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The Bombay Tramway Company Limited was formally set up in 1873. The Mumbai Municipality was given the right to buy up the concern after the first 25 years or after every period of 7 years thereafter. After this contract was entered into between the Bombay Tramway Company and the Municipality, the Government of Mumbai enacted the Bombay Tramways Act, 1874, under which the Company was licensed to run a tramway service in the city. The tram-cars were of two kinds-those drawn by one horse and those drawn by two. In 1905, a newly formed concern, “The Bombay Electric Supply & Tramways Company Limited? bought the Bombay Tramway Company and the first electrically operated tram-car appeared on Mumbai’s roads in 1907. The passing years aggravated the problem of rush-hour traffic and to ease the situation, double-decker trams were introduced in September 1920.

Mumbai saw its first bus run on 15th July 1926. The people of Mumbai received the bus with enthusiasm, but it took quite sometime before this means of conveyance really established itself. For several years, it was looked upon as transport for the upper middle classes. Those were the days when the tram was the poor man’s transport, carried one all the way from Sassoon Dock to Dadar for a mere anna and a half, that was nine paise. The bus fare for the same journey was four annas, that is 25 paise.