The legislation  for Melbournes cable tram system created the Melbourne Tramways Trust in 1883, which built and owned the necessary infrastructure. The members of the Trust were those municipalities serviced by the cable trams. The operation of this infrastructure was then leased to the Melbourne Tramway & Omnibus Company (MTOC), which had to supply the staff, rolling stock, tram depots and cables. This lease was due to expire on 1 July 1916.
During the first decade of the twentieth century, the total population of Melbourne was growing, as was the suburban population density. The cable tram system was hugely successful, so that by the end of the decade MTOC could pay a 20% share dividend as well as giving every employee a 5% bonus. It was clear that by 1914 MTOC would complete payments on the Trust debenture and sinking fund, and that the final two years of the lease would generate huge profits for the company.
These profits proved very tempting for the State Government, so a major objective of the 1911 Royal Commission on the Railway and Tramway System of Melbourne and Suburbs, as well as the 1911 Royal Commission on Tramways Fare Revision, was to examine how the profits could be transferred to the Government. The second Royal Commission was supposedly an investigation into fare structures, but much of the effort was spent on determining whether the Trust could acquire the company before the end of the lease. The Royal Commission found that the contract between the Trust and the MTOC was iron-clad, and guaranteed the Company cost-free infrastructure for the duration of the lease as long the sinking fund  was maintained.
Given the proliferation of electric tramways in Melbourne, the first Royal Commission recommended that these, together with the cable tram system, all be brought under a single authority. The Commission also recommended conversion of the cable trams to electric traction. An initial step towards these recommendations was the foundation of the Melbourne Tramways Board by State Parliament passing the Tramways Board Act 1915 (no. 2818). The Melbourne Tramways Board assumed the liabilities  and assets of the Trust and took over the operation of the MTOC cable trams, excluding the independent Northcote City Council line, from the end of the MTOC lease. The objective of this interim Board was to administer the business until a decision could be made on the long-term arrangements for operation of all tramways within Melbourne. The Board also acquired an extensive property portfolio  from both the Trust and MTOC. The Companys employees transferred to the Board, and it could now look forward to the burgeoning profits being generated by the cable trams.
The first task of the interim Board  was to assess the condition of the system and ensure that the Company had fulfilled the covenants of the lease. The Board alleged that MTOC had failed to do so, and lodged a claim against MTOC for the sum of £368,000. However, the Companys counter-claim for its transferred assets  had to be settled first. This counter-claim for £469,218 went to arbitration, where the level of compensation was assessed at £335,000, which was not accepted by either the Board or MTOC. An extensive amount of litigation eventually resulted in the claim reaching the Privy Council before it was settled at the originally arbitrated sum on 16 April 1919.
Once MTOCs counter-claim was settled, the Boards claim then went to arbitration and was settled at a total amount of £115,000. MTOC was finally wound up on 30 June 1919, providing a very lucrative return for long-term investors.
While this dispute was going on, the interim Board had to continue to operate the cable tram system. The Board was reluctant to incur capital expenditure, so only necessary works were carried out and no major initiatives were undertaken. These necessary works included the construction of new dummies and trailers, which was funded out of income rather than borrowings. So the interim Board spent the three years of its existence in masterly inaction, enjoying large surpluses generated by its effective monopoly on urban street transport in inner Melbourne.
 The sinking fund was maintained as a reserve to settle the debentures of the Melbourne Tramways Trust on their maturity (30 June 1916). These debentures were the instrument used to fund the original construction of the Melbourne cable tram system.
 The liabilities of the Melbourne Tramways Trust were debentures to the face value of £450,000 which matured on 30 June 1916, met in full by realisation of the sinking fund plus £5,228 contributed by MTOC.
 The interim Melbourne Tramways Board acquired a large number of properties from the Melbourne Tramways Trust and MTOC to support its operations. These properties were mostly freehold, except where noted below:
|Victoria Street||Victoria Street, Richmond|
|Carlton||Johnston Street, Collingwood|
|Clifton Hill||Plenty Road, North Fitzroy|
|North Fitzroy||St Georges Road & Holden Street, North Fitzroy|
|Nicholson Street||Nicholson Street, North Fitzroy|
|North Carlton||Rathdowne Street, Carlton (part leasehold)|
|Brunswick||Sydney Road, Brunswick|
|North Melbourne||Flemington Road, North Melbourne|
|Port Melbourne||Beach Street, Port Melbourne|
|South Melbourne||Victoria Avenue & Beaconsfield Parade, South Melbourne|
|Esplanade||Acland Street, St Kilda|
|Brighton Road||Brighton Road, St Kilda|
|Prahran||Chapel Street, Windsor (includes weatherboard cottage)|
|Toorak||Chapel Street, South Yarra|
|Richmond||Bridge Road, Richmond (leasehold)|
|Royal Park||Royal Park|
|Fitzroy||Victoria Parade & Brunswick Street, Fitzroy (includes weatherboard cottage)|
|Richmond||Bridge Road & Hoddle Street, Richmond|
|Nicholson Street||Gertrude Street & Nicholson Street, Fitzroy|
|Carlton||Johnston Street, Fitzroy|
|North Carlton||Rathdowne Street & Park Street, North Carlton|
|Brunswick||Brunswick Road, Brunswick|
|North Melbourne||Queensberry Street & Abbotsford Street, North Melbourne|
|South Melbourne||City Road, South Melbourne|
|St Kilda Road||St Kilda Road & Bromby Street, Melbourne|
|Prahran||Toorak Road & Chapel Street, South Yarra|
|Windsor||Wellington Street, Windsor|
|Head Office||673 Bourke Street, Melbourne|
|Workshops||Nicholson Street, North Fitzroy (includes brick cottage)|
|Store yard||Arnold Street, South Yarra|
|Store yard||Victoria Street, Fitzroy (includes feed works)|
|Shops (2)||Bridge Road, Richmond (adjoining engine house)|
|Store yard||Victoria Road, Fitzroy (adjoining engine house)|
|Store yard||70 Cecil Street, South Melbourne (adjoining engine house)|
|Tar Distillery Works||Flinders Street Extension, Melbourne (leasehold)|
 The first and only Chairman of the interim Melbourne Tramways Board was Colin Templeton, later a foundation member of the Board of the M&MTB until his retirement in 1935.
 The assets of MTOC were mainly the rolling stock, car depots and other equipment. The rolling stock at takeover by the Melbourne Tramways Board consisted of the following vehicles:
No of cars