Circumstances Preceding and Accompanying the Company's Formation.
In Glasgow, prior to 1870, the only public means of locomotion were cabs or omnibuses, the venerable. " shanks' naggie " being a private and not a public conveyance. About that date Tramways had been newly imported to a limited degree from the United States, and proved such an advance that a Tramway mania seized the country, and lines were projected in all the large towns of the kingdom. It was impossible that such a promising field as Glasgow could be overlooked, and accordingly in the autumn of 1869 the City was favoured with, two schemes by London speculators for laying down a system of Tramways in its principal thoroughfares. Two separate competing Bills were promoted in the Session of 1870 for Parliamentary authority to construct these lines, and to both Bills the Corporation of Glasgow offered strenuous opposition. As many of the opposing lines proposed to occupy the same streets, it was evident that the opposition of the Corporation was likely to prevail; and, accordingly, the promoters of the Bills agreed to blend them into one as a means of disarming the Corporation's opposition. Power was also taken to the Corporation to substitute themselves, within six months of the passing of the Act, in place of the promoters, the latter in that case getting a concession of a lease of the lines for 23 years from 1st July, 1871. As the original promoters had, of course, the power to work the lines, the Corporation, by being substituted for the promoters, thus acquired this privilege also—a power which would have been refused to them under the general law had they been the original promoters. Under the general law, power to work Tramways is withheld from Corporations. The promoters referred to proposed to form a Company with a capital of £200,000, which would have met, all the requirements of the Company as then authorised; but the British and Foreign Tramways Company saw a good chance here to make something, and boldly subscribed for the whole capital, and undertook all the obligations of the original promoters. This latter Company, the British and Foreign, then formed the present Glasgow Tramway and Omnibus Company, Limited and subscribed by itself and its nominees the whole capital of £350,000. They then issued a prospectus offering these shares" to the public at par, and were successful in having them taken up. This increase of capital by £150,000 was described as " promotion money," and much indignation was expressed in the newspapers and by the public generally at the Company being burdened with this additional and unnecessary amount; some even going the length of saying that the Corporation, or certain "of their members, were privy to the increase, and were benefitted by allowing it. But the Corporation was alike unaware of the proposal until published, and unable to prevent it. To warrant such an increase of capital, however, something had to be done for it, and, therefore, the British and Foreign Company^ agreed to supply the Glasgow Company, when floated, with 2000 horses, 200 cars, £60,000 of stabling, and to undertake various other onerous obligations. The British and Foreign Company were also to buy up all the omnibus proprietors in Glasgow and suburbs, so as to give the Glasgow Tramway Company a complete monopoly. This agreement was subsequently largely amended by the contracting parties, and only £315,000 was actually paid to the British and Foreign Company by the newly-formed Glasgow Tramway Company in exchange for certain properties plant, &c, to be furnished, and at that figure the capital of the Glasgow Tramway Company now stands. Even as modified, the arrangement paid the astute financiers who proposed it uncommonly well, the real value of the assets handed over being £165,000.
The Company's Articles ofr Association were at this time,, in terms of agreement, submitted to the Corporation of Glasgow, and approved by them. These Articles provided for the carrying On of the business of omnibus a proprietors in Glasgow and vicinity at the conclusion of its lease of the Tramway lines, and, in consideration of this special agreement, the Company is now providing for the running of omnibuses when the lease expires.
Commencement of Business by the Company in January, 1872.
The Company having, under the concession to the original promoters, as already mentioned, become lessees of the Glasgow Tramways, commenced business in January, 1872, with 500 horses and 50 omnibuses acquired from Mr. Andrew Menzies, and ultimately the businesses of Mr. Walker, Mr. McGregor, The Partick Omnibus Company Limited, Mr. Bennie, Mr. Young, Mr. Richmond, and others were merged in the concern. For these concerns, and the goodwill thereof, very large sums were paid. Three proprietors alone got about £100,000 for their premises, stock, and plant, including. goodwill. The first half-year's receipts obtained from omnibus trafiic alone, which was very much interfered with by the work of constructing the Tramways then going on, was only £34,712, but Glasgow and its suburbs were not then of their present extent. The first section of the Tramways, viz. :-—between St. George's Cross and Eglinton Toll, was opened for traffic on 19th August, 1872, and about the end of that year 9 miles had been opened.
Remarkable Tramway Schemes Authorised by Parliament.
The Parliamentary Session of 1872 was remarkable for the number of Tramway Schemes promoted affecting Glasgow and the district. Speculators and promoters seemed to think that tramways would revolutionise the system of suburban locomotion and would prove a rival to railways for considerable distances from town. It is strange now to read of proposals to lay lines of tramway from Glasgow to Coatbridge, Airdrie, Hamilton, Bothwell, and Wishaw on one side of Glasgow, and to Paisley and Johnstone on the other; but, such schemes were not only promoted, but fought vigorously before Committees of both Houses of Parliament, and eventually authorised, at least in part. The evidence in support of the schemes was strong upon the advantage of bringing passengers in cars, as well as coals and general merchandise in railway waggons to the very doors of the people and, in fact, it appeared as if the proposals were simply to make railways along turnpike roads. Fortunately for shareholders, these rural Tramways were never constructed.
Extensive Additions to the Glasgow Tramway System.
The system of Glasgow Tramway authorised in 1870 extended only to about 21 miles, several of the routes stopping short of the City limits, and in 1872 the Corporation proposed to extend these lines to its boundaries, and to add many miles of lines beyond the City itself. In the same year three other separate schemes proposed to come from the various places, outside already named and join their lines to the Corporation lines authorised by the Act of 1870.
The Tramway Company opposed, at great expense, the Corporation and other Bills. The Corporation Bill itself sought extensions of no less than 21 miles in length, in addition to those authorised by the Act of 1870 but they were unsuccessful, and only the financial clauses of their Bill were sanctioned. The lines from Kent Street, along the Gallowgate and from Morrison Street to Paisley Road Toll were authorised as part of the Both well and the Yale of Clyde schemes, and power given to the Corporation to take over these lines, so far as within the City, and to make and work them. This power, the Corporation exercised, and they were also leased to the Glasgow. Tramway Company. (Glasgow Corporation Tramways Act 1872)
Abandonment of Buchanan Street Tramways, and Power given to the Company to Veto other Lines.
The original agreement between the Company and the Corporation was in 1874 subjected to a modification, whereby an abandonment of the construction of 3 1/2 miles of tramways, authorised by the Act of 1870, was agreed to. Among these abandoned lines were the Buchanan Street and St. Enoch Square Tramways. These were considered by the Company as likely to have been their best paying lines. In consideration of this concession of a valuable right being made to the Corporation by the Company, the latter obtained a right to veto the construction of certain other lines along the streets specially mentioned—a right which they exercised, as they considered the lines of little value. They intimated to the Corporation that the Tramways along Cathedral Street and Parliamentary Road to Springburn, &c, should not be made. Believing that the right to veto the construction of Tramways (gained in exchange for the concession above described) was valid: till the end of their lease, as was in the mind of both parties at the time the agreement was made, the Company sold their line of omnibuses on the Springburn route to Mr. John Russell, and came under an obligation with him not to compete thereon.
Development at End of 1874.
At the end of 1874 the Company owned 108 cars, 26 omnibuses, and 822 horses, and £62,633 of heritable property—receipts per annum from all sources, £113,221.
Flaw in the Act of 1870 Company Unable to Collect Fares Act of 1875 Defining Fare Stages.
Clause 67 of the 1870 Act authorised simply a fare of one penny per mile; but, as it contained no short distance clause, the Company was unable to -collect its fares, as every passenger was entitled to enter the car at any point, and travel the full distance of one mile for one penny. Much ingenuity was exercised by the Company to frame some method, more or less accurate, of collecting the fares to which it was entitled. All contrivances, such as issuing tickets which recorded, within a safe approximation, the point at which a passenger entered the car, proved abortive. The Company was unable to collect the fares which were legally exigible, neither was it possible to uplift those which it did receive without an amount of wrangling and altercation between car conductors and the public, which was greatly to the prejudice of the whole Tramway system. The Company, owing to the above imperfection in the Act, lost a large sum in the shape of uncollected fares from 19th August, 1872, till 9th October 1875. On the latter date an Act was passed for the construction of new lines, and under it bye-laws were framed, which set up a well-defined system of fare collection. The method referred to, which had its origin in a Parliamentary Committee, was the establishment of mile stages, and while it did not abolish sources of public irritation so entirely as it might have been made to do, it furnished a system of collecting, fares which made the Tramway car service of Glasgow cheaper to the public, as a whole, than perhaps any other Tramway system .of that period. The Company, at the same time, had its'rights in the matter of fare collecting thoroughly preserved. (Glasgow Corporation Tramways Act 1875)
1877 Extension of Lease Arranged with the Tramways Committee, and Rejected by Town Council.
No further prominent incident occurred Until 1877, when the Corporation became desirous to have the system extended, and negotiations were entered into for an extension of the lease for 10 years. A draft agreement was arranged with the Tramways Committee of the Town Council on terms satisfactory to both parties, which, however, was ultimately rejected by the Corporation, many members of the Tramways Committee who approved of the draft agreement in Committee voting against it when it came before the Town Council.
Corporation Bill Rejected in Parliament and Abandoned.
The Tramway Company acquired in 1874, as has been stated, the right to veto the construction of lines the working of which they deemed would not prove to be profitable. This right of veto was exercised by them in regard to lines proposed to be laid in Cathedral Street and Parliamentary Road, Immediately after the failure of the above attempt to arrange for an extended lease of the lines with the Company, the Corporation prosecuted a Bill in Parliament in the session of 1878, in which they sought power, notwithstanding their agreement of 1874, and the Company's power of veto, to construct new Tramway lines, among which were included those named as having been already vetoed by the Company. This Bill was prosecuted by the Corporation in opposition to the opinion of the Town Clerk, who advised the Council that such a Bill should only be proceeded with "in concert with the Tramway Company." The Company was obliged to oppose this Bill, as a breach of the agreement of 1874 and of their right of veto, and also as compelling them to work difficult and unprofitable lines of Tramways on the same terms as those which they already worked under the lease, and this after they had, in consideration of obtaining this right of veto, agreed to abandon the lines of Tramways which they considered would have been remunerative. The Bill was practically rejected by Parliament, the only part of it which passed being one giving an extension of time for making a suburban line. Having failed in its main object of breaking down the Company's valuable safeguard in the power of veto, it became a Bill not worth prosecuting further, and the Corporation abandoned it altogether on 27th May, 1878.
Additional Tramways Authorised in 1879.
In 1879 two Bills were promoted, one by the Corporation and another by an independent Company, for the construction of certain lines occupying almost identical routes. Various negotiations followed, and an agreement was ultimately entered into between the Corporation and the Company, whereby the lines proposed under the Corporation Bill should be leased to the Company to the end of the present lease, and the opposing Bill was thereupon withdrawn. Under that agreement and Act about 10 1/2 additional miles of line were constructed. The Company at once provided the necessary equipment for working these additional Tramways.
Development at End of 1880.
At the end of 1880 the Company owned 178 cars, 20 omnibuses, 1836 horses, and £110,423 of heritable property, with a revenue per annum from all sources of £167,401.
Special Arrangements as to Construction of Tramways in Both well Street, and to Pollokshaws, Springburn, &c System Extended to its Present Mileage.
Although the lease was running down, the Corporation were desirous to have Tramways along Dalmarnock Road, and also from Normal School along Garscube Road, and from Shawlands along New Kilmarnock Road to Pollokshaws, by Coustonholm Road, which latter was for a considerable portion a mere footpath. The Company agreed to the extension desired, and undertook, at their own expense, and at the risk of an Act being obtained, to widen the Coustonholm Road. The Company paid for this unauthorised portion of the Tramways a large sum, which was ultimately, but with some reluctance, repaid to them, and the Company also paid the entire expense of the legal conveyances of the ground thrown into the road. The Company bought land in Coustonholm Road, Pollokshaws, on which to erect stabling. Out of this land they contributed a considerable portion adjoining the road for the purpose of widening it.
In 1884 an agitation was raised for additional Tramways along Bothwell Street and St. George's Road, and a Bill was promoted by private parties for the same purpose. The Corporation deposited a Bill for these lines also and including the Parliamentary Road and High Street Tramways, which the Company had already vetoed under the agreements of 1874 and 1879. The Corporation, by their Bill, asked power to work the lines by cable, steam, or other power. The Company opposed this Bill also in consequence of the right of veto being disregarded, but an agreement was ultimately come to in 1886, whereby they obtained the right to work the lines sought to be sanctioned, on terms to be agreed on, failing which the terms were to be settled by arbitration. Had the Company not been successful in its opposition, the Corporation would have had another Company with whom to reckon and negotiate at the close of the Company's lease. These hew lines included, as has been mentioned, Tramways in Parliamentary Road to Springburn, but not the High Street line, which was dropped. In entering into an agreement to work these lines, the Company had to keep in view the fact, which has been already referred to, that they had brought themselves under an obligation to Mr. John Russell not to compete with his omnibuses on that route. They had, therefore, to proceed to buy back, on the best terms they could arrange, the plant, stock-in-trade, and goodwill which they themselves had sold to Mr. Russell in 1874. A bargain satisfactory to both parties was eventually concluded. The various extensions, already named, bad brought the lines to 26 miles at the end of 1882, and the lines constructed under the Act of 1886 brought the total mileage to 31 miles of almost double line of Tramways.
Development at End of 1887.
At December, 1887, the Company owned 23,3 cars, 22 omnibuses, 2846 horses, and heritable property of the value of £180,422, and a revenue per annum from all sources of £217,155.
Ibrox and Govan Tramways.
In 1891 the Company entered on a lease of the Tramways lying between Paisley Road and Ibrox, and in 1893 of the Tramways between Paisley Road and Govan, both from the Commissioners of the Burgh of Govan.
Negotiations by the Corporation for Renewal of Lease The "Conditions of Let," &c.
In 1887, a Bill was promoted by the Company for the purpose of extending the scope of its articles and taking power to carry on the business of carriage hirers, undertakers, contractors, &c. This Bill the Corporation opposed, and after a large expenditure on the part of the Company, an agreement was proposed by the Corporation, and ultimately entered into between them and the Company, whereby within 5 years of the end of the lease, negotiations were to be entered into for a prolongation of the lease, and the period of six months was to be allowed for the completion of such arrangements. The Company's Bill was accordingly withdrawn.
In the second half of 1889, negotiations should have been commenced for a renewal of the lease, but it was not until 3rd September in that year that: the parties met for the purpose the first step in the negotiations being a demand on the part of the Tramways Committee of the Corporation for a copy of the list of shareholders of the Company, with the number of shares held by each, and that free of expense. This the Company furnished at no cost to the Corporation. What bearing this had on the negotiations the Company was not informed. Shareholders can form their own judgment on the matter. The result of the negotiations, if such they could be called, is now well-known.
After one or two preliminary meetings between the Company and the Corporation, the latter framed and submitted "Conditions of Let." Some delay in the matter took place on the part of the Corporation, owing to the occurrence of the annual municipal elections. In November, 1889, the parties met to discuss the conditions, of which the following is an epitome :—
1. The duration of the new lease to be five years from 1st July, 1894. ;
2. The Corporation reserved full power to alter, lift, and remove Tramway sidings, cross-overs, and others, without compensation to the Company for loss of traffic caused thereby.
3. The Company was not to take any steps with a view to altering their Articles of Association, or for extending the scope of their business as then authorised.
4. The Company was to renew, during the currency of the five years' lease, 14 miles of the 31 miles of line, and to maintain and repair the whole 31 miles from time to time to the satisfaction of the Corporation. If the Corporation did not call on the Company to renew the full length of 14 miles, the Company were to pay to the Corporation, on the expiry of the lease, £5,000 for each mile of unrenewed Tramway short of the 14 miles.
5. The Company was to pay, in advance, a sum of £12,000 per annum to form an accumulating fund, out of which the Company was to be repaid their outlays on maintenance, repairs, and renewals of the Tramways.
6. The whole of the Company's cars were to be constructed according to designs approved by the Corporation.
7. The Company was to adopt, experimentally, on certain agreed cars, signals for indicating that the cars were full, and, on being called on, to apply such signals to all their cars.
8. The working hours of drivers and conductors were not to exceed 60 hours per week. Conductors to be supplied with uniform, consisting of tunic, trousers, and cap, and drivers with coat and cap, Both classes of men to be provided with greatcoats in winter.
9. The Company was bound to obey in regard to certain details of working, the orders of an Inspector appointed by the Corporation. Every failure to comply with an order by this Inspector to make the Company liable to a penalty of £2. No provision was made for the Company being heard before exaction of the penalty.
10. The Corporation to have power to construct new Tramways, or purchase lines of existing Companies, to cross on the level the lines proposed to be let, and to apply any kind of motor to them, and the Company not to be heard before Parliament, either directly or indirectly, against these schemes.
11. The Corporation reserved the power to lease new or purchased lines to another Company, even although competing with existing lines, and no compensation to be paid or abatements made for such competition or abstraction of traffic. The Corporation also reserved the option to compel the Company to work these lines, and to pay 4 per cent, on the whole expenditure, and to give a 10 minutes service of 14 hours per day, whether it was required or not.
12. The Corporation reserved the right during the last two years of the extended lease to enter upon the Tramways in sections, with the view of adapting them to any other motor than animal power, and the Company to give facilities for carrying out alterations, but no compensation to be allowed for any loss occasioned thereby.
13. The Company to provide £60,000 of security.
14. The Company was to run cars in such numbers and at such speed as the Corporation might direct.
15. The Company was to pay all taxes on the Tramway lines including those exigible in respect of ownership as well as of occupancy.
The Company was invited, under these conditions, to make an offer of annual rent, accompanied by a deposit in cash or approved securities of £10,000.
Many of the conditions were regarded by the Company as impossible of fulfilment. The effect of some of them could not be defined except that they would involve, on the part of the Company, large liabilities and expenditure, of which it was impossible to forecast the limit. Others of them, which were definite in character, imposed obligations so onerous, that even with a nominal rent, they would alone have deprived the shareholders of any certainty of return. The defined and the undefined conditions together would, had they been accepted, have undoubtedly placed the solvency of the Company in serious peril. So far as a definite money value could be placed on these conditions, a careful estimate showed that they would cost £29,844 per annum, in addition to the rent expected by the Corporation, and estimating at nothing the undefined conditions, such as the power reserved to the Corporation to make and work new competing lines without compensation or abatement of rent, &c. It appeared to the Company, from the first meeting in connection with the "negotiations," that the proposals and dealings of the Corporation lacked the element of sincerity. It as difficult to imagine that a set of "conditions" relating to a large undertaking, so impracticable in their nature, and which pointed so certainly to financial disaster, was ever drawn up by one public body and presented to another for their acceptance. The Company, however, in the interests of shareholders, was compelled to deal with the conditions of let seriously. They drafted and submitted many modifications, but to no purpose. It was obvious, indeed, as the matter proceeded, that the agreement to "negotiate," which had been proposed by the Corporation, and entered into by them in 1887, had become a piece of waste paper, and that the affair could no longer be regarded as being in the category of business transactions. The Company was compelled to intimate that they could submit no offer under the conditions, and the "negotiations" came to a close in March, 1890.
Rejection of the Company's Offer to Introduce Mechanical Haulage.
In October 1891, the Company submitted to the Corporation an offer, of which the principal feature was that the Company would agree, under a new lease, to introduce gradually the use of mechanical power by any motors or by different motors, as might be fixed by the Corporation, the Company having meantime obtained from the Court, of Session, as afterwards explained, certain extensions of the Memorandum of Association, including power to work the cars by mechanical motors. This offer was made equally in the interests of the public and of the Company's shareholders, as the introduction of mechanical haulage was thought to be a progressive step, and greatly to be desired. The Corporation, on a variety of grounds, declined this offer. In discussions in the Town Council previous to this offer being made, the entrusting of the introduction of mechanical power to theCompany under a lease had, however, been strongly deprecated. It was said that the Company was a horse concern, and on that account, so long as the Company could avoid changing the motor, it would be their interest to retain horse power. The bulk of the Company's capital was sunk in horses and stabling and a large proportion of it must necessarily be sacrificed by any change from horse power to mechanical motors. The Company's offer, in spite of the fact that it disposed of these objections, was declined.
The Corporation Resolve to Work the Tramways as a Municipal Undertaking with Horse Power only.
In this same month, and previously, earnest discussions took place, both in the Town Council and especially at meetings of electors prior to the annual elections, upon the desirability of the Corporation themselves working the Tramways; but it was felt and expressed by many that the management of the large stud of horses involved a serious risk, and was a formidable objection to this branch of municipal enterprise. The objections were met by the statement—which often amounted to an absolute assurance— that the motive power would be mechanical and not animal power, and the objectors were silenced if not convinced.
On 12th November, 1891, the Corporation definitely resolved to undertake the working of the Tramways as a municipal concern on the expiry of the Company's lease on 30th June 1894. On a careful perusal of the Town Council debates, it would appear that two reasons chiefly prompted the Corporation resolution. The first was that the large dividends, which for the previous four or five years the Company had been able to declare—from the cheap rate of fodder and other exceptional circumstances—might thus be diverted to the municipal pocket; and the second, that a public advantage could be at once gained by running the Tramways by mechanical motors at the end of the lease, and so avoiding the inconvenience and disorganisation incident to a gradual change of motive power. The Corporation, however, subsequently resolved to begin working by horse haulage alone.
These discussions on the Company's offer of October, 1891, and on the Corporation resolutions now form an extraordinary commentary on the fact that the Corporation, in taking up the working of the Tramways, are themselves equipping the entire system with horse power, and are sinking the capital of the City in those assets of horses and stabling which they formerly described as being, a lasting barrier to the introduction of more improvecl. modes of haulage.
Corporation Offer to Buy Company's Plant, &c.
When some time had elapsed, the Corporation made overtures with a view to buying from the Company certain buildings and plant. To meet these proposals, and in response to a request by the Corporation, the Company furnished a statement of partciulars as to the capacity of their buildings, and the disposition therein of their stock and plant. The Corporation then made certain further offers, but having now become possessed of the particulars referred to, these offers were accompanied by a reservation as to future competition by the Company, which is referred to further on. The Company at once declined to consider a proposal burdened with such a, reservation, declared the correspondence to be closed, and asted that the particulars of the property and plant, which had, unavoidably, disclosed valuable information as to the Company's business, should be returned, along with all the printed copies, of it which the Corporation had made. The Corporation intimated that the original and the prints had been lost or mislaid with the exception of three or four, which they forwarded. Some time afterwards the original statement, having been found, was returned.
Close of Communication with the Corporation Remarks on Future System of Haulage.
At this point communication with the Corporation in regard to the future working of the Tramways may be said to have definitely and finally ceased, one Councillor remarking in debate, that the Corporation ought not to buy even "a leather strap" from the Company. Before quitting this period in the narrative, it ought to be said that it must remain a matter of deep regret that the Company's offer of October, 1891, to enter on a new lease and introduce mechanical power, was declined by the Corporation. The Company, by that offer, placed within the reach of the citizens of Glasgow an advance in the mode of working the Tramways such as could not have been offered by any other Company. Its financial position would have enabled it with comparative ease to effect the desired advance in tramway methods. It had freed its capital account from all extraneous burdens. Its assets were written down to a point so low that the figures expressing their value might safely have been left untouched for many years. The Corporation, however, fancied that the fact of the Company being owner of horses and properties suitable only for horses was a fatal objection to its being allowed to be placed in charge of carrying out such improvements. It is a fact, causing almost some feeling of humiliation, that the introduction of these improvements, which the Company's offer brought within reach, is now further off than ever. The Corporation is itself perpetuating, by its duplication of horse haulage appliances, the very hindrances to improvement which they professed desire to avoid. Mechanical traction can now only be introduced after delay of many years, or if introduced at an earlier time, while the Tramway assets are still standing at their first cost in the Municipal accounts, at a sacrifice of capital to an extent which cannot be other than.enormous.
Extension of Company's Articles of Association—Cab and Carriage Hiring Business.
Under the foregoing circumstances, the Company, in view of its ceasing to be lessee of the Tramway lines in the course of three years, took immediate steps (which have been mentioned elsewhere) to strengthen its position. In 1891, under the "Companies' (Memorandum of Association) Act, 1890," they applied to the Court of Session for power to extend its Memorandum of Association, which the Corporation strenuously opposed; but the Court granted the powers asked, and accordingly the Company commenced on 9th May, 1891, to carry on the business of cab and carriage hiring proprietors in the city and suburbs. They began with one stable and three offices; they have now 15 stables and 52 offices in connection with this business alone, and they are now lessees of the Central and Buchanan Street Stations of the Caledonian Railway, and of the St. Enoch Station, Glasgow and South-Western Railway, for cabs and carriages.
Development at End of 1893.
At 31st December, 1893, the Company owned 3,524 horses, and its receipts from all sources for the year amounted to £320,158.
The Company is preparing to run at the end of its lease of the tramway lines, in accordance with the agreement with the Corporation of Glasgow, a service of omnibuses built on the newest and most approved principles, and upwards of 70 of these have already been delivered, and consignments are being received every week.
Company's Present Financial Position.
The financial state of the Company is sound. Its assets have been extensively written down, e.g. :—The cars have been written down by £39,375, and now stand at £3,330, and this latter sum will be reduced to a nominal figure at the end of the current half-year. Harness has been written down by £2,335, omnibuses by £2,330, heritable property by £40,304, horses by £44,586 (from £37 13s. each) making the stud price £20, while the Company is now frequently buying horses of the value of four times that sum. Plant and furniture have been written down by £16,005.
Company's Right to Run Omnibuses The Corporation Propose its Relinquishment.
Reference has been made in the opening paragraphs of this statement to the fact that the Company, when instituted in 1871, paid to the British and Foreign Tramways Company the sum of £315,000—the entire capital of the Company—in return for which they received from the British and Foreign Tramways Company certain stabling, omnibuses, cars and horses, &c, some of which had been the property of the old Glasgow omnibus proprietors. These assets at their real value represented only about £165,000. The remaining £150,000 paid by the Glasgow Tramway Company to the British and Foreign Company was simply a price paid to be allowed to come into existence as a Company, and to secure from the British and Foreign Company the privilege of becoming the lessees of the Glasgow Tramways; and, as has already been said, the buying up of the goodwill of the omnibus system in Glasgow. The Glasgow Tramway Company paid this sum, in return for which they obtained not only an existence as a Company and the lease of the Glasgow Tramways, but they also got an entire monopoly of the streets of Glasgow, as the British and Foreign Company paid the omnibus proprietors large sums as goodwill. The Corporation of Glasgow, however, would buy nothing from the Company at the end of its lease unless they agreed not to compete against the Tramways—a right which, as has already been said, was specially reserved to the Company by arrangement between the Corporation and the Company under their original agreement! In asking the Company to retire from competition, the request meant their relinquishing for a mere passing consideration, a perpetual right which had cost the Company £150,000.
As a name had to be found in the Company's accounts for this sum paid for the goodwill of the omnibus proprietors, it was denominated "Lease Account." It has been systematically written down from half-year to half-year, till it became entirely extinguished at 31st December last, and it now no longer appears in the Company's published accounts.
The amount paid by the Company in dividend to its shareholders till 31st December, 1893, has been £451,208 6s. 8d. The cash in hand, investments, stores, and reserve fund at 31st December, 1893, amount to £82,727.
Company's Obligations under the Expiring Lease.
The Company, under its lease, entered into very onerous money obligations to the Corporation. It was bound to give to the Corporation in pledge, by absolute conveyance, £60,000 of heritable property to be held in security for the due fulfilment of all the terms of the lease; but the property now actually held by the Corporation cost the Company £129,232. The arrangements as to annual payments were as follows : —
(1) The Company paid the interest on the capital borrowed by the Corporation for the purpose of constructing the Tramways, and of obtaining the various Acts of Parliament. The entire interest paid under this heading from the commencement till 11th November, 1893, was £230,212.
(2) A rate of 3 per cent, on the same capital expenditure, which was to be put aside by the Corporation as a "Sinking Fund" for the purpose of redeeming that capital outlay. The intention of this arrangement was that a fund, with accrued interest, would so accumulate as to be sufficient at the close of the Company's lease to wipe out entirely the whole cost of constructing the original Tramways, and of obtaining the necessary Acts. Had the whole system of the Glasgow Tramways been constructed at once, this might have proved to be the case, and the Corporation of Glasgow would, in July, 1894, have been in possession of a Tramway system, so far as originally laid, as free of cost or outlay as if it had been a gift. The Tramways, however, were laid down in sections at somewhat widely separated dates, arid the full force of the 3 per cent, rate did not take effect until some years of the lease had elapsed. The sum paid by the Company, under this heading, from its institution till 11th November, 1893, was £134,857, without allowing for accumulating interest. The cost of Tramway construction and Acts, which it was purposed that this "Sinking Fund" (plus accrued-interest) would be sufficient to redeem, was £223,583. That was the amount expended by the Corporation in the laying of lines worked by the Company under its lease of 1871. Various additional sections were laid at dates ranging from 1879 to 1886, and these have been worked by the Company under agreements made from time to time quite apart from the original lease. The cost of these additional sections was £121,382. The total gross cost, therefore, of laying the Glasgow Tramway lines as they now exist in 1894 is £344,965. In the agreements referred to under which the additional and lately laid sections are worked by the Company, no provision—except as regards one trifling section of line—was made for a " Sinking Fund." The Company simply paid interest on the Corporation's outlay for construction. These more recently laid Tramways, however, ran for the most part into localities where, for several years, the traffic was not remunerative.
(3) A mileage rate, or wayleave, of £150 per mile per annum on all the Tramways within the municipal boundaries so far as not laid on turnpike roads. This arrangement has yielded to the Corporation down to 11th November, 1893, the gross sum of £43,229.
(4) A rate of 4 per cent, on the cost of constructing the lines, to form, in the hands of the Corporation, a Renewal Fund for the purpose of replacing the rails and relative causeway from time to time as they became worn out. The Company were bound to execute these renewals to the satisfaction of the Corporation. Their outlay in this respect they claimed, and received back out of the fund referred to. The amount expended by the Company under this condition of the lease, including ordinary repairs and maintenance, paid by the Company out of revenue direct, from the beginning till July, 1893, was £175,569. The Company also paid a fixed allowance to the Town- Clerk, the City Chamberlain, and the Master of Works,in fulfilment of a condition in the lease, that the Company were to keep the Corporation "free from all expense" in connection with the Tramways. The allowance to the Town Clerk was £200 per annum, to the City Chamberlain £50 per annum, and to the Master of Works £50 per annum.
The grand total expended by the Company since 1871 till November, 1893, under these four different classes of Corporation charges, including maintenance and repair of the lines and the allowances mentioned, was £583,867.
To put the matter in a more concrete form, and to show the annual money obligations of the Company under the lease, the following figures for one year might be quoted:—