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

previous years could not he used as
a basis for future calculations The
| board has accordingly taken the ng-
| ures OF 1914 the first full year OF OPP
| GRAFTON under the present rate OF
| fare, as a basis for its computations
! A summary OF the earnings and ex-
penses of the company for the year
| 1914, as appOrtioned between the city
! and interurban divisions BY the ac-
| 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. ......-.......
EXPE
Maintenance Of track. roadway.
electric distribution. bldgs ETC..
! Maintenance OF equipment. ..........
! Depreciation charges and reserve.
experimenting and soliciting and
Operating power plant and cars.
General and Observation-Disclosures
expenses. etc Observation-Disclosures.
Total expenses .............
Total Pront on operation before de-
Quoting interest and taXeS.......
-Apportionment partly estimated
In order To be conservative and to,
better adapt the above results 70 mu-
/ HNiPdl operation, fsON ara W. BNfnlS
and Mr.. Nathan Agar. experts en-.
/ pioyed by the board in this work.
| have thought best 10 make certain
adjustments OF the figures for the
one-tare zone, the chief Of which are
| follows:
7 % More adequately providing for
maintenance and depreciation by in
creasing the annual charge therefor
TO sum equivalent to 5i1c per car
mile.
f9N r-li,oio.,,.. - x.-,
earnings. S1l.s30.30. which are uncer-
tain, and of bank interest. 32s.544Ts.
CD Elimination OF, part cost OF
valuation expenses. $is.+Sl.St. and the
cost OF the publication OF the bulle-
tin Electric Railway Service, S3s.-
1873. which would De discontinued
under municipal operation.
The above and a few minor ad
Justments reduce the net earnings
exclusive OF interest and taxes. %
sl.sts,o5t6s. Allowing $751; 400 for
taxes leaves the net profit on oper-
alton for the one fare zone for the
year ending Dec. 81. 1914, exclusive
OF interest, Sl.sll.S3s.ss.
The accounts OF the Detroit Unit
ed railway from 1900 to 1912 show
that the net earnings of the company
In the one-fare zone. for that period
Increased at rate In excess of 10
Traffic has increased annually since
1912. and the net earnings FOR the
year 1916. the first year OF municipal
operation. should normally show an
reasonable citizen regards a steady
increase OF this traffic In future as
certain.
"Disregarding the probability OF
this Increase, however, and accepting
the results OF operations OF The year
there would have been available
thertfrom. with normal conditions
and under municipal operation, the
sum OF S1.sl1.s36ss to pay interest
ard apply on the purchase price. or
for other purposes.
The board In 1914 employed DR..
Bemis. an expert OF well-recognized
ability. TO inventory and appraIse the
street railway property in the one
fare zone. The nnal appraisal report
fixes the value OF the street railway
property as follows.
Physical property as or 80
July !. 1915 ..........- sl1. 100000
Franchises as OF Dec. 81.
1915 2.42i.fg3
Total ................. .fis.42l.fs3
DIR. Bemis states In his report that
he regards this valuation as entirely
Alfred Lucking and Richard ]. Law
son. attorneys for the city. declare
that they regard Or Bemis' figure
as more than liberal, and that they
siderably lower valuations.
The average rate OF interest on
the purchase price will be less than
4s7 per cent. which II the present
average rat. on the outstanding debt
OF the company. Applying this inter
est rate 10 the Bemis valuation shows
annual interest of ss0s.ss3.1z. De-
Quoting this from the net earnings or
Si.6ll, 6Gc.6s above leaves balance
OF ,sOg.s5c97 available 10 apply on
ne purchase price. or for extensions
and betterments or for any other pur-
pose to which the city might wish TO
Assuming that this 1914 balance.
1904. s53s7. was placed In q sinking
fund at ~ per n cent ini ,s,s , an
than $4,000. 900 would be accumuiat-
ed before Jsn. 1, 1852. the date At
which the major portion OF the pur-
words. taxing the 1914 earnings OF
the D. L. r. without assuming any
increase whatever. the city could ac-
cumulate from earnings. In Is years
But extensions and improvements
are necessary and the board has es-
timsted that t30,oooooe In all MAY
be required TO purchase tn: property
"In order 20 produce Sso.ooo.ooo
from earnings In 30 years the &C.
eountants estimate that q dekost OF
CURED. while s1s0.79+.u saved an
nually In the same way. would retire
$40 o60. 900 in the course Of 40 years.
Thus. on a basis OF 1914 earnings. the
city would be able to pay the pur-
chase prlce In 30 years ana allow
over $4,000 900 for improvements.
and still have moro than 100000 per
year 10 spare II The payments be
spread over 20 years. the annual psy-
nient into the sinking FUND would De
only $3.50. 2pAsl. leaving Gin either
cnse) large rurpfuses for Improve
m-nt ~ service. fare reduction. IN
ereas. OF wages and the like,
beginning July I, 1918. the city
I. required x sh so gTrsh y.s, eo "at es
earnings, In sinking fund IN apply
on the purchase price, until the exact
price is hsed by the court. After the
price IL hXsd. the city must set aside
as per cent of the price annually.
cot OF esrninss, applied 70 the
Hemis valuation, this percentage
amounts 10 Slss,ts0,Ia, Thus the
city's contract obligation to the rail-
way company In also well within the
limit 81 1919 earnings, whatever 'hs
price as fixed. this annual payment
OF ISIS per cent, accumulated at u
per cent annually, would be sum
Gent TO pay that price In about 81
The fast IL eiear that Detroit has
been paying large profits annually TO
nonresident o~psrs OF the railway,
which, n applied to our sva use. vii
I'm rpaHODe biy sbOrt tins nav for