The sun. [volume] (New York [N.Y.]) 1833-1916, 1908-04-12
LONDON'S ACCOUNTS JUGGLEO
MUNICIPAL TRAMWAYS RUN AT
4 HEAVY loss.

Ad, Ocates Of city Ownership Had Figured
out n PrOht From Their Operation
The Truth Revealed by an overhaul
Ing NJ the BOOks-A Zig Deficiency.
osDoS, April 2-The great campaign
a gear ago, which resulted in the overturn
ul the SoCialistio regime that had controlled
the local government Of London for fifteen
wears. was wage chiefly on the record
made in municipal ownership during the
reriod when the party Of the so-oallei Pro-
gressivos was in power,
Grave charges we're made by the Moder-
a,as t the effect that by means Of mis-
leading counts the Progressives had
shown false profits where businesslike
methods Of bookkeeping would have re-
yelled substantial losses. These Illega-
tons we're vehemently denied, but even
without access to the books the Moderates
we're able to make out u prima faCie case
against their opponents. At all events
ina evidence was so strong that London
accepted it us convincing and put the
Moderates in by a large majority.
one Of the first acts Of the new County
Council was to order a full in estigation
Of their predecessors by experts of such
standing that their report would carry
conviction. They assigned the task to
" +. Peat and F. W. Pixley, president
and ex-prcsident respectively Of the In
stitute o. Chartered Accountants, and they
have Just presented the first section Of their
report on municipal tramways,
Il vas insist d on behalf Of the Pro-
grossiyes in their campaign that the tram
ways under their control had made a gem
uue profit, as shown b; their books during
the previous year, Of about $4,000. The
Nloderates contended that the lines had
been operated at a loss, The report Of the
experts discloses a far worse state Of things
L-n the Moderates alleged.
~ Progressive County Council during
the period Of 1893 to 1907 invested about
133.jOODOO in tramways. They paid about
81, 10000 for horse tram lines and spent
81. go 900 in electriication.
During the years that the change was In
progress the Council paid into the public
treasury on so-called profits Of the horse
system a total Of about $1,000 90, 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 electrihcation was completed to
the extent Of moro than 100000. The
experts point out that by all business princi-
PIES the sl,OOO,OO o Of so-called profit should
have been placed as a partial Offset to the
great s~hrinkage in value.
The next item Of financial Juggling came
in connection with the expense Of street
improvements made necessary by the ex-
tension and electriication of the lines. The
total expenditure under this head amounted
q about SO, $50, 900, but Of this sum only an
insignificant $780, 900 was charged TO the
tramway5 account.
Here is an illuminating example Of the
Councils action; They estimated that
$4,000 Of the cost Of the widening Of st.
John street should be charged to the tram
ways account. Then they resolved that
the charge should be postponed until
the profits Of the proposed tramway shall
I've sufficient to meet the annual charge in
respect Of the capital outlay
The auditors, being ordinary business
men, naturally report:
This resolution is based upon an unsound
principle. The apportionment Of eXpendi-
tVre betw cen the various accounts should
he made on business and commercial princi-
nIes, quite irrespective Of the results which
may be derived from such expenditure.
The foregoing points apply only to the
unbusinesslike management Of the
account Of the enterprise. When
it comes TO the operating account the au-
ditors make exposures just as crushing.
1t is one Of the elemental rules Of manage
ment Of tramways OF any other business
makes use Of deteriorating plant
that a proper sum shall be charged on each
year for renewals. The council had been
by its W officials that the lowest
adequate allowance for this purpose would
he one penny a car mile run.
Such a reserve fund for the period 1903
d, the time during which electric traction
in operation, would have required
$4,000, The amount that was actually
assigned was sj25, 900,
As an example Of the erroneous method
nj dealing with this charge the auditors
refer to the accounts for the year ended
March 81, 1907. The surplus revenue was
shown as $4,000. but il n penny a car
had been charged for renewals the
tramway undertaking would have shown a
deficiency Of s29O,OOO.
They are Of opinion that revenue should
be charged with the cost necessary to main
the undertaking as a going concern,
could only be done by providing an
reserve for future renewals;
o herwise long before the termination Of
he loan periods the undertaking would
become an instrument incapable Of making
profit because Of the excessive repairs and
renewals which would be necessary and
he absence Of an adequate renewals fund
MT Of which the cost Of the renewals could
be properly met.
Il appears therefore as the net result
VI this sensational exposure Of falsity and
representation in London's great ex-
.prlment in municipal ownership that in
,te1d Of at any time earning a profit the
municipal tramways Of London have been
at a heavy loss year by year with
greater burdens upon the public ex-
hcqucr for the future to provide for. Not
My is the experiment a failure economically
Il has brought in its train en- evil Of
proportions. The public has been
deceived sc~andalously by honest men!
Ih2t they have perhaps deceived them
80