form the basis of the purchase price. The municipality paid £420,000 ($2,045,000). Lost taxes and sinking fund payments amounted from the beginning to £17,000 ($82,800); that is to say, to £4,000 ($19,000) more than the profits realized by the company in 1897. In March, 1901, after fifteen months of operation, the deficit was £4,175 ($20,332); in 1902-1903 it had reached £4,813 ($23,239). The number of consumers was 5,000, out of a population of from 600,000 to 700,000; and this small number was being supplied at the expense of the whole body of taxpayers.

It is not enough for an industry to be municipalized in order to bring in customers. Bath bought out, for £24,500 ($119,315) an enterprise which had cost its founders £43,000 ($209,400); but municipalization did not furnish it with consumers. In 1900-1902 the plants upon which the municipality had expended £7,800 ($38,000) were out of use, and the engineer estimated the sum necessary to put them back into condition at £70,000 ($341,000). The town found no company willing to take up the business. It therefore continued to operate, but at a loss. In 1909-1910 it had lost £1,335 ($6,500) and in 1910-1911 £157 ($764).

A local government board return has been devoted to accounts of municipal enterprises during the four years from 1898 to March 31, 1902. We give below the results of the gas and electrical enterprises to March 31, 1902:

'The Times (London), September 5, 1902.

Gas, then, yields a profit. The gross profit was £1,289,000, or 5.4 per cent. on the capital invested. Any municipality might hope to obtain this gross profit.

But if we deduct the amount necessary to pay off the capital and pay interest, we would require a net revenue of 4.8 per cent. on the capital invested. This is allowing 34 per cent. for interest and an amortization period of 32 years. Then, if 4.8 per cent. be deducted from the 5.4 per cent. of gross profits, we find that the profit to the municipalities is about 0.6 per cent. Thus, the municipalities can reckon that they make a profit of a little more than 0.5 per cent. Such are the dazzling "results of numberless experiments" in England.

But Major Darwin shows that an interest rate of 34 per cent. is very low, and that it has a tendency to increase. It is true that the period of amortization can be lengthened, but a long period of amortization would be only an added burden.

Further, Major Darwin makes a relative calculation, based upon the gross profit of municipal operations of gas plants for several periods.

In these calculations the gross profit for the last period is lower than that during the years 1898-1902. Major Darwin therefore concludes:

"If we consider that local governments will have to pay 4.8 per cent. during the 32 years of amortization of capital, it can then be said that the profits on municipal operation of gas plants will vary from zero to a trifle more than 2 per cent. at the maximum. In any event, the later municipalizations of gas are less profitable than those which preceded them."

On March 31, 1904, out of 190 municipal electric enterprises 116 claimed a profit, while 74 reported losses amounting to £80,504 ($392,054). The last report of Municipal Trade is dated June 2, 1909, and it includes only a few Scotch cities. It gives no details regarding capital, and only the annual receipts and expenses. In Edinburgh, in 1902-1903, the excess of gas receipts was £3,303; in 1903-1904 the deficit was £3,397; in 1904-1905 the excess was £5,965, but it fell again in 1905-1906 to £1,460.

For electricity the excess of receipts was £14,532 in 1902-1903; in 1903-1904, £23,997; in 1904-1905, £21,143; in 1905-1906, £16,539.

In Glasgow excesses of receipts occur regularly, but they are subject to extreme variations.

The municipalities which operate electrical plants have an excellent customer in their tramways, to the operation of which electricity was first applied in 1885.

According to the Municipal Year Book for 1912 local authorities to the number of 140, having obtained from the Board of Trade the "orders" provided for by acts of 1882, 1888, 1889, and 1909, turned them over to private companies, whereas only 20 municipalities had made use of the privilege to buy out companies and substitute public for private operation.

In London the City Corporation, the Camberwell Borough Council, and the Lambeth Borough Council have the right to buy existing plants in 1927, and the London County Council in 1931.

In 1910-1911 the following 47 local authorities, which were operating 16 electrical installations, were doing so at a loss:

Acton, Alloa, Bangor, Barking Town, Barnstaple, Bath, Batley, Beckenham, Bury St. Edmunds, Buxton, Cambuslang, Clacton, Cleckheaton, Dorking, Dudley, Elland, Farnsworth, Frome, Gillingham, Gravesend, Hastings, Hereford, Heywood, Hove (Aldrington), Kendal, Kingston-on-Thames, Kirkcaldy, Leek, Loughborough, Maidstone, Middleton, Morley, Paisley, Rathmines, Redditch, Rhyl, Stalybridge, Hyde, Mossley, Dukinfield, Surbiton, Todmorden, Torquay, Wakefield, Weymouth, Whitby, Whitehaven, Wigan, Wishaw, Worcester.

A number of local authorities were operating at a loss during the preceding year.

CHAPTER XII

TRAMWAYS IN GREAT BRITAIN

Tramways in Great Britain.-Opposition of the Municipalities first to Tramways, then to the Omnibus Automobile.-The Light Railways Act and the Municipal Journal. The Tramways of Glasgow and the Street Railways of Boston.-Birmingham.-The Tramways in the United Kingdom and in the United States.—Paralysis of Private Undertakings and Weakness of Municipalities.-Policy of Arbitration and Privilege.-Sheffield: Robbing the Poor to Give to the Rich.-The London County Council and the Tramways.—Advantages of Employees.-Reduction of Transportation Rates at the Expense of the Taxpayers.-Apparent Profits and Actual Losses.-Situation of the London County Council Tramways.

When in 1870 Mr. Shaw Lefevre (the present Lord Eversley) introduced a bill granting to municipalities the right to construct tramways, he declared that his object was not to "authorize municipal operation."

However, certain municipalities gave the bill a significance that its author never intended, and by interfering with the construction of tramways by private companies, further action on the part of the towns themselves was, of course, indirectly promoted. The bill gave to local authorities the right to purchase at the end of 21 years, "by paying the value of the tram