TRANSPORT 6 , C " PROSPECTS As I both hoped and
expected, the Railway Rates Tribunal has granted the application for a 5 per cent increase in London fares and the market has registered its apprecia- tion by hoisting London Transport " C " stock from 72 to 83. The Board is, of course, the principal beneficiary of the Tribunal's decision, as it should get about £732,000 of the estimated net increase of £1,179,000 in the pooled receipts in a full year. Allowing for the fact that last year's 4 per cent. dividend on Transport " C " was met only by drawing on provision for income-tax no longer required to the extent of £230,000, I calculate that if the anticipated benefits are fully realised, the full standard rate of 51 per cent should be covered with about L roo,000 to spare. That, of course, applies to 1939-40 ; I do not look for any higher dividend than 4 to 4+ per cent. for the current financial year ending June 30th.
Will this solution appease Mr. Heaton and his Committee of Transport " C " stockholders? I think it ought and will, since there is much in the Tribunal's findings which recog- nises the case which Mr. Heaton has built up. It is stated, for example, that in interpreting the Act of 1933 the Tribunal can find no warrant for the contention that the public interest, as opposed to the financial interests of the Board's stockholders, should be regarded as paramount in determining the application of the receivership clause. The Tribunal also rejects categorically the construction which has been put upon the Act in some quarters that the Board is not bound to pay the standard dividend more than once in three years ; it also rejects the suggestion that with the object of preventing the " C " stockholders making appli- cation for receivership, the Board should over-appropriate in one year and under-appropriate in another. These are common-sense views which, I am confident, are as acceptable to the Board as to the " C " stockholders. Now that they have been expressed, I fed that one can budget. on the standard rate of dividend with some assurance after this year. On a 51 per cent. basis the " C " stock offers a potential yield of nearly 7 per cent. at 83. It should be held for further improvement.
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