He completely renounces the idea, which still persists, that such combinations are impossible to perform. Further study reveals the fact that the above capital earned no dividends or interest. According to the author, therefore, it is safe to assume that the "residual value" of the fleet is a full 33 percent, or say 6 percent.
This is the number that is usually considered to be the value of the necessary renewal fund. The average of the above figures in each individual case will be a reasonably safe basis for a preliminary estimate. Fuel costs are about half of the total cost of electricity, or if it is assumed that electricity represents 20 per cent.
Of course, the number of seats greatly exceeded the average number of passengers carried. This was the real money value at the time of the section or article as the case may be. BARBOUR felt that the period mentioned as the life of the power plant - 40 years - was too much.
In terms of the lifespan of the building, he could not claim any originality for a period of 40 years.
DISCUSSION
On page 39 was a statement of the earnings of ordinary shares, preferred shares and debentures in percentages of the British systems, together with the average net profit (3.54 per cent) on capital. But, unless he was mistaken, the quoted average was simply the arithmetic mean of the interest rates on certain types of capital components. On a further consideration of the matter in the light of Table I:—It was stated that the capital of the London County Council system was, and from the other figures in the table, the gross profit was 9.33 per cent.
But simply as a luxury, as an indirect means of raising revenue, or as a result of providing expensive schemes for the investment of capital, the promotion of the "custom" was not in accordance with the higher economy. Obviously, this would be completely misleading as a measure of efficiency or of profit-earning capacity. He also had very little time for a complete study of the paper, having accidentally received it only a few days before.
A great deal of experience has been gathered in the older world systems, and if problems here become acute, we have only ourselves to blame if we do not take full advantage of the experience of other countries. Such a paper, they heard, would help researchers and open the way for other researchers to study a very important feature of the whole question—its economics. When he got to some of the details of the paper, he was glad that Mr.
Brearley spoke in such unequivocal terms on the question of converting the Melbourne cable-tramways when he said it was beyond all doubt that no system of guidance could be seriously considered, and that even if it were the Mel-. Brearley seemed a little doubtful whether in making financial provision for a tramway system allowance should be made for redemption, or whether it should not be left to future generations to bear their share of the burden. It would never have done to begin with the proposal that they would only pay the interest on the borrowed capital, because they would have been left with an obsolete and useless system, and faced with the burden of the entire debt. came
And the only possible policy in raising the money for railroad construction was to provide for a proper annual levy on the sinking fund, so that the entire debt would be cleared within a limited time. Brearley's suggestion to include a residual value for several fundamental parts of the system was very good, and he did not recall having encountered it before. He was sure that the Institute would welcome the meeting of the Chairman of the Prahran Tramways Trust, who took a keen interest in tramway economics.
PAPERS
The writer has usually advised withdrawing the debts by agreement on an annual basis with the full amount of the sinking fund. He had looked into it, but didn't think he could add anything to the benefit of the discussion. CAMERON, Chairman of the Prahran-Malvern Tramway Trust, said he considered it a compliment to be invited to take part in the discussion.
He felt that this would be extremely valuable at the moment, as they are dealing with the problem of setting up the entire electric streetcar system. He then wanted to emphasize that the increase in earnings is mainly due to the increase in population; secondly, to increase the habit of travelling; third, the increase due to the expansion of the tram network, so they had a much more useful system. The result was that the trips of the population initially increased to 150 trips per year, even though they were that much at the beginning.
Smith in discussion of the use of the carmile as the unit of calculation. But with the two working together, the success in each municipality depended on the success of the whole. These were among the reasons why the figure did considerable justice to the transaction, and why no other figure would be so effective as a common basis for the calculation.
First of all, he would like to express his admiration for the wonderful memory of Mr. As for the arithmetic mean of the interest rates in the table on page 39, he would say it wasn't, although the number 3.54 --- more coincidentally than anything, was the arithmetic mean. mean from the others.
Smith in regard to buildings, he held that they could only assume that the object to be renewed would be of the same character and extent. He had not dealt with the obsolescence aspect and believed that it should be separated from the treatment of the renewal fund. The relationship between the variables taken on a passenger-mile basis was, in his opinion, not quite as clearly defined as on a car-kilometre basis.
The question of the limitation of the sinking funds' investments had often come up, and he believed that there was some justification for the legislature's insistence that a sinking fund should be invested outside the company. The purpose of the sinking fund was to replace the original amount advanced to the system.
