THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, MARCH 7, 1914. BUSINESS AND RAILWAYS.

New Zealand Herald, Volume LI, Issue 15551, 7 March 1914, Page 6

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, MARCH 7, 1914. BUSINESS AND RAILWAYS.

The business side of the New Zealand railways will not bear criticism, for it is hopelessly confused by the enormous expenditure during past years upon lines which cannot be profitable for generations, if ever, and is still unlighted by any defined policy of pushing forward lines from which ample returns are assured. This unfortunate position of the national railways cannot be denied for it is proclaimed and emphasised month after month and year after year by the official figures published . by the railway department. For example the returns dealing with the working rail-

way account for the four weeks ending upon January 31—the most active railway weeks of the yearshow as conclusively as the slacker weeks of July that the department draws its main revenue from the neglected North Island and comparatively little from the overrailwayed South Island. The aggregate figures are as follows: — Mileage. Receipts. Expenses. Profits, f-orth .. 1199 - £198.947 £125,785 £73,162 South . . 1652 £153,271 £98,770 £64,0ut It will be seen from this that without considering mileage the profit on working expenses' in the North Island exceeds the profit in the South Island by £18,661, and if we multiply this by ten to obtain an approximate estimate for thirteen four-weekly periods in which the average business would be less than in January, we have the enormous difference of £180,000 in actual profit-earning capacity. This estimate, however, ignores the fact that the North has only 1199 miles of line, as compared to the 1652 miles i of line in the South, and that the capital invested in the South—capital upon which interest must be paid from earningsis correspondingly greater. An analysis of the mileage earning and profit, which alone indicates the actual position, gives the following approximation: —

Earning. Expense. Profit. North (per mile) .. £166 £104 £62 ] South (per mile) .. £92 £60 £32 j In the January four-weeks each ; Northern mile gave to the depart- , ment £30 more profit than did each \ Southern mile; multiplied by ten, j to obtain an estimate for the year, | this gives a difference in favour of ] the North Island of £300 per mile. ( What can we say of a railway business which has been conducted with such monstrous indifference to . traffic and earning-power 1 | , To understand the effect upon the ' ( finances of the Dominion of this ' I traditional system of starving the t North Island and pampering the 1 South we have only to ' calculate 1 what would be the profit made by I the South Island railway mileage if i the capital there invested had been l spent upon lines as profitable as our 1 North Island system : i South Island (1652 miles):— Actual earnings for four weeks £155,000 Estimated earning per year .. £1,500 000 ' Earnings upon North Island . basis of £166 per mile would ' „ .>« t , . •• £274,000 ] Intimated earning per year .. £2,700,000 Loss to the Dominion per year £1,200,000 ' Enormous as the difference is, it is ' absolutely justified by the figures. 1 The Consolidated Revenue actually 1 and positively suffers a loss of far 1 more than a million sterling every • year through the fact that the money ' invested in South Island railways 1 fails to earn what it would if the 1 money had been invested in North- 1 em lines. The truth is that while the North Island lacks the most ' elemental trunk lines in certain great districts such as the East Coast, and the Far North, and sorely needs a number of great settlement lines such as the PokenoPa«roa, the Kawhia, the East CoastRotorua and other most promising projects, the South Island is largely packed with railways which had no excuse for their construction- excepting as vote-catching agencies. ' The j

Dominion has to pay for this, year after year, through the Consolidated Revenue, our wonderful railway financing simply consisting in loading North Island lines with the perennial deficits of the Southern systems. If this is good business method what shall we call bad 1 And what is "Reform" unless it implies and involves a radical and drastic change in this iniquitous railway construction policy of the past i

Hitherto, reform in the Public Works system of the Dominion has not been pre-eminent. Hundreds of thousands of pounds are still being poured into the Otira Tunnel, which will not add a log of timber, a ton of coal, a pound of butter, or a bale of wool to the productive capacity of the Dominion. Vigorous work at the Waihi end of the East Coast is still in the air; not a sod has been turned on the Pokeno-Paeroa; and Mr. F raser has solemnly assured the settlers of the Kawhia district that he believes in having roads before there are railways— carry metal. Mr. Allen is a careful financier and has displayed ability as a loanraiser which excites admiration in the breasts of all but his envious opponents. Will Mr. Allen deny that it is sound business to invest money in railways that pay averagely a profit of £62 per mile in January £600 per mile per annum —rather than in railways that pay averagely a profit of only £32 per mile in January—£3oo per year. The matter should not be thought worthy of discussion. Any competent administrators, any intelligent financiers, should have but one opinion—the opinion of all business men. It is inconceivable that any private business would be thus extraordinarily managed, that any tramway company would make extensions to districts that could not pay and ignore districts which would pay handsomely, that any gas company would refuse mains to rapidly-expanding suburbs and waste shareholders' money in giving service to parts that could not pay interest on the cost of laying the pipes. The railway policy of the Dominion should be regarded from a business point of view. Lines should be provided where they are needed and will pay, not where they are so little called for that they can only be worked at a loss.