The Council's own power station, 1893–1929

The short answer. For thirty-six years the Shanghai Municipal Council was an electricity company. It bought a struggling private plant in 1893 for 66,100 taels, on a vote of twenty-five ratepayers against fourteen, to keep its street lamps lit. It sold power to the trams from 1908, opened a station on the river at Yangshupu in 1913, and by 1923 ran the largest thermal power plant in the Far East, 121,000 kilowatts, with 3,000 Chinese employees and a load factor the engineer liked to compare with Manchester’s. In 1929, with the Settlement’s future in doubt and Chinese demands for its return growing, the Council sold the whole concern to an American-led group for 81,000,000 taels, enough to pay off every loan it had, and went back to being a town council. The department’s own reports, written by engineers for ratepayers, record the growth year by year; the Municipal Gazette of 1929 records the sale, and the arguments.

1882–1893: a failing company and a two-vote majority

Electric light came to Shanghai in 1882. The Shanghai Electric Company switched on its first current on 26 July that year, and in October the first arc lamps were lit on the Bund and Nanking Road, where the gas lamps of 1865 had stood. Arc light was for streets; the company’s successor, the New Shanghai Electric Company, began incandescent lighting for houses and offices in April 1890 from its works on leased land at Chapoo Road in Hongkou. It did not make money. The Council was its principal customer, buying light for the main thoroughfares, and when the company’s position became hopeless the ratepayers were asked whether the Council should take it over. The debate was not printed; the resolution was. At the annual meeting of 1893 a motion that the Council itself undertake “the future supply of Electric light for public and private use” was carried by a majority of two: “25 Ratepayers with 61 votes voting for it, and 14 with 59 votes against it”. Thirty-nine men holding 120 votes put the Settlement into the electricity business.

The directors did not resist. On 17 April 1893 they wrote that it would be “prejudicial to the interests of the Company to oppose any wish of the Ratepayers to acquire the property”, asking the par value of the shares with seven per cent interest from the end of 1892, the Council taking over assets and liabilities. A special meeting on 7 June 1893 carried the purchase on a show of hands, no one demanding a poll, and authorised up to 80,000 taels of debentures. The Council’s own valuation, by the engineers Chambers, Timm and Mayne, had put the plant at 58,365 taels; it paid 66,100 on 31 August 1893, including new plant, and reckoned 20,290 more would be needed to bring the arc installation up to its full 130 lights, 81,055 taels in all. The 800 debentures of 100 taels at 5½ per cent went out on 30 September. The Electricity Department, which the gazetteer records as the first municipal electricity undertaking in China, opened on 1 September 1893 with the company’s superintendent, Price, and his assistant, Roach, re-engaged for three years under the Council’s engineer, Charles Mayne.

What the Council had bought was small. The arc side ran on Tangye engines, two Lancashire boilers and Brush dynamos; the incandescent side on two Marshall engines and two Mordey-Victoria alternators of 37½ and 25 kilowatts, with another engine and alternator on order from England and late because of a coal strike. The Settlement had 88 electric street lamps at the end of 1893, 123 arc lamps in all on three circuits, “about 9 miles of streets (mostly main thoroughfares)” lit by electricity, twenty by gas and fourteen unlit. There were 6,325 sixteen-candle incandescent lamps connected, and the engineer printed the list of incandescent consumers: twenty-six names, among them the Shanghai Club, the Hongkong and Shanghai Bank, Jardine Matheson, the North-China Daily News, the hospital and the electric light works itself. Applications were being refused until the new machinery arrived. The first four months showed a balance of 6,018 taels, most of it put to a sinking fund, and the estimate for 1894 was a net profit of 3,038 taels after depreciation, on receipts of 36,570. Mayne wrote that he had “every reason to believe that the Council will be able to run the undertaking quite as economically as the late Company”, which was not a high bar. The lease at Chapoo Road was about to run out, in 1895 by one page of the report and 1896 by another, and a new station was proposed beside the Hongkou abattoir.

1905: the ratepayers who wanted to sell

The department grew with the Settlement, to 576 kilowatts in 1900 and 1,600 by 1905, but it was not yet a business the ratepayers were proud of. In 1905 it had 1,167 consumers, up from 918 in a year, sold 1,776,823 units, 45 per cent more than in 1904, at 14 cents a unit for lighting, lit 223 public arc lamps, burned 10,629 tons of coal and took 216,982 taels for electricity. It also made a net loss of 8,717 taels after extraordinary items, with a maximum load of 1,090 kilowatts on 1,600 of plant and a load factor of sixteen per cent, which is to say that most of the machinery stood idle most of the day. When the Council, on 17 May 1905, resolved to give the tramway concession to Bruce, Peebles and Co., twenty-nine ratepayers, among them Dr Ward Hall, who had moved the purchase twelve years before, the property owner Silas Hardoon and the German firms Arnhold Karberg and Carlowitz, requisitioned a special meeting to sell the Electricity Department along with the concession, “together with the land, buildings, plant”. The meeting on 6 June 1905 went the other way: the proposal failed, and an amendment to press on with the trams was carried almost unanimously. The tramway agreement signed that October made the Council the trams’ supplier of power and, in its clause 21, allowed the Council to sell the works only “to a British corporation, company, firm, persons or person”. That clause would matter in 1929.

The trams changed the department’s economics. Traction load came in the daytime, when lamps were off, and the engine room that had run for the evening began to run all day. Chinese consumers changed it further; by 1913 the engineer was noting that “the bulk of these additional connexions was for Chinese consumers” and that “the Chinese consumer burns his lamps for much longer hours than the foreigner”. A department that had sold light to twenty-six foreign firms was selling it to a Chinese city.

1913: the river station

The Council built its own station on Fearon Road in Hongkou in the 1900s, 6,400 kilowatts by 1913 counting its battery, and outgrew it. In November 1911 it bought 39 mu of riverbank at Shenjiatan in Yangshupu for 500,000 taels, downstream of the Settlement, where coal barges could unload at the door and the Huangpu could cool the condensers. The Riverside station “was opened on April 12th by the Chairman of the Council”, the engineer T. H. U. Aldridge reported for 1913, though it did not run continuously day and night until the fourth quarter, because the foreign shift engineers sent from England were late and “mechanical troubles were experienced with the new boilers”. Its normal rating was 4,000 kilowatts; with Fearon Road and the overload the machines would stand, the department could put out 10,400. Visiting engineers, Aldridge recorded with satisfaction, were “surprised that such an up-to-date and thoroughly well equipped station should be found in Shanghai”. Working costs fell 15.6 per cent in a year.

The figures for 1913 show a utility that had become the Settlement’s largest enterprise. Units sold reached 21,888,230, eighty per cent more than the year before: 8.6 million for private lighting, 6.9 million for power, about 3.1 million for the trams, a million for the street lamps, 125 arc and 1,098 metal-filament. Service connections rose from 6,870 to 10,987 in the year. The motors connected came to 5,264 horsepower, nearly 6,000 with the bulk supplies to the Naigai Wata cotton mills and the Chinese-owned Chapei Electric Light and Water Company across the boundary. The department employed 59 foreigners and 700 Chinese, made a net profit of 69,381 taels, which Aldridge thought would have been 98,000 without the delays, and was already answering critics who said its cheap power was subsidised by dear light. He had a table to print: Shanghai’s load factor of 30.8 per cent against West Ham’s 27.6, Manchester’s 26.5 and Glasgow’s 21.4, though Manchester sold 104 million units to Shanghai’s 22. Two 5,000-kilowatt turbo-alternators were on order from AEG in Berlin at £2 a kilowatt, against £3 for the 2,000-kilowatt sets already running; Aldridge had gone to Europe and America in May 1913 to buy them. Around this date, the gazetteer says, the Council was taking about 26,000 taels a year from the department.

1922: the largest plant in the Far East

Nine years later the department’s annual report was written by an “Engineer-in-Chief and Manager” and ran to its own appendix of comparative tables. In 1922 the two stations generated 275,069,325 units, 99 per cent of them at Riverside, and sold 232,457,361, a quarter more than in 1921. Power was now 85 per cent of what it sold, against 16 per cent in 1918: the mills of Yangshupu and the western district had put their looms and spindles on the Council’s current. There were 36,792 connected premises and 8,958 motors totalling 77,698 horsepower; the maximum load was 53,950 kilowatts and the load factor 51.5 per cent, which the department set beside Manchester’s 158 million units and Glasgow’s 21 per cent. The foreign staff numbered 159 and the Chinese 3,163. Capital outlay stood at 27,671,552 taels, revenue at 7,253,158, net profit at 1,221,806, a return of 10.45 per cent on capital in use; the department had handed the Council 2,860,000 taels of profit since 1916 and would hand over 690,000 for 1923. Four new boilers, two Babcock and Wilcox and two Stirling, each evaporating 80,000 pounds of water an hour, had gone into service in November; a 20,000-kilowatt Metropolitan-Vickers turbo-generator was “well advanced” and a 20,000-kilowatt Parsons set and a 10,000-kilowatt General Electric set were on the capital list. “The plant capacity at Riverside at the end of 1923 will be 121,000 K.W.”, the report promised, and defended building ahead of demand: “provision must be made in advance to anticipate new demands rather than wait for the demands to overtake the means of supply”. The gazetteer calls Riverside the largest thermal power station in the Far East; Pott, in 1928, one of the largest electric plants in the world; by the 1926–27 extensions, the chairman of the electricity committee told the ratepayers in 1929, installed capacity was 161,000 kilowatts. In 1928 the department sold 458 million units, carried a peak load of 98,500 kilowatts, made a net profit of 3,165,300 taels, and had contributed 9,760,000 taels to the Council since 1916.

All of it was built on borrowed money. Between 1893 and 1928 the Council floated sixteen electricity debenture issues raising more than 36 million taels, the greater part of everything it ever borrowed, and the capital works went on: 36 million more would be needed by 1940. A town council whose other business was roads, drains and police was carrying the debt of a power company that sold most of its output to factories, in a Settlement whose political future, by 1928, nobody could promise.

1929: why sell, and to whom

The Council insisted it had not gone looking for a buyer. Its statement of April 1929 says that “the first intimation which the Council received that anyone was interested in the purchase” came in October 1928, when “a representative of a group of New York business men” called on the chairman. The chairman told him that the undertaking had been built up by British initiative, that most of its debentures were held by British subjects and most of its ratepayers were British, and that a purely American purchase was unlikely; “at no time did the Council invite bids or take any initiative in the matter”. Bids came anyway. By 19 March 1929 a special electricity committee under A. W. Burkill had three offers before it: a lease proposed for Lord Meston’s group, under which the lessee would carry the Council’s electricity loans and pay a rent, the Council taking three-quarters of profits above a nine per cent dividend; an outright purchase by the British Trusts Association at 51,000,000 taels, or £7,200,000, plus seven per cent interest; and an outright purchase at 81,000,000 taels by the American and Foreign Power Company “on behalf of itself and its British Associates”, a syndicate whose cable was signed by Dudley Docker, Lazard Brothers, Whitehall Electric Investments and Whitehall Trust, with the Electric Bond and Share Company of New York behind it. On 22 March the committee unanimously recommended the international group’s offer, the alternative being to “remain a municipal utility undertaking”.

The Council’s reasons, as it gave them, were political before they were financial. The undertaking, the committee wrote on 3 April, “should be safeguarded from all possibility of interference” “in view of possible future changes in the status of the Settlement”, and the way to do that was to “place its control in the hands of an International group” with British, American and Continental capital in it, whose home governments would all have a stake in its protection. The lease was “an expensive way of financing”. Stirling Fessenden, the Council’s chairman, said the rest at the annual meeting of 17 April 1929: the Settlement’s status was uncertain, Chinese politicians and students demanded its rendition, and a municipal power plant could end in the hands of “a particular political faction”; 36 million taels of capital works were needed by 1940 and some 15 million for police, fire, hospitals, schools and a refuse incinerator within five years; “protection and efficient management” were what the Council wanted for the plant, and he urged the ratepayers “not to be unduly influenced by the idea that municipal ownership” was in itself better. The critics had written to the newspapers. Some objected that the Council had not called public tenders; more objected to losing the department’s annual contribution, which Fessenden answered was “about 9 per cent of the total Municipal revenue” and would be replaced many times over by the interest on the price. He claimed a “lack of opposition” from responsible Chinese residents, whose interests, he said, were better served by foreign control and management of the plant; the Gazette prints no Chinese ratepayer’s view, and the three Chinese members of the Council had taken their seats only the year before. Resolution VI, moved by Fessenden and seconded by W. P. Lambe of the electricity committee, was put without questions and “carried by a very large majority. (Applause)”. No count was taken. A resolution authorising a second Riverside station, in case the sale failed, had already been carried unanimously the same afternoon.

The agreement of sale, dated 8 August 1929 and printed in the Gazette two days later, was with the Shanghai Power Company, “a Corporation organized under the Laws of Delaware” acting for the American and Foreign Power Company of Maine, through its attorney Samuel W. Murphy. The price was 81,000,000 Shanghai taels with interest: the buyer would assume an estimated 36,348,200 taels of municipal loans falling due by 1933 and pay the balance of 44,651,800 by instalments as the Council called for them, secured by a mortgage on the whole undertaking and a letter of credit for 30,000,000 taels from the National City Bank of New York. The franchise was perpetual, with a Council option to buy the undertaking back after forty years and every ten years after that, the valuation to be made in gold. The company would pay the Council five per cent of its gross sales, called an income tax; lighting was capped at 0.11 taels a unit, power at 4½ candareens, against 14 cents in 1905; and if net profit passed ten per cent of capital, half the excess would go to a consumers’ reserve to bring rates down. The clause of 1905 that had required a British buyer was satisfied by the British names in the syndicate.

The Council’s report for 1932 shows where the money went: 47,597,784 taels to redeem loans, 29,616,126 to capital works, 3,786,090 held against loans still to fall due. The Council had said in April 1929 that its whole indebtedness would be gone by 1937, and that “the incoming Council will give its immediate consideration to the question of a reduction of the rates”. The Settlement’s streets stayed lit, its mills kept turning, and the bill now came from a company in Delaware.

What the sale meant

The department had been the Settlement’s one great success at doing something other than keeping order. A council of nine merchants, elected by two or three thousand voters, had built and run a utility serving a million people and most of the city’s industry, and had done it, by the department’s own tables, as efficiently as Manchester. It sold the plant at the top of its value, at a moment when every foreign institution in Shanghai was reading the same signs: the Mixed Court returned in 1927, three Chinese councillors in 1928, five in 1930, a Chinese city government across the boundary that was building roads to hem the Settlement in. The sale converted a political asset into a financial one and moved it beyond the reach of whoever governed Shanghai next. Fessenden did not say so in those words, but the committee’s report did: “safeguarded from all possibility of interference”.

What to look for

Nanjing Road East and the Bund were the first streets in Shanghai lit by electricity, in October 1882; the Council’s 1893 works on Chapoo Road, in Hongkou near today’s Zhapu Road, and the Fearon Road station near the creek mouth are gone without trace. The Riverside station became the Yangshupu power plant and made electricity for the city until 2010; the site, on Yangshupu Road by Dinghai Road at the eastern end of the Yangpu waterfront, keeps its chimney and part of the plant as industrial heritage on the riverside walk.