Hawke's Bay Herald. SATURDAY, FEBRUARY 28, 1880. OUE RAILWAYS,

Hawke's Bay Herald, Volume XXI, Issue 5624, 28 February 1880, Page 2

Hawke's Bay Herald. SATURDAY, FEBRUARY 28, 1880. OUE RAILWAYS,

Tin; Colony is fast awaWiig to the fact" that we cannot go oh constructing railways fc't the rate we have been doing. . Eveu if the English capitalist were coil* tent to lend us money without limit, we could not find really productive works in which to expend it. Where the lines pass through settled country, they do not, as.h. whole, nearly pay interest on the cos fc of construction, and on several the working expenses actually exceed the receipts! When they arc pushed on into unsettled country, things will get worse instead of better, for the expenses must o£ necessity largely exceed the receipts Until those lands, now lying waste* are cultivated and thickly peopled. The majority o£ our lines have already reached the verge of settlement, and, unless We arc prepared to drift into a state of natural bankruptcy, their further progress must be slow, -just going ahead with settlement* but not passing it. The functions of the recently, appointed Railway Commission will be. to enquire into the whole of our railway system, and their report, if the Commission had been bettor selected* and had contained men practically acquainted with railway construction. And management, would have proved most valuable as a guide in the immediate future. As it is, one or two are shrewd men of business, and they will doubtless take a commonsense view of the subject, but from Mr Oswald Curtis, and other members, we cannot expect anything very practical. Mr Curds will hold out £or the cc-nliuu-ance of the present unpayable kelson line, others will follow with . their local demands, and in all probability the old game of " You roll my log and I'll roll yours " will be found played over again in the report of the Commissioners. We shall be agreeably surprised if they are content to face the gravity of the situation, abandon log-rolling proclivities, and report calmly and dispassionately on the chances of success promised by the various Hues We have commenced. Many seem to be surprised when they arc told that the railways are not paying-, and point to the excess of receipts over expenditure as proof to the contrary. The paying character of the lilies is not solely dependent upon a balance over working expenses. Interest must be provided on the cost of and unless the receipts are large the proportion of working expenses docs not afford much of a criterion as to tho paying nature of the railways. This is easily illustrated by a comparison drawn from ordinary business avocations- A tradesman may make, say, 50 per cent, profit, but if he only does business to the extent of £'100 a year he has not enough left to live upon. But if he only makes 10 percent., and turns over £10,000 in the year, he is a rich man. Our railways are in the position of the poor tradesman. There is on the whole a margin of about 20 per cent of receipts over expenses, but the total sum taken is comparatively small, and the profit goes only half-way to pay interest, the deficiency being drawn from ordinary sources of revenue. Many do not recognise this truth, and think that 20 per cent, profit on the mere working means 20 per cent, towards the interest of construction. Only the other day a writer in the Taranaki Herald went into ecstasies over their local line ■ and declared that it was "paying " at the rate of 15 per cent., because the expenses were only 85 per cent, of the receipts. As a matter of fact that line is a heavy loss to , the colony. In ; England the average receipts on the railways are £3086 per mile of line laid, and tlie working expenses about 50 per cent., yet the average dividend paid is only 2 j)er cent. In Scotland the receipts are £20d,G per mile, and the expenses 40 per cent. ; in Ireland the receipts are £1081, and the expenses in about the same proportion as in Scotland. In New Zealand the receipts on our best paying railway — the through line from Lytlelton to Dunediu — are only £800 per mile, and the expenses come to nearly 85 per cent. Taking all tho South Island the average receipts are not above £GOO per mile, and the North Island lines return about £400 per mile, that of Hawke's Bay averaging something like £350. It must not be thought that ttc occupy exactly the same position as England in the matter of railways. Our lines cost far less to construct, and less money will therefore pay the same rate of interest. With our present small receipts the average contribution towards interest on i cost of construction is about 2 per cent., and tho probability is that if the receipts I reached £1000 per mile tho whole interest I would be defrayed out of profit, but it must be some years yet to come before we can look forward to such a desirable consummation. If in the meantime the lines arc extended into unsettled country — unless it be with the direct object of uniting two great centres of population — the proportion of profit will gradually become less instead of greater, and our position will become worse instead of better. The present Minister for Public Works deserves great credit for the efforts ho is making to reduce tho expenditure on the i railways. In so doing he must offend many whose influence will at tho next elections probably tell against him and his party, but Mr Oliver seems to have set himself in earnest to his task, regardless of the consequences to himself, and we cannot but admire him for the stand he has made. There is ui'gcnt need — we may say absolute necessity — for retrenchment in the working of our railways, and though our travelling facilities may bo somewhat restricted we must reconcile ourselves to the necessity.