So long as these provisions applied to horse tramways only, the companies may not have found them specially oppressive, inasmuch as there was still a prospect of their being able to make a profit within the twenty-one-year period before they were compulsorily bought out at "scrap-iron" rates, while they could expect to realise the value of their stock of horses; though, in effect, the statutory obligations meant, even then, that towards the end of their tenure the tramway company did not spend a single shilling on the line more than was absolutely necessary to keep it in working order until the day of their eviction arrived, generally grudging even a coat of paint for the cars and refraining from any avoidable labour on the roadway. Individuals, and especially foreign visitors, unacquainted with the facts of the case, might well have considered some of the old tramway systems a discredit to the country.
When electric traction for tramway operation was introduced, there was a natural expectation on the part of the British public that the tramway companies would adopt it in place of horse traction. The companies were hampered, however, by the Act of 1870, which remained in force though a complete revolution in the conditions of street rail-transport was being brought about.
The substitution of electricity for horse-power meant (1) the provision of power stations, sub-stations and new car depôts; (2) the fixing of overhead wires, together with fresh track-work, in the streets; (3) the use of a heavier type of car; and (4) the running of a much more frequent service, since only under these conditions can an electric tramway possibly be made to pay. All these things involved a very substantial increase in the capital outlay, and companies may well have hesitated to incur so great an expense with the prospect of only a twenty-one years' tenure before them; while the position was even more hopeless in the case of companies whose tenure had already half expired.
The dissatisfaction of the public when they found that the tramway system of the country was not being brought up to date, and compared most unfavourably with tramway systems abroad, gave to the local authorities an apparent justification both for providing and for operating tramways as a special phase of municipal enterprise. At the time the Act of 1870 was passed it was assumed that, although local authorities might construct or acquire tramways, they would certainly lease them to private companies to operate.[[61]] In proportion, however, as the movement for municipal enterprise developed, local authorities were the more inclined to operate tramways in addition to owning them. There was no general Act giving them authority so to do, but the difficulty was overcome by the insertion in Local Bills of clauses giving to the local bodies promoting the Bills power to operate their own tramways, the reason advanced being that there were difficulties in the way of leasing the lines to companies on satisfactory conditions.
Matters were not left entirely in the hands of the municipalities, various tramway companies having sought, as their twenty-one years' tenure came to a close, to make such arrangements as would warrant an adaptation of their existing system to electric traction; while other companies applied for powers to construct new lines or extensions of lines on the same system. Parliament had certainly sanctioned a longer period of tenure than twenty-one years when the promoters could make an arrangement to this effect with the local authorities concerned; and it was hardly likely that a company would incur the great expense of constructing an entirely new tramway, with electrical installation and other requirements all complete, unless they had some guarantee of a longer tenure than the statutory period. But these very factors enabled the local authorities concerned to control the situation; and their power to exercise this control was made still more complete by the operation of Standing Order No. 22, which applied to Private Bills for tramway schemes requirements similar to those of the Tramways Act as regards the obligation on promoters to obtain the assents of local and road authorities.
These authorities had thus an absolute veto over any new tramway schemes, and such veto might finally rest in the hands of a single local authority, controlling a sparsely populated section of the proposed mileage, yet having, perhaps, the controlling voice in being the one authority whose approval was needed to make up the requisite two-thirds.
There had been some expectation on the part of tramway promoters that the general position would be improved by the Light Railways Act, 1896, many light railways being indistinguishable from tramways. Under this Act the assent of the local and road authorities is not required, and the frontagers' veto was done away with by it in the case of light railways; but authority to oppose was given to railway companies, and in practice the Light Railway Commissioners held that they ought not to authorise a tramway as a light railway unless it connected the area of one local authority with another. For these and other reasons the Act was not so beneficial in regard to tramways as had been anticipated.
In the case of tramway companies it became a matter either of paying to the local authorities the "price" they asked for their assent, or else seeing the schemes fail at the start, without any chance of having them even considered on their merits. How local authorities have used—or abused—the power of control thus possessed by them is suggested by some remarks made by Mr Emile Garcke in an article published in "The Times Engineering Supplement" of July 25, 1906, where he says:—
"The right of veto is exercised not so much with the desire to destroy a projected enterprise, but rather to exact the utmost conditions which a promoter will accept sooner than abandon the project. When a scheme is proceeded with in spite of these exactions it is taken as evidence that the conditions imposed have not been exacting enough; and whenever the operating company has occasion subsequently to ask the local authority to approve anything, the company is expected to offer more than commensurate consideration, although the object for which the approval is desired may be primarily for the benefit of the public. All these obstacles imply increased capital outlay or increased working costs, and perhaps both. If, notwithstanding these conditions, the company earns a moderate profit, it is accused of striving only after dividends to the prejudice of the public. If non-success of the enterprise follows, then the company is accused of being over-capitalised and mismanaged, and it has come to be considered an impertinence for a company to offer ever so mild a protest."
On the same subject it is stated in "The Dangers of Municipal Trading," by Robert P. Porter (1907):—