10 P Y.
328
Note on Mr. Chao's Letter dated 11th. May, 1911.
Mr. Chao now states that his calculations proceed
from two hypotheses, viz.:-
(a). that the volume of through traffic per mile way be assumed to be the same on both Sections.
Any deduction drawn by Mr. Chao from this hypothesis cannot be correct owing to the wrong premise of "equal mileage". The length of the two Sections is not the same and the problem becomes a question of long and short haul, and consequently the conditions under which the volume of through traffic per mile has to be carried render it imperative that the rates for the short haul must be considerably higher than those of the longer
distance.
(b). that the working expenses per mile will be the saune). This hypothesis is again wrong and against all Rail- -way Experience and Teaching. The average ratio of expensos to earnings on American lurge lines is about 64 per cent and on small roads 70 per cent. Among these latter the ratio varies from 80 per cont on a 20 mile road to a 70 per cent on a 96 mile
one.
It is futile to discuss opinions as to the ratio of Working Expenses to Earnings. The best way would be for lir. Chao to produce his Estimates and lay them before us for criti- -cism and to criticise ours if he wishes. He should be in a position to give us his earnings and expenses on the already opened line, coal consumption and other details all of which we can also put up and then we can really go into the problem which is not an academical one but a real one, and as capable of solution as such problems usually are.
If Mr. Chao can really tell us what it costa him to carry a Third Class Passenger, he can do what no other Rail- -way Manager professes to; but, even supposing his statement is correct, it does not follow that we can carry for the enme under different conditions. It is generally adudtted that short
distance