The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1915-08-18
SINKING FUND ESTIMATES
BASED ON PAST EARNINGS.

| reduction in rate of fare was made
on Aug. 10. 1913. figures OF 1918, OF
| previous years could not he used ~
= basis for future calculations. The
board has accordingly taken the ng
| ures OF 1914 the nrst full year % OPP
| GRAFTON under the present rate OF
| fare. as a basis for its computations
summary 81 the earnings and eN-
| penses OF the company for the year
1914. "a apportioned between the city
| and interurban divisions by the &C
! countants for the city, Is as follows
INC
Gross Income from passengers ......
| Gross income from chartered cars.
freight and express cars. etc.
Gross sundry earnings. .............'
EXPl
Maintenance OF track roadway.
electric distribution. bldgs ETC..
Maintenance Of equipment. ......-..,
| Depreciation charges and reserve.
Supertntendins and soliciting and
advertising ............. ........
General and administrative-Ofrc
expenses. etc. observation-disclosures.
Total expenses ............
Total Prort on operation before de-
Quoting interest and taxes.
.Apportionment partly estimated.
In order TO be conservative and to
better adapt the above results TO mu-
ntcipal operation. Edward w. Bemis
and MIR. Nathan Agar. experts en-
ployed by the board in this work.
have thought best 10 make certain
adjustments OF the figures for the
ons-fare zone, the chief Of which are
follows:
"a More adequately providing for
maintenance and depreciation by in
To sum equivalent to 5 &c per car
mile.
Cd Elimination OF funeral car
earnings, $1l.s3o.30, which are uncer-
tain. and OF bank Interest. St9.5t47s
t0 elimination Of par! cost Of
tin Electric Railway Service S3s-
1873. which would be discontinued
under municipal operation.
The above and a few minor ad-
Justmeuts reduce the net earnings.
exclusive of interest and taxes. %
$l.ss3.o3s.ss. Allowing s25i,ioo for
taxes leaves the net profit on oper-
alton for the one-fare zone for the
year ending Dec 81, 1914, exclusive
of interest, u,sll.sss.ss.
The accounts of the Detroit Unit
ed railway from 1900 to 1912 show
In the one-fare zone. for that period
Increased at a rate In excess of 10
per cent Per annum compounded
Traffic has increased annually since
year 1915. the frst year Of municipal
operation, should normally show an
increase over the year 1914. Every
reasonable citizen regards a steady
increase OF this traffic in future as
certain.
'sDisregarding the proba OF
the results of operations Of the year
1914. the accountants estimate that
there would have been available
ther.from: with normal conditions
sum of N.sl1.s3s.ss TO pay interest
ard apply on the purchase price. or
for other purposes
The board in 1914 employed DR..
ability. TO inventory and appratse the
street railway property in the one
fare zone. The Anal appraisal report
hxes the value OF the street railway
property as follows:
Physical property as OF
Franchises as Of Dec. 81.
1915 142l.te3
Total ............... .Sis.f2l.4ss
"Dr. Bemis states in his report that
he regards this valuation az entirely
Alfred Luckiny and Richard T. Law
SON. attorneys for the city. declare
that they regard DIR. Bemis figure
as more than liberal. and that they
will contend before the court for con-
siderably lower valuations.
The average rate OF interest on
the purchase price viii be less than
+sT per cent. which II the present
average rate on the outstanding debt
OF the company. Applying this inter
est rate 10 the Bernis valuation shows
annual interest Of s9os. es313. De-
Quoting this from the net earnings OF
l.sl .sSs.as above leaves balance
of s7g4.65-sT available 10 apply on
and betterments or for any other pur-
pose TO which the city might wish to
| apply IL.
Assuming that this 1914 balance.
fund, at IA per cent interest an
nually, beginning Dec. 81. 1915. more
than s1s 100000 would be accunuiat-
ed before Jsn. /. 1921. the date ~
chase pric. viii fall due In other
| words. taking the 1914 earnings OF
the u. L. r. without assuming any
increase whatever. the city could sc-
more than 3is.ooo.oo0
But extensions and irnprovemsnts
/ are necessary and the board has es-
timsted that S3o.ooo.ooo in all may
4
build extensions and add needed
equipment
Gin order 70 produce sso.cooon
from earnings in 30 years the &c.
| countants estimate that q deposit o'
only S&ei.Its.zs annually would be re
| auired. while $3.50. z9<tI saved an
nually IN the same way. would retire
/ t3n.t6n.D0o In the course OF 20 years
| Thus, on q basis Of 1914 earnings. the
| city would he able TO pay the pur'
\ chase prics In 20 years and allow
over $4,000. 0oo for improvements
and still have more than 100000 pet
year to spare IL IN. payments b.
| rlent into the sinking fund would b'
only t3so.2sAti. leaving Gin either
easel large surpiuses for Improve
nn.nt OF service. fare reduction. In.
crease OF wages and the like.
beginning July !. 1919. the eit,
. reg . X s :cJ per- y.. e0 oa, q
earnings. In a sinking fund 10 apply
on the purchase price, until the sSscl
price 10 fyed by the court. After the
price 10 nxed. the city must set aside
iss per cent Of the price annually
Out OF ssrnipss Apple. 49, 20 III ;
amounts 10 t9st.iso,ls, Thus ths
city's contract obligation to the rail
/ way company In also well within ths
limit 81 1914 earninss, Whatever 'hs
| price as fxef, this sneusl payment
% i.ss per cent, accumulated at 4 -
per cent annually would be SURF,
cient TO pay that price In about 81
years,
The fact IL sisss that Detroit IA.
been paying large profits annually "a
| non resident owners Of the railway
| which. II applied 20 our sVR use, Wi
In reasonably short time pay for