PUBLIC RECORD OFFICE
Reference :-
ELLICO. 882
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO |
4 PUBLIC RECORD OFFICE, LONDON
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applying to the 25 miles of that extension the mileage rate of the 41 miles of the Nanu Oya section, to which an addition is made for carrying the new traffic over the existing line, and a further addition for the eventual cost of replacing the rails on the extension. The first of these calculations appears to me to ignore the fact that much of the cost of railway working is either independent of mileage or not in direct proportion to mileage. Moreover, the extension is not; as you state, a few miles, but nearly 40 per cent. shorter than the Nanu Oya section, and as the result of this difference is to reduce from 41 to 25 the division which determines the mileage rate, it would seem only prudent to require clear proof that all the conditions of working on the Haputale extension will bear a proportion to those on the Nanu Oya section exactly corresponding to the difference in mileage. Again, as regards the cost of conveying the new traffic over additional the main line, you appear to have assumed that the down traffic will entail no cost, because it will merely absorb rolling stock which at present runs empty. This assumption is certainly not justified by experience here, where it is found, as might indeed be anticipated, that the bringing in of additional traffic does not solve the traffic manager's difficulty of estimating the daily provision of rolling stock required, and that no fresh traffic is ever carried without some additional cost. As to the estimate of cost of relaying, I consider that if an item of this nature is to be charged to working expenses, to which, in point of fact, I see no alternative on Government lines, the renewal of locomotives, rolling stock, a share of deterioration of workshops and plant, and other similar renewal charges, should also be provided for.
6. In the 20th and following paragraphs of your Despatch under acknowledgment, you explain the method of estimating working expenses by a train mileage rate, and from this method you deduce a result very similar to that obtained by the Commission. I must observe that, in the first place, you assume that the three trains a day which carry the Nanu Oya traffic will suffice for the service of the extension, a conclusion which appears inconsistent with the statement made in the 15th paragraph of your Despatch that the Nanu Oya traffic is "far less than it will be on the Haputalé section." If the number of trains has to be increased, the whole calculation will be upset, and the result will be to disprove completely the conclusions of the Commission. In the second place, I have to point out that the train mileage mode of calculation depends on a double multiplication, and that comparatively small errors in the two multipliers will gravely affect the result. For this reason it is not a reliable method of estimating, although a most useful means of measuring, the cost of actual working when deduced from known train mileage and known working expenses.
7. For these reasons I entertain doubts whether the Commission's estimate of 35 per cent. for working expenses can be safely accepted. The fact to which you refer, that the main line, in exceptionally prosperous years, has been worked at this ratio, must be considered side by side with the other fact, that in more recent years, under conditions similar to those which may be expected to affect the extension, these expenses have exceeded 40 per cent. on this, the most remunerative, portion of the system. When I turn to the records of the extensions of the main line, I find that their working expenses have ranged from 51 per cent. on the Nanu Oya to 103 per cent. on the Matale line. It may be contended that these extensions have brought to the main line none of that new traffic which is expected to prove 80 remunerative in the case of the Haputale extension; it is, however, certain that these extensions were built with the object of feeding the main line, and the fact that they have proved to be most costly suckers affords, in my opinion, strong justification for exercising caution as regards further extension.
8. Mr. Stanhope, in proposing 60 per cent. as a reasonable rate of working expenses, adopted the standard suggested by you, namely, the working of the Nanu Oya section. I admit, however, that the conditions affecting the Haputaló extension are in some respecta more favourable than on that section; and I consider that it will be safe to take, as regards working expenses, the same view which you have taken on other questions connected with the work; that is to say, to regard it simply as an extension of the general system, and to apply to it the average rate of working expenses pre- vailing on that system. This I understand from the Administration report of 1885 to be about 56 per cent., and on this basis, adopting your estimate of traffic, and the Con- sulting Engineer's estimate of departmental construction, the work will just pay its expenses and provide for the increased annual charges of the debt incurred for its construction.
9. The financial question at issue, therefore, resolves itself to a certain extent into this: Is there, in this forecast of the future of this work, a reasonable prospect that no increased burden will be thrown on the finances of the Colony? I need not
Bay shall be much gratified if you are able to give me a satisfactory answer to this
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question; but as the matter now presents itself to my mind, grave doubts arise on at least two points. They are as follows:--
1. Can the estimate of traffic be trusted as regards the contributions from the
Badulla district, and those in its immediate neighbourhood?
2. How can the charge for interest on the debt during construction be provided
for?
10. As bearing on the first point, I have not failed to notice that you state in the 5th paragraph of your Despatch under acknowledgment, that there are no planters between Haputale and Badulla, or beyond Badulla, who will not be most materially benefitted by the extension, and that you believe that there is not an estate in any part of Uva which would not so benefit. And I also note, that as regards Haldamulla, further extension to Badulla must be a matter of absolute indifference to the planters of that district, and that the question of a further extension to Badulla is merely one of improving the outlet for the produce of the Uva district which you anticipate will be provided by the Haputalé extension. This view is evidently shared by the Railway Commission, inasmuch as nearly one-half of the estimated traffic on which they rely is derived from the districts around and beyond Badulla. But I am bound to compare with this expression of opinion the confident assertions of the deputation which waited on Lord Granville in June 1886, and to which reference has been made by my predecessor. That deputation comprised, among others, the Chairman of the Uvah Company, the representatives of Messrs. Baring, Brothers, and of Messrs. Murray, Robertson, and others, owners of the Uvah estates, and it stated in the clearest terms that the Haputalé extension would not secure the traffic from a large portion of the Uvah district, the produce of which would still be conveyed by cart to Colombo, unless the line were extended to Badulla.
11. The statements of that deputation naturally weighed with my predecessors, and their views have been strongly corroborated by the statement made to me recently by Mr. Christie, the Chairman of the Planters Association, and a member of the Railway Commission, who assured me that the planting interest in Uvah would certainly not be satisfied until the line had been carried to Badulla. I have further gathered from the newspapers that the Badulla Planters Association are pressing for a narrow gauge extension to Badulla, and mention has been made of pushing the line even beyond Badulla. In these circumstances it is of the first necessity to ascertain beyond doubt that the large proportion of traffic credited to the Haputalé extension from the Badulla district will accrue to that line, and that the history of the Haputalé extension, if sanctioned, will not be a mere repetition of the most unsatisfactory experience of the Nanu Oya section, which, advocated originally on its own merits precisely as the Haputalé extension is being pressed, now occupies, as stated in paragraph 31 of your Despatch, the position of a failure to be redeemed only by further extension.
12. The importance of a clear understanding on this part of the question will be obvious to you, because I regard the discussion of the rate of working expenses as closed, and, with the ratio of 56 per cent., which I am satisfied to accept as reasonable, there is no margin for the least reduction of the traffic estimate; and, further, because, if the statements of the deputation and of Mr. Christie are correct, the question which has to be considered is that of an extension from Nanu Oya not to Haputalé merely but to Badulla.
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13. The second difficulty to which I have alluded is one for which I can suggest no satisfactory solution. The charge to be met is considerable, amounting at 4 cent. to Rs. 260,000 a year; probably about one-third of this will have to be provided for in the first year of construction, the charge increasing at intervals until completion. No increase of the Colony's permanent debt can be incurred on this account, and I have great difficulty in arriving at any other conclusion than that, assuming all other difficulties to have been overcome, this, and indeed any other considerable public work, must be postponed until the revenue has recovered sufficiently to meet liabilities of this nature. Otherwise, either the charge for debt during construction must be paid for out of the capital of the loan, or the ordinary expenditure of the Colony must be curtailed and the ordinary services crippled in order to pay the interest on fresh loans.
14. There are many statements of secondary importance contained in your Despatch to which 1 have not thought it necessary to refer, because, concurring with you in the desirability of avoiding as far as possible a controversial tone, I have felt it better to deal only with those parts of the question which have a distinct bearing on its solution.
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