Finance—Public and Private
Home Railway Outlook
[N. view of the fact that something like one thousand pillions of money is invested in our English railways and that this capital has suffered severe depreciation luring recent years, I feel. that no apology is needed For offering a few comments upon the railway outlook From the investor's point of view.
Very few words, however, are required to show that the position is a serious though not, perhaps, an alarming one. A few of the obvious points were, indeed, brought out very clearly in a recent number of the Railway Gazette. In that journal it is shown that while up to May 1st of this year the gross reeeipts of English railways showed an increase of just over .g1,000,000, that increase, largely as a consequence of the prolonged coal stoppage, has been transformed into a total decline of over £27,000,000. It is also suggested that not more than a third of the _loss has been offset by reduced expenses, and that therefore an estimated loss in net revenue may be reckoned for of over £18,000,000. For 1925 the combined net revenue of the railways was about U8,500,000, of which, however, nearly £7,000,000 was taken from Reserves. Assuming, therefore, that forth- coming dividends were to be maintained, it is reckoned that something like £25,000,000 would be required over and above the net revenue for the year. Moreover, it must be remembered that this policy of drawing on reserves to maintain dividends has been going on for some time past and, in view of repairs, renewals and extensions, it may be doubted whether the policy can with safety be pursued very mach further, for these are not the times when it would be easy to raise fresh capital for electri- fication or other purposes on favourable terms.
FACTORS OPERATING.
It is one of the many misfortunes attending abnormal occurences such as the Great War and, on a smaller scale, the recent prolonged coal stoppage, that there is rather a tendency to attribute all subsequent evils to the one cause. That the coal stoppage can be held mainly responsible for the disastrous showing of the past year is, of course, beyond question. Indeed, it can be admitted that but for the coal stoppage, net revenue would probably i have shown an expansion instead of an appalling decline. Similarly, it can also be recognized that in the absence of fresh labour disturbances, the outlook for the coming year is more favourable, and already, indeed, traffics are beginning to increase as a result of arrears of goods traffic.
RAILROAD POLICY. •
Nevertheless, I believe that railway shareholders would be well advised in regarding the present moment as offering an exceptional opportunity for a general over- hauling of policy. That railroad directors should feel that they have special responsibilities to their share- holders and to the vast numbers represented. by their staffs..is natural, but I consider that a sense of these obligations has obscured the claims of the general public which provides the revenues and, as must always be the rase when the.intenst; of the public are overlooked, or are insufficiently appreciated, it is the shareholders and even the staff itself who suffer in the long run.
INADEQUATE FACILITIES.
So long as high freight charges, passenger rates and diminished facilities tend to depopularize the railways and drive traffic on to the high roads, shareholders will never be able to regard their railway stocks as really satisfactory investments. Most, if not all, of the railroads, both in main line and local traffic, and especially the latter, have failed to provide for the increasing population and the increased demands for transport facilities, while by the curtailment of the period of the summer service of. trains not only do the travelling public and the seaside resorts themselves suffer, but the congestion of traffic, with people standing in corridors who have paid for seating accommodation, becomes necessarily intensified by this shortening of the period of the summer service. If anyone doubts these facts let them compare a Bradshaw of last August, when the population was much greater than in 1918, with an August Bradshaw of that year. Those were the days when there was something like a keen desire for traffic and when on the local lines some attention was given to the comfort and convenience of the season ticket holders. To-day the season ticket holder pays fully 50 per cent. more for his season ticket with diminished facilities and with the attention of officials chiefly concentrated upon a daily and evening inspection of his ticket to see that by no chance he is defrauding the company. That the grouping and fusions of railways may have occasioned some economies can be admitted, but that they have ministered to the spirit of monopoly and indifference to the requirements of the public there can be no question, while the results even to the shareholders of the new policy is obviously un- satisfactory.
SOME HANDICAPS.
I am not, however, forgetting the extent to which railways have been handicapped by such matters as the high cost of coal and the uneconomic wage paid to railway staffs, while under Government control, and it is just here that I suggest the opportunity now offers for an overhauling of the general policy. If the outcome of recent events in the coal industry should not bring about increased output and cheaper coal, not only the railways but the whole community must suffer and it should be the task of the railroads to bring all possible pressure to bear if the price of coal is maintained at a high level. It is, however, largely a question of insisting upon the principle of the economic wage and it is a principle which must be applied generally.
THE ONLY WAY.
If in the coal industry increased output per man and enlarged output as a whole, with lower prices, is the policy best calculated to ensure prosperity to coal owners and the maximum amount of employment, so a similar policy is the one which is likely to ensure ultimate prosperity to the railroads, and in each case it will be noted that the policy implies a consideration of the requirements of those who pay for the coal or pay for the transport as the case may be. It is, indeed, the only policy, moreover, which is in harmony with the well- being and good fellowship of the entire community; it is the motto of service as distinct to a policy of aggrandisement and profiteering and has probably as much to do with good social order and happiness in a community as any principles laid down in purely ethical teaching. A human fact underlying many of these problems is that troubles arise from abuse of power; whether that power is exerci§ed by a combination of coal owners, railway • magnates or a trade union, and ultimately the mistaken policy reacts upon those responsible for it. . . As I have already said, I am no railway expert and I have little doubt that something of what I have ventured to say by way of general criticism may be wide of the mark, in which case I do not doubt there are many who will hasten to communicate to the Editor of the Spectator the true state of affairs. I can only say, however, that in the comments I have made I have had quite as much in mind the interests of railway stockholders as those of the travelling public, and it is on their behalf that I have ventured to offer these suggestions to those who have in their hands the organization of our railroads.
ARTHUR W. KIDDY,.
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