PROSPECTUS OF YELLOW CABS (N.Z.), LTD.

NZ Truth, Issue 985, 11 October 1924, Page 13

PROSPECTUS OF YELLOW CABS (N.Z.), LTD.

Profitable Solution of a City Problem

How to Make Money and Brighten

Our Towns

The rapid progress made m recent years', m all of our urban, areas has been the means of bringing into city requirements numerous needs that were never dreamt of "m the good old days." One great problem that has evolved from the natural developments caused by growing population and intensified . occupation .of townships and cities is the matter of speedy locomotion for the ' eople which has made great demands upon the methods of transit , needed for these purposes. Space here is not sufficient to enable one to trace. these developments, so it will be necessary to focus attention upon the effects brought about through the introduction of the motor car. The latter vehicle has forced upon municipal and county authorities the provision of better roads which can stand up to swift moving conveyances carrying loads of considerable weight, which again called into action the better grading of- roads and smoothing of surfaces of the highways already m existence. Wonderful progress has been made m the latter developments, but m the provision of cheap passenger accommodation very little has been accomplished. On every hand the movement of humans from place to place is expensive,' and these services are so BADLY ORGANISED that they have continued to be so costly to the individual that many persons are unable to avail themselves, except on pressing occasions, of the current means or services which are on offer at the present time. These are facts that anyone can see for themselves. It is clear therefore that a vast social service awaits immediate attention and that the time for the due solution of this outstanding problem has -arrived; m fact, that time is long overdue. The prospectus of the Yellow Cabs (N.Z.), Ltd., comes as a most timely document. It brings into notice, wen buttressed by reliable evidence and economic considerations, a range - of experience which more than confirms the soundness of the proposition^ that the public of the Dominion are asked to -ally themselves to. In the first place," this prospectus is sponsored by a boar^d of provisional directors a.n-3 signatories to the memorandum of *issociation of the proposed company of outstanding social status and commercial ability. "Cambist" is aware of the laborious investigations made by these gentlemen before ever they consented to put their names on tMs prospectus. He is also struck by the fact that the majority of these gentlemen have had long experience m all kinds of municipal enterprises and that thennames are associated with many, of the most progressive undertakings m and around the city of Auckland. Probably NO BETTER • BOARD 'jould be selected for the purposes of this particular company, for the reason of their being m constant touch with civic affairs for many years past must have, per force of this necessary association, made them expert judges of the transit problems of the times. At any rate they have proved themselves to be competent and trusty t servants of the public and have a splendid record of urban successes to point to for which the public are sufficiently grateful as to induce the latter to keep these gentlemen m office for so long a period. « The question arises as to whether New .Zealand is ripe for the Yellow Cab, whether such a movement will turn out to be a payable proposi■tipn for investors, and whether the social benefits to accrue from the inauguration of such a company will develop into an actual and emphatic "Yes." Since the prospectus is so we:l endorsed by leading' citizens, wo get an assurance that 'these, at least, are quite satisfied on ajl of these points. "Cambist" has made on his own account, a very exhaustive examination o (I the proposition, , and he feels confidence m assuring/ his wide circle of readers that m his opinion this prospectus opens up a new field for tne^ safe investment of capital and that it predicates vast •■ possibilities of weil and safely earned profits. The business m itself is clean and serviceable to the public and it carries none of the pitfalls which savor, of graft or unfair monopolistic combination. Tlie first question that he applied to this preposition was: Can the company ■ MAKE ENOUGH PROFIT h our small country, seeing that the parent company behind the local one operates m places peopled with huge populations greater than ours? He soon found v - ah answer to this important question 'vrhen- he had demonstrated to him that the parent company could point to successful operations and no failures m districts with populations of from 5000 persons right on to those of such cities as ' Chicago and New York, m America, and others on ,the continent of Europe.. In the widespread orbit contained m this general sweep of possibilities, both of failure and success, the whole , proposition has been found to have met with remarkable success, mainly because the system founded and elaborated by the parent company — the pioneer of the Yellow Taxi-cab movement— embraces everything from the cab itself, the administration of the various companies, the response of the public to these services, and above all, the undoubted tried experience on which the whole matter rests. The parent company has developed on the principle of providing good, efficient service, at the cheapest rates, and it expands itself by continually cheapening its services to the public. We hear much , talk r?f "volume' prodviction" m such matters as? manufactures, and m this connection Mr. Ford, of motor car fame, is continually quoted, but how seldom do we hear of the many other applications of the same nature which can be made to other propositions? "Cambist" has discovered that "volume" services ;at the " ' - CHEAPEST POSSIBISE COST are equally applicable to such matters as the transit of passengers or consumers of taxi services. This Yellcnv Cabs (N.Z.), Ltd. concern is promoted on proved lines which embrace all of the essential principles of "volume production," and this writer will affirm that he has greater hope for the success of this institution because i;f these important factors than m anything else stated m the excellent prospectus issued by the promoters of the company. , , , The nature of this company is dual. It is an industry as well as a service corporation. Its purpose* is to. make money for its proprietors and to give good .service to its customers. The Yellow Cab industry is quite a neAV adventure: into the vast field of economic development. In such circumstances the .historical; records cover but a short period, but what is most important, the records, are invariably (satisfactory, m this case, from every point of view. Fourteen years "is the full' age of the movement, and; in that period everything that is known regarding the transit of motor taxi passengers has been formulated, checked, combed fine and brought down to efficient and stable profit-earning conditions. Invested capital has earned huge dividends, and there are sound reasons to expect considerable exten-

sions m this domain. The assets side of the question has

BEEN MADE SECURE

by a system of depreciation, and tlie quality of the assets themselves has, therefore, ever remained beyond question.. Looking at the record of the parent company, headquarters ,m ■ Chicago, for the year' 1922, that company paid close up to 50 per cent. 1 " to its stockholders and placed almost one-half as much to reserve', or as they call it ?n America, "surplus." In 1915 the shares m the parent company cost £ 6 and are now worth on the market £ISO. The appreciation is about 3000 m eigh r . years. That company commenced the 1923 period with less than 2000 cabs. Its net profits on a running of G5.000,---000 miles gave about l%d per mile. "This makes the total net profit of the Yellow Cabs for the year equal to more than £500,000." The American experience shows tint the four leading features to ensure profits and success were the following, namely, " a specially built cab vehicle, low rates, competent, reliable drivers, organised responsibility." Low ratas would so increase the market for cab rides that sure income throughout the year is more essential to success than big profits per mile. "The^class nf cab used ,will operate for the lowest cost per mile over a long period of time, which is the final test of the tru.'y successful cab unit." And all of the foregoing is achieved m the , Yellow Cab; it seldom goes to the repair shop, it keeps , on the street longer and that is where the money is earned. Py acting on these factors, operators have teen saved from failure, and the future can be / FACED / WITH CONFIDENCE. 1 "Cambist" refers his readers to the estimates of income and expenditure .made on pages 16 and 17 m the prospectus. In these we get somewhat nf the earning capacity of these cabs operated m the Dominion... Y/ith n fleet of fifty cabs, running on an average of 350 miles per week per cab, which is, m his opinion, a very conservative estimation of the likely situation, the weekly income would amount to .£1035 Bs, giving an average of 14.20 d per mile. "All-in expenses" are computed to amount to £784 4s per week, leaving a net profit of £251 4s. The latter works out at 3.45 d average per mile or net mileage profit. Taking these profits on a yearly the sum amounts to £13,062 Bs,' which equals, 25.47 per cent, on a capital of £50,000. On page 20 of the prospectus the capital required is set down at £46,100. This is for 50 cabs, the cost of a B& r ~ nge, advertising, working capital, arid brokerage. The Yellow Cab Manufacturing Co. is to subscribe £ 3000, ko that interest on £49.100 about mak ;s up the! £50,000 on which the 25.47 per cent, should be earned. On looking over the costs side of the estimates it will be noticed that all charges are put upon a high level. The wages to be paid are, indeed, on a handsome scale and should -provide n comfortable living for those who may be classed as the workers — hand and brain. In this we find that the operations of the proposed company cannot be hampered by -FEAR OF LABOR TROUBLES. The company sets out Ho pay its employees a decent wage and adequate salaries. At the same time, heavy depreciations are allowed for, more than is ever likely to be required, :.o vthat here there are good prospects on an elerneiit'which will help to build up a strong reserve fund situation and thus give some extra assurance fov the snfguarding oC the capital invested. Benzine is put m at 2s per gallon, about 10 per cent, higher than it is likely to cost. The mileage per gallon is set down at only 15 miles, while the experience gained with these cabs is about 22 miles to the gallon. Licenses at £7 10s per year is £5 more than the present rate. Everything seems, to have been done to place the heaviest burden possible upon the outgo of me company and, on the other hand, the income has been computed on so :;-3stricted lines that the possible returns bear the look 'of practical actualities rather than an attempt to boost the venture by too much optimism. A fair and clean set of estimates is what "Cambist" concludes to be the case here. This looks like good, business, and good business should stimulate 'confidence m the proposition. • ■ The company, is to "be registered when 50,000 contributing shares have been allotted and, the amount payable; on application and allotment has beon paid m. The nominal capital of the company is £100,000 IN £l' SHARES. Seventy- five thousand are now offered to the investing public, [>s per share is to be paid 1 on application and a like amount upon allotment, 2s Gd one month after allotment and the balance m calls of 2s Gd per month as requ.'red. The promoters get 5000 fulij. paid shares, which is all of the loading 'that the company-will haveito carry.. Twenty thousand shares will be held m reserve for future requirements. "Cambist" is greatly pleased by the moderation expressed by the promoters. The company will, therefore, get the full beiiefit of the capital subscribed for, and it will be placed m a splendid position to carry out its objects accordingly. Besides the '■ profitable nature of this investment it must not be forgotten that this is the parent Yellow Cab Company m the Dominion. Later on it will, extend operations to *all of the larger cities of New Zealand. This candid, critic considers that as the pioneer of the Yellow Taxi-cab it wWi not' be long before further . extensions take place. He will not attempt to estimate the value of these* imminent possibilities, but will leave to his *ntelligent readers the pleasure of making their own deductions. One thing is -abundantly clear to him, namely, that this share issue seems "to be a good ■ thing," no matter how viewed, and, consequently, that it will be quickly absorbed by prudent investors. Already applications for the shares are pouring, m, and what pleases him most is that the small investor appears to be highly interested m the matter. A widespread shareholding must make for a co-operative feeling m the undertaking and "that, as, everyone knows, is a favorite feature m the estimation of "Cambist." v ■ '