The New Zealand Times. TUESDAY, OCTOBER 23, 1923. OUR RAILWAYS

New Zealand Times, Volume L, Issue 11657, 23 October 1923, Page 4

The New Zealand Times. TUESDAY, OCTOBER 23, 1923. OUR RAILWAYS

The railways have ha*d a good halfyear. Not long ago there was throughout the Dominion complaint that the railway system was not finding anything to meet the capital charges, and was in danger of no-t Being able to meet the ordinary working expenses. The department met tlia-t danger’ by a policy of oconomy, and though a good deal was done in reduotion, it was fairly evident that the saving power of the management was limited by various causes. From the high cost of living to the increased cost of materials, these causes bulked large, and the worst of them was the high cost of coal, which, for various reasons, had T. 3 he imported in large quantities, in face of the abundance of the mineral in the New Zealand mines. There was, in consequence of these untoward things, considerable general uneasiness about the railways. So much so that there was actually an idea that the Tailway management should be inquired into by outside authority, and there was ultimately a proposal to put the matter into the hands of a Royal Commission for general overhaul and recommendation. Last year demonstrated the fallacy of this demand. For at the close of it the railways were found not only to have met all working and maintenance expenses, but also t-o have paid a. shade over 3 per cent, on tHe capital cost. As tho requirement is 3£ per cent, on an expenditure of some forty millions, this result was, in view of the prevailing pessimism, very satisfactory. The tide of fortune had turned, and the proposals for radical inquiry and desperate reforms were submerged." The economies of the department were found to have been effective, the need for importing coal from abroad at abnormal prices had ceased, and traffic had increased according to the returning prosperity. There was no need for a Royal Commission to save the railways. These were saving themselves.

The good half-year, following on this satisfactory state of things, is, therefore, particularly welcome. It shows, of course, that the railways are a faithful record of the country’s progress, possessing as they do all the qualifications for successful work. In comparison with the corresponding period of last year this first half of the current financial year, the returns for which were published recently, has yielded a net profit, after paying expenses of all kinds, including maintenance, of £446,000. This Is better than the profit of the corresponding half of last year by £227,000, as the Hon. Mr Parr, speaking at Invercargill on Saturday, mentioned, quoting the figures published by the Hon. Downie Stewart some days previously. As this is nearly double the net profit of the first half of last year, and as the general prosperity continues, it is a fair inference that the net profit, to go against the capital charge at tho end of the current year, will be double what it was at the end of last year. This conclusion is supported by the fact that the recent floods in the South Island and the great accident in the North made a large, abnormal call on the halfyear’s expenditure. There is, further, the fact that the summer traffic always increases the railway revenue, by reason of the general increase in the country’s production. And there is the Christmas holiday traffic and the increased passenger traffic due to the more propitious season. Tho estimate doubling the year’s net profit as compared with last year’s, is, therefore, a conservative estimate. As the net profit last year was a shade over 3 per cent, on the capital cost of the railways, we may look forward, bar accidents, to a net profit of a shade over 6 per cent. It is true that the net profit of the first half of the current year—£446,ooo—is only a shade over 2 per cent. —2.2, as a matter of fact. But it is also true that the net profit of the corresponding period was only 1.1 per cent, on the capital cost. The fact that, nevertheless, last year’s profit was a shade over 3 per cent., strengthens the conclusion that the second half is always a better revenueproducer than the first. The estimate of double for the current year is, therefore, a conservative estimate. Given good weather, then, and a good producing season, tho railways will probably give a net profit of 6 per cent, on their capital cost at the end of the current year. There will in that coso be a substantial sum to recoup losses of past years. It can safely be said that the railways are justifying themselves. If production and •settlement can be rapidly increased, as they ought to he, by a well-considered forward policy, the time is not far off when the railways will be paying a handsome annual profit to the State without imposing charges too burdensome to tho users. It will be the crown of tho achievement for which the railways were designed. When the system

reaches it, tfie duplication of the principal profit-paying lines will be a feas ible proposition.

Mr Parr, in his reference to the railways, and the state of trade generally, made some observations which suggest reflection. He also referred, principally, of course, to education, the department with which he is most concerned. He mentioned, inter alia, that we must rely oil education to counteract the set of the population towards the towns. But education will not be of much avail for that. People do not live by what they get out of books; they live on what they can get out of the ground. There is a set towards the towns, because the ground is not sufficiently available for getting things out of it by independent, well-directed industry. Establish a policy of increased settlement and more production, and education will go ahead by leaps and bounds. Mr Parr, in addition, took the opportunity to raise a. warning against overimporting. The wholesale traders control importations, not the retailers. They have had a strong lesson. They wore, however, not responsible for the lesson which they suffered. There was no doubt some recklessness caused by the boom of prosperity accidentally inflated. But most of the over-import-ing of the lesson, severe as it was, was forced upon the importers against their will. That is not likely ever to occur again. Now the importers are not likely to become reckless, forgetting their lesson. We trust there is no need to warn them to be careful. But as the warning has been given, we can only hops it will be heeded. It is hacked bj T the fact that the European confusion and the uncertainties of Imperial preference are making the economic position tend at present somewhat towards an undesirable instability. This should be realised by all whom it may concern.