CO129-453 - Acting Governor Claud Severn - 1919 [1-3] — Page 356

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8.

Under the Tramway Ordinance, a Royalty is now paid to

the Government of 5% of the working profit but for the first 10

years after the opening of the tramway this was not the case. The

Company is however prepared to regard the Kowloon tramways as an

extension of its present lines and from the outset to include

the Revenue therefrom in the calculation of Royalty.

9.

From observations made in Kowloon I would observe that

the potential traffic there for a long time ahead does not appear

to be large, and it would only be by the most economical working

and by taking advantage of its present plant and resources that

the Company could make a tramway system there remunerative. It

is indubitable that the tramway could not be worked as economically

by the Government as by this Company. In the first place the

Company has the advantage of having at its disposal a staff of

Europeans with long experience of tramway work and would save in

management expenses, It would probably only be found necessary

to employ one additional European, whereas under the Government

a complete new staff would be required. Further, the Government

would require complete workshops for the repairs to cars, whereas,

if the Company undertakes the work, the larger repairs would be

done at the existing workshops of the Company in Hongkong, leaving

only minor adjustments to be attended to in Kowloon. This would

mean additional saving in working expenses.

10.

A further important advantage which would accrue to the

public from the tramway being in the hands of this Company is that

the experienced staff referred to have not only long experience

of tramway work, but also of local traffic requirements and of

obtaining the best results from the skilled native Chinese labour

which has to be employed.

11.

If the Government construct and work the tramway, they

will almost inevitably be faced with a loss on working for a

number of years. If the concession is granted to the Company, the

Government are immediately in receipt of Royalty, the roads on

which the track is laid, (and for 18 inches on either side) are