Fares please! An economic history of the Melbourne & Metropolitan Tramways Board


The legislation [2] for Melbourne’s 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.

Nicholson Street bound MTOC cable tram no 237 in Bourke Street. Photograph courtesy State Library of Victoria Nicholson Street bound MTOC cable tram no 237 in Bourke Street, between Elizabeth and Queen Streets, by Kozminsky’s jewellery store.
Photograph courtesy State Library of Victoria.

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 [3] 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 [4] 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 [5] from both the Trust and MTOC. The Company’s 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 [6] 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 Company’s counter-claim for its transferred assets [7] 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 MTOC’s counter-claim was settled, the Board’s 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.

MTOC cable tram No 63. Photograph courtesy State Library of Victoria MTOC cable tram No 63.
Photograph courtesy State Library of Victoria.

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.


[2] There were a large number of Acts passed by the Victorian Parliament regarding the establishment, funding and operation of the Melbourne cable tram system:

  • Melbourne Tramway & Omnibus Company’s Act 1883 (no. 765)
  • Melbourne Tramway & Omnibus Company’s Branches Act 1883 (no. 784)
  • Melbourne Tramways Trust Act 1884 (no. 788)
  • Melbourne Tramway & Omnibus Company’s Additional Branches and Amendment Act 1884 (no. 815)
  • Tramways Act 1884 (no. 819)
  • Melbourne Tramways Trust Amendment Act 1885 (no. 836)
  • Melbourne Tramways Trust Amendment and Extension Act 1887 (no. 952)
  • Melbourne Tramways Trust Amendment Act 1889 (no. 1031)
  • Tramways Act 1890 (no. 1148)
  • Melbourne Tramways Trust (Borrowing Powers) Act 1890 (no. 1173)
  • Suburban Tramways Company Act 1890 (no. 1195)
  • Act to amend Tramways Act 1890 (no. 1218)
  • Melbourne & Williamstown Tramways Act 1891 (no. 1211)
  • Financial amending Act, December 1892 (no. 1278)
  • Financial amending Act, April 1903 (no. 1841)
  • Financial amending Act, November 1904 (no. 1954)

[3] 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.

[4] 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.

[5] 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:

Car houses  
Victoria Street Victoria Street, Richmond
Carlton Johnston Street, Collingwood
Clifton Hill Plenty Road, North Fitzroy
North Fitzroy St George’s 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
Engine houses  
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
Other properties  
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)

[6] 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.

[7] 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
Passenger capacity
Weight (tonnes)
Length (feet)
Standard trailer 472 34 2.5 22
Bogie trailer 56 46 4.5 30
Open trailer 2 52 2.8 24
Small trailer 4 22 2.0 17.5
Horse tram 2 34 2.3 22
Dummy 490 20 2.7 16