| PUBLIC RECORD OFFICE
سيات
Reference:
C.O. 882
PUBLIC RECORD OFFICE, LONDON
| ALLY WITHOUT PERMISSION OF THE
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2. You promise further despatches bearing upon the subject, but as I have had the advantage of a personal discussion with you, at which you have ably set forth the considerations which lead you to advocate the immediate construction of this important work, I proceed to explain the opinion I am disposed to form on this proposal, which I do not doubt will be fully weighed by yourself, your advisers, and the Legislative Council of the Colony.
3. You have very properly stated in the 15th paragraph of your despatch that, notwithstanding the strong claims of the Province of Uva to share the benefits of railway communication, and the political considerations which would dispose you to commence and carry out this work, even if you were less satisfied with its financial prospects, you prefer to base your advocacy of it solely on the financial results with which you believe it will be attended; and it is obviously from a financial point of view that the question must be decided. Lord Kimberley, in reply to a similar proposal, wrote as follows in his Despatch of the 16th of November, 1882:-" The very serious depression in the Colony, " and the great diminution of the Colonial revenue which has now been continuous for no less than five years, render it, in my opinion, impossible, consistently with ordinary "financial prudence, to embark in so heavy an outlay.”
These words appear to me to possess even greater force at the present time than when they were written.
The depression of the Colonial revenue still continues, and the annual receipts are barely sufficient to allow the ordinary administration of the Colony to be efficiently carried on. There is, as yet, no evidence that the depression is passing away. Indeed, it is stated that the terms on which the arrack farms have recently been re-let involve further considerable loss in this branch of the revenue; at the same time, as shown in Lord Derby's Despatch of the 17th of April last, the charge for loans has been constantly on the increase.
4. In these circumstances, it must surely be unwise to embark on a work, the cost of which must be very great even at the lowest estimate, and on the assumption that the consulting engineer is able to give his approval to the revised estimates now furnished. It must be remembered that even if the line eventually proves remunerative, it cannot be completed or furuish any receipts for some years to come; whereas the local Treasury will in the meantime, at a period of great financial trouble, be hampered with an additional load of interest on debt.
Nor can the ultimate success of the line be regarded as beyond all doubt. Its success mainly depends upon agricultural produce, the future of which is necessarily most uncertain; and if the returns now collected promise well, it must be borne in mind that the estimates framed for the Nánu-oya section, which promised a fair return on the outlay, have proved to be altogether misleading. The latter section, moreover, was sanctioned after a year of exceptional prosperity, when the revenue of the Colony seemed to justify an undertaking of considerable magnitude; whereas the Haputalé extension, if now undertaken, would be at the best a speculation involving a certain large and immediate expenditure and an uncertain prospect of eventual success.
5. These are, in general terms, some of the objections which appear to me at first sight to make it necessary to use the utmost caution in dealing with this proposal, and I proceed to offer some further observations on points of detail.
In doing so, I desire to take the most favourable view of the scheme as it presents itself in your despatch. Putting aside the subsidiary scheme for the extension of the Coast line, I note that the revised estimates of Mr. Waring for the Haputalé extension show a total capital expenditure of Rs. 6,349,899, and, if the work is executed depart- mentally, of Rs. 5,987,649. am ready to assume, for the moment, that these revised estimates may be accepted as satisfactory, that it will be found desirable to execute the work departmentally, that the contribution to the sinking fund may be deferred until the completion of the line, say, three years hence, and, finally, that the loan can be raised at a charge not exceeding 4 per cent.
6. The amount of interest during construction will, of course, depend upon the rapidity with which it is found necessary to issue the several instalments of the loan, but some charge will be incurred from the commencement of the works. It will be a progressive one, and when the whole amount has been borrowed, it will have reached Rs. 239,504. (assuming the work to cost Rs. 5,987,649), and from the date of the commencement of the contribution to the sinking fund of one per cent, a further annual charge of Rs. 59,876 will fall due.
Consequently, as soon as the line is completed, and during the whole currency of the ioan, a total annual charge of Rs. 299,380 will have to be met. It is, therefore, of vital
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importance that the Legislative Council and the Secretary of State should be satisfied as to the correctness of the data furnished by the general manager, and the more so as your own advocacy of the scheme admittedly is based on the sufficiency of these figures.
7. In considering this question, I have been placed at some disadvantage by the stipulation that the estate returns are to be treated as confidential, as I have been unable to have them properly examined and analysed;-but, assuming their accuracy, I have to point out that they are based on data extending over a period of only three years, obviously too short for the deduction of trustworthy averages. In the next place, and with reference to the important question of rates as bearing on the existing means or transport, the general manager assumes that at a rate of Rs. 33.00 per ton he will secure the whole of the down traffic. But this rato is higher than the existing minimum cart rates in all the districts, and higher also than the average cart rates in two out of the three districts to be served by the railway. Are the undoubted advantages of greater security and rapidity of transport sufficient to induce the plauter to pay to the railway Rs. 33-03 per ton for carrying his produce from Haputalé, when, as I gather from the returns, he can cart it at the cost of only Rs. 27?
If not, a considerable reduction will have to be made in the estimated earnings of the line.
8. One consideration to which you very properly attach importance, is the probability of the new line being able to compete with the existing cart traffic. So far as regards the up traffic, I see that you assume that there can be no doubt of the success of the line in this respect, but it appears to me that the existing lines have not altogether succeeded in their endeavour to compete with the carts, and therefore the conclusion at which you arrive seems open to question.
9. I do not find that the up cart rates are anywhere given in the general manager's returns, so that it is impossible to make any comparison between them and the proposed railway rates for this class of traffic; and I have nothing to guide me but the experience of the existing line, which does not seem to support your conclusion, or that of the traffic manager, who anticipates' that from the moment the completed line is open for traffic, the cart competition will cease, and he will secure the whole of the traffic both ways.
10. In the 8th paragraph of your despatch you also observe that no accɔunt has been taken of increase of traffic due to future improvement in the coffee crop, nor of ten or passenger traffic. But, on the other hand, no account has been taken of the possibility that the decrease in the yield of the coffee crop in the Haputalé district during the last few years may still continue. That decrease is stated in the Revenue Administration Report on the Central Province for the year 1884 to have been very great, viz., a reduc- tion between the years 1873-1883, of from 11 cwt. to the acre to 4 cwt. to the acre. Seeing that the plantation returns which you now send me for the past three years, indicate no recovery whatever in this industry, the figures which I have quoted appear to have a very serious significance.
11. As regards the tea traffic, you are clearly right in not taking into consideration a class of traffic which must be regarded at present as speculative. Neither would it be prudent to count upon any material passenger earnings, if the line is rightly stated by Mr. Waring in the 10th and 77th paragraphs of his report to run through nu uninhabited country.
12. Again, as regards expenditure, the working expenses are estimated at 50 per cent. of the gross receipts, but I find that the working expenses of the section of the Nanu-oya Railway, which is open to traffic, are over 70 per cent. of the grom receipts, and the Haputalé Extension is, I believe, quite as difficult a line as the Ñánu-oya, and therefore likely to be as costly to work.
It may be urged, however, that the circumstances of the Nanu-oya_line_are exceptional, inasmuch as its receipts are much below the anticipated yield. But, looking to the fact that the working expenses on other important sections of the Ceylon Government railways-e.g., the Nawalapitiya and Kalutara lines have varied during the last few years from 51 to 79 per cent., I do not think that specially difficult line it will be safe to count on working expenses being kept down to 50 per cent.
the case of this
13. Hitherto, in examining this question, I have assumed the sufficiency of Mr. Waring's revised estimate. I shall lose no time in submitting it to the courting engineer, and in the meantime I would only remark that, if Mr. Waring's expectations of saving are not realised, the general manager's calculations will be seriously affected, for with over-estimated receipts and under-estimated capital and working expenses, the anticipated profits will not be made.
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