,000,
"
4
6.570 sq.ft. 365–427,631 of 25 £53,454 412 Peak Kowloon LL 349 6,050 sq.ft. fr (Cost Price £20,000)...$520,015
- 32.0 *
Sub-Inspedor. Shaltain said he was compelled th very great reluctance to accept the sea of guilty. The infor mation be recives was to the effect that the arms belaged," not "to the second de-
presence ofths árias were known to the first and send defendants. He added that the seus feature of the case" was that there is a connection between the men and thayoi Tik piracy..
fendant, but the first defendant. The
Mr. Den objected to the cspmote The nature of je officer's statement. allegations did first to be proved.
He
The Forth China Sunday Times Tiente) of August 13th says -During the focoon of last Sunday, more than
The Polie Officer reiterated that he had good gounds to believe that there was a conneting link between the defends 10-During the past 11 years (first)
ants and th pirates; unfortunately he balance sheet produced, 1905) the Coni-
could not ling informers into Court in pany has male 300,000 in Hongkong. 3-The Company's valuation contains à
support of his statement. The armis, he subject to London Office expenses and de larger sum of Land and Buildings than is said, were found concealed under a bed preciation. The Capital in 1905 was necessary for the operations of a tele-in a passag running along three cubicles
ös the send floor of the house. £14.701, and £23,000 was added in 1916, phone service of this magnitude. making the present capital £39,781," on Dildell Street
| could not by if the bed was being used, which dividends (frge of tax) bave been
but he d know conclusively that the paid amounting, to £82,073. The present
7,000, first deferint undertook responsibility. 3-The present system is to a great capital works out to the equivalent of
The Majstrate discharged the first de, 4,100 fendant að santneed the second defend- extent obsolete, making the introductionCapital put in plus 12 per cent per annum compound interest (less dividends paid
ant to 19 Jonths' imprisonment with hard' of some more modern systein at an early out). For a public utility investment
4114 Inbour." date desirable, (Note: Mr.. Cola's report 12 per cent. is above the average and.
When Ir. Dennys appealed for the of 1922 mentions the plant in both ex- the reserves and carry forward ofG-The subscription rates set forth in alternativ of a fine. Mr. Lindsell replied changes as obsolete. Also the fact that $60,000 are intact, the shareholders may the schedule attached to the proposed that he fuld think of it as he considered the system has been changed in Singapore be considered exceedingly fortunate. In agreement are too high, and any increase it a series case. to the Central Battery System and that effect, on the plea of forming a local on the present rates should be graduated, the Government of India have stipulated Company, and taking advantage of so that the maximum is reached after the
nide Mr. Parker Ness) that the magneta virtual monopoly, the Company are now new system has been introduced. system may only be installed in exchanges pecking by a stroke of the pen to further
PART III- of less than 300 stations and that they increase the value of the undertaking by bare also insisted on an Automatic ex 125,000, representing unrealised en- We have, therefore, to make the change being installed in Bombay at thehanced values of Pleat and Land, on following recommendations, hearing in 70 perins, all of whom were Chinese, Company's expense and risk).
which amount the subscribers are to be mind that the Company have maintained droppd dead in the streets of the Chinese sad jest with 12 per cent interest and a telephone service, perhaps neither verzity a Tientsin, the cause being heat 4-The Company is prepared to install ample allowances for depreciation and efficient, nor up to date, but for some 30 apople More than 70 also "dropped a more modern system provided their reserves. The subscribers are, therefore, odd years. It was, perhaps, not re- dead the Saturday from the same lence is extended, and the rates in quite justified in characterising the con- munerative in the earlier years, due pos cause. The normal death rate for Chinese crased to allow un adequate return on the duct of the Telephone Company is sibly to their lack of enterprise, until the at Tilsin is 10 persons per diem, so that capital.expenditure involved.
advout of the late Manager, Mr. W. L. the itense in the death rate due to the 3.--Somme sort of control over the
Carter, when great development and Company's operations is desirable from
prosperity, took place as the Directors extrc heat was alarming and it would the Government and subscribers' point of
row. This can be arranged by the pre foregoing facts and, allowing for the ing that the greater portion of the present heat dive and gave the needed respite. We have carefully examined all the report for 1917 records. Also remember-probaly have increased but for the timely intertion of min which arrested the sent Company obtaining or nominating a great disadvantage due to the absence of plant was purchased before the War at majority of local Directors and the keep the two expert valuers whom we were less than half present prices and, there than the worst summer we have ing of the accounts in Hongkong whilst unable to examine, and to the handicap fore, any enhanced valne now sought to know for quite a number of years and still retaining their London standing. arising from the fact that the Company be placed upon it should not in a con-althch we have passed the day which A similar control can be obtained by either could not, or would not, disclose timing Company) be held to have the thesives say is the beginning of reconstructing the Company as local the residuary values and rates of depte effect of increasing rates. Also, without autu" it is still on the cards that we registered Company with majority of cation employed, our considered opinion losing sight of the fact that, but for the mye more unpleasantly hot days
This would have saved
Company's own miscalculation, very befogautumn really sets in. annually a large som in Income Tax, 1.The only ground upon which the much larger profits would have ncerned in (Note:
Payments for Income Tax, present agreement with the Company recent years owing to their demanding Excess Profit Tax and Corporation should be amended and extended is the payment in sterling and pet'in legal local as ils economically practicable to open Tax have averaged $1,800 per annum advisability of providing for continuity tender. And yet, in spite of this, over fure exchanges) there shall be an during the past 7 years).
of service and progressive development of £65,000 has been paid away in dividends at feharge of $50 per annum per route
and home taxation during the past 7 The draft agreement provides for the the telephone system,
milor part thereof) from the nearest i flotation of ariew local Company to take
2.The proposed new Company will, in Reserve Fund.
years, in addition to £10,000 placed to
poison the boundary of the areas men- tion in this Schedule or of any ex- over the assets and liabilities of the pre-effect, be the old Company under a new
1-That, an extension of licence bechage hereafter completed, Bens Company whereby the shareholders of name, and, mnless a large number of the China and Japan Telephone and shares is issued locally, the clil Company offered to the present Company provided the completion of the exchanges at Electric Co. Ltd. will receive shares and will retain the complete control of the they undertake to bring their plant up Vicia, Peak, Shaukiwan, Kowloon and debentures in the new Company equival-new Company. As a matter of fact, in to date and to maintain an efficient ser Taid hereof the annual rates of subscrip cat to the revaluation of their plant and 1021 the sterling income at new rates vice.
and other charges for subscribers other assets.
I would have amounted to £120,000 and, if That rates should be fixed from time with the areas of such exchanges shall Two valuations-one mile by Mr. P. the proposed new rates had been agreed to time by a Committee appointed by the be the same rate as those in the above
sticule mentioned. Cole, A.M...E.. Manager of the Shang.. so large an increased income would Government or Chambers of Commerce. tai Mutout Telephone Co., Ltd., on he
bave resulted as to necessitate little, if That the following rates for the next half of the Government, and ane by the any new capital being: required, five years (subject to revision by the Company's Consulting "Engineer. Mr. W. 3-in Gxing the value of the Com-Committee, mentioned above) he brought Cook, ALInst., CE, M.I.EE have pany's holding in the new Company into force from the commencement of the been submitted for this purpose.
something less than the present-day sale now agreement:- 16-Mry Cole's valuation. is based on value of the undertaking would be fair. replacement values supplied by The As due consideration should be given to China and Japan Telephone and Electric the following facts, viz.: Company, which he states to be liberal,. and capable of reduction in view of a all in prices. He considers that £10,837 (Plant, £141,501, Land and Buildings, 250,029; and Stores, £10,214) represents. the present value of the undertaking sold by ong owner to other (with, presum-. ably, an extension of licence and
power to increase rates), the b
Jacal Directors.
.
7-The Company's valuation of £279,687 (Plant, 185,359 Land and Buildings. 265,114 and Stores, £10,214) is, we understand, their ides of a fair value for the undertaking transferred from one owner to another as a gafng concern (with presumably an extension of licence and powers to Sterenso rates). They have supplied deiniled, schedules, showing how ||| this amount is arrived at, but refused any
·Information as to the basis on which the schedules were compiled. From examing, tion of their figures, we infor, they estimated the cost of reconstructing the present plant at the high prices ruling on December 31st, 1921, and then revalued this according to the age of the plant on the** Binking Fund,” method of depre- ciation. The amount deducted for depre- ciation in this valuation is much less than that "estimated na fecessary for the new Company, and “lean” thấh the allowance. provided 167 (in the Government's draft agreement
is:--
|
Annual Sabscription payable monthly
in acanda "
Wall or Desk Telephone On application by
0
That the Company should keep their eats in some form approved by the
Fixing Committee.
That the Company should be left to adopt any modern and efficient fin af telephones they desire, but, if overnment insist on any particular hi, we ndvise that they make further pendent enquiry is to the most suit-
That, if the Company do not accept ters, the present licence be allowed dfepire and the Government install, à 108ern system to be in working order by
Jijuary 31st, 1930.
uootwayT#= ©
$44 204 24 1921.06 90 1924 108 108
· 1927 114, 114 114
(.) The existing Company will pili retain its whole interest in the business. (8.) Through demanding and accept Jng a sterling rate of £10, in place of Company to Coun Lo old rate of $100 when exchange
mittee who must satisfy themselves ruled about 2/-in 1005, the Company lost in reduced income about 800,000
the accounts sub- mitted and service -- in 1917, 8193,000 in 1918, and $181,000 in 1019. The Co. will now supply working
conditions justify account agures for 1920 and 1021, but Extension Telephone (In- it is entimated they lost $140,000 in the fernal) Wall:or Desk latter year owing to the net rate, being Extension Telephone (According to 87.35 in place of $100. In spite of ternal)........ the fact the Company made £23,000 in Extension Bell or Single Hongkong in 1921. The obligations Switch
!
30 20
distance
That, with a view to the Government 1026 120 120 120ing a direct interest in the telephone, ics, free lines be abolished and, in- stal of a fixed allowance covering equiva Jines, a small royalty be substituted. -That the terms of the new licence bo le public, in order to prevent a recur ribe of such overcharges as were made by Campany in 1908 and 1907-We have honour to be, sir, your obedient ser
"(Signed) 4. R. Lowe,
change would be avoided by a return to arising from a disadvantageous, ex- Private Branch Exchange
a dollar rate squalling $100 and, there! (C10 at 5/7) means additional profit to fore, any additional rate over $77.42
the Company.
(c.) They derive considerable benefit from an extension of their franchise on favourable terms, which enable them to find further employment for much plant. which might otherwise be scrapped.
d. Prices have fallen since 31st December, 1921, and still show signs of falling considerably, and it is manis
Switchboards per líné capicity
Renorale.
Telephone lines and single
telephone In the same house
From one house to another... Extension telephone.... Private Branch Exchange
Bwitchboards perline capacity.....
Kowloon includes the area South of the old boundary line.
In all districa not included in the
festly unfair to ask the public to pay above boundaries, the same rates apply an excesively high rate of return upon with the exception that (until such time inflated values arbitrarily placed on
to equipment
(Continued at foot of next colum
CHOW SAGU SON Chow Taux NM
F. K. MARSH.
Lon, Mr. A. O. Lasa, Chairman, Hong- kong General Chamber of Commerce. Fo KWAI, Esq.,, Vice-Chairman, Chinese General Chamber of Com merce..
APPENDIX L-Company's 1921 A/ch
Company's estimated 1921. 'Afer.
LANE, CRAWFORD, LTD.
French Plums
Marron Glace, Fresh Cresca" Table Figs
Fard Dates
Stuffed Dates
Prunes
in bottles $1.00 & 2,00
Mixed Crystallized Fruits Crystallized Cherries
Caviare, Russian" Norwegian Lax
Hammel's Pate de Foie Gras.
per
doz. 1,20 per bot. 1.50
1.75
235
2.35
. 2.50
2.50
per jar 3.75 per tia 210
; No. 12, 3,50
No. 10, 4,50: Naturat Foie Gras
Anchovies in Oil
C. & B. Spanish Olives
per tin : 4,00. per bottle 90, 1,40
3 pt. 60, pts. 100, qts. 1,65
SODA FOUNTAIN
AT
CAFÉ WISEMAN.
SUNDAES, PUNCHES
ICE CREAM SODAS, ALL FLAVOURS
BEST SERVICE.
HIGH QUALITY. LOW PRICES.
LANE, CRAWFORD, LED,
SHORTEST BABY GRAND
BY
COLLARD AND COLLARD
(EXPERTS IN TROPICAL CONSTRUCTION)
AT
ANDERSON'S
Powell
TELEPHONE 3146.
GENTLEMEN'S PYJAMAS
We have always a large selec- tion of these goods in LIGHT and MEDIUM-WEIGHT CLOTHS.» Being Tailor-made satisfaction is assured.
New stocks just received in Cotella Matt, Mercerised Cotton Taffeta, Silk and Wool, and Spun Silk
A Visit to
No. 10, 10E HOUSE STREET
will repay you.