CO882-(3-4) — Page 723

༄། ། ༄། ‛། ;།

PUBLIC RECORD OFFICE

19

Reference :-

C.O. 882

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO

106

No. 15.

The RIGHT HON. EDWARD STANHOPE, M.P., to GOVERNOR THE HON. SIR A. H. GORDON, G.C.M.G.

(No. 10.)

SIR,

Downing Street, January 7, 1887. I HAVE taken into my most careful consideration your Despatches* noted in No. 257, 23rd June. the margin, on the subject of the proposed railway extension to Haputale, and I regret to inform you that I have come to the conclusion that I cannot sanction the work being undertaken by the Government.

258,

+ 259,

""

11

276, 16 July.

17 284, 27 17

351, 16 Sept.

}

.., 363, 23

"

The main elements in the question are financial, and I only note in passing the following subsidiary considerations.

2. Even if the enterprise were carried out forthwith as you suggest, a large amount of irritation and discontent would still survive, among those who would not have been benefited by the extension, and there is a likelihood amounting almost to certainty that strong pressure would immediately be brought to bear upon the Government to plunge still deeper into debt in order to carry on the line to Badulla.

3. I find it difficult to allow that the Province of Uva has special claims upon the While every one must public revenue beyond those of any other part of Ceylon. sympathise with the distress which has of late years befallen the planting interest, it is more than questionable whether such sympathy should influence the Government in weighting the island generally with a load of debt for the benefit of one district; and here I may point out that when you plead that the whole prospects of the province depend on making this extension and making it speedily, you practically imply that the produce on the prosperity of which the success of the railway depends, is in a most uncertain and precarious condition.

4. The opinions of those who are or have been connected with Ceylon, and whose judgment deserves respect, are greatly divided as to the desirability of the undertaking, and though you forward a unanimous report in its favour by a Commission composed of men whose character and ability are, as you justly point out, beyond all dispute, I cannot help noting that no direct representative of the native interests found a seat on that Commission, and that the witnesses examined would, as far as I can judge, be for the most part naturally inclined to favour the extension rather than the reverse.

5. The argument, on which you have laid considerable stress, that the council will not be inclined to vote money for other works of public improvement unless and until their wishes are complied with in regard to railway extension would have much weight if Ceylon were a Colony possessing responsible Government and if the legislative body were composed of representatives elected by a widely extended franchise, but seeing that the only two representatives in the council of the vast majority of the population are not in favour of the scheme which you have put forward, I cannot attach any great importance to it; the more so, as I do not doubt that all members of the council, official and unofficial, will recognise that in giving my decision I have had regard solely to what I conceive to be the interests of the general community, and that it would have been far more congenial to me if I could have felt myself justified in giving my consent to the scheme which has been so ably advocated.

6. I now turn to the consideration of figures bearing on the question, and enclose a copy of a report by the consulting engineer on the probable cost of the construction and equipment of a broad gauge line from Nanu Oya to Haputalé.

7. You will perceive that Sir C. II. Gregory is unable to adopt the estimate taken in the Report of the Railway Commission, inclosed in your Despatch, No. 257, of the 23rd of June last,† viz., Řs. 5,640,000 for such a railway, if it were to be constructed by the Department, but is of opinion that in that case the cost would amount to about Rs. 6,500,000.

8. Moreover, some of the conditions under which the consulting engineer considera that the departmental system of construction might be adopted, are precisely those which it has usually been found impossible to fulfil, and Sir C, Gregory is of opinion that the cost of the work, if carried out by contract, would amount to not less than Rs. 6,843,827.

9. I observe that the Railway Commission place the estimated working expenses at Rs. 275,000, whereas the estimate submitted in your Despatch, No. 265, of 19th June 1885,‡ amounted to Rs. 515,400. You will remember that Lord Stanley, in his reply to

† No. 3.

‡ No. 1.

• Nos. 3, 4, 5, 7, 8, 9, sud 10.

107

that despatch, took exception to the estimated ratio of working expenses to gross receipts, viz., 50 per cent., as being lower than the expenses of other Ceylon lines warranted; but I notice that the proportion of working expenses to gross receipts as now estimated is only 35 per cent., a ratio which I cannot but think is not justified by the experience of any similar line in Ceylon or elsewhere.

(Page 11 of Enclosure 2 to Despatch, 10. The estimate of Rs. 275,000 appears to be No. 257, of 23rd June.)*

derived solely from the average rate of expense

per

mile throughout the whole railway system in Ceylon (with additions for the cost of carrying the traffic over the main line), but in making or adopting this estimate no consideration appears to have been given to the proportion of the expenses so calculated to the gross earnings. The calculation of working expenses on the basis of a mere mileage rate prevailing on other lines differing from the proposed line in length and other essential conditions is obviously unsound in principle. The fact that it has produced so clearly inadequate a ratio between working expenses and gross receipts as 35 per cent. ought to have led to the immediate detection of the grave error thus made in dealing with one of the most important factors in the question of the prospects of this extension as a remunerative public work. I am reluctantly compelled to conclude that I cannot accept the figures given in your despatch or the conclusions drawn from them with confidence.

any

11. Assuming for the moment the rates and the traffic adopted by the Railway Commission, hut adopting 60 per cent. as a more reasonable ratio of working expenses, we have :--

Gross receipts Expenses

Profit

Rs.

·

774,183

-

464,509

309,674

which, with Sir C. Gregory's latest estimate for the expenditure, viz., Rs. 6,843,827, is

a profit of about 4 per cent., qr if the work could be constructed departmentally, for Rs. 6,500,000 about 4 per cent.; in either case there would not be enough to pay interest and sinking fund on the loan.

12. I may add, that 1 am not satisfied that the rates could be lowered as much as is assumed by the Commission, nor that the estimated traffic is sufficiently free from uncertainty to base on it any justification for so large an expenditure of public funds. I observe that nearly nine-tenths of the traffic returns are expected to be derived from coffee or traffic dependent on coffee, and the remainder from tea and cinchona, princi- pally the former. Either, therefore, it is assumed that the coffee traffic can be relied on at least to remain stationary for the future, or else it is anticipated that the tea traffic will largely expand. Although there is some reason to hope that both of these con- tingencies may be fulfilled, I consider that it is too soon to depend upon either of them, and that a few more years' experience will be required to form a safe judgment in the 13. In view of the above remarks, I think it unnecessary to enter at length into the other points raised in your despatches under acknowledgment, and have only made a short allusion to some of them in paras. 2-5 of this despatch.

matter.

14. My predecessor had proposed to direct an inquiry into the applicability of the Darjeeling system of railway construction to the hill country of Ceylon, but I have considered the reports made by Mr. Waring in regard to Mr. Prestage's proposals, enclosed in your despatches Nos. 259 and 284.† and I have also considered Mr. Prestage's further letter of 30th October to the Ceylon Government, copy of which I have received direct from Mr. Prestage, and I have come to the conclusion that there is not at present sufficient prima facie evidence of the practicability of the scheme to justify even the expense of an inquiry, and I am not, therefore, prepared to press the Colonial Government to undertake it.

15. I will only aid, that while I am unable to sanction the extension of the broad gauge railway to Haputale in the present condition of the Ceylon finances in view of the uncertainty as to its being able to provide interest and sinking fund on the necessary loan, and while I am also unable to sanction a railway on the Darjeeling system because I am not convinced that apart from other obvious objections it would be able to carry the traffic, I concur in the proposal made by Lord Stanley in the last paragraph of his Despatch, No. 153, of 28th October 1885,‡ and am prepared to allow the line to be

‡ No. 2.

• No. 8.

† Nos. 5 and 8. P 4