The funds have been built up by transfers from revenue account, premiums received on issue of shares and debentures, and sales of old plant. These funds have from time to time been debited with ordinary current repairs and maintenance up to 1901, special outlay on replacements, loss on sale of investments, costs of alterations in connection with change of pressure, amount written off capital outlay for obsolete plant, expenses of issue of shares, parliamentary costs of opposing bills in Parliament. In addition to the above a transfer has been made to the debenture stock redemption account. This latter fund is in respect of the first debenture stock of the company, of which they have issued £400,000. This stock is redeemable at 125 per cent., which represents a premium of £100,000. The account was opened in 1900, and since that date the revenue account has been charged with interest on the balance standing to the credit of the fund, which has been increased by such interest. There is not any fixed date for the redemption of the debenture stock, but it is redeemable at the option of the company at six months notice after 1910. We consider that this provision is ample. In addition to the above. reserves the company has a bad debt reserve of £1,400 and has carried forward to next account £22,235, being the balance of undivided profits.

(The other companies are covered in the schedules

*)

In conclusion we would express our thanks to the officials of the various municipal and private undertakings who have so kindly furnished us with copies of documents and other information and without whose help we could not have obtained all the information which we have.

We have been very pleased to have been engaged in this investigation and hope that the result will be satisfactory to the members of the Commission and to the National Civic Federation.

MEETING OF COMMITTEE ON INVESTIGATION

At St. Ermin's Hotel, London, July 3, 1906 To Hear Leading Representatives of the Municipal Ownership Movement in Great Britain

Prof Frank J. Goodnow was selected to act as Chairman, and the following gentlemen were heard:

Messrs. T. MCKINNON WOOD, M. P., L. C. C., Leader of the Progressive Party in the Council.

J. ALLEN BAKER, M. P., L. C. C., Chairman of the Highway Committee in charge of the L. C. C. Tramways, etc.

ROBERT DONALD, Editor of the "Municipal Journal," and the "Municipal Year Book," and Managing Editor of the "London Daily Chronicle."

G. W. SPENCER HAWES, Member of the Institute of Electrical Engineers.

The following is a condensed report of the hearing, as nearly verbatim as possible:

T. MCKINNON WOOD: People sometimes look on municipal undertakings as mere matters of making money, and thereby reducing rates, but that is a narrow and inadequate way of looking at the question. We have a further object. Take the tramways. If a private company goes into the tramway business it is obviously their duty to the shareholders to get a profitable line and not go a mile further because it would help the housing problem or be convenient to the people. Then we have had great complications in London arising from the fact that the matter has been dealt with in a piecemeal way by separate companies, each monopolizing certain tracks. There has been no coherent scheme running through the transportation system. A municipal authority like the London County Council can consider these larger questions. They can say: It is true, we are not going to make a profit out of this particular line, but it will feed one of our great routes, or open up a great piece of land where the working classes can house themselves in comfortable and airy homes, instead of being penned up in monster barrack erections in the heart of the city. The opponents of municipal ownership have not proved their case when they say the municipal authority is not making much money out of the tramways. We regard it as much an advantage to carry people at halfpenny and penny fares as if we made another 1 per cent. out of the venture.

We regard it as a great advantage to work the men humanely, 6 days a week instead of working them 7 days a week or at any rate 20 days out of 21, as some of the old companies did-as great an advantage as 1 per cent. more profit-and we regard it as a paramount advantage that we may use the control of the tramways system to develop all the resources of London, and to subserve all the interests of a great commercial and residential town.

People often put the figures of municipal enterprise in a very misleading and unfair way by omitting the item of sinking fund. A municipal authority in this country is obliged to consult-in the case of London, the Treasury, and in case of other towns, the Local Government Board-as to the term of years over which it may spread any loan for capital expenditure. Take our tramways for example; there is one term of 60 years for land and buildings, which of course will last a great deal longer than that, with shorter terms on other items, making an average of about 5 and 20 years. The effect is that in 25 years a very great portion of our tramway debt will be paid off and we shall have unencumbered property belonging to the rate-payers of London. This is done by the sinking fund, to which no credit is given in the criticisms made by opponents of municipal enterprise.

We have spent between four and five millions on our tramways. We are still in process of transition. We have only this year got possession of the northern part of our system. The southern lines are partly electrified. We are changing horse lines into electric lines, and under these circumstances you cannot expect to get the best results from the system, as the traffic is interfered with and the receipts are stopped on part of the lines.

The total capital is £4,818,000. This includes the purchase money. The sinking fund is about £450,000. Of the £4,818,000 capital, we have paid off £607,000, and of that £607,000 about £450,000 is sinking fund. We have also put a sum of £290,000 to relief of rates.

Although we have low fares, as a half-penny and a penny-we carry millions of passengers at a half-penny for short distanceswe still earn over a shilling a mile on our tramways, and when we have completed our generating station we shall be able to operate the tramways for about 7d. per mile, leaving 5d. for interest and sinking fund. It has been costing us about 73d. to operate the lines, because we have had to buy electricity from other people.

The receipts which we estimated have been fully realized. The margin we estimated at 4d. has been in fact 41d., and has gone £30,000 beyond our estimates during the last two years.

Let me give you a concrete comparison between a private company in London and the County Council tramways, taking them on the same basis exactly. The London County Council Southern Tramways for the year ending 31st March, 1905: Capital expended, £2,600,000; profit on working, £203,500; percentage of profit to capital expended, 7.6 per cent. The London United Tramways Company, year to 31st December, 1904: Capital,

£2,905,000; profit on working, £120,000; percentage of profit to capital expended, 4.1 per cent. Those are the figures given by the Official Comptroller, and I assure you, you may take them as absolutely correct.

Mr. WALTON CLARK: I should like to ask Mr. Wood one question. The statement has been made to us that the London United has had to pay large sums for way-leaves and consents. If then their capitalization is so greatly enlarged by these way-leave charges, is the comparison you made quite a fair one, assuming that the London County Council has not been pledged to pay large amounts for widening the streets and for way leaves?

Mr. WOOD: As a matter of fact the London County Council has paid much more than the United Tramway has for widening the streets.

Mr. WALTON CLARK: What is the principle upon which the London County Council Tramways Department is charged with the expense of street widening?

Mr. WooD: It depends first of all upon whether the widening is nécessitated by the tramway. The Local Authority is expected to pay something toward the cost of a local improvement, because it is of advantage to other classes of traffic, and the rule that has usually been adopted is that one-third is paid by the local authority, one-third by the Improvements Account, and one-third by the Tramways Account.

Mr. WALTON CLARK: There is one point about the London United and the County Council that ought to be brought out. The County Council has two millions capital which represents the horse cars. They introduced electric traction on an old system, and therefore they have this dead capital. The London United lines are nearly all new. Therefore they have no dead capital or horse lines.

Mr. BAKER: The dead capital or excess of capital over structural values in case of the London United, infinitely exceeds the dead capital in the Council tramways.

Mr. WooD: It is said that municipalities often obtain powers and do not use them. That is a very reckless assertion. For one case where the municipalities obtain powers and do not use them, there are a hundred cases and very probably more in which companies obtain powers and do not use them. The reason is obvious. A municipality has no difficulty in raising money. But companies having obtained powers fail to use them because they cannot raise the money. You have lines of tube railways-and when they have the powers they cannot raise the capital. Then they have to come to Parliament for an extension of time. But nobody else can go in even if they can find the money, as the line has been monopolized. That is one reason why it should not be left to private companies. To show the difference between the horse cars and the electric trams-from Greenwich to the Bridge, 1901-02, we were carrying 23 million passengers and our receipts were £98,490; in 1905-06, we carried 372,259,000 passengers, and our receipts were £169,000.

Mr. WALTON CLARK: You run cars for working men at 1d., early hours, and you carry them any distance for a penny, don't you?

Mr. WOOD: Not any distance.

Mr. WALTON CLARK: Does the London United do anything of that sort?

Mr. BAKER: In their franchises they are pledged to run a eertain number of workmen's cars at cheap fares at an early hour in the morning, but they run a limited number compared with those that we run.

I might enlarge the comparison which Mr. Wood has forcibly put before you. He gave you the capital expended and the percentage of profits, 7.6 for the London County Council, and 4.1 for the London United. But he did not tell you that they have their own generating station, and that they are therefore at a very great advantage as compared with us in that respect. The cost of power to us, purchased from four companies, was 2.78d. per car-mile. And when we are working from Greenwich it is estimated that we can produce it at 1.4d. per car-mile. That makes 1.38d. per carmile advantage they have as compared with us in the generation of power. If we had been producing our own power as they are doing, it would have meant an additional £67,579 of earned profit on the twelve million car-miles run, and would have brought our 7.6 per cent. up to about 10 per cent.

Mr. WALTON CLARK: You pay more for power and yet run much more cheaply. What is it that they pay more for than you do?

Mr. BAKER: A provisional order in the hands of a company. represents anything from £30,000 up. Sir Clifton Robinson of the London United is always complaining of being held up by the local authorities and cheated, but he has walked away with a million pounds in a few years.

Mr. WALTON CLARK: The point is that they have a large capitalization.

A VISITOR: With small tangible assets.

Mr. WALTON CLARK: Are they wasting material and energy? Do you think they are running their cars as cheaply as you run yours per car-mile?

Mr. WooD: I am not able to say, as they do not publish their accounts in the detailed way we do.

Prof. PARSONS: May I ask whether the regions over which the two systems operate are different in some way, so that you get a much larger number of passengers per car-mile than they do?

Mr. BAKER: That is a very fair question, certainly. We have the denser population and earn slightly more per car-mile. But there is another point which I think an important one and which Mr. Wood did not bring out. On the 183 millions of passengers we carried in 1905, the average fare-one-third or about sixty millions roughly being half-penny fares-per passenger upon our lines was .97 of a penny-that is just under 2 cents.