THE WORLD OF BUSINESS

NZ Truth, Issue 1030, 22 August 1925, Page 17

THE WORLD OF BUSINESS

(By "FIAT LUX.")

PROSPECTUS OF BLACK AND WHITE CABS, LTD. Better Transport at Lower Cost. Removing Reproach From Our Taxi Service. i Gild not the lily—this is not publicity for the well-known brand of bon- , nic Scotland's national product but I is a tentative promise that Wellington is at last to be treated to something decent m the taxi-cab line. And if only some of the promises contained m the prospectus under review are carried out Wellingtonians and visitors alike will have another blessing con-j ferrod upon them. and investors m the company should receive good rewards for their enterprise.

Ten years ago the Yellow Cab Operating Company was started- m

Chicago with a fleet of 31 cabs and m June, 1924, it had a total. of over 3000 taxi-cabs m commission -in Chicago alone. Throughout the world m cities and towns of 5000 inhabitants and upwards its subsidiary, companies now operate and not one is there ' but has made good. Good service to the public and good returns to investors. Now it is a very popular fallacy td suppose that the traffic -or other conditions 1 are totally different m say Timaru or Dunedin, Wanganui or Auckland, Chicago or London, Shanghai or Lisbon. They are not different. Exactly the , same principles apply to the solution of the traffic problem m each place irrespective of country or people and the first of these principles is ORGANISATION. It . was scientific organisation that brought success to tlie original Yellow Cab Operating Company. The traffic problem m all New , Zealand's cities and towns is a serious one and one that is becoming more acute with each passing year. The Black and White Gabs Ltd.'s proposals seem to be a genuine attempt --to better taxi-cab transport m the Empire City and no doubt the success of the company m Wellington will be sufficient inducement for many similar companies to form m other parts of the Dominion". One of the company's most pleasing proposals is its undertaking to instal the Yellow Cab Company's standard taximeter cab — a vehicle which has been evolved and built solely for taxicab work which demands a capacity for ■; REAL HARD GRINDING TOIL year m and year out which no ordinary .touring' car is designed for. In addition to adopting- this car as Standard equipment the service is to be initiated by a trained organiser belonging to the parent Yellow Cab Company and these two factors should go a long, way towards assuring the Wellington company of the success which its enterprise deserves. Another factor which will be most reassuring to investors is the business arid technical strength of the provisional board of directors which is headed by the late general manager of New Zealand Railways who should 1 prove a tower of strength on transport matters. The technical business and financial sides ai-e also most ably represented and include' the two managing directors of the A.B.C. Motors i (N.Z.) Ltd., 'whose taxi business is to be taken over by the new concern. The Yellow taxi r cab with its successful operation is no" stranger to Australasia. In March, 1924, "Yellow Cabs of Australia, Ltd.," a company with a nominal capital of £500,000 was 'successfully floated m Melbourne and active operations were commenced in' October, 1924. Reliable reports now to hand indicate that the company is meeting with more than the measure of success anticipated and there have been transactions m its £1 shares at 23/- and 24/- each. It is also stated that "the vehicles are very familiar on the. streets and are much m favor, particularly for short trips." This favorable regard m which the. cabs are held is no doubt due almost entirely to the fact that the computation of the fare is done by the taximeter and the fallible; human element is entirely "eliminated.' The promised scale of fares for Wellington by taximeter is just a shade over half the present LEGAL fares. For instance the existing legal minimum fare is 2/6. This fare has to be paid even though you travel only across the road but under Black and White Cabs, Ltd., the minimum is to be 1/6, .f0r one or two" passengers for any distance up to one-third of a mile, whilst a full mile will cost two persons only 2/6. From the G.P.O. to Brooklyn tram terminus the present legal fare is 7/3 for 2 passengers, 10/3 for 4 passengers, whilst under the taximeter system the .charges are to be 4/6 and . 5/6 •respectively. Other routes show similar sayings over existing charges ■ and the 1 very pertinent inquiry one is apt to make at this -stage is: "If a new taxi service can be profitably operated at fares approxim'a.tely 40 per cent, below existing charges, •■•have not present taxi owners, aided by the City Council, been robbing the public for years past?"' The answer is an unqualified denial. Even as the nations have indulged' m an armament race for years past (and its on again now apparently from latest British advices) so have taxi owners vied with oiic another m th«eir efforts to place a more luxurious and consequently more expensive machine at their clients' disposal than their competitor. The more luxurious the machine, the heavier the depreciation and almost invariably it follows that the other .operating costs are also heavier... Well, the taximan has to pay off the cost . of his machine and he has to keep it on the road and the public has to foot the bill for running a traction engine to do. a perambulator's work. So that's that. Now Black and White Cabs', Ltd., are installing a tried ■' an:d proved standard- taxi-cab. Not ;'■•' perhaps ,■ a machine you would hire to 'do a long country trip; say Wellington =to Napier or even to Palmerston North, but certainly one that will render yoit good, quick, ' ofliuiont: and cheap transport within the confines of Wellington and its environs and this is WHAT IS WANTED by the public. The fact that the company is standardising on., a proved model cab and will purchase all spares' direct from the factory will m itself bo no mean factor ii^reducing the run-' ninpr costs since it will eliminate ' the middlemen's profit on spares which it is safe to place at 150 per cent, over factory cost. Then big contracts can be let for petrol, oil, tyres and other requirements and the sayings !on these purchases m bulk should be •sufficient to assure shareholders a satisfactory return on their capital. Perhaps the riiost , satisfactory feature about the proposal is the introduction of the taximeter. Most of us at some time or other have been compelled to, utilise a present-day taxi and have approached; m fear and trembling, the king-pin at journey's end to inquire the fare. He, meanwhile, probably . has spent the journey calculating- how hlg the. fare might possibly be. The taximeter, which is years overdue m New Zealand, will eliminate all these and other objectionable features of the present system and the introduction, complete m all detail of the Yellow Cab Operating Company system of operation, with its many stands scattered throughout the city, all controlled from a central dispatch office, should materially reduce running costs since "empty" running would be mostly eliminated; also, it should popularise the use of taxis hy fostering m tho public mind the utmost confidence m the reliability, trustworthiness and fair charging of the standard taximeter cab. There will always remain a certain demand for high-class touring cars for. long distances especially and also, for wecklings and similar functions and no doubt a certain number of people will always be prepared to pay the additional cost inseparable from chartering a high-class touring car. : Having dealt with generalities let us proceed to discuss this company's financial proposals as outlined' m the prospectus. The nominal capital is £50;000 divided into £1 shares, but only 25,000 are now being offered to the public and "5000 are to be allotted credited as funs'- Paid up to the.vendors and persons hereinafter mentioned m consideration of sales und services. . . . hereinafter mentioned." This leaves 20,000 shares m

reserve for future requirements. The minimum subscription upon which the directors can proceed to allotment is 10,000 contributing shai'es and of this number 7600 are contracted for m the memorandum of association which of course forms part of the prospectus. Thus, the company is assured of going to allotment since only. 2500 further contributing shares are required. It is QUITE ON THE CARDS this number will have been subscribed before this appears m print. Assuming the whole 25,000 shares are taken up and the company proceeds to business by purchasing its 20 cabs it seems to this scribe that some kind bank must come to the rescue with an immediate overdraft to meet pressing engagements since the capital is payable 5/- application and allotment and 2/6 per call at intervals of not less than three months. Hence the capital will not be paid up m full till January. 1927. Now let us see what these "pressing engagements" are. Firstly, there is an item of £3250 to be paid m cash to the A.B.C. Motors (N.Z.) Ltd., for its present fleet of high-class taxis, m addition to 1000 fully paid up shares for the goodwill attaching to its taxi business which is to be taken over m toto by the new company. Next is the item of brokerage which will amount to £ 1250. Then comes the mysterious and intriguing item "preliminary expenses" which are estimated at not exceeding £1000, this being m addition to "general expenses of forming, pro[moting and floating the company not exceeding £1500," which are being paid by the promoters. But on the point as to whether such expenses are j repayable to them when the company is formed . the prospectus is silent. But what the prospectus is not silent about is the fact that these promoters who are thirteen m number (evidently, not at all superstitious) are to receive 3000 fully paid up shaves between them for paying these expenses and m .a £50,000 company this cannot be considered excessive for the risk taken by them. The only other issue of paid up shares (except the £ 1000 for "goodwill" to A.B.C. Motors (N.Z.) Ltd.), is 1000 to the holders of tho Yellow Cab rights m New Zealand and as certain services have to be rendered therefore no reasonable objection can be taken to this item which after all depends for its value entirely upon the success which attends the Black and White Company's future operations. Now we come to the real item of the picnic — the cost of these cabs which are to be imported from the . land of Stars and Stripes. A modest estimate ■places the landed assembled cost at £700 PER CAR, so taking this figure as a basis the 20 cars will absorb a further £14,000. Certain repair plant will be necessary, uniforms for drivers, office equipment, etc., etc., will take at least another £1500, bringing the total outlay up to £21,000 which is ,-/ ' ALL WANTED IMMEDIATELY . or, anyhow,' within six months. Yet the capital available m the , time will on present arrangements amount to only -£9000 to £10,000. Who is. to find the balance? The bank, the directors, or the shareholders? Any bank would no douh.t be prepared to do this financing given suitable security such as a general lien over the company's assets including its uncalled capital and having the directors "joint and several'Vas Collateral but such accommodation costs real money— present' time 7 per cent. — and ; boiling the situation down it moans the company must pay out 7 per cent, to obtain the capital the shareholders should be providing. This proceeding is quite wrong and moreover is opposed to every sound principle of finance. It is submitted with all humility that a capital of £25,000 (the subscription of w.hich is spread over a period of 16- months) is inadequate to carry out the company's project and it would be ' infinitely better to place all the shares on the market at once, call up the full amount- within say eight months and with the capital thus available carry out the scheme m its entirety, i.e., place at least 50 ,cabs on. the streets as early as possible. Perhaps the provisional directors are apprehensive' ot-> the reception the investing public will give, the venture seeing" it is a new idea m - this part of

the world; but the world loves a bold operator and is always prepared to back its fancy and why not when that fancy possesses such sound prospects as tjiis concern undoubtedly does? No, Mi-; Director, DON'T TINKER WITH THE JOB and leave It half done; to use an Americanism, "Take your coat off and bring, the bacon, home." The public wants this service and will patronise it; investors want the profitable employment of their funds, so see to it that both wants are adequately supplied. Regarding income and expenditure estimates are set forth which if realised should produce very handsome returns to shareholders, but it should be carefully noted that these estimates are based on the operation^ of a fleet of 50 cabs. It seems quite unlikely that the same ratio of profit can be secured on operating only 20 cars since the "overhead ' charges" such as rent, superintendence, management, etc., would be very little different on operating 50 cabs to operating only 20 cabs. Some very interesting figures are quoted m these estimates. For instance, revenue is -calculated at 1/4% per cab mile and this of course includes* all "empty" running. The Yellow Cab Operating Company of Chicago by a series of exhaustive tests has proved that a «cab can earn revenue for b 5 miles out of every 100 miles it runs provided it goes direct to its nearest engagement stand after each engagement. Thus, suppose a person took a cab from Thorndon station to Oriental Bay, the cab after depositing its passengers would not return to the city but would from its stand at the Rotunda advise its dispatch office where it was and the first call for a cab m the Oriental Bay district would be filled by this vehicle on instructions from the central dispatch office. Thus would empty running be reduced to a minimum and don't forgeS that the public are sharing m the economic saying thereby effected. Wages, salaries and charges at £ 552 per week seem extraordinarily high. Authoritative figures before the writer show that this should be about £400, so that the promoters have left • • A GOOD SAFETY MARGIN under this heading if they/ staff arid carry on under the Yellow Cab Operating Company's scheme. The running expense account totalling £377, overhead £38 and contingencies £41 all seem reasonable, making a grand total weekly expense of/ £1010 against a. gross profit of £1203, leaving a net profit per week of £194. This seems quite within the bounds of reason and given sound, careful and economical management which one could have every confidence m with the provisional directors named m the prospectus, then the company should proceed to do good and financially satisfactory business and be a ■ source of, revenue to its shareholders and a genuine source of pride and satisfaction to the JEmpire City. -• t ■ .. EVERY-DAY ACCIDENTS. A broken arm, a sprained ankle — not dangerous, but they may mean loss of ; work and wages; Phoenix "Multum" Personal Accident ' Policy pays £6 week while disabled, or £1000 at death. Inquire Phoenix Assurance Co., Ltd., 235 Lambton Quay, Wellington, or see Local Agent.* UNDOUBTED STABILITY. Any institution seeking the support of the community must show proof of its ability to provide the service the public demand. This is more than ever necessary m insurance. Fortunately,' New Zealanders have m the Mercantile and / General; Insurance

Company, a fully equipped organisation of insurance " specialists concentrating principally upon home and furniture insurance. The ■ subscribed capital is '£ 250,000, and it is all invested m NewZealand. Consequently prompt and liberal settlements are an "M. and G." feature. Head Office, Panama Street, Wellington. . Branches and agents everywhere.* "Better than builioh-^gobfl health." — Markley. ; During winter, don't run the risk of 'catching colds, coughs, qr influenza —use Baxter's Lung Preserver, "Baxter's" has, rich, warming, dependable properties. ' Never fails to give speedy relief, even m most chronic bronchial, chest and throat troubles. In addition, Baxter's Lung Preserver is a fine tonic. Enriches the bloodfortifies 1 the system against prevailing ailments. You can, obtain a generoussized bottle for 2s' 6d at all chemists and stores; family eize, 45 % 6d. But be sure you get "Baxter's"!*