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proportion is regularly added to or deducted and expenditure in a very satisfactory way was trom a known sum of money, or any fixed | closed, and after lingering for 12 years more it quantity, at uniform intervals, it can be was wound up. The logarithmic curve became represented either by an ascending ora irregular and impossible in the 18th year and descending curve. The rate at which the showed that reconstruction or winding up curve falls depends on what is called the ought to have been applied in its 20th year. logarithmic decrement.

The diagram show's also that as soon as we Now when we take such industries as I have can determine the logarithmic decrement (K in indicated above, and graphically record from the equation) we can forecast the business in year to year the relations between capital, any future period if no price-cutting rival enters revenue, expenditure, and profit, we possess a the field. On the other hand we may have permanent and continuous diagramatic history fresh developments introduced which add new of the growth, decay, or conduct of the busi- sources of income. The curve may become ness. It indicates the changes in time. We a straight line. It may even as: end. This is have a running view of progress and a clear occurring with the modern electric light inindication of fall. The signals are as rapid dustry. Fresh markets are opening out in and as certain as those of the barometer in , electro-chemistry, heat and power. Power showing changes of weather. They require and automobiles are “a potentiality of observant and practical translation. They wealth beyond the dreams of avarice," and give us indications of laws. They enable us certainly beyond the scope of the matheto forecast and even to prophecy.

macician. Fig. 1.

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The average growth of business per year is

1.-WATER. the total increase during any period of years Water is the oldest of these industries. The divided by the number of years. The growth New River Company for supplying London would be constant and uniform if the business with water for drinking purposes, originated received equal increments in successive years, with Sir Hugh Myddelton in the reign of but the components of most businesses are | James the First--300 years ago. The supply variable quantities, and the increase per annum of pure water which is so necessary to the itself is also variable. It is, in fact, in most health and comfort of every human being of the cases, a diminishing quantity due to the community, is essentially the proper function approach to saturation in the possible amount of the municipality, and in the majority of of business attainable. We can represent this cases it has been carried out by the local growth as a diminishing percentage perannum, authorities. Many companies, however, exist, and this gives us the descending logarithmic especially in serving the metropolis. It is, curve.

however, not a speculative or competitive Fig. 1 is a curve of an imaginary business. | business. It is conducted under strict statuIt shows that it took two years to be established. tory powers. The amount of water supplied It then began to show profit and it flourished varies directly with the population ; its income steadily for the next 16 years when some new depends on the rateable value of the district; rivalindustry made inroadsinto its business. The | its growth is steady, and its prosperity fixed. capital which had been growing with its revenue There is, however, one branch of it that is

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The capital is divided thus

illustrates a diminution. Fig. 3 (p. 11) shows Shares ...

6580,000

this. The business has been too long established Debentures ......

to show the logarithmic law, but it show's strange ccccrrr...... 120,000 Reserve ......

....

50,000
50,co

ups and downs in the variations of profit, and

remarkable jumps in the increase of capital. ... £750,000

The curves show the increased rate of growth The diagram shows how admirably the busi- in the business since the introduction of the ness has followed the logarithmic law, how | electric light. steady has been its progress, and how well its! The following are the last available statistics prosperity has been maintained.

I of the two big London companies :

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II.-GAS.

III.-RAILWAYS. Gas commenced with the 19th century, and The curves (Fig. 4, p. 13) show that the comwas in a flourishing condition of steady pro- mercial soundness of the railway interests in gress and steady indolence arising from great | the United Kingdom is in anything but a prosperity and fat dividends when electricity satisfactory condition. appeared as a rival in 1878, and gave its The mileage of railways open is 22,078. proprietors a very serious fright and a very The capital invested is £1,195,564,478. rough shaking. It is, however, remarkable The revenue is £ 106,558,815; ratio to capital, that electricity has proved the friend and not 8.9 per cent. the enemy of gas. It has created an appetite The expenditure is £07,489,739 ; ratio to for more light, and has taught gas managers revenue, 63-3 per cent. that if they are to keep their businesses The profits are £39,069,976; ratio to capital, together they must look out for “fresh woods 3:27 per cent. and pastures new.” Hence, gas for heating, There is no apparent allocation of this differcooking, and power purposes has been much ence to depreciation, reserve, or redemption pushed. The supply of gas has not been of capital. checked, but, on the contrary, its rate of growth While capital is increasing, and the growth is actually increasing. The advent of the of traffic both in passengers and goods is incandescent mantle has had much to do with satisfactory, the rate of growth of revenue is this. Not so its profits where the business is in stationary, and the difference between exthe hands of private enterprise, for the diagram penditure and revenue is seriously diminishing.

The consequence is that dividends are also diminishing.

This state of affairs would be very serious if we did not see daylight ahead.

What are the causes of the present depression?

The first cause is unquestionably Parliament, which legislates for the railway world without the least regard to the science of business or the ordinary requirements of commercial prudence. The enforcement of cheap fares and workmen's trains at the expense of the shareholders is pandering to a sentiment, and savours of a bribe to catch votes.

The operation of the Railway and Canal

application of new regulations. The result of the control of this Department has been most beneficial to the safety of the travelling public. The lives saved annually are untold. We have every reason to be proud of the security of our lines. But the finances of our railway companies have been sadly dislocated by this enforced incessant expenditure, and our managers are much exercised to determine what to charge to capital and what against annual revenue.

The local authorities and municipalities also are insatiable in their unscrupulous assessment for local taxation. The growth of this drain on the resources of the companies is

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Traffic Acts of 1888 and 1892 forbids our | alarming. The taxation of railways has inrailways being worked on commercial lines creased 75 per cent. in the last decade, while so far as goods and mineral traffic are con- that of the whole community has increased cerned. What is to be said of a law only 39 per cent. which places an impediment in the way of Trade unionism has generated a serious reducing rates by enacting that they may | labour trouble. Shorter hours, greater pay, not be restored, if their reduction be found enlarged staff are very desirable for the men not to have led to the expected result, i themselves, but these advantages are not to be without liability to an expensive law suit ? acquired if they lead to financial deadlock and Or to the refusal of permission to restore the to the disregard of the dictates of commercial rate to its old figure without such elaborate law. The men cannot obey two masters, ror proof of change of circumstances as shall can the first masters submit to the external satisfy the Railway Commissioners that it management of their business by self-constituted is right to do co? Other industries could second masters. If this were submitted to, not live if exposed to such conditions, and chaos and bankruptcy would be the result. their effect is most detrimental to our railways. The railways are now subject to a very

The Board of Trade is ceaseless in its serious competition in the introduction of electric tramways in their suburban districts. i panacea for every evil. There is little sign The American railway companies have recog. | at present of our being able to work main lines nised this, and they have not only electri- economically by electric traction. fied their suburban lines but they have When, however, a line worked by steam is developed a tramway system themselves to congested, and you can get no more trains act as feeder to their own system, and to through, as it is on our Metropolitan underenable them to close stations and transfer ground lines, and as it is on many suburban passenger traffic to street tramways.

lines, then electric traction comes in to increase Automobiles will also certainly interfere the speed of running, to enlarge the carrying with passenger traffic.

capacity of the line, and to reduce the working But the most serious element of financial expenses. , disturbance is competition among the great! The true remedy is co-operation and com

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railway companies themselves. The demand bination among the great railway companies for increased speed and greater comfort has themselves, and if the railway companies do led to new stations, big hotels, larger loco- pot realise this fact, and set to work to put motives, superior coaches of greater capacity, their houses in order, they will find that the heavier rails, straightened curves, revised | last and least desirable, but most effective gradients, reduced distances. Capital has measure will be enforced upon them by public been increased without the productive in opinion---the financial control of the railcrease of traffic or earning power, for the ways by the State. expenditure is caused chiefly by the necessity to hold one's own.

IV.-TELEGRAPHS. Now, what is the remedy? I am no believer Fig. 5 is a diagram of the business of the in the conception that electricity is to be the Electric and International Telegraph Company

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