RAILWAY BURDEN

Evening Post, Volume CXVIII, Issue 60, 8 September 1934, Page 9

RAILWAY BURDEN

PROBLEM IN CANADA

FRESH STIR CREATED

A BLUNT STATEMENT (From "The Post's" Representative.) VANCOUVER, August 14. .A blunt statement by Mr. Edward Beatty, president of tho Canadian Pacific Railway, that £15,000,000 a year would be saved by amalgamating that system with . the Canadian Na- . tional Railway, which: is being con- ,. ducted with, a continued loss of ; £.10,000,000 a year, has again focused attention; on Canada's perennial railway problem. Mr. Beatty proposes amalgamation for administrative purposes only—- ' that the Canadian National should bo leased to the Canadian Pacific, and that the net revenues of the unified system be divided between the owners of each, the State and the C.P.R. shareholders, on a mutually-agreed basis. . The plan, he says, would not affect the capital structures, of £450,000,000 in tho case of the C.N.R. and £200,000,000 in the case of the C.P.R. The saving of £15,000,000 would pay interest on the public indebtedness of the "National." and provide a substantial margin for dividends to its competitor. How difficult tho problem is appears on analysis of the basis of a possible agreement. Were it to be based on. the total revenues of the two systems between 1925 and 1930, tho division of income would be made in the ratio of approximately. 55-45', with the larger share going to the Canadian National. On net revenues the position is reversed, the C.P.R. having an advantage of 60-40 on the traffic density; 53-47 in favour of the C.P.R. would bo the actuarial proportion. THE POLITICAL ASPECT. Fear of creating a monopoly may ... prevent public opinion supporting Mr. Beatty's proposition. Politically, it would be termed a betrayal of trust. Politics seem to be inseparable from the history of the Canadian National. In this connection the attitude of the labour unions would be a potent factor. Large numbers of workers would be thrown out of employment by amalgamation. Something more palatable in a depression atmosphere must bo suggested to avoid political repercussion. Mr. Beatty suggests nothing further than his belief that the normal turnover of labour would take up the slack. Alternatives are now being devised. One, regarded as feasible, is the establishment of a third company to operate both systems. Supporters of this plan believe that an agreement on the basis suggested by Mr. Beatty might be reached without the implication that the owners of one system were, being sacrificed for the benefit of the other. That the division might be equal is contended, in the light of the greater milage in Canada in tho Canadian National system. Conversely, as the National has more light traffic. lines, it would have the greater proportion of lines abandoned in the unification process. Enhancing the problem further is the fact that labour constitutes the larger share of railway expenses. Labour must therefore suffer by amalgamation. Dismissal under the age of 30 years, and advancing the superannuation age from ' Go to 60 years,. are suggested, with a possible compensation for those dismissed. PUBLIC DIFFICULT. The alternative to these modifications of-the Beatty plan is tho resumption by the Dominion of the Canadian Pacific, with the whole of the railways under public ownership. Purchase at „ its present market valuo would be regarded as good financing. To. this Mr. Beatty replies that tho Government ■ could not offer such terms as the shareholders of the Canadian Pacific would accept. Most of its securities are held ihGreat Britain and the United States. Coercion is out of the question. An anticipated change in Government next year clouds the prospect of early solution. The Liberals, convinced that Mr. Bennett, former holder of C.P.R. stock, does not favour the National, are likely to support the public system. How they propose to ameliorate the heavy burden it lays on the country they have not yet indicated. In the more distant future lies the problem ■ of co-ordinating all means of transport. Solution of the railway issue will materially enhance the prospect of success when the public mind prepares to grapple with the major problem.