The sun. [volume] (New York [N.Y.]) 1833-1916, 1876-06-01

sudden wealth, or how and from whom 1t
was acquired.
A BIunder In Railway Management.
Why is it that even with honestly con-
Quoted railroads the expansion Of traffic
has not been attended with proportion
ate increase in dividends' The average
rate of interest paid on railway stock dis
tinguished from bonds in France is nearly
eleven per cent, in England il is scarcely
four, while in our own country IL can
scarcely exceed the latter figure, although
the cost OF construction has been much
less than in Europe. Adequate data for
an exhaustive analysis OF expenditures
and receipts are not accessible in the
United States, but English companies are
compelled by act Of Parliament TO audit
their accounts in great detail. By the aid
of late statistics of this nature and nn able
report on British railways addressed to the
French Minister of Public Works. we are
enabled TO trace one great source of leak
age, aud point out a radical flaw in Ameri-
can rs well as English administration.
1t is now susceptible of proof that the
railways o: the United Kingdom have
their trucks the slow, heavy traffic for
merly controlled by river and coast craft
and by canals. In 1873 the gross passenger
revenue earned by oil these roads amount
ed 20 twenty-four millions sterling, OF
which the net profit was eighteen and one
half millions, or say seventy eight per
cent. On the other hand, the gross mer-
chandise returns. computed at some nine
teen millions, showed profit of less than
seven millions, or about thirty-flve per
cent. Finally, the mineral traffic which
was audited separately, and TO which we
would direct special attention, yielded n
net profit OF less than 100000 10y an ex-
penditure OF twelve millions and n quar-
ter; in other words, less than three per
cent ON the running expenses. When we
| supplement these figures with the fact that
| the augmentation of track aud rolling
| stock mainly exacted for the transport of
minerals had entailed in n single year an
| addition TO invested capital of more than
| twenty millions sterling, ii becomes obvi-
Gus that traffic OF this sort was n positive
injury TO stockholders.
| In estimating the relative cost OF con-
Quoting the fast and slow business OF rail
| WAYS, we should distinguish between what
may be called the road" or fixed expen-
diture. and the train" or variable ex-
penses. OF the latter. those which increase
with the augmented velocity of trains, are
mainly confined TO the cost Of traction,
| which Is itself measured by the consump-
ton Of fuel According to the calculations
OF BRUNEI and others, only about ten per
| cent. is added to the cost Of running n
train by trebling its speed. With regard
to the wear and tear, not velocity per Sc,
but shock, must be regarded; i'll other
words, the weight of machinery no less
than the rapidity OF its motion. Thus a
freight engine, drawing mean weight of
say 400 tons will exert more destructive
force on the complex system OF track and
rolling stock than passenger engine with
n mean draught OF perhaps ninety, al
though the latter should run three times
as fast. If now we look at the "road," or
fixed expenses, we find that the lines are
engrossc q ten hours by the mineral traffic
alone for every hour that they are occu-
pied for passenger transportation. 1t is
clear, therefore, that the fixed annual
charges OF railways, including the salnl lbs
OF officers, watchmen. and stationary en-
ployees generally, ought to be debited in q
far larger proportion to the former than
to the latter branch of business.
Whatever has been stated respecting the
movement OF minerals by rail, may be ap
piled with nearly equal force to the greater
portion of that bulky merchandise former
ly transported by canal boats and coastnl
vessels. The Immense superiority in earn
ing power of passenger line compared
with one conveying mixed traffic is illus
trated by the working OF the London Met
ropolItan Railway. The cost OF construct
ing this subterreanan road exceeded tire,
and quarter millions Of dollars per mile
and II the working expenses bore the nor
NAL proportion to gross income of Engllsl
lines generally, a business of $500, 900 PEI
mile would be required in order to pay fou
per cent. on the investment. The traffic pc
mile last year was in fact only little owe
1901 600 and yet four per cent. was divided
, on the ordinary stock.
For the first time since the accounts o
6 the annual movement of English road
+, have been published, an increase in tn
gross receipts TO the amount of one anC
quarter millions sterling has beer
, accompanied by an actual deoreas
in the net revenue amounting t.
! 100000. That diminished net earning
| moreover, had TO he divided ever al
l invested capital larger by twenty-one mil
e lions Of pounds than that OF the preceding
a The cause OF this unsatisfactory change
4 the Increase of working expenses to tn
ratio of ifty-six per cent. on the gros
. revenue, while the Investment account ha
| been steadily swollen, AS We have shown