CO129-587-7 Telephone Amendment Ordinance 1940 9-4-1940 - 16-4-1940 — Page 8

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and goverTrent, subject to the provisions of the law

regarding a minimum return on capital. in Hong Kong,

Ordinano No. 9 of 1940 terminated subscribers'

rights to a reduction of charges when net profits

nxoceded 12, per annum. This course was no doubt

Justified in the particular čircumstances of Hong long,

since it was then generally agreed that telephone

charges wera low. It Boems, howevor, that the low

charges were largely due to the fortuitous

circumstance that the Comparty's equipment was

purchased during a period of keen competition among

memfao turers at about one-third of what it would

have cost in 1940. High profits did not therefore involve high telephone charges. In the onse of te

telephone system

British Milana, however, (which is badly in need of

now equipment that cannot fail' to be costly in present

cirowastances) it might be necessary to retain

safeguards to prevent rates being unduly increased

merely to provide higher dividends for shareholders

(or higher royalties for government).

7.

Government must msure that the torms granted

to the company are such as to encourage efficient

operation without exploitation of the consumers, and,

at the same time, must obtain a reasonable charo of

the net profits for the general public in the form

a royalty for the rights granted. a In Hong Kong there

is no goverment control of the company's operations.

If government is not to obtain its share of the not

profits through shareholding, which would carry with

it a measure of control, it seoma jesirable, in an

undertaking of such importance to the public as the

telephone and telegraph system, that government should

have the right to approve the appointment of some or

all of the directors, or to nominate one or more

direotors,

In Hong Kong, the goverment obtained

/most