The Irish standard., 1908-04-18
LoNpoN's TRAMWAYs.
Under Municipal Ownership They are
Run at a Loss.

poi6L q SCol dSop NlliSll ISSullCu tIlS
overturn Of the Socialistic regime that
had controlled the local government Of
London for Is years. was waged chief
ly on the record made in municipal
ownership during the period when the
party of the So called Progressives was
in power
Grave charges were made by the
Moderates to the effect that by means
of misleading accounts the Progress
sives had shown false profits where
businesslike methods of bookkeeping
would have revealed substantial losses.
These allegations were vehemently de-
MED. but even without access to the
books the Moderates We're able to make
out a prima facie case against their
opponents. At all events the evidence
was SO strong that London accepted it
as convincing and put the Moderates
in by large majority.
One of the first acts of the new coun-
One of the first acts of the new
county council was to order a full in
vestigation of their predecessors by
experts of such standing that their re-
port would carry conviction. They as
signed the task to w. B. Peat and F.
w. Pixley, president and ex-president
respectively Of the Institute of Char
tered Accountants. and they have just
presented the first section of their re-
port on municipal tramways.
1t was insisted on behalf of the Pro-
gressives in their campaign that the
tramways under their control had
made a genuine profit, as shown by
their books during the previous year.
of about $4,000. The Moderates con-
tended that the lines had been operated
at a loss. The report of the experts
disclosed a far worse state of things
than the Moderates alleged.
The Progressive county council dur
ing the period of 1893 to 1907 invested
about s33.5OO,O0O in tramways. They
paid about s11,5OO,0O0 for horse tram
lines and spent s22,oOo,o0 in electriti-
cation.
During the years that the change was
in progress the council paid into the
public treasury OH so-called profits Of
the horse system total of about ST.
100000. But they continued to carry
as assets the full price they had paid
for the horse trans, although their
value had shrunk by the time the cleo
trification was completed to the extent
of more than $5.0O0,000. The experts
point out that by all business prin-
ciplcs the $1,00O,OOO of so-called prof
it's should have been placed as a par
tial Offset to the great shrinkase in
value.
The next item of financial juggling
came in connection with the expense
Of streets improvements made neces-
sary by the extension and electrif1ca-
tion of the lines. The total expendi-
lures undea' this head amounted to
about $S,750.Oo0, but of this sum only
an insignificant sa50.oo0 was charged
to the tramways account.
Here is an illuminating example of
the councils action: They estimated
that $4,000 of the cost of the widen
ing of st. John street should be charg-
ed to the tranways account. Then
fhav rNSn1SoH 1,of ho r1,o el,&
be postponed until the profits of the
proposed tramway shall be sufficient
to meet the annual charge In respect
of the capital outlay"
| The. auditors. being ordinary busi-
ness men, naturally report:
This resolution is based upon an un-
sound principle. The apportionment OF
expenditure between the various
counts should be made on business and
commercial principles, quite irrespect-
i've of the results which may be de-
rived from such expenditure
The foregoing points apply only to
the grossly unbusincsslike manage
| ment OF the capital account Of the en-
terprise When 1t comes TO the oper-
ating accounts the auditors make ex.
posures just as crushing.
1t. is one of the elemental rules OF
management Of tramways or any othe,
business which makes use of deterior-
ating plant, that a proper sum shall
be charged off each year for renewals
The council had been advised by its
own officials that the lowest adequate
allowance for this purpose would be
one penny a car mile run.
Such a reserve fund for the period
19oS-'o7. the time during which elec-
trio traction was in operation, would
have required 100000 The amour,
that was actually assigned was $685.
900.
AS an example of the erroneous
method Of dealing with this charge the
auditors refer IN tho ocrount., for %l,<