THE RAILWAY ACCOUNTS.

Lyttelton Times, Volume CXVIII, Issue 18570, 24 November 1920, Page 6

THE RAILWAY ACCOUNTS.

Somebody in the Railway Department appears to be taking notice of criticism, which is at least a good Bigffi We do not know whether it is the comment that appeared in this journal that has evoked a reply, but the circumstances, support that idea. We pointed out, among other tilings, the extraordinary growth in the ratio of expenditure to revenue, which in the twenty-eight weeks ended October 16, 1920, was £B4 6s 3d per cent compared with £73 4s lOd in the corresponding period of last year. What we assume to be the official reply, or defence, appears in the Wellington “ Post.” It is as follows :—•

Comment lias been made on tho fact that tho railway returns published last weelc show that in the period AprjJ. J to October 16 tho percentage of expenditure to revenue was 84.26, as against 73.24 for the corresponding peviod of last year. It has been pointed out that a falsa impression may oe created by these figures unless it is made clear that the increases in wages granted to members of the service ante-dated tho corresponding increases in fares and freights by some three months. Had the provision for increasing the revenue become effective at tfto same time as the increase in wages, the returns would, of course, have shown a much bettor position.

This defence, we think, is unsound. It may be that if the higher charges had been in operation from April 1 the ratio of expenditure would have been less, but there certainly is no guarantee that this would have been so. On the contrary, all the circumstances and experience support the view that the more, revenue the Railway Department receives the more it. is likely to spend. To test the validity of the defence that has been put forward we will take the four-weekly period ended October 16. In that period there were no arrears of bonuses to come out of the receipts, arrears as from April 1 having been paid off in the previous month. The increased schedules of fares and freights were in full swing throughout the four weeks ended October 16. Business was unusually good. Nearly a million passengers were carried, coav

pared with some six hundred thousand odd in the corresponding weeks of 1919, and there were substantial increases in the quantity of goods traffic. There was also a greater length of railways working. Everything, indeed, was in favour of good financial, results, the outstanding conditions being big business and heavy charges. This is proved by tho fact that tho gross revenue rose by £111,448 as compared with the corresponding period in 1919. But in spite of these favourable—unusually favourable —conditions tho net revenue fell by £2072. The apologist whose story appears in tho “Post” says that if the increased charges had been operating from April 1 the expenditure would “of course ’ ’ have been less than 84.26. Well, in tho fourweekly period ended October 16, when tho Department was sailing along on an even koe?, ns it were, with arrears of bonuses cleared off and the schedules of charges keyed up, tho ratio of expenditure was actually higher than the average for the longer period referred to. In the last four weeks of brisk business and high rates the expenditure consumed £BS 5s per cent of revenue, as compared with £BO Os lOd for tho corresponding weoks of last year. However, if there is anything in the defence which wo have quoted in full in this article, there should from this on bo a steady Improvement in tho railway accounts. For the rest of the financial yoar traffic is certain to bo hoary, and there is still a chance to recover some of tho leeway. That the Department is taking notice of criticism is, in itself, ono of the healthiest signs that we have noticed for some timo past. Much improvement is needed, however, if tho railways during the current financial year are going to earti sufficient over working expenses to pay interest on capital cost At present the accounts show a heavy defioienoy.

In our “ Commerce and Finance ” column this morning will bo found a table showing the depreciation in value since May last of various classes of stocks and shares dealt with on New Zealand exchanges. From an economio standpoint Buoh widespread depreciation can only bo taken to mean a reduotioii of the amount of currency (or credit) available, and a consequent increase in tho rate of interest demanded by investors. It is common knowledge, of course, that tho banks have in recent mqnths raised their overdraft rates, and that they have shown a disposition to reduce credits. A further factor in the situation particularly affecting New Zealand and Australia has been the trade slump in Britain, which has led manufacturers and exporters in that country to take advantage of large numbers of orders from these colonies, formerly neglected, and long regarded as dead by those who placed . them. Importers generally seem to have neglected to cancel orders which have not been filled, and the sudden refluiTection of these (of course at the highest level of prioes) is said to he one of. the causes both of tho phenomenal increase in Australian and New Zealand imports and of the present tightness of money in both these countries.

Miss Jessio Maokay tgrites this morning giving “ a few of the data suggested ” by us in regard to the results of prohibition In America. Our correspondent does not, however, answer our question, which was, How many judges, magistrates, and police have been dismissed aa tl» -result of this experiment? Instead, she quotes reports of alleged change#, but there is nothmg very convincing in them. One would expect a Board of Inebeity to go out of action under prohibition, of course, and everybody will admit that the removal of drunkenness reduoes destitution and vagrancy. Possibly the abolition of tobncco and tea would reduce indigestion, and tho abolition of amusoroent* would save people money. But liberty would go also- Miss Mackay challenges ns to produce evidence of “ authentic benefits conferred by re-opening hotels after a spoil of prohibition.” We fear this would bo useless. Miss Mackay would not believe us last year when wo showed tho magnificent results that followed tho adoption of State Control in Caid isle, and our facts and figures were authentio enough.

Tbe correspondent signing himself " Disappointed,” whose letter we print tins morning, seems to us a little ungrateful. He is entitled by law to a superannuation allowance of £l9 17s per annum, and for tho current financial year he is receiving an additional sum of £4O. He thinks he is being treated shabbily, and complains that we had stated that superannuitants whose allowances were under £IOO were to have fheir amounts brought up to that figure. Whatever we said was merely a re-statement of what Mr Massey wqg reported to have said. But what was in our minds was that sinoe the State had allowed the cost of living to rise more than it need have risen, the Government ought to do something reasonable for men who hud spent all the working years of their livos in the servioe of the country only to find in their reclining years that their superannuation was much less, in purchasing power, than the actual amounts for which they had contracted. We do not know t* Disappointed’s” circumstances, but his annual allowance suggests that ho was not very long in tho servioe, and we doubt if he should complain at a free gift which more than trebles the amount that he has been drawing. For the time being, at all events, he is receiving quite a handsome cost-of-living bonus.

Cablegrams concerning recent disturbances in Ireland team with references to “ auxiliaries ” and “ Black and Tans.” Tho terms are rather confusing, and explanation may be helpful The Royal Irish Constabulary is now being largely recruited from amongst ex-service men. These recruits are given a uniform of very dark green and khaki, and the Irish people, not liking that kind of green, call it black. The khaki suggests ton, hence the term “ Black and Tans,” The “auxiliaries ” wear the samo uniform, but have a higher status. They arc all ex-officers and take rank as sergeants in the R.1.C., receiving payment at the rate of £1 per day. Their especial duty is to instruct tho men of tho R..1.C. in the gentle art of defending the barracks against the forces of Sinn Fein. The auxiliaries number, about 500, and' the R.1.C., with its new recriiits, numbers abput 10,000.