THE MAKE-IT-PAY POLICY UNDER FIRE

Manawatu Times, Volume XLIX, Issue 3336, 3 May 1926, Page 9

THE MAKE-IT-PAY POLICY UNDER FIRE

RAILWAY PIN AN UP CKITHJISED. (To the Editor.) Sir, —Under the new system of railway finance there is the expectation that the railways must “pay” from a commercial point of view. With a nationally owned service it is questionable whether the commercial viewpoint is the true one to guide national policy or whether public policy must with truer vision avoid tho “wrangling of the market place.” National services should be used to secur* national advantages (which are often loft out of commercial bal-ance-sheets) rather than be crippled in their activities by a too rigid adherence to tho worship of the 4 per cent. That the limit beyond which railway transport does not “pay” may be known, there must be a proper comparison of cost and return. This is a, technical problem and involves a study of how costs are derived; what realities they include and what they leave out. Real fsoonomy is the return in values for effort exerted. Values and effort being matters of individual feeling and not of reason, true economy can never be defined logically. The ordinary commercial standard of economy is profit (tho difference between cost and selling price), and it would be advisable to consider just what are the components of this standard before applying it to measure operations conducted as national services.

Commercial estimates omit many things. Take one instance. Tho faro by rail from Wellington to Palmerston North, a dista.nco of S 7 miles, is '.is 3d. The faro by motor service from Glcnhopo to Rccfton, a distance of S 3 miles, is £3 10s. A commercial balance-sheet would show credit to correspond with the saving to Ihc Palmerston passenger of the extra £2 he would be charged were there no railways to keep down fares.

It is doubtful whether an enlightened community would use tho commercial standard of economy to gauge whether a public enterprise “pays” or not. With a business like the railways there are so many variable expenses, and so many benefits derived that arc not taken into account, that the gauge will otter, read false. • —I am, etc., WAHAO. Palmerston North, March 30, 192 G,.