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Taxicab Extras: A Proposal.

16th December 1909
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Page 1, 16th December 1909 — Taxicab Extras: A Proposal.
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Which of the following most accurately describes the problem?

We would urge upon motorcab proprietors the expediency of early and united action in respect of the unsatisfactory yield to them from authorized extras in ordinary daily service. These, in the metropolitan area, where concerted action is so desirable, are: 2d. for each package carried outside; and 6d. for each person above two. It is common ground, that the drivers do not register extras in practice, or of their own free will: such receipts are regarded and treated, in practically all cases, as perquisites, and it is an exception for the " fare" to insist upon hand-made additions to the figures within the dial. More than one company let the matter slide—ask for nothing, but take what comes; a few manage to average la. paid in per cab per day ; all realize that exact control is out of the question. The admitted difficulties, however, do not preclude the adoption of a course which will be a step in the direction of equity. We suggest that every driver of a London motorcab be required to pay in Is. 6d. per day, in respect of extras, without regard to what he•reeeives from the public: the driver, occasionally, would be the loser; the company, occasionally, would have to take less than was shown on the record. Let us examine, if briefly, the effects of the proposed compromise. Does it not count for something, with drivers, that they should honestly secure to themselves, on an accepted basis, part of the varying sums which now, as a general rule, go into their pockets surreptitiously P Is it nothing to them that they should be freed, by the arrangement in question, of the test ease and the inspector in this connection P We think so, and we recommend the course to the men—in their own interests, as much as any other. They cannot expect benevolent indifference to huge leakages to continue, and an early settlement of this out, standing flaw should be amicably made. , The reason, of course, why proprietors will not be able to go on "turning a blind eye" on present-day proceedings, is found in the daily-increasing competition. So long as there was some " fat " for all, directors and managers were not inclined to grudge the coming-in of their drivers. Now, however, with average gross earnings per day on the down-grade—as we forecasted some 20 months ago—to 26s. or 27s., we doubt if these easy-going methods (sic) will pay anybody. Taking 340 days per cab per annum. which we consider good working, the Is. 6d. represents a total of £25 10s., and that is the equivalent of at least a five-per-cent, dividend on the capital invested in the rolling stock and fixed plant. It is true, as we have pointed out, that a few companies aro averaging Is. per day, but that is much above the customary result of the hand-made record. They would, by the change we propose, be the smaller gainers, but they would benefit appreciably from its adoption.

We put forward, therefore, this concrete proposal, as a

Inew and universal rule for adoption by metorcab com

panies in London : " On and after to-day, the

1910, each driver in the employ of this company must record and pay in not less than is. 6d. per day for 'extras.' Any sum recorded above is. 6d. will, on and after the same date, be paid out to the driver each day. This rule %N ill hold good, irrespective of the times at which any cab is taken Out of the yard, or brought in." We do not offer this as the ultimate wording, but it should serve for discussion, and we hope it will be considered.

Interesting Features in the General Motor Cab Co.' s Report and Accounts.

II the object of a balance-sheet is to provide food for reflection, and to stimulate lawful curiosity, the document issued by the General Motor Cab Co., Ltd., and which we have been unable to review fully until now, is an unqualified success. If, however, the intention of the directors is to provide the shareholders with a clear account of the company's present financial position and future prospects, the success of the document is less pronounced. It would appear, from a perusal of the abovementioned balance-sheet, that the company has a paid-up capital of £822,946, divided as follows: 816,946 fully-paid preferred ordinary shares of El each, and 120,000 fullypaid deferred shares of is. each. It also appears that the net profit for the year's trading, from 1st August, 1908, to 31st July, 1909, amounted to £225,553 12s. 6d., and was divided as under:— Now, a profit of £225,000, on a capital of well under £1,000,000, seems, at first sight, such an excellent result as to leave the critic no other course than humbly to congratulate the managers and directors on the success of their administration; but, frankly speaking, the more we examine the accounts, as shown by the balance-sheet, the less can we understand how this profit has been obtained. Depreciation is the bee noir of all companies connected with transport in any shape or form, and nowhere is adequate provision on this score more necessary than in the case of a motorcab company, since the life of a vehicle is, when competition is still so easy and when fashion still changes from year to year, so much shorter than it will be at later stages of the movement. The

company's original prospectus showed that the directors contemplated allowing sufficient in this respect entirely to renew their rolling stock every six yearsa very wise and businesslike proposition, though possibly none too conservative. The chairman, in his speech on the 1st inst., repeated this, and further stated that the cabs were made practically " first class" every year to pass Scotland Yard, and that these renewals were done out of revenue. From this it appears quite dear that the cabs are kept up out of earnings, and that one-sixth of their value, or 16* per cent., is placed every year to depreciation. When, however, we turn to the balance-sheet, we find that, though the value of the rolling stork running for the whole of the year was 2455,000, and part of the year 2331,000, or 2780,000 in all, the total sum placed to reserve against rolling stock was only 263,500, or less by 210,000 tlm.n the depreciation which should have been allowed on 2155,000 alone! It is rather difficult to see how the directors arrive at the figures for depredation shown in the balaneeesheet, unless they increase the book value of each cab by the amount spent on it in repairs and renewals before dealing with depreciation at all. Or, is the sinking-fund for the debentures being allowed to replace the original depreciation eeheme ?

As no figures are given showing the gross earnings and expenses of the cabs, it is not at all easy to guess at the future prospects of the company ; but, unless the earning.s are very large, the outlook for 1910 does not seem at all encouraging. This absence of data. of earnings and expenses incurred in the maintenance, ete., renders it impossible to judge fairly of the company's actual position, and, whilst there is undoubtedly plenty of money to be made over motoreabs, the experiences of others connected with transport has shown how necessary it is to be prepared for bad times, and how advisable not to divide profits amongst shareholders till adequate provision has been made to safeguard the position of the company. It is, therefore, greatly to be hoped that the directors will, in accordance with the indication of the chairman, create, as soon as possible, a large cash reserve, since a reserve fund, if invested in the business itself, is of little or no value, as it must always be of the least use when it is most wanted. If adequate provision be made for depreciation and a rash reserve created, we see no reason why, with good management and due observance of economy, the company should not have ft good future, and we are somewhat surprised to note that no fewer -than 4 out of the 13 directors should have resigned their seats on the Board, more especially when the exceedingly-fortunate financial position occupied by a director of this company is taken into consideration. Perhaps, however, the financial gain attendant upon the resignation of these four gentlemen will suffice to prevent the shareholders wondering why.

An issue of 2400.000 of 5 per cent. debentures has been created, and this is to be repaid in equal instalments of 266,680 over a period of six years. The charges accruing for the current financial year will therefore, unless, as we query above, the debenture sinking-fund is intended to absorb the so-called special reserve, be Repayment of debentures* ... 66.660 Interest on debentures 20,000 Depreciation :— .1,085,246 Less amount already put to reserve fund 110,426 One-sixth of 974,820 162.170 Preliminary expenses, say 7.000 Charges for 1909-1910... 2256,150 Thus, we see, no less a sum than 2250,150, or, deducting the balance of 1192,143, 2164,007, has to be made in profits before the shareholders can hope for any return, and these figures do not allow for any depreciation of buildings, which stand at over 2160,000, or for the interim dividend promised for the 31st January next. The directors, no doubt, are satisfied that the value of buildings has net been overestimated, but it seems to stand very high. It is rather hard to see, too, why business people should trouble to pay -2300,000 in advance, fur cabs not received, when they apparently are compelled to borrow 2400,000 at 5 per cent, to do ; but, doubtless, by making these advance payments, the directors were enabled to obtain some preferential conditions for the company? These do not appear in this balance-sheet.

The London General Omnibus Co. s Fiftieth Annual Meeting.

Our second leading article this week, has reviewed the position of the over-capitalise.d General Motorcab CO. Our third has to deal with the considerable troubles of the enlarged London General Omnibus Co., and certain allied topics. We had the L.G.O.C. report and accounts before us, a fortnight ago, and our latest references to it current affairs can be found on pages 234, 2-54 and 255 ante. As promised in " The Overseas Special," we now have to deal with the position which the Board, to a limited extent, explained and unfolded at last week's annual general meeting. We pass over the curious legal anomaly that, whilst the incomings from—and expenses upon_ their vehicles were included in the accounts and hi-Jaime. sheet before the meeting, shareholders in the aid Vanguard Motorbus Co. had not been convened, and were nut present. We understand that. they have not yet received their L.G.O.C. stock, owing to lads of final valuations.

The Chairman, Mr. Henry Hicks, and his co-directors had an unpleasant duty to perform in facing a large meeting after a disclosed loss of 233,060, and the auditors' statement that there had been no provision for depreciation in respect of either the motor or horse stock. We, notwithstanding the trial attendant upon two hours of "

stewing" in an inadequately-ventilated room, are bound to say that they met the situation resolutely, and with encouraging indications of a real belief in both the future of the company and their own ability to carry on its business. Mr. Hicks, we must remind crities and shareholders alike, did not hold out expectations of anything but trouble and financial anxiety, at the general meetings of 1906 end 1907, and, in 1908, when other companies were also confronted by stupefying losses, and carne together in an amalgamation, he did not promise recovery in a single year. Had he done so, he must have been blameworthy and discredited, but, with commendable restraint and sound judgment, he pledged himself only to material relative improvement, and that undertaking, given on behalf of himself and his colleagues, has been very fully redeemed. Had it not been, in fact, for the desperate situation in the horse department, where the 1.5 months under review caused a deficiency of 270,299 to assert itself, the company would have stood 276,205 to the good, and could have more than paid the whole of its debenture and preference interest out of that profit on working. The results, had as they may appear to the holder of ordinary stock, bear undeniable evidences of internal reeonstitution and reorganisation of a. beneficial character. The outstanding change is the conversion of a working loss per unit into a margin on the right side. Once that condition is fulfilled, and maintained, it becomes a comparatively-simple process for the management to effect desirable increases of such individual balances, provided that the engineering department be properly supported with stocks, and in other respects. The bad feature, in several precedingyears, was the prevalence of material losses on the working mechanical units, in which circumstances any extension of activities merely foreboded a multiplication of those losses. Mr. Hicks, hereement, tells us that, en the average, 634 motorbuses were in service, and that they showed a profit en working, after careful analysis and apportionment, of 259,400—that is, per motorbus in service, a. margin of morethan 2749 per annum on the right side, but out of this, presumably, there would have to come, in normal circumstances, the administration, depreciation and interest charges. It is a splendid margin, and it nuist be a matter for profound regrets on the part of the directors that £45,000 of it were absorbed by losses on the working of horse omnibuses—an admission of worldwide interest, whose significance cannot be misunderstood. With further realizations of horses and horse stock in process, and with every likelihood that the 30th September, 1910, will find the L.G.O.C. with its horses on the low side of 5,000, it is very difficult for the directors—let alone anybody who possesses partial information—to forecast the position at that date. The savings that were named at the meeting (for report of which see page 316), of lid. per motorbus-mile now compared with the costs for January-June last, and of 2id. per motorbus-mile compared with January-June of 1908, should not diminish, and the company, by reason of the increases in its active fleet since the opening of its current financial year, may be thereby put, relatively to 1908-1909, to the good by an amount in the neighbourhood of 2150,000. We hope it will : the possibility exists, if all departments and officials pull together. The directors, certainly, in forcing the meeting through as they did last week, and the Chairman, in declining to answer questions, can only have acted under one impulse and conviction—the belief that next year's meeting will taw the corner turned. They did rightly to keep their own counsel upon details. There remain the important subjects of depreciation and the petrol tax. We gave our views on the former at some te.-eth. two weeks back, but Mr. Hicks has since then propo&nded the theory that liberal maintenance justifies retention in the books at liberal valuations. On the score of maintenance, we can only confess to a sense of amazement at his figures-2451,000 expended in a period of 15 months! We conclude that he included the tire vests. Be that as it may, and although we do grant appreciation in value qua commercial efficiency, it is a piece of bald presumption to reckon upon the indefinite renewal of licences by Scotland Yard. It is little better than the gambler's throw of the dice, and it certainly is not prudent. The exigencies of the situation may have been great, but this was not the best way out! Next, about the petrol tax. Should there be a change of Government, something may yet be done. There are good chances, and they will be taken. The raw-material plea is fairly sound, but there is a. better one, and one which we desire again to impress upon the directors of the company. They protest that their class of motor vehicle alone, in all of those employed for the purposes of London's passenger conveyance, is to be taxed ; tramways, tubes and shallow railnays, they say, are to go free! If tax there must be, why not, they go on, have a wheel-tax on all competing interests? These cries, we think, are futile and idle. Tramways, tubes and shallow railways pay heavily already—by local assessment and rating. They, however, get something in exchange, and that something is a monopoly of their own tracks. The effective and proper basis of protest for London omnibus proprietors, when the everrecurring fallacy of a tax for the use of the existing roadways is brought forward, is this: we are not comparable with tramways, tubes or shallow railways; we have no monopoly ; they have, and that is why they are required, in equity, to pay something to the community. London motorbuses, which were ruthlessly ignored by Mr. LloydGeorge, have a unique claim for exemption from the petrol tax. They are a case apart, and, as we urged on the 6th May last, they do not use the country roads for whose improvement the money is raised and earmarked.

London's Motorbus Fares.

We endorse the opinion that there is scope for revision of London's motorbus farde, and justification for a scheme analagous to the strip-ticket system of the tubes. The traffic returns of the District and the Metropolitan railways, too, show that increases of fares do not choke off traffic : we have in mind, for example, the drastic additions to first-class fares same twenty months ago. Many people will go the way they like best, and they are not deterred by fractional increases. On the other hand, fractional reductions, such as discounts on packets or books of tickets, can attract the tens of thousands who study these things without reference to any consideration but economy. The London omnibus companies, therefore, and not only the L.G.O.C., might do much for their revenues, by a revision which studied the regular and fare-critical user whilst it did not perforce put the more-wealthy and more-willing thousands of visitors, tourists, sight-seers. and other non-critical patrons, who cannot "see London" from the bowels of the earth, on a compulsory parity with the clerk at 30s. a week. We know that a departure from old-time custom, in the matter of shortened penny stages, has been tried and found wanting. Let the old historic and landmark stages remain, say we, but let the "regulars " only enjoy the privilege of travelling over them at Id. each! How, it will be asked, can such a differentiation be effected in practice? We see no difficulty. It has, in fact, been initiated, on a small scale, by the MetropolitanSteam Omnibus Co., Ltd.

We postulate that all stages remain approximately at the accepted lengths which have become impressed upon the public mind : we may quote, by way of example, BankCharing Cross, Id.; South Kensington-Putney, 2d. ; Hammersmith-Piccadilly Circus, 3d. The principle is to charge more to the constantly-renewed occasional user : he, in probably ninety per cent. of the cases, is a man who-either must go by omnibus (in preference to rail, tram, or tube), or one who has no occasion to study farthings. He should not be tempted, even when. he hears about their existence, to purchase a book of tickets, and that safeguard can only be provided by selling them not less than a dozen at a time, and preierably in greater numbers. The plan of operations, then, will be something like the following, but the figures are put forward tentatively :—

(A) Advance—subject to particular exceptions— the fares on the boards thus: id. to lid., lid. to 2d. ; '2d. to 3d. ; 2id. to 30. ; 3d. to 4d. ; and so on. (B) Sell books of tickets at the rate of per dozen : lid. for 11d. ; 2d. for is. 4d. ; 3d. for Is. 9d.; 3id. for 2s. 3d. ; 4d. for 2s. 8d.; and so on—i.e., at discounts, to the regular user, comparable to tube allowances. (C) Allow all tickets to be available on all routes.

It will be observed that there is an all-round increase in the face-value, but that the buyer of books of tickets is a gainer. On highly-competitive roads, such as the one above the Central London Railway, or on any other such road, the present Id. fares might, if it were so decided, remain unaltered. This would not vitiate the working of the scheme, for every passenger could pay his penny (cash) as before; the fewer the exceptions the better. The root idea is an old one—that of giving preferential rates to the regular traveller ; in omnibus work, we see no better way of carrying it out. No user would have cause for complaint; should he only learn of the change on his mounting a bus, he can, there and then, take advantage of the old and lower rates by "putting up" a few shillings. If he does not want to buy so many tickets at once, because he is only "a casual," he is the very man who ought to pay a little more.

Tags

Organisations: Scotland Yard
People: Henry Hicks
Locations: London

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