The Pamphlet Collection of Sir Robert Stout: Volume 61
Report on Mr. Vaile's Proposals Respecting Railway Rates and Fares
Report on Mr. Vaile's Proposals Respecting Railway Rates and Fares.
[Memo.—I ask my readers when perusing the following disgracefully untruthful document, signed "J. P. Maxwell," to be good enough to bear in mind that they are reading an authoritative Government report, prepared to the order of the Hon. Edward Richardson, Minister for Public Works, and laid by him on the table of the House. It appears to me that the presentation of such a paper is an insult, not only to Parliament, but to the whole Colony.]
As to this so-called report, it may be summed up in the words, What does Mr. Vaile know. It is one long, laboured attempt to prove that I am ignorant of the subject I have written and spoken about, and in order to do this I am misquoted in the most untruthful manner, and petty details are alone dealt with, while the broad principles I advocate are not even referred to.
|1.||That the railways of the Colony belong to the people.|
|2.||That, as every colonist is taxed for their support, the beneficial use of our railways ought to be brought within the reach of every class—the poorest as well as the richest.|
|3.||That we have no right, and that it is unsound policy, to make the direct payment of interest the primary object in making and working our railways.|
|4.||That the primary object in making and working railways ought to be the settlement of the country, the development of its resources, and the convenience of its inhabitants.|
|5.||That railways ought to be so managed as to bring about a more equal distribution of population and wealth.page 38|
|6.||That where railroads belong to the community there should be no differential rating, but that all districts and all men placed under similar circumstances should be treated alike.|
With none of these principles is there the slightest attempt to deal, nor is there the faintest reply to my heavy indictment against the errors, inconsistencies, and absurdities of the present management.
Mr. Maxwell's report being merely a criticism of my personal qualifications, and that report being made by order of the Government, they have narrowed the question down to this issue, Who is best able to give an authoritative opinion on the matter, Mr. Maxwell or Mr. S. Vaile and those gentlemen who have carefully examined and reported on his plans? It therefore becomes necessary to say something about Mr. Maxwell's qualifications. He arrived in this colony in 1875, being then, I believe, about 25 years of age, and having been educated as a civil engineer.
In the old country he had no training whatever, either as a traffic manager or as a commercial and financial man. All he knows about railway management he has learnt since, by some mysterious process, he was pitchforked into the position of general manager of our railways. He has learnt what he knows in and at the expense of the Colony, and dearly have we paid for his education. As I proceed I shall prove that he is hopelessly ignorant of the system he professes to criticise.
On the other hand, the gentlemen who, after the most careful study, have reported that the adoption of my proposals would add at least £200,000 per annum to our railway revenue, are all thoroughly trained men, who have held offices in the old country that Mr. Maxwell would be utterly incapable of filling, and where his presence would not be tolerated for a moment. As to myself, I commenced my career as a principal in business when a mere boy, in 1851, and from that time to this have always been at the head of a firm occupying a prominent position, so I think I may fairly claim to have some commercial knowledge and ability. I ask, Of what value is Mr. Maxwell's opinion, with his imperfect training, as compared with the united opinions brought to bear against him?
1. To "The Hon. the Minister for Public Works":—In compliance with your instructions that a report should be made on the so-called scheme of management of Mr. Samuel Vaile, of Auckland, I have the honour to remark as follows:—page 39
2. While Mr. Vaile appears to claim to have enunciated a "scheme of management," I can find nothing touching on a "general scheme of management," but only some very extravagantly expressed opinions on the subject of rates and fares, mainly unsupported by facts, and with many errors and misstatements, comprised in various fragmentary circulars, letters, and addresses.
I have repeatedly stated that I have made no attempt to go into details, but have merely indicated the broad lines on which I believe railways ought to be managed. It will be time enough to furnish details when there is a chance of trying the proposed plan.
3. In his printed circular of the 6th April, 1883, which he addresses to the Chambers of Commerce in New Zealand and Australia, Mr. Vaile says, "It seems to have been assumed by the Governments of the colonies that the railways must be made to pay interest on the cost of their construction and maintenance. This I hold to be a most mischievous error." Again, he says, "I deny that they (the Governments) have any more right to charge interest on the cost of construction and maintenance of the permanent-way than they have on the cost of construction and maintenance of common roads." The curious error of supposing that it is usual to try to make railways pay interest on the cost of maintenance is repeated in Mr. Vaile's lecture of the 3rd November, 1883. It will be seen that there is a great degree of ignorance displayed in these remarks.
The position I have taken up throughout is this: That the permanent-way of our railroads ought to be placed in precisely the same position as our main trunk roads. These we construct out of loan and maintain out of taxation. Railroads we also construct out of loan, but we are supposed to maintain them out of interest earned. This is what I wished to point out and condemn. I have also reason to believe that large sums, which under the present system ought to be charged to revenue, have been charged to capital account.
4. Mr. Vaile, means, of course, that it is an error to try to make the railways pay interest on their capital cost; but, with the inconsistency which is displayed throughout his writings, he violently condemns the Government because the railways do not pay interest, and urges steps which he asserts will make them do so.
I meant nothing of the kind, but merely what I said; and I have over and over again stated, both in the circular he professes to be quoting from and in numerous other places, that interest must be paid on the amount expended for rolling stock, which I presume forms a considerable item in the "capital cost," although Mr Maxwell "may not be aware of it."
The statement that I have violently attacked the Government for not making the railways pay interest is an untruth. I have everywhere stated that the payment of interest ought to be a very secondary consideration. What I have attacked the Department page 40 for is, not making the railways pay either directly or indirectly, but I have always attached the most importance to the indirect payment. I have also asserted that by treating the public in a more liberal manner, they (the railways) could be made to pay both directly and indirectly; and I think I have pointed out means by which this may be accomplished.
5. In the same circular, speaking of the rates and fares in use, Mr. Vaile says, "I have utterly failed to master them." Cadets of fifteen years of age, who have passed the sixth standard at the Government schools, have no difficulty in learning them.
I have in my possession numberless proofs that not only will two stationmasters give different answers to the same question, but that the same man will charge three different prices for the same service rendered. Consequently, if Mr. Maxwell's assertion is true, he must have selected men for stationmasters who are far inferior in ability to sixth standard boys. This proves him totally unfit for his post. The circular referred to was written only three months after I first commenced to ventilate the subject.
Recently a gentleman called at my office, and handed me a freight receipt for conveying a boat 22 miles. On applying at his own station for the cost, he was told 5s. or 6s.; but on arriving at its destination, he was charged 13s. What about the sixth standard boy?
6 and 7. Mr. Vaile's original object in advocating low fares appears to be set forth in the same circular. He remarks as follows: "Take, for instance, the Rotorua Railway, in which I am a shareholder. To go from Auckland to the junction of this line under the plan proposed would cost second-class passengers 2s.. and first-class 3s. each; thus, being carried so far on their journey for such a small charge, they would be better able to pay the higher fare for the rest of the distance." That is to say that, by lowering the fare on the Government lines, Mr. Vaile would be able to secure higher ones on the line in which he was interested.
Mr. Maxwell evidently judges other people by his own standard. This is the whole sentence he has garbled.
"It has been objected that my plan would prevent the construction of private railways. This is a mistake. Take, for instance, the Rotorua Railway, in which I am a shareholder. To go from Auckland to the junction of this line under the plan proposed would cost second-class passengers 2s., and first-class 3s. each; thus, being carried so far on their journey for such a small charge, they would be better able to pay the higher fare for the rest of the distance. Thus, I think, the new plan would help the construction of private railways. There would also be this inducement: that the Government would ultimately be compelled to purchase and take them over."
My contention has always been that all the railways ought to be in the hands of the Government. Neither directly nor indirectly have I ever possessed a larger interest than £200 in the Rotorua Railway.page 41
8. Mr. Vaile's crude and incomplete proposals for fares and rates, as stated in his circular of the 5th April, 1883, are on a differential basis. In subsequent letters he violently condemns differential rating, and scurrilously attacks those who do not agree with his projects.
I have before stated that Mr. Maxwell's professional training has been very imperfect, but I did not suppose him to be so ignorant as this sentence proves him to be, for it is very evident that he does not know the meaning of the term "differential rating." It may be useful to him if I explain what it does mean. This is differential rating:—" Deeming" 21 miles round Christchurch to be only 15 miles, for the purpose of reckoning fares and freights, when the full distance, or more than the full distance is charged in every other district; 0f charging a Christchurch man 8s. for the same service that a Dunedin man would have to pay 10s., or an Auckland man 13s. 9d. for. This is done every day, and it fairly illustrates the principle.
I am at a loss to know what Mr. Maxwell means, and can only imagine that he refers to the fact that in districts more than 30 miles from a large centre of population I propose a rate that would be less per mile than that within the 30 miles. If this is his meaning:—"It will be seen that there is a great amount of ignorance displayed;" for how can there be any "differential basis" when every man, and every district, placed under similar circumstances, are treated alike?
9. We learn thus from Mr. Vaile: 1. That his remarks apply to the Australian railways, as well as to New Zealand. 2. That he holds it to be a mischievous error to try to make railways pay interest. 3. That he does not understand the present system of rates and fares. 4. That he would have charged higher fares on the Rotorua Railway, in which he was personally interested than he proposed for the Government railways. 5. That while he himself does not hesitate to propose differential rates and fares, he at the same time denounces them.
All the items in this paragraph have been answered except the first, and for gross perversion of any writer's meaning, I have rarely seen that equalled. The following is what I wrote:—
"I communicate with the Australian Chambers, because the question raised interests them quite as much as it does ourselves, but the colony that first adopts a cheap system of railway communication will no doubt gain a great advantage."
Mr. Maxwell seeks to make it appear that I have found the same fault with the management of the railways of Australia as I have with those of New Zealand. The fact is, I have shown at every lecture that not only are the New South Wales rates enormously lower than ours, but that, as the financial result, they not only pay all interest, but also pay a large surplus. Mr. Maxwell has no doubt felt the sting, and so seeks to pervert my meaning.page 42
10. It is difficult to seriously discuss the inconsistencies and misstatements with which Mr. Vaile's writings abound. When he suggests that it costs no more to carry a ton of passengers than to carry a ton of coals he is writing nonsense, though he may be unaware of it.
What I said was this: "Competent English authorities have said that the net cost of carrying a passenger is thirty miles for one penny,' and "minerals, notably coals, are every day carried on the English lines at the rate of one-halfpenny per ton per mile, and this is one of the best paying trades done on the lines." It is usual to reckon fifteen passengers to a ton, which at the above rate is equal to thirty miles for one penny. If we set the profit on carrying the coal as against the extra, cost of carrying the man, we shall find that my statement is well within the mark. I have no doubt Mr. Maxwell thought I was writing nonsense, but the fact is everything he says and does proves his ignorance of what railways are capable of accomplishing.
11. When he says that "the loss on our railways increased from £180,855 in 1881 to £377,186 in 1884, and at this rate we should, in 1888, require £2,500,000 to support our railways," he is making a statement which is misleading, and drawing a conclusion which is false. He may or may not be aware of this. In either case he is equally untrustworthy as a guide, and consequently should forfeit all claim to the respect of intelligent men as an authority.
With an evident wish to mislead, Mr. Maxwell quotes the loss in two years only. I gave four years, and said that if the loss went on increasing in the same ratio for the next four years that then the result would be as above. My statement is correct.
12. The following is an instance of an error in a letter of Mr. Vaile's, dated the 14th July, 1885, in which he misstates the distances on which some coal rates are based. I give Mr. Vaile's figures alongside the correct ones:—
Mr. Vaile's Statement of Distances. Correct Distances. Springfield-Rangiora 65 miles 41 miles Springfield-Riccarton 65 miles 45 miles Springfield-Selwyn 80 miles 40 miles Springfield-Rakaia 80 miles 53 miles Springfield-Chertsey 97 miles 58 miles Springfield-Ashburton 97 miles 70 miles
13. These figures Mr. Vaile used to give colour to a further misstatement which he made about the coal rates. His figures and opinions are, as a rule, as unreliable and untrustworthy as his misstated distances.
I have only lately found out the true solution of this matter. This is it: When I wrote my letter re the coal rates, following the only maps and other data obtainable here, I worked out these page 43 distances as explained in my letter of 22nd July last. I was aware that the Sheffield-Oxford branch was in course of construction, but several gentlemen who know the Canterbury lines intimately assured me that it had not been opened, and it now appears that as a matter of fact it was not opened until the middle of September, or two months after my letter was written. A reference to the September Bradshaw will show that this line is not mentioned there. It was therefore impossible for me to know that for some time before the date mentioned the Department had been carrying coal along that line. It is not necessary for me to characterise the conduct of the Minister and his colleague in the terms it merits. Honourable men will know how to do that. The eagerness with which the Department seized upon the first thing they could call an error shows how closely they have watched for a chance to show me in the wrong.
14. If we judge from these preliminary inquiries, we may conclude that we are unlikely to find Mr. Vaile's proposals to be of a reliable character. A brief examination of his paper, read before the Auckland Institute, on the 12th November, 1883, will enable us to further test his statements.
15. In regard to goods rate, we find in Mr. Vaile's circular of the 5th April, 1883, a proposal published to carry trucks for "horses, cattle, sheep, calves, pigs, goats, hay, straw, and firewood at 8s. per truck; minerals, at 2s. per ton; timber, at 6d. per 100 superficial feet or fraction of 100 feet; all other merchandise, of every class and description, at $s. per ton." This is for each fifteen mile, thirty mile, and one hundred mile units of distance; so that for sixteen miles the charges would be double those for fifteen miles. Grain would be charged for sixteen miles 10s. a ton; the present Government rate is 4s. a ton.
16. Then, to use Mr. Vaile's words "On more mature consideration, I thought it desirable to double the number of stations and to halve the fares. This alteration was made in November, 1883."*
17. Turning to Mr. Vaile's lecture of November, 1883, we find his proposals for goods rates varied thus: "Trucks for horses, cattle, sheep, calves, pigs, goats, hay, straw, agricultural produce of all kinds, and firewood, 4s. per truck; minerals, is per ton; timber, per too feet or fraction of 100 feet, 3d.; all other merchandise, 2s. 6d. per ton."
18. This is first for four units of distance of seven miles each, and after that units of fifty miles each, as he then explains. Yet he deliberately ventures to to say in another printed letter of the 9th July, 1885:—"My proposals have never been altered, and the only modification made is this: In my first letter I proposed to have half the number of stations, and to charge double the amount of fares now suggested." Let us see how he did alter his proposals as they affect one item—agricultural produce—which, under his proposals of April, 1883, he would have charged 10s. a ton for sixteen miles, and 15s. a ton for forty-six miles. Under the proposal of November, 1883, he would charge for sixteen miles 2s. 5d. per ton, and for forty-six miles 4s. a ton; and yet he says he has only halved the distance, and doubled the fares!†
* I find on referring that I suggested this alteration in my letter of 5th April, 1883, three months after the publication of my first letter.page 44
† I have never proposed either a 30 or a 46 mile distance. They are simply an invention of Mr. Maxwell's.
19. After this we find Mr. Vaile, at the Napier Chamber of Commerce, in March, 1885, reported, in the Daily Telegraphy to have said, "He had not published any proposed goods rate, because there were no statistics published on which he could found any scale of charges, and he had no wish to make a mistake which would be freely used by his opponents."
20. As we have seen, this statement was untrue; but, at any rate, it is an acknowledgment of failure, and an admission that his proposals were bad. It is therefore of no use to try to pursue the subject of goods rates further, except to remark that if the latter proposals of Mr. Vaile were adopted, the revenue would fall far below the working expenses.*
It will be remembered that Mr. Richardson stated to the House that "Mr. Vaile's proposals had been so much varied from time to time that it was almost impossible to say whether they had all been considered or not."†
The above six paragraphs appear to be an attempt to prove the truth of that assertion. But what does it all amount to? Simply this, that they accuse me of making one alteration in the rates "suggested" for agricultural produce. Now, if the alteration of a rate means the alteration of a system, then the present system must be altered daily. However, I never made this alteration; Mr. Maxwell has made it for me, to suit his own purpose, but I never did.
In my paper of the 5th of April, 1883, agricultural produce is not mentioned at all. Whether it was my omission in writing out the fair copy, or whether it was the printer's, I cannot now tell, but it was intended, as was done in my paper of the 12th of November following, to include it in the trucks, at 8s.
This is all they can bring in support of their assertion, that I have so much varied my proposals that it is impossible to consider them. It is really sickening to have to reply to such untruthful, puerile nonsense.
21. We will now consider the subject of passenger fares.
22. The impression Mr. Vaile has conveyed to the public is that he proposes a universal reduction in passenger fares. It is found on investigating his proposals, that his scheme would largely increase a great proportion of them. On the Auckland line, for instance, there were last year, 411,745 journeys due to ordinary tickets, and 240,352 due to season tickets.
* What I said at Napier was "That I had not paid so much attention to goods as to passenger rates, because," etc.
† A reference to Hansard of July 8th, July 21st, and September 4th, will show that Mr. Richardson has three times made this untruthful statement to the House.
This figure of 411,745 throws a flood of light on the way in which the railway accounts are made up. Return No. V., attached to Mr. Maxwell's reports for last year, states that there were 187,461 "single passengers," and 224,284 "return" passengers. Return No. X. shows that on the Auckland section the total number of "tickets issued" was only 299,603. On investigation, I find that the 224,284 "return" given in No. V. table is really only so many halves of returns; that is to say that the number of return tickets issued was only 112,142. Comment is unnecessary. As to the 240,352 journeys said to be due to season tickets, like Mr. Richardson's celebrated 10s. 1d., it is a purely bogus figure, created by Mr. Maxwell for a not very creditable purpose. Every season ticketholder knows that no record is kept of the journey he takes:—
23. A six-monthly season ticket-holder for stations seven miles apart can travel as many journeys daily as trains permit; first-class for 9d. a day, and second class for 7d. a day. Mr. Vaile's lowest proposed fares for the distance are 6d and 4d. for each separate journey. For a fifteen-mile distance the six-monthly season ticket costs is. 4d. first class, and is. ½d. second class per day. Mr. Vaile's proposed fares are is. and 8d. for each separate journey respectively. If Mr. Vaile's fares were substituted, the heavy increase would be objectionable on many grounds, and would diminish the traffic. If the present season tickets were retained, then, as regards this section of travellers, they would be unaffected, and no increase of traffic would result.
This is a comparison of six-monthly season ticket fares, on the assumption that every holder would travel every day, with my single ticket fares. Could a more dishonest comparison be drawn? If Mr. Maxwell is so ignorant of his profession as not to know that season tickets could just as well be issued under my system as under his, it is another proof of his unfitness for his post. The single first-class fare to Penrose (six miles) or Onehunga (eight miles) is is.; my proposal is 6d.; Manurewa (fifteen miles) 3s. 9d.; my proposed fare, is.; and yet Mr. Maxwell has the audacity to say that for these distances I propose to increase the fares.
24. The ordinary tickets, Auckland to Onehunga, for return passengers, now cost 9d. and 7d. per journey first-class and second-class respectively. Mr. Vaile's proposal would raise them to is. and 8d. for each journey respectively.
I am sorry to be compelled to use such strong language, but as I have never, at any time, in any place, under any circumstances, either in writing or speaking, proposed any other fares to Onehunga than 6d. and 4d., I can only characterise this statement of Mr. Maxwell's as deliberately untrue, for it is impossible to imagine it could have been made in error.
25. Between Auckland and Otahuhu the present fares for return passengers are is. and 9d. first and second class respectively for each journey. Mr. Vaile proposes for each journey is. and 8d. respectively.
When my proposals were first made, single fares to Otahuhu were is. 6d. and is. Any reduction made is due to my agitation.
26. Thus, for more than one-third of the total number of journeys namely, for the season ticket journeys—Mr. Vaile's proposals would, if adopted, involve an excessive increase in fares. Of the remaining journeys, by far the larger proportion are for distances under ten miles, for which Mr. Vaile's proposals provide either increased fares or fares not very materially differing from those prevailing. So that no practical increase in passenger traffic could be expected by adopting Mr. Vaile's proposals in these respects. Mr. Vaile has deceived himself, and has misled others by his averages.
As I have shown, the one-third here spoken of is a bogus figure. As to the remainder, it must be remembered that Mr. Maxwell is now professedly comparing single fares with single fares, and states that for distances under ten miles I propose either increased fares or no material reduction. They compare as follows:—First-class: Present fare, 3 miles, 9d.: my fare, 6d. Four miles: Present fare, 1s.; my fare, 6d. Six miles: Present fare, is.; my fare, 6d. Nine miles: Present fare, 1s. 6d.; my fare, 1s. The statement deliberately made in a document presented to Parliament, by order of the Minister for Public Works, is that these reductions are either an increase or not a material reduction.
27. The only portion of the passengers that Mr. Vaile's proposed fares would largely affect are those travelling beyond distances of 10 miles. He proposes fares which may average, according to his own views, about one-fifth the present fares. The long-distance travellers form a small proportion only of the ordinary ticket travellers, but, being charged at a uniform scale of fare, they bring not less than two-thirds of the total ordinary ticket revenue. While, therefore, the number of passengers is small in proportion to the total ordinary ticket passengers, the revenue affected is large is proportion to the total revenue.*
28. While we could expect no practical effect on passenger traffic within short distances, we should have to increase the number of long distance passengers five times to get the same revenue from that source.
* I find that the average distance travelled by passengers on our rails is under 11 miles, and therefore cannot believe Mr. Maxwell's statement that the long distance fares pay two-thirds of the passenger revenue. If they do, it is a most convincing proof that country residents are charged an unfair price, in order that townspeople may travel cheaply. In paragraph 26 Mr. Maxwell informs us that five-sixths of the journeys made are for short distances, and, in paragraph 27, asserts that the remaining one-sixth pays two-thirds of the total revenue. Does he know what he is talking about?
29. If such a passenger traffic did arise, there would be a heavy loss, as passengers could not be profitably carried for such long distances at such low fares, with the conditions under which we are working.
Mr. Maxwell here gives me the first opportunity of replying to anything that is not either a personality or a misrepresentation. I gladly avail myself of the opportunity.
First, let me remark that, having been always used to work at an even mileage rate, he evidently thinks that the through fare is all that can be earned.
When fares are thus reckoned as regards the financial result, it matters nothing whether a seat in a carriage is occupied by the same passenger for the through journey or by twenty different passengers. The result, however, works out very differently when fares are reckoned by stages. Thus, on my system, a first-class seat occupied by a through passenger from Auckland to Te Awamutu would only earn 3s., it is possible for that seat, by a succession of passengers from station to station, to earn 17s. This is an essential feature of my plan, and to it I look for a large share of the profit. I confidently expect that the station to station business would so largely increase, that, on the average, my through fares would be more than doubled.
However, in order to give Mr. Maxwell every possible advantage, I will argue the matter out on the through fare only, and so that he shall not accuse me of taking any advantage to myself, I will at once select the longest fare possible—namely, from Waikari, in Canterbury, to the Bluff, in Southland, a run of 436 miles. The present fares are: First-class, £4 10s.:id.; second-class, £3 os. 9d. 1 propose to reduce them to 18s. 6d. and 12s. 8d.; averages of the two fares, 15s. 7d. I maintain that passengers can be very profitably carried at these fares, and beyond the mere assertions of Mr. Maxwell and the few men of inferior professional attainments who are with him, my position has never been disputed, and these men have never brought, nor can they bring, either facts or figures in support of their assertions.
To prove that I am right, I quote the following indisputable facts: In America they use only one class of carriage, but that is far superior to our first-class.page 48
The every-day fare on the Erie railroad is one cent per mile, which is equal to 18s. 2d. for the 436 miles, or fourpence less than my first-class through fares.
On the East Indian Railway the fourth-class fare is two and a half (2½) pie per mile. Reckoning the rupee at 1s. 8d., this is equal to nine and sixpence (9s. 6d.) for the 436 miles; and Mr. Maxwell tells me we cannot do it at an average fare of 15s. 7d.
Let him listen to this, and learn a lesson if he is capable of doing so. In 1883 this railway carried 11,959,581 fares, and of that number, 11,311,372 were carried at the rate quoted above, leaving only 648,209 fares for the three higher classes. On some, a very few, of the Indian railways there is no fourth-class, but their third-class fare for the return journey is generally about one farthing per mile.
In 1883 the Indian railways carried a total of 65,008,953 fares, and of that number 60,113,313 were fourth-class passengers, yet these railways paid all round a "net profit of 5-91 percent." Do not cheap fares pay?
Mr. Maxwell will, of course, talk about cheap labour in India for construction and working. Well, we will now take him to the most expensive line in the world, and from it I will undertake to draw my grandest illustration of how cheaply people are carried. On the London Metropolitan Railway passengers are daily carried 16 miles for twopence (2d.), which is equal to 4s. 6½d. (four shillings and sixpence half-penny) for the 436 miles.
In comparing what is done on English lines with what might be done here it is necessary to keep the following points steadily in view:—1st, The much greater cost per mile of the English railways, and (2nd) the fact that the rate of interest the English companies have to pay will certainly be as high, and probably a great deal higher, than our rate. The drawbacks on our side are defective construction and the slightly increased cost of wages. Every mile of the London Metropolitan Railway costs on an average £655,000 as against our £7,979 They, therefore, require to earn over eighty-two times as much interest per mile as we require, and yet they daily carry passengers at only a little over one-third of my lowest proposed fare.
I shall of course be met with the usual talk about the enormous population of London, but it will be seen that, as we require only one eighty-second part of the interest they require, and the proposed fare is three times theirs, we could do with one fare for every 250 or 300 they require. 1 shall again be told that they can get them page 49 easily—how and from where? The population of London is not more than nine times the population of New Zealand and that of the United Kingdom not seventy times, therefore they can only get their fares by giving greater facilities. If we gave similar facilities we could get fares in the same proportion.
On the Caledonian Railway (which pays from four to six per cent, dividends), they carry goods of all classes at an average rate of one-eighth of a penny per ton per mile, and the proof that this rate pays, is the fact that it is an internal arrangement with another company. In weight this is equal to carrying a passenger 120 miles for one penny (1d.). This would give us about 3¾d. for the 436 miles, consequently Mr. Maxwell assures us that we cannot do work in New Zealand for fifty times the rate it is done at in Scotland.
One more proof, and this time from the rates for which Mr. Maxwell is alone responsible. The highest goods rate we have in our tariff is for class A. I might, in all fairness, take the average of all classes carried by weight, but being particularly anxious to give Mr. Maxwell every advantage, I take class A alone. The freight for twenty tons of this class for the 436 miles would be £109 10s.,* and the weight of rolling stock required to haul it, say fifteen tons.
Twenty tons of passengers (300) at my average fare for the 436 miles (15s. 7d.) would yield £,233 15s., and the weight of rolling stock required would be, say sixty-three tons. In England it is usual to reckon 1/8d. per ton per mile for the use of rolling stock, but suppose (to make sure) we allow four times that amount,† and the charge would be £43 12s. for the forty-eight tons of extra rolling stock required, which would still leave £90 3s. in favour of the passengers.
Mr. Maxwell will say, "It is all very well, but you cannot fill your cars." I reply," Neither do you fill your trucks, and that it is easier to estimate closely for passengers than for goods, inasmuch as with passengers you always have a return cargo."
* In my original reply to Mr. Maxwell this figure was erroneously given as £146 6s. 8d. receivable for twenty tons of goods instead of £109 10s. as above, thus reducing the extra profit on passengers to £43 17s. instead of £90 3s. the right figure. This proves that passengers at my lowest rates Would for the longest journeys pay eighty-live per cent, better than the highest class of goods.
† This is equal to 5d. per carriage per mile. I find the usual charge in England is ¾d. per carriage per mile; but I can afford to be liberal, and yet shew that my low fares will yield a handsome profit.
Mr. Maxwell says, "Passengers cannot be profitably carried at such low fares with the conditions under which we are working." The reply is obvious. Adverse "conditions" ought to be removed. For many, if not most of them, Mr. Maxwell is himself responsible.
30. The demand made for lower fares, rates, and charges is a natural one and it is one which the Government and its officers must always be most desirous of meeting, because the granting of concessions and remedying of grievances are always popular, and therefore grateful to those in control as well as to the public.
Mr. Maxwell appears to think that the railways of the colony are his private property, and that it remains with him to grant "concessions" as he thinks fit.
31. Last year the railways yielded. £355.685, after deducting working expenses, which sum was available towards the payment of interest on the loans. This amount was about 33 per cent, of the gross revenue. If, then, the rates and fares were lowered by about 33 per cent, all round, we might expect that the revenue would just cover working expenses, and there would he no net proceeds available towards payment of interest, and there would be an additional sum of, £355,000 or thereabouts to be raised by taxation.
The commercial ignorance Mr. Maxwell displays in this paragraph is absolutely asteunating. It is almost inconceivable that a man in his position could have written it. It must also be borne in mind that this was done to the order of the Minister for Public Works, and that he has perused, passed, and laid it on the table of the House, thereby adopting the opinion expressed as his own.
The fact that such an incompetent pair are allowed to preside over the most important department in the Government, is sufficient to make New Zealand the laughing-stock of the commercial world.
That it is no mere slip, but their deliberate opinion, is proved by the fact that it is repeated and enforced in paragraphs 33, 34, and 35.
We here have the general manager of our railways deliberately signing his name to a statement to the effect that no matter what inducements may be offered, no matter what facilities may be given, both to consumers and producers, that it is utterly impossible to expand railway traffic. Could we have a more emphatic proof of the truth of my assertion that Mr. Maxwell does not possess one grain of commercial or financial ability?page 51
There can be no doubt Mr. Maxwell really means what he says. He believes that there is only so much trade to be done, and that therefore he had better charge the highest possible price for doing it. He has persistently conducted the work of the department on this assumption, and that is the cause of the serious loss we have made, and the greater loss we are now making.
I am aware that the following information will be lost on Mr. Maxwell, but it may not be on the public.
In the Southern States of America the average fare paid by all travellers is 2.84 cents per mile, and they shift their population only a very trifle over once per annum.
In the Western states the average fare is 2.56 cents per mile, and they shift their population four-and-a-half (4½) times per annum.
In the Middle States the average fare is 2.17 cents per mile, and they shift their population ten (10) times per annum.
In the New England States the average fare is 2.15 cents per mile, and they shift their population eighteen (18) times per annum.
The above facts prove conclusively that the lower the fare is, the more often will the population travel.
32. If the colony is of opinion, with Mr. Vaile, that it is a mischievous error to try to make the railways pay interest on their capital cost, it is quite easy to reduce the rates, fares, and charges, so as to make no profit.
This is addressed to the public, and it reads very like an insult. Everyone knows that it is easy to reduce and lose. It is quite possible to reduce and make a large profit, but it takes a man of ability to do it.
33. A second-class single fare for eighty-four miles is now us. 8d. If it were reduced by 33 per cent it would be 7s. 9d. Mr. Vaile proposes to make it is. 8d.
34. We must he clear on this point. We have seen that, were fares, rates, and charges reduced all round by 33 per cent, we might expect to realise no profit, and additional taxation in some form, to the extent of about £355,000 a year, would be needed to pay interest.
35. It is easy to see if they were reduced all round, as Mr. Vaile suggests, a further large sum would have to be raised to pay the deficiency of the revenue below the cost of working.
These are but a reiteration of paragraph 31. They, however, serve to show how rooted and fixed the idea is in Mr. Maxwell's mind.page 52
36. The question is asked by Mr. Vaile, "If applying the law of averages has been so successful in the cases of letters, parcels, and telegrams, why should it not succeed in the case of railways?"
37. There is a strange confusion of ideas in classing the transmission of telegrams with the conveyance of goods. It sounds like a suggestion that the transmission of telegrams should be by the ton. As regards letters, letters at a uniform postage of 2d. each will cost about £600 per ton to transmit. They will at this rate be carried from Auckland either to Onehunga or the Bluff. There is a material difference in dealing with letters or with parcels of light weight and with goods. In the former the element of weight only affects the cost of operations in the most trifling degree in proportion to the other elements which determine the cost of working the Post Office. In railway goods traffic the bulk and weight rank as chief factors in making up the cost of conveyance.
There is no doubt "a strange confusion of ideas" in Mr. Maxwell's mind on this subject, but there is none whatever in mine. Mr. Maxwell has got the idea of "by the ton" so firmly fixed as to incapacitate him for dealing effectively with that very important branch of railway traffic, the half-tons, quarter-tons, hundredweights, and smaller parcels.
38. It has often happened that persons contrast the services, rates, and fares of the New Zealand railway with those of Great Britain and other great countries, to the disadvantage of the former The New Zealand railways' management and services, etc., have been contrasted with the Midland Railway, for instance. 'I he Midland Railway is situated in one compact system, occupying a small area in the most densely populated part of one of the most densely populated countries. The Company works about fourteen hundred miles of railway, in which is invested more than seventy millions of capital; it has an annual gross revenue of over seven millions sterling. The rates of wages for working range from one-third to one-half the rates of wages current in New Zealand. The lines are most expensively and perfectly constructed, and equipped with the very finest locomotives and rolling-stock, and there is a professional control with absolute powers of management. The colony has fifteen hundred miles of very lightly constructed lines, with steep gradients and sharp curves, with light stock designed for low speeds. The system is in detached portions scattered over the whole area of a very sparsely-populated country. I he colony deliberately went in for a system of very cheap lines, and very humble accommodation and equipment, because the means were not available to do better. There can be no doubt of the prudence of adopting Such an economical course. The originators of the railway system, I am informed, never contemplated building first-class lines and equipping them in the luxurious and complete manner suitable for a densely populated country. Nor was it anticipated that wages would be lowered to approach those in Great Britain, so as to enable the working of the railways to be done as cheaply.
39. It is idle to suppose that, under such widely differing conditions, the New Zealand railway system could perform its work as cheaply as the Midland Railway system, or that rates and fares can be placed so low here as in England unless a much lower percentage of net earnings is looked for.
J. P. Maxwell,General Manager New Zealand Railways. Wellington,
17th Sept., 1885.