TRAMWAYS FINANCE,

Dominion, Volume 1, Issue 231, 23 June 1908, Page 6

TRAMWAYS FINANCE,

In a. letter which appears in another column, the Mayor takes exception to our observations upon tho finances of the tramways system. He avoids reference to our complaint of a general wastefulness in the system, and the fallacies behind his figures are more easily exposed than usual. His first contention is that we have understated the net profits from the system by £1483, that being " the amount of a sum set aside out of profit towards liquidation expenses." He might with as much reason have objected that we understated tho profits by .another £30,603,'. tho " amount sot aside out of profit " towards interest, sinking fund, and depreciation. He might, indeed, have selected any item of expenditure' at all as a sum' " set aside " for some necessary payment, and then claimed that wo should have included it in profits. That, indeed, is what he does claim on item after item. He reminds us of a payment of £3G2 for band instruments, of about £1000 for compensation to the victims of tho Brooklyn disaster. Ho points out that " ropairs and vnplnoomonta h»vo boon puiri qui) of rov<\nu6,". if Jie bad choHefl t jie wIkH ,

by pushing far enough his demand that this or that item ought not to count, have established a case for almost any percentage of profit whatsoever. There is roally no reason why he should have restricted his ingenuity to the moderation of his statement that " other items which he could point out would make our profits over £6000."

As a matter of fact, the sum of £4085 set down by Councillor Shirtcliffe as " profits " is obtained without debiting one single item to revenue that should not have been so-debited. But that sum should have been debited with interest on depreciation fund amounting to £715. it is of no uso to say that "the careful Glasgow people " add the interest on the 'depreciation fund to rbyenue, or, in other words, that they do not credit that fund with its own interest. The point is that sound finance directs that the interest on a depreciation fund should remain ill that fund. In any. event, anybody will understand that that interest is not revenue earned by the system, ' and it is the capacity of the system to earn rovenue, the soundness of the management of cars and' track and men, that is in question. What was earned by money lying in a bank cannot be credited to the people running tho system, and it should therefore not bo included in revenue, it

was not tramways revenue, and that is all there is about it, It is a subtler contention of Mr. Hislop's that"the "not' : and not the " gross " receipts for powci should be doducted from the total in-

come to give tho car income,- and an astuter man than even Mr. .Siilrtcliffe might have been unablo on the spur of tho moment to detect Mr. Hislop's fallacy, Tho gross receipts from power were £3500. " You treat the £3500 as net income," says Mr. Hislop, " whereas it has to stand its share of sinking fund interest, which would reduce the profit of this department to about £1600, and this sum should bo further reduced because tho power could not bo produced at anything like the cost except as an adjunct to the tramways." ' Mr. Hislop dobs not tell tho public that " its share of sinking fund and interest" has already been chargcd in the gross appropriations for those payments. Ho cannot ask us to charge it all over again in the same balance-sheot. In any case, if no power whatever wero sold—if the sale of power .ceased to-morrow—the charges for sinking fund, etc., would not be a penny less than they are. Tho £3500 gross receipts are therefore simply an extraneous windfall, in nowise springing from the tramways proper. It is like the interest on the depreciation fund.

On every point, therefore, our support of Councillor Shirtcliffe's analysis of the revenue is clearly justified. It is an cxcoptional thing to find Me. Hislop presenting a financial argument in such a way that one has 110 difficulty in exposing its fallacies. The, fact is, of coursc, that the figures of Councillor Sh'irtcliffe on the points involved are so plain and solid ■ as to be beyond tho reach of confusion. With respect to the figures which we quoted from a speech by the Chairman of the Ckristchurch Tramway Board to show that our tramways system is specially favoured in the matters of thickness of population along the routes and of rovenue i)er head of population, it is not enough for Mr. Hislop to say that they " really prove nothing." The pub-lic-knows that they prove a great dealthat they, prove, for instance, that our tramways administration must be very wasteful when it has' to rely on all kinds of things alien to tramway running to make cndß just meet, and this after allowing .only 2| per Cent, for depreciation on a system specially subjcct to wear and tear, as against the 5 per cent, and more set aside by " tho careful Glasgow people " whom Mr. Hislop so admires, but whoso practices he follows.only where they are of doubtful soundness, The public has not yet heard the details of the concessions recently made to the tramways employees. If they are published—and they should be published if uneasy fears' are to be allayed—the public will assuredly find that the need for caution is greater than it so clearly is at present.