The Dominion. THURSDAY, JULY 16, 1908. RAILWAY FINANCES.

Dominion, Volume 1, Issue 251, 16 July 1908, Page 6

The Dominion. THURSDAY, JULY 16, 1908. RAILWAY FINANCES.

1) In the Railways Statement, which was presented to Parliament on Tuesday, no special reference is made to the impending completion of tho Main Trunk Railway. ' Before discussing the Statement, we may express again the satisfaction that everyone must feel at the completion of this project, and at tho end of the need for criticism upon its slow progross. Having said so much, we find really' little cause for rejoicing in the figures of which tho Statement almost entirely consists. Tho total earnings for tho financial year 1907-8 amounted to £2,761,938, and the expenditure to £1,949,759, so that the "net profit on working" was £812,179. This is an inciease upon the " net profit" for 1906-7 of the insignificant sum of £61, surely a 'Very disappointing result when the year saw tho train miles run grow by 295,820 miles, and the capital cost of open lines rise from £23,504,272 to £24,365,647. The percentage of " net profit" to capital, which was only 3.45 per cent, for the year 1906-7, fell to 3.33 per cent. Tho causes for tho falling-off are 1 by no means clear, although it is attributed in the Statement to " tho incroasod train-mile: age," which, it is explained, " represents additional facilities to meet the requirements of the business and the public convenience, and has,cost over £81,000." As froight of all kinds, however, showed an incroaso in tonnago of nearly 150,000 tons, while thore was a reasonable increase in tho carriage of passengers and live stook, it would almost appear that matters aro so arrangod that any provision for traffic expansion means a drop in the oarning power of the system. Obviously, there is something wrong with the administration of the system somewhero, and the Government must really tako in hand a position 1 that grows serious. Some of tho sections aro run at a heavy, annual losb—the Kaihu and ICawakawa sections actually fail to show even a net profit on working, while tho Nelson section returns only 1 per cent, in net revenue to meet tho interest charge of from 3.75 to 4 por corit. An important paragraph of the Statement is that which shows that £333,386 spent on " additions to open lines " was charged to capital. Had this sum been charged against revenue (included in tho working, oxponses) the ." net profit" would havo been £478,793. Taking the rato of interest on the capital spent on open lines at per cent.—it is probably more, but wo' take' the absolute minimum—it will bo seen that tho interest to be paid was 3| per cent, on £24,000,000, or £900,000. There would, thcreL/e, bo a.final.sum of £421,207, the difference between the real net revenue and the interest due to tho moncy-lendor, to bo found by the general taxpayer. It will bo objected, of course—and not without somo roason—that it is unfair to insist thq,t all the things on which'the £333,386 loan money was spent should have been provided, out of revenue. Perhaps some of it might reasonably be allowed to go as a charge on capital, but footwarmors, fencing, additions to dwellings, new machinery for workshops, drainageworks, stone-crushing plants,:and similar works should certainly have been borno by the business. And'a proportion, at leastj of tho new rolling-stock would havo! been built out of revenue by a,ny other Government. The Prime Minister recently quoted an ex-commissioner of the yictorian Railways to support tho practice of charging improvements to capital, but as Professor Le Rossignol pointed out in an articlo that we lately reprinted, tho Victorian. Commissioners reported in 1906' in favour of devoting profits "towards liquidating liabilities chargeable on revenue," and towards providing funds for additions and improvements to open lines and for rolling stock! thus to some extent " obviating tho borrowing of additional money by the Stato for such purposes, thereby increasing the debt of tho State." When the next occasion offers, we trust: that the House will require from tho Government somo assurance that an attempt will bo made to check the drift of our railway financo. Tho Piuiie Minister' has said that by raising freights and fares ho could provide enough to pay. interest and - evorything clso, but as Postmaster-General'a cardinal- point of his policy has been basod on tho fact that it is low charges that bring increased business. By raising the railway rates to a high level business would fall away. What, is desired is a thorough investigation of every detail of the working of tho system. It must in fairnoss bo added ! that iStho acquisition ■ of the Manawatu Railway—a rich investment—and tho completion of the Main , Trunk Lino promise ;a better balance-sheet in tho future. The Statement is rather barren of other | interest, but we must note the announqement that plans are in preparation for a schcmo for the flattening,of gradients and the improvement of alignment.! Tho need for caution and economy is clearly by no means at an end.