The Press Wednesday, November 6, 1929. Tramway Loans.

Press, Volume LXV, Issue 19769, 6 November 1929, Page 10

The Press Wednesday, November 6, 1929. Tramway Loans.

Tfc« ('hri.'Wh-jrrh Tramway Board hat | rsf *•<! troni th» L»<cal err.: n*. I I>>*n. authority !•> raise by I' .-ir ii and witi.-'-'.t rviYr-nce to th" r'it*-p;i} *"ri two loanj total: ir,™ t 17.1"K>, one of £6500 f»>r trnrk | duplication in C&shel ; and l'*>r special capital expenditure, and the other of £l*),6W lor replacing the v.orn-ont track in Colombo stmt. A ,-irfnifVant condition attached t<> the Loans Board's con.-en* is that the term of the loans mn.-t not •xr«-ed twenty years and that a •inking fund of three per cent, per annum must be provii. d. in order to redeem the liability within the estimated life of the as-Ks. Ti.«term* of the Loans Board's letter to the Tramway Board suggest that it ithe policy of the Board, when sanctioning loans for tramways to make the period jhort and the sicking fund hiirh; and this policy is no doubt dictated f*>th by experience of tramway Scuiaee in the Dominion and by the present necessity of taking a new v:« -v of the ultimate value of tramway undertaking. It is of course quite conceivable that by the time vast tramway loan.* have to l« repaid the as-en they represent and the transport service they provide will have suffered a depreciation in value, broueht about by chanced condition* and the compel ii ti»n of other forms of transport. Though such a contingency was naturally not foreseen when the fir-t loans for electric tramways were raised, some wrinm financial problems are likely to develop as the outcome of a policy which provided for sinking funds and renewals on the assumption that the assets and services paid for with loan money would never lose their economic value. The Christchureh Tramway Board's first loans were, in fact, raised on a sinking fund basis of one-half per cent., and although this weakness has been partly remedied by I the institution of special depreciation ar.d renewal funds there will nevertheless be a big shortage to be met in some manner when the existing loans mature in 1934 and 1944. What may b» regarded as the present policy of the Loans Board, with regard to tramway loans to be raided by special order or otherwise, will, if continued, assuredly make for much stronger finance for tramway authorities, will improve the security for the loans, and may possibly cheek uneconomic tramway expenditure. llow it will afleet the ratepayers, who are always in danger of being called on to rescue distressed undertakings, will depend very largely upon what say the ratepayers have in incurring a loan liability, and upon the business ability and prudence of the controlling authorities. Loans by special order for tramway purposes may suit them; but the practice may easily be overdone and may in the end so menace the rights of the ratepayers as to warrant a pruning of the present powers of tramway boards and corporations. It is no idle fear that a tramway authority may be prepared to go much too far to bolster np an undertaking before admitting that its policy is wrong, or that its day is done; and, if it is free to do so, the ratepayers may be left to discharge * dead load of debt, incurred wholly or in part without their sanction.