RAILWAY LOSSES.

Dominion, Volume 2, Issue 317, 2 October 1908, Page 6

RAILWAY LOSSES.

A Discussion on railway finance took place in the House of Representatives on Wednesday' afternoon to which some notice is duo, since it revealed tho straits to which the Government is being reduced in its attempt to defend a financial position the unsoundness of which is beginning to be realised by the public. Mr. Vailh, of Auckland, has lately been re peating his criticisms of tho heavy annual loss shown by the railways, a feature of tho system with which our readers arc familiar, sincc wo have shown over and over again that the railways fail each year to make ends meet by several hundreds of thousands of pounds. Tho Minister for Railways spoko in a violent strain of Me. Yaile's intention to circulate his "lies" abroad, and he directed special attention to one of these "lies" concerning a loss of over £2,000,000. Of course, Mr. Hall-Jokes made no attempt to disprove Me.. Vaile's contention: he contented himself with abuse. Later on the Prime Minister backed up his colleague by referring to one of his own speeches in Auckland, a speech to which, ho said, with a cheerful disregard of fact, no reply.had been made " except by Professor Le Rossignol, who had honourably admitted that in his prcvious_ statement he (the Professor) had been in error to the extent of two millions sterling." Anyono ignorant of the true position would suppose that Professor Le Rossignol had admitted that he and Mr. Vaile were completely in error regarding the loss of two milliors in revenue. Wc must once more repeat the facts of the situation. In calculating the annual loss upon our railways, and tho total loss over a period of years, Professor Le Rossignol omitted to mako a certain annual adjustment of capital— a comparatively slight error, which did not affect his argument, and which ho corrected as soon as his attention was called to it. Tho position was this, to quote Professor Le Rossignol's own correction : Sir Joseph Ward, ill his criticism of an article by me in tho August issue of "Moody's Magazine," very properly calls attention to tho fact, that, when I deducted tho amount of expenditure for additions to open lines from the net earnings, I ought to havo deducted the same amount from capital, in order to show tho truo percentage' of net earnings and the truo amount of tho annual deficit The expenditure for additions to open 1 lines for the ten years ending in 1906 amounted to £3.122,478, and, when this amount is deducted from the capital cost of opened and unopened lines appears as £20,969,607, instead of £24,092,085, and the net revenue, according to my way of reckoning, should he, 1.79 per cent., instead of 1.56 per cent., as I had it. The difference is not great, amounting to only £55,808 for tho year 1905-1906. That is to say, this critic contended that the railways yielded only 1.5G per cent, of net revenue wherewith to pay 3.75 per cent, in interest on loans; whereas ho should have admitted that the net rovenuo was 1.79 per cent. The Prime Minister's statement, therefore, that his critic had admitted " an error to the extent of two millions sterling" is utterly misleading. He did not explain that it was an error in calculated capital, an error that, largo as it sounds, hardly affected the Professor's criticism at all. That ho has to resort to such moans to obscure tho position is the strongest possible proof that the finances of the railways are past defending. The Prime Minister cannol deny that the railways arc run at an enormous annual loss, at an'annual loss equal to the interest on several million pounds. The full seriousness of the situation, unfortunately, is not appreciated by the who pay very littlu

attention to the larger, questions of finance, but the outstanding fact remains that there was never a more urgent necessity than the immediate appointment of the .Royal Commission of inquiry demanded by Mr. Herries.