The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-11-29
CHINESE RAILROADS
FINANCIALLY SOUND
Operating Revenues Increased
About A. Per Cent. in Four
Year Period.
FIXED COSTS LESSENED
Extension of Lines and Stand
ardization of Equipment Be-
ing Pushed Steadily.

PEKIN. Nov. THAT very sound
fundamental financial condition prevails
on the Chinese Government Railways is
indicated by a summary report released
to-day by the Ministry OF Communica-
lions here, showing the working results
of the railways for 1919 in comparison
with the previous four years. The ac-
counts are not yet closed on all lines, but
for the purpose of obtaining an esti-
mated working result for the year re-
ports from the different lines have been
used to make up the summary report.
For the five years from 1915 to 1919
| operating revenues have increased from
S57 900. 900 to $S2,000,0O0. New lines to
the extent of some hundreds of miles
have been excluded, being considered
still under construction" The increase
in operating revenues is about A per
cent, or IL per cent per year on the
average. At this rate revenues may be
expected to double upon existing lines
every ten years. The increase in reve-
nues during the last five years has not
been regular due to unusual flood con-
oitions in 1917, which interrupted traffic
a period of three months. Hence the
revenues for 1917 were very much re-
duced and considerable tonnage was left
over, which swelled the traffic of 1918
beyond its normal proportions.
While operating revenues have in
creased $25,0O0O00, operating expenses
have increased only 100000, from
something over s30,0O0000 to s37, 200, 0O0
Because of certain accounting adjust
ments, the 1915 figure was perhaps over
stated by $1,000, 900, and the increase
should therefore be from S29. 100000 to
S37. 200, 900, or SIS, 00O, 900. Thus the increase
in operating expenses is only 2S per cent.
compared with an increase in revenue
of "A per cent. Operating ratio shows
a decline from 50 per cent in 1915 to 10
per cent. in 1919 and the present return
on the cost Of the property is increased
from GA per cent to 1917 per cent Com
pared with the general run of European
or American railways, net revenues
yielding a return on the investment Of
1917 per cent. are very good.
Costs Greatly Decreased.
Due to the paying off of mortgage
bonds and the more favorable rates of
exchange. the cost of interest payments.
taxes &C., the income debts over the
five year period have decreased from
over $1,000, 900 in 1915 to less than $1,000
900 In 1919 On the other hand, income
credits have increased steadily, coming
from rentals and from investments of
railway funds in Government securities.
Such income is nearly four times as
great In 1919 as it was in 1915. or consid-
erably less than half the 1915 amount.
Although the railways in China have
been built largely by means of foreign
loans. the Government has advanced
funds for construction and other pur-
poses, and out of earnings had built
improvements and paid off n consider
able portion of the loan indebtedness.
The final result is that while the mort
gage and other secured indebtedness of
the lines stands on the books at $751;
1877 9l1 O5 the Government Investments
permanent and temporary-amount 10
s1ss 623 76S 81 or about half as much as
the indebtedness. These figures have
been obtained from the old rates OF eN-
change
On the whole the summary report
figures indicate that practically all the
Government lines are in very sound
fundamental condition, and that the
prospects are extremely good for
future revenue and profits. This con-
dition seems assured when 1t is con-
sidered that lines like the Tientsin-
Pukow and the Shanghai-Nanking,
which were most unpromislng four
years ago, are now paying handsome
profits, with traffic growing at the rate
of about 20 per cent. per annum IN
spite of shortage Of equipment, which
Is now being overcome by large pur-
chases of both locomotives and wagons.
Elimination OF Waste.
At the present time war prices for
4tr,rr
nenses. but Il appears very probable
that administrative Improvements VIII
be able to offset this considerably.
While the uniform classification of ac-
counts has been in force a full five
years. no comparative figures were
available until about year ago by
means of these statistics the usual dis
coveries have been made as to waste in
various departments. There has not
been sufficient opportunity to demon
strate what can be done by way OF cor
rection. but what has been done through
cost accounting elsewhere will no doubt
be repeated to n certain degree in
China. If this be the case it is prob
able that a so per cent increase in
traffic can be handled with an increase
in the number Of employees Of not more
than is or 20 per cent. A 10 per cent.
increase In traffic in 1918 was handled
with an increase Of u per cent. In the
number of employees
The Standardization programme which
is now under way. the general inter-
change of rolling stock which began
with 1920 through billing of goods.
which will go into effect In 1921, all
will have considerable effect in aug
menting revenue and holding down ex-
penses. In fact. the Ministry of Com
munications is just now taking into It's
hands the tools for making these rail-
ways into an effective instrument for
profit and economic transportation.
What has been done up TO date has
been done because OF the more in
herent worth of the properties and the
integrity of those in charge OF them. In
the future much should he expected OF a
conscious direction OF the entire system
toward desirable end.