Evening star., 1947-07-27

tinual problem for the government.
But few people realize what the
Canadian National has been up
against from its beginning. When
the government took over the lines,
the funded debt due to the public
was $4,000, 900 and the amount
due on Dominion government ac-
count was 1924 1000, 900, or a total of
81, 1884 900, 900. This debt has always
been milestone for the peoples
railway" The CNR did not have
the alternative of going through re-
ceivership or writing down their
bonded Indebtedness as the govern
ment is the guarantor Of many of
their securities and they could not
default without affecting the credit
of Canada.
Traffic Levels Off
During the war years the Cana
dian National paid the government
more than 100000 900 in interest
and earnings, but now the leveling
off in rail traffic has come and in
1916 the CNR operated at a deficit
Of $a,s61 $40 as compared with an
income surplus of $24,756,130 in
1945.
In their financial report of 1916
the Canadian Pacific Railways state
that it is necessary to 60 back to the
days Of depression or to the days
of the railroads beginning to find
net earnings as low as those realized
in l946 and there is no record Of an
equally low rate of return on invest
ments. Accordingly there have been
no increases in passenger and freight
rates on either railroad. Canadian
freight charges, lower than any
in the commonwealth. Europe or
America, have remained at virtually
the same level for more than two
decades. AS q result of this. Cana
dian railways have made application,
through the Railway Association of
Canada, for an increase in freight
charges.
The Capital Revision Act of 1887
reduced slightly the debt of the
CNR, but interest charges still
amount to 2s per cent of gross rev.
enue.
More Than Rail Service
The Canadian Pacific's ratio Of
debt charges is II per cent, the diff
ference between this and the
CNR's IS per cent partly accounts
for the CNR losses in the years
when the CPR operated at surplus.
To relieve the Canadian Nationals
debt it has been suggested that a
large block of securities formerly
held in Britain and transferred to
the Canadian government during
the war be replaced by income bonds
on which interest would be paid only
the years profits are made. Thus
the Canadian Nationals fixed
charges would be reduced by some
|S13,o00,oo0 yearly.
The two organizations give. much
more than just rail services to the
Canadian public. They operate
telegraph services, hotels, summer
resorts, steamship lines. express
companies and air services. AL
though both railroads vie for SUI
periority, several Of their enter
prises are operated jointly. Among
these are terminal facilities in sew
eral Canadian cities. The beautiful
Hotel Vancouver is also managed on
behalf of both the railways.
Comparison Difficult
Canadian National operates the
Trans-Canada Airlines, the Domin-
IONS best-known air service. Trans
Canada's fast daily hop between St.
Johns, Newfoundland, Halifax and
Vancouver flies mainline route of
nearly 5000 miles. This airline links
not only the principal cities of Cam
ada but also has transatlantic
flights which promote closer rela-
tions with Great Britain. The
Canadian Pacific Airlines do not
have the extensive service of the
Trans-Canada but operate between
Montreal and Quebec and connect
several Western Canadian points.
Looking at the Canadian railway
situation as it stands today. public
ownership versus private enter
prise, one Is led to think that the
privately owned company is more
profitable, both to the government
and to the public. Unless something
is done to reduce the debt of the
CNR it will inevitably operate at
deficit, therefore the solution to
the problem seems to lie with the
government. A fair comparison of
the two railways cannot be made
successfully as the CNR has al
ways been dragged down by the
weight of the debt 1t carries.