The Press Monday, June 29, 1925. Railway Finance.

Press, Volume LXI, Issue 18420, 29 June 1925, Page 8

The Press Monday, June 29, 1925. Railway Finance.

The report of the Railways Board which was issued last week may be welcomed as a sign that the- Board is seriously taking in hand tho finances of tho railway system. It was, of course, high timo that this was clone, for the railways hare been losing money long enough. The Board explains quito frankly that tho recovery which must be mado is a largo one: indeed, to prevent tho system from losing money this year, tho revenuo must improve by no less a sum than £G50,000. This sum includes the 192425 deficit of £90,000; insurances, renewals, etc., and additional charge in respect of subsidy to tho superannuation fund, amounting to £340,000; and additional interest on capital £220,000. The last item is explained by the fact that the interest on capital which the system is expected to earn is to be 4& per cent, instead of 32 per cent. It is a good many years since the idea of a "policy rate of interest" Avas (bought of —an idea which " The "Press" has consistently condemned as unsound and conducive to inefficiency in management. Originally fixed at 3 per cent., the " policy rate " has been increased by the Reform Government to 3if per cent., but even this higher rate lias been lower than the interest actually chargeable in respect of the railway loans. The bad idea that it will be sufficient if the railways earn somo arbitrarily fixed rate of interest less than the actual rate paid out of the Consolidated Fund is now, apparently, to be abandoned, and tho system will be expected to earn the interest really paid out. This is a most wholesome. change of policy. As we have suggested the idea of a "policy rate" has worked enormous mischief jn the past twenty years, for if tho railways had always been required to pay their way the real deficits which inefficiency would have produced, and which could not have been concealed or explained away, would many years since have caused an irresistible public demand for those measures of improvement which - are now so late in tho day being undertaken; and the country would have been saved millions of pounds. Since the new fares and freights are to be submitted for discussion by all those interested —and this is something of an innovation, and a very good one —it is not necessary for us to offer any comment upon them just now. But there are two points which must be noted. The first is tho discovery by the Department that nowadays good service is reckoned more important, and is more anxiously desired, by the -users of the railways than mere cheapness. They would like cheap service as well, of course, but efficient service—service that really takes account of needs —is the prime desire of the Department's customers. Fortunately there is now good reason for' believing that tho Department will strive towards that understanding and efficient conduct of the system which has been wanting for decades. Tho second point is that expenditure is as important a consideration as revenue. The Board has not overlooked this fact, but it does not receive that prominence in the report which one might have expected. The system will not become a sound paying concern if a vigorous and unremitting policy of wasteelimination does not supplement tho strengthening of revenue.