New-York tribune., 1906-07-08

On z-w q 90 a.z..tus wE-k q DE steamship train
hTns.ioans were Isllee te aooonpaTins etsa,
soT The Current raInbar q Te Asio Monthly" Q,
siTnsy inaeEestI
Given railway system which earns each year
sust about what IL earned the year previous.
while the capital charged against it IS each
year materially greater. how are dividends al
ways 90 be paid at the usual rate?
This IS a problem which can be worded IN
many ways: it is subject 20 much twisting and
turning about while local conditions may greatly
modify either or both OF the main premises.
But the central fact OF it IS confronting every
British railway manager, and win not down: ne
has always the skeleton in his closet, and is
fortunate if he can keep It hidden It is not the
purpose Of the present paper 20 deal with sta
tistics, but rather TO show some OF the broad
tendencies OF British railway transportation IN
their relation to the situation this side Of the
Atlantic and with especial reference to interest
lng differences in practice Suffice It. then. 70
say, at the outset. that the average capitaliza-
ton OF the British lines. as reported by the
Board Of Trade stands at some $213000 route
mile while that OF our lines is approximately
$4,000 a mile
Taken by themselves, these figures are mean
lnsIess. We are comparing single track lines
thrown across the Kansas plains. unfenced and
ly built and safeg1arded. leading into the heart
pt London AS country grows up to its
transportation system, the capital account will
f7yeI by leaps and bounds, and, in truth,
xend-ures during the last twenty years have
been ont OF all proportion to the increases IN
route mileage. We have fairly entered into the
period when the characteristic Of railway prog
ress IS the betterment and enlargement OF exist
sns facilities rather than the opening Of new
territory with hastily constructed lines But
she fresh budget Of capital expenditure charged
each year against American railways is bringing
constantly increasing returns: the money buys
1,eEy tools. which enlarge the output of the plant
in England. unfortunately, this IS not true. The
$1,000 miles of railway IN the British Isles cover
file country like the hlaments Of a cobweb; every
traffic centre is splendidly served already. and
not much nss IS to be hoped for. Gross earn
tngs increase each year, # IS true: but they in
crease very slowly, while the railway properties
built for all time. three-quarters of a century
ago by engineers who had the hardihOod 10
assume that their designs could not be bettered,
cannot now be adapted TO economical working.
but must be carried as best may be- with their
aerrfhc burden Of capital cost.
TO put the matter in a word, the English man
ayers for the last fifty years have been cap
stalking maintenance in order to pay their divi-
denda. They DO not call It capitalzing main
1enance. Theoretically, the strict upkeep OF the
line is paid for out OF earnings, and the new
capital goes into permanent betterments. larger
and more powerful locomotives heavier bridges
and many other items that leave the company
with new assets 10 set against the new llabil-
ities. But It is only too evident that, in the
face of the sharp and ever present competition
an all quarters, these capital costs do not bring
new trafic-for there is not much new traffic 70
be brought-but only serve to retain the existing
business. and to keep It from falling into the
hands Of rival companies British railways do
not suffer from competition in rates; but they
are gradually being bankrupted by competition
in facilities.
It has often been said that British railway
traffic had the characteristics of a retail busi-
ness. while American railway traffic was anal
ogous 10 a wholesale business. The extent 20
which this is true scarcely be realized by
the tourist; the difference IS fundamental. and
the conditions under which the lines are worked
are wide apart as the two continents. Some
of the British lines have recently complained
bitterly OF the serious inroads into their pas
senger revenue made by tramways working
within a radius of, say three miles from the
cifies-a traffic that the American manager
never had and does not want. The extreme
minuteness if the term may be used, of the
British merchandise business tends to destroy
all comparisons with American freight carry