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The Pamphlet Collection of Sir Robert Stout: Volume 72

No. 9. — The Financial Argument, Concluded

No. 9.

The Financial Argument, Concluded.

When I first laid my scheme for reforming the administration of our railways before the public, the passengers' fares, first class, were, for 7 miles, 1s 9d; for 21 miles, 5s 3d; for 100 miles, 25s. Three months after they were reduced 25 per cent., and the present absurd arrangement re return tickets made. I immediately stated that this reduction would mean loss. A year's trial showed that I was right. The stupid transaction led to a loss of £25,000, and no increase of traffic.

The fares were then raised again to the present rates, which are for the distances given 1s 6d, 4s 5d, and 20s 10d. When, therefore, I proposed to replace these by fares of 6d, 1s 6d, and 3s, and asserted that two of my fares would produce a larger amount of money than one of the old fares, it is no wonder that most people thought me a lunatic, as the statement seemed to defy the laws of arithmetic. The explanation of the seeming anomaly is simple enough; it lies in the fact that the present average fare is only 1s 11½d, and that I have so adjusted my system of stages that under it the average fare cannot beless than 1s, unless there is such a development of "wayside traffic" that the total revenue would largely exceed the amount calculated upon, and in that case we should of course all be pleased.

I have no doubt, whatever, that in the economy of working the new and much simpler system, at least 20 per cent, of the working expenses might be saved, which would equal £130,000 per annum. This statement is borne out by experience on the Whangarei Kamo line, where my system has been applied so far as it is possible to apply it on so short a railway.

The immediate effect was to reduce the working expenses by no less than 48.9 per cent. In Whangarei it is openly stated that since the appointment of the Commissioners orders are frequently sent from Wellington to debit to the working expenses of that line, items of expenditure that have never been incurred there, but notwithstanding this the working expenses for 1889 were 29.6 per cent less than they were during the last year of the old system.

Experience in Hungary also supports my statement. There the passenger traffic has been increased by 160 per cent, and the re-venue by 2,000,000 florins, while the working expenses have not been increased in the least; indeed, it is claimed they have been decreased.

It may be, and has been, asked, how is it possible that reckoning fares and rates by stages of several miles in length, can give a better financial result than reckoning by stages of only one mile each. For this reason.

When you reckon by stages of one mile only, there are several stages between each stopping station, except in rare instances, and even then the charge being by the mile the through fare can only be earned once by each seat in a carriage. When you reckon by stages of several miles each, you have many stopping stations within each stage; as, for instance, in the stage from Pukekohe to Frankton Junction there are fifteen stopping stations within that one stage, and the charge being the same for the whole or any portion of a stage, it is manifest that each seat could earn the stage fare fifteen times over, or 5s instead of 4d, during the one journey, and as a rule the stage fare would be earned several times over. This is how the Manhattan Railway of New York makes such vast sums of money by charging twopence half-penny (2½d) only for the whole or any portion of 38 miles.

This Manhattan Railway is a splendid example of what may be done by workings line on the stage system. The Manhattan Company has a lease of this railway, and in 1885—the latest information I have to hand page 15 —after paying £291,808 for rent and interest, they disbursed £312,000 in dividends. The net earnings were 41.62 per cent., all out of a universal fare of 2½d, and this on a line that cost £168,743 per mile to construct, while ours cost less than £8000.

The London Metropolitan is the most costly line in the world. It cost £656,000 per mile, and yet it daily carries multitudes of people at a fare of 2d only for the whole or any portion of 16 miles, which is equal to 200 miles for 2s 1d, and yet our Railway Commissioners tell us that on our cheap lines we cannot carry a passenger 100 miles for 2s without severe loss. But what is the opinion of our Commissioners worth? In every line they write, every word they utter, every act of their administration, they prove their thorough incapacity to form a correct estimate of what railways can and cannot do, and I say this country will not be true to itself if it does not insist on their speedy dismissal. They have harried the colony long enough.

Many of my supporters have said to me, "Your proposals are too extreme, your reductions are too great." My reply is, that it is the sweeping reductions that will secure the financial success. We must have such a reduction as will arrest the attention of everybody, and compel them to travel. We have seen that a reduction of 25 per cent., both in this colony and in England, did not secure one additional fare, and I very much doubt if a reduction of 50 per cent, would do much better. Unless the reduction is so great that every labourer in want of work can travel 150 miles to get it there will be no financial success, and the labourer cannot afford to pay higher fares than those I propose, nor is there any valid reason why he should do so.

One great advantage this stage system has over the mileage system is this, if for revenue purposes it is necessary to collect a larger amount, this can be done without disturbing local traffic at all. Suppose, for instance, on the Auckland lines it was thought desirable to introduce a stage station at Mercer and another at Huntly, the effect would be to raise the through fare to Te Kuiti from all stations north of Mercer and vice verm by 1s first and 8d second class, but the local traffic, that is the traffic between the shorter stages, would remain as before. Under the mileage system the effect would be felt all over the lines.

As to the question—can passengers be profitably carried at the rates I propose?—I reply that the examples given above abso-lutely prove that they can be carried at far less rates. The Manhattan railway costs per mile twenty-one and a-half times as much as ours have cost, but the only fare charged on that line is not one-eighth part of my lowest through fares. The London Metropolitan cost eighty-two times as much as ours, but their lowest fare is only half that which I propose. There can be no doubt that this low rate pays them, for they are so overloaded with traffic that they can hardly work it, and therefore are not obliged to carry at low rates to secure fares.

I have given numerous illustrations of how cheaply passengers can be carried; and our Railway Department has met me by stating that my calculations were ridiculous, but they have never made even a decent pretence of demonstrating them to be unsound.

A simple illustration will show how cheap transit by railway may be made. The combustion of one ounce of coal in a locomotive engine, will move one ton, one mile on a railway, 15 passengers weigh one ton. So after making ample allowance for all other charges it is evident we ought not so have to pay what we do pay in transit charges.

The tact is our railway controllers have been in complete and blissful ignorance of what railways are capable of doing, and they are so wrapped up in official conceit that they will not learn. The Hungarians will soon wake them up. If our railway magnates had been blessed with a little common sense, a little decent courtesy, a little power to investigate, they and this colony might have taken the lead in the great forward movement that is now taking place, as it is we must follow in the rear. They smile complacently in their official chairs, and fondly imagine that by obstruction they can arrest progress and preserve their cherished "no-system," but they are just as powerless to stay the present movement as with their puny arms they are to arrest the mountain avalanche.

This is what the Hungarians have been doing in passenger traffic by means of their stage system.

1888. 1889.
No. of Passengers. No. of Passengers.
August 434,859 1,112,440
September 427,673 1,146,197
October 413,586 1,059,602
November 1342,432 971,617

Thus during four months passenger traffic was increased by 2,677,306 fares, and the revenue by 680,982 florins.

These figures are derived from information very courteously sent by the Hungarian Minister direct to the Railway Reform League. Since then we have the result of five months' working of the new system, the outcome being an increase of 2,000,000 florins in the revenue. Mr. Baross, the Minister, states that this vastly increased traffic has been secured without the Government "having to buy a single additional carriage or to add to their staff of servants. On the contrary, it is proved that the new tariffs have enormously diminished incidental expenses, and particularly the cose page 16 of the booking-offices. Formerly 697 categories of tickets were sold at the terminus of Buda-Pest; now there are but 92 categories, which means that six-sevenths of the labour of booking, sorting, controlling, and auditing have been abolished. A single booking clerk can now do the work which formerly required two or three clerks, while in the administrative department of the railways the saving on clerks' salaries is even greater."

This is very important. It fully bears out my oft repeated statement that we could treble the traffic on our lines without increased cost.

On committee Mr. Commissioner Maxwell (see page 57) stated that on the main line alone from Auckland to Te Awamutu, there were 1156 changes, or journeys requiring as many different tickets. On my system there would be only forty-nine (49) changes, which means there would be not one twenty-third part of the above described work to perform. What a saving there would be here.

Again Mr. Hannay stoutly asserted that to double the passenger traffic on the main Hurunui-Bluff line alone would add £55,000 per annum to the working expenses, but he afterwards stated that the average number of passengers carried per carriage in this section was only seven (7). What becomes of his estimate in the light of the Hungarian results?

This is how their carriages were occupied before the recent changes: nine-tenths of the first-class seats were unoccupied, four-fifths of the second class, and about two-thirds of the third class. Mr. Hannay has shown that on the Hurunui-Bluff line 33 out of every 40 seats are empty, and yet he says that to double the traffic on a part of the line only will cost an additional £55,000 per annum.

There is one point of special interest about this Hungarian experiment. Our Commissioners and their friends have always loudly asserted that people will not travel, no matter what inducements are offered, and that the proposed scheme would fail because the long distance travellers could not be obtained. What do we find in Hungary?

Prior to the introduction of the new system, no account was kept as between long and short distance travellers; there is now. During the four months of 1888 the total number of travellers was 1,618,550, while during the four months of 1889 the long distance travellers alone numbered 1,991,944, or 373,394 more than the total of travellers under the old system.

Is not this another glaring proof of the inability of our Commissioners to estimate what ra lways are capable of doing? Should similar results be obtained here—and they would be better—the financial success would be enormous.

Do not the facts given above prove that I am justified in saying that two of our Railway Commissioners are merely traffic managers, and that apart from that they are supremely and contemptibly ignorant of everything pertaining to a railway; or worse. I ask any candid man to read my article No. 8, and then say if it is possible for me to believe that such evidence was given honestly, or any other assumption than that the men giving it were commercially and financially incapable.

Strong language, says somebody; yes, and why not? It appears to me that there is great need of strong language. These men, by their ignorance or selfishness, have barred the progress of this country for years past, have brought ruin on thousands of its colonists, and they have robbed New Zealand of the glory of leading the world in the great forward movement which is now taking place.

Again, I ask my fellow-colonists to re-member that those who control the roads of any country, absolutely control its trade and commerce, and most of its other social conditions; and I also again ask what can we expect in this colony but misery and disaster, when we allow such men to remain in such positions? I do hope that we shall wake up to a true sense of the position, and during the next session of Parliament repeal the existing Act, and send our Commissioners to some post where they may be more useful.