The New Zealand Times. SATURDAY, APRIL 8, 1922. THE RAILWAYS

New Zealand Times, Volume XLIX, Issue 11180, 8 April 1922, Page 6

The New Zealand Times. SATURDAY, APRIL 8, 1922. THE RAILWAYS

The railway figures for the period ending March 4tli last enable the true railway position to be approximately defined. They are the returns and accounts for twelve of the thirteen fourweekly periods into which the railway management divides its year. As the outcome of the worst situation which the Donfinion has ever faced since the first railway was opened over half a century ago, the financial showing is by no means hopeless. Of course, by contrast with the period before the effects of the war were felt,' the showing is deplorable. For in that period the railways paid all expenses, including capital charges, and returned a profit, whereas the showing to-day is a small surplus of revenue over expenditure and a very large deficit in the capital charges. For that the public has been prepared by the official statement, repeatedfy made, that the railways are losing practically £4OOO a day. At one of the last periodical showings there was reason to believe that this loss was likely to be reduced for the year’s operations to £3OOO a day. This estimate is confirmed by the figures for the aggregate published yesterday of twelve of. the thirteen periods of the railway year which elided on March 31st last. This is, in a way, satisfactory; at all events, in view of the probability that the turning point of the strained financial position has been reached. That probability is suggested by the improvement in the wool and meat markets directly, and indirectly by the betterment of the general trade atmosphere. The main point for consideration | is that the moment of probable general improvement offers a fair ehaneb of success to the efforts nowj being made A>y the railway management to restore the railway balance. The 1 figures show approximately what amount of increased revenue is required to enable the railways to be soundly self-supporting. Any analysis of the figures can, of course, be only rough. We proceed to make one, therefore, without pretence of exactness in detail, taking the figures first, and adding an estimate for the remaining thirteenth period. The figures give a revenue of slightly over six millions, with a surplus over expen. diture of nearly £344,000. The showing for the thirteenth period can be safely taken as certain to maintain the average in receipts and expenditure of its twelve predecessors, with the advantage due to the finality of accounting which belongs to the thirteenth periodIt is fair, therefore, to conclude that the year’s revenue will be found to have reached slightly over £6,500,000, and a surplus over revenue of slightly under £400,000. Now, this last figure represents 1 per cent, on a capital charge of forty millions. The actual capital charge. being over thirty-six millions, the use of the larger sufn gives a margin of safety to the rough analysis we are making. The above estimated surplus over expenditure, of £400,000 being sufficient to pay 1 per cent, of the capital charge—which at 4 per cent, stands at £1,600,000 —- the net deficit on the year’s railway operations will be £1,200,000, representing £3287 as the average daily loss. As the daily loss was £4OOO in the earlier periods, the prediction of diminution to £3OOO is satisfactorily borne out. It is safe to say that the average is now somewhat less.

The problem before the management is the restoration of the balance of the working. There are only two ways of solving it. They are increase of revenue and lessening of expenditure. The two, of course, ought to be 001117 bined. If it is impossible to lower (the expenditure, the whole work of restoration falls on tile revenue. In such event railway equilibrium requires an increaso of £1,200,000 —taking the figures roughly as above—in as short a time as it can be managed,. That gives us the worst aspect of the railway outlook. Whether this increase is possiblo early, and the general state of the public finance stresses .that it must be early, is a very searching question. On the one hand, a revenue of six and a half millions is at the top of the railway record of this country. On the other, this is a country of very elastic resources. To . help that elasticity to achieve better returns than those of the worst of all our periods of depression there are the possibilities of the turn of the tide, which is actually setting in. It is, moreover, more a question of proportion than of big figures. A seventh pore of the recorded Teveiiue would give nearly another million to the revenue. Can we expect an increase of two millions of the fourteen million passengers carried, Which represents bub a million and a quarter increase of the passengers of the year before? Can we expect to make up the deficiency „ of 97,000 cattle, ! of 8700 tons of >timber, of 51,000 tons of minerals—in a. word, of 214,898 tons of the aggregate traffic deficit? Given substantial improve-

mont- of the general linancial situation, upon which, of course, everything depends, the above questions do not look hopeless. This is the worst aspect of the outlook, and it is accentuated by indefiniteness as to times and tonnages. But the worst aspect is not the one the outlook gives us. With the extent of the turn in the tide, some automatic increase jn the revenue is certain. And the expenditure is not going to remain as high as it is. There are improvements in cost of coal and materials, already substantial, and showing further promise. The whole weight of restoration is not going to fall on the revenue. There may be improvements in management, and it is possible to increase revenue, more particularly in improving times, by decreasing freights. But that is the business of the management. Outside critics can do nothing hut wait, and the public must wait with them. At all events, we know now that the problem of restoration which the management has in hand is, though difficult, by no means so hard as the large deficit may frighten many people into believing.