5. The rehabilitation of the railway workshops, which suffered heavily from looting and damage during the war, was completed during the year with the erection of a new foundry to replace the old one which was falling down. The re-railing programme made good progress, but was still behind schedule owing to the difficulty of obtaining sleepers, and work had eventually to be curtailed. All other rehabilitation work was practically finished and, when the new coaches arrive, the railway will be in a better position than in pre-war days so far as rolling stock, equipment, plant and buildings are concerned.
6. Every effort at economy was made during the year but, unfortunately, these efforts were nullified by the rise in prices of many commodities. This was particularly so in the case of coal and fuel oil which rose from an average cost per ton of $83.79 and $136.47 in 1950/51 to $129.59 and $167.20 respec- tively for the year under review. This alone resulted in an increased expenditure of $308,140, despite a cut of 25% in the train service from May 1st. Staff was reduced where practical, and the numbers employed in March, 1952 were 782 as against 858 in March, 1951.
7. Although the future prosperity of the railway depends on a relaxation of the restrictions now in force, it is possible that the post-war development and increase in population of the New Territories might allow of a small profit on working being made from the carriage of local passengers and goods only. Strict economy of operation will be necessary and, from a long term point of view, a more economical method of traction than the use of 2-8-0 austerity locomotives will have to be found for the short journey to the border. Diesels would appear to be the solution when replacements are required.
8. The question of increasing fares will also have to be considered when the new coaches arrive and passengers can travel without being overcrowded. Local fares have not been increased since 1946, and are only twice those prevailing in 1939.
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