ASC
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329
distance traffic cannot repay for a very considerable distance further on, the cost incurred at its point of origin. By insist- -ing on changing engines at Lowu and the various methods advocat- -ed by the Chinese at the Frontier the British Section is practic. -ally converted into a Branch Line to the Chinese Baction from which it gets no rebate on account of Traffic put on to the longer line and our traffic may be said to originate either at Hongkong or Shanchun. Consequently owing to the conditions pro- -posed and to the comparatively inadequate traffic it is quite impossible for us to accept a less charge than that at which the cost of transit is covered and that is admitted to be between 40 to 50 miles. In asking for a double rate per mile therefore we are really under the mark. very thing is against us; our part of the Engine run being so short, the day's work of an Engine is reduced to an uneconomical extent. It cannot be said that the sae loads can be hauled up a 1 in 100 grade and round sharp xxXY curves necessitated by our Section at the arme expenditure of haulage as up grades of 1 in 150 and round 30 curves. Consequent- -ly the figures given at page 3 of lir. Chao's letter are quite inadsissible. Ir. Chao assumes 70 per cent of his takings for Working Expenses but credits us with being able to run at under 30 per cent, a ratio of "orking Expenses to Earnings that has not been attained elsewhere.
It is stated that the returns of the Taoku Ching Han Railway cannot be taken as an example for the Chinese Section for the reasons that the Capital costs of the Railway are inexpensive. A cheap capital cost therefore is responsible for cheap Working Expenses and yet the Torking Expensee of the British Section which has a higher Capital cost per mile than the Chinese as calculated by Mr. Chao are at 30 per cent of the earnings while those of the Chinese Section amount to 70.
In the example Mr. Chao takes on page 5
of his letter he still persists in basing his calculation on the assumption that the Working Expenses of the two Sections dis- -similar in every respect in grade, aligment, and of length
will