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The Pamphlet Collection of Sir Robert Stout: Volume 72

Railways: Mr. G. Findlay's Book

page 7

Railways: Mr. G. Findlay's Book.

I have carefully read the notice which appeared in the New Zealand Herald, of Saturday, December 4, of the work recently published by Mr. George Findlay, General Manager of the London and North-Western Railway, on the "Working and Management of an English Railway." The object is to make it appear that, no matter what the fares may be, people will not travel, and that a reduction in fares must necessarily mean loss.

I have more than once had occasion to remark that our railway authorities appear to be incapable of reading the lessons that railway statistics teach, this reviewer seems to be in the same position, and before I have done I shall show that Mr. Findlay's facts and figures, so far from controverting my position, in the strongest manner support it.

All who know anything about railways know the name of Mr. George Findlay. He is one of the foremost of English railway experts, and no one is better able to argue the question from his point of view.

Mr. Findlay's statement simply amounts to this: That certain reductions in fares were made, and that those reductions have not paid the English railway companies.

It is a marvel to me that it ever could have been thought that they would pay.

In saying this, I am aware that I lay myself open to be charged with presumption. I know that some of the leading financial men of the great financial country were concerned in making this arrangement. Still, the result proves that they were out in their calculation, for it is certain that their only object was to make money.

At the risk of being thought egotistical, I must direct attention to the fact that on more than one occasion I have foretold that certain financial operations in connection with railways would not realise the expectations of the operators.

In March, 1883, three months after my first letter on railway reform appeared, the department reduced ordinary passenger fares by 25 per cent. As soon as this alteration was announced I wrote as follows:—"I am strongly of opinion that the concession made will simply mean loss so far as the revenue is concerned."

The result for the year showed a loss of £25,242, and 10,734 fewer people carried. Of what use was this reduction? It was similar to that made in England. The sole object of Messrs. Maxwell and Hannay was to make money, and they failed.

In 1884 Mr. Mitchelson put forward his famous tariff, which was to add £150,000 to the year's revenue. I pointed out that the gain was more likely to be £50,000 than £150,000. The result showed £50,372.

I could multiply instances, but these are sufficient to show that with the most meagre information at command, I am able to form a correct estimate of the effect of an increase or decrease in railway charges.

Let us now examine the reductions made on the British lines. They were as follow:—
First Class Fares.
Old fares.
2d per mile.
New fares.
1½d per mile.
£ s d £ s d s d
20 0 3 4 0 2 6 0 10
40 0 6 8 0 5 0 1 8
80 0 13 4 0 10 0 3 4
120 1 0 0 0 15 0 5 0
Second Class.
20 0 2 6 0 2 1 0 5
40 0 5 0 0 4 2 0 10
80 0 10 0 0 8 4 1 8
120 0 15 0 0 12 6 2 6
Third Class.
No reduction

The object was, of course, to increase the volume of first and second class traffic. It could not have been intended to operate on third class traffic, because no reduction was made in that class. We shall see how they succeeded.

I have not the figures before me showing the numbers carried in the various classes in 1872, but in 1875 they stood thus: First and second class, 22 per cent, of the whole; and third class, 78 per cent.

With all due respect I submit that the ridiculous reductions quoted above, and these operating on only 22 per cent, of the traffic, could only mean financial disaster. I wonder how any sane men could have expected anything but loss from them. They were not enough to open up fresh trade, and must lead to increased proportionate expenditure.

That the operators intended, and expected, to increase the first and second class passenger traffic is obvious, or the reductions would not have been made. That they failed miserably in their attempt is proved by the fact that this class of traffic, year by year, steadily declined till from 22 per cent, in 1875 and no doubt a higher percentage in 1872, it fell to only 13½ per cent, in 1885.

It cannot be pretended that this falling off in trade was due to the fact that these reductions were made—they simply had no effect whatever, and were only a gift to certain people.

In 1872 the revenue of the London and North-Western Company from first and second class passenger traffic was £1,378,032. In 1882 page 8 it had shrunk to £951,313. Thus we see that notwithstanding the great increase in the population and trade of the Kingdom the revenue received from these two classes was actually less by £426,719 than it was ten years previously. Could there be a more complete failure of any financial operation?

During the same period the third-class traffic of the kingdom increased from 392,741,177 to 603,762,117 fares, and the revenue from this source from £12,985,829 in 1872 to £17,588,730 in 1882, but it is evident that this increase was not in the least respect due to the financial operation mentioned above.

By the end of 1888 the revenue of the London and North-Western Company showed a further decrease of £112,729 from first and second class passengers, and a further increase of £187,071 from third-class passengers.

The article goes on to show that on the London and North-Western line the receipts per passenger train mile have fallen from 52.30 d. to 43.08 d., and the statement is made: "This is due to the increased mileage run, the greater weight of the trains, and the reduction of fares."

If this statement is put forward in good faith (I understand it to be the statement of the writer of the article, and not Mr. Find-lay), it is another proof of the inability of the reviewer to understand the teaching of statistics he ought to have perfectly at command.

Here are the facts. This is the result of the working of the whole railways of the United Kingdom:—
1875—Passengers receipts per train mile 60.06
1885—Passengers receipts per train mile 48.32
1875—Goods receipts per train mile 75.32
1885—Goods receipts per train mile 69.85

Did the reductions, etc., in 22 per cent. of the passenger traffic cause the falling off in the receipts from goods traffic?

This falling off has been steady and continuous year by year for the last sixteen or more years, ana shows clearly that there are influences at work affecting the whole railway traffic. What are they? Clearly not—as our department would have us believe—the reduction in the fares charged for 22 per cent, of the passenger traffic.

I think I have shown that the statement made that, "The introduction of reduced fares and increased facilities since 1872 has led to these results" is not in accordance with facts and is misleading.

So far I have dealt with the construction the writer of the article puts upon Mr. Find-lay's work. I have not yet seen his book, but where his words are quoted he seems to me to say something very different.

He very distinctly states that a large trade is to be created by giving "low fares and season tickets between all the larger centres of population and places within a radius of 20 miles so as to build up a residential traffic." This is precisely what I propose to do.

Mr. Findlay further states that his remarks as to long distance traffic, "of course" do not apply "to the traffic between large towns and seaside or other holiday resorts." Now, if you take this out, what have you left? Is not the traffic mentioned fully nine-tenths of the whole? It is more likely nineteen twentieths.

What we may gather from Mr. Findlay's facts and figures is this:—
1.They prove incontestably the soundness of my oft-repeated assertion that a moderate reduction in fares must lead to financial loss.
2.They also prove that the wants and requirements of the people are such that they can only avail themselves of the cheapest transit facilities.
3.That when cheap and good transit facilities are provided the people eagerly avail themselves of them.
4.That a reduction of 25 per cent, did not lead to any increase in the number of travellers.
5.That there has been a large increase in the passenger traffic of the United Kingdom.
6.That after the usual fashion of railway controllers, the companies in England withheld cheap fares and improved facilities until the demands of the public and the pressing requirements of trade forced them from them. It was not the companies that developed trade, but the increasing trade forced the hand of the companies, and wrung "concessions" from them that were very reluctantly given.

Thus I claim that Mr. Findlay's statements, so far from disproving my position, in the strongest manner support it.

I will now deal briefly with the conclusions drawn by the reviewer from Mr. Findlay's book.

He states that "it would appear that any great reduction in fares is likely to lead to heavy financial loss." I want to know why? The result depends on the system and extent to which the reductions are made.

There is no analogy whatever between the small reductions made on 22 per cent, of the traffic in England, and the sweeping reductions on the whole of the traffic which I propose to make here.

The reviewer is, evidently, quite unable to see the difference between reducing fares and rates on an even mileage basis, and giving low fares and rates on a stage system; and our Commissioners seem utterly unable to comprehend the vast difference in financial results obtainable by reckoning fares and rates by a stage system, having severed stopping stations within one stage, and a system (mileage) where there are several stages between any two stopping stations.

On the one system low charges pay, because each seat or truck may, and, as a rule, does, earn the, through fare several times in each stage, while in the other the through fare can only be earned once.

This is the reason why low charges pay on the one system, while on the other they mean loss.

I ask attention to the following statement:—"The third-class fare for 50 miles of travel being in England 4s 2d whilst a scheme has been considered to make the fare for the same distance in certain parts of New Zealand fourpenee."

This is a repetition of the misrepresentation to which the advocates of the present page 9 system persistently subject me. They try to create the impression that I rely for financial results on carrying passengers 50 miles for 4d. They know well that in nearly every instance my lowest through fare for a 50 mile distance is 1s 8d, and this fare may be paid several times over.

In England 50 miles of third-class travel can only produce 4s 2d. Here under my system, even on the 50 mile stage for 4d, which is such a terror to our department, from 5s to 6s would often he obtained. The charge is fourpence for the whole or any portion of the stage, but there are from fifteen to twenty stopping stations within these stages.

The accountant of the railway department. Mr. A. C. Fife, has proved to demonstration and signed his name to the statement that two travellers paying my low fares will give a better financial result than one traveller paying the high fare they now charge him.

I have constantly pointed out that the chief cause of the failure of the railway system is the practice of reckoning fares and rates by the mile, which causes the area or circuit of profitable railway working to gradually but surely and continuously contract upon the great centres of population. Mr. Findlay seems to say that in the United Kingdom this circuit is now limited to 20 miles. In this colony it certainly does not exceed 30 miles.

The reviewer states that the conditions of railway working in England and New Zealand are very different. Most certainly they are, and our railway department ought to be able to see that the conditions are all in our favour and not against us as they imagine.

In England railway traffic is very fully developed. Here, although we have railways, practically we have no traffic, especially the best paying portion—passenger traffic.

In England they work with two, four, or more lines of rails; here we work with one only. In England many, if not most, of the railways are taxed to their utmost carrying capacity. In some instances trains are started at a minute and a-half intervals, consequently even a small increase in the traffic must mean considerably increased cost—in some cases it means absolute loss.

For this reason it is doubtful if the passenger traffic of England could be increased even 10 per cent, without greatly increased cost. Here we have the testimony of Messrs. W. Conyers (late Commissioner of South Island Railways), R W. Moody, James Stoddart, and T. D. Edmonds, all railway men, that we can treble our passenger traffic without increased cost. We all know that our carriages run practically empty.

Before the Railway Committee of 1886, Mr. Commissioner Hannay gave evidence that the average number of passengers per car on the Hurunui-Bluff section was seven (7) only, whereas they are able to carry forty (40). Yes the conditions are certainly very different. In England the traffic is all developed, here it is all to be developed. It is a pity our Commissioners cannot see the difference.

There is one other condition, population. We are told we have not sufficient population. It will be time enough to say this when we make use of the population we have. With more than five times the railway accommodation, in proportion to population, we do less than a fourth of the passenger traffic they do in the United Kingdom, also in proportion to population.


Wilson and Horton, Printers, Queen and Wyndham Streets.