CO882-(4-5) — Page 12

PUBLIC RECORD OFFICE

Reference :-

PLEC.O. 882

PUBLIC RECORD OFFICE, LONDON

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

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receipts from the carriage of the traffic over the main line. If it should be said that the latter amount should be added to the profits of the main line, it is sufficient to reply that it is entirely new traffic, altogether due to the Haputalé Extension, and that the credit for these receipts must therefore be given to the latter section when considering the advisability of the construction of that section by the owners of the existing line.

15. Having thus, I trust, shown the soundness of the principle adopted in the calculations which have resulted in a ratio of 35 per cent. working expenses to gross earnings, I would draw your attention to the fact that the ratio of 60 per cent., suggested in paragraph 11 of Mr. Stanhope's Despatch, is a ratio far beyond our present experience in Ceylon, and beyond that on the Nanu-oya section, which was 53 per cent. in 1885 and 51 per cent. in 1886. If the working expenses are but 51 per cent. of the gross earnings on the Nanu-oya section, where the traffic is far less than it will be on the Haputalé section, and where, as the traffic is not new traffic (ie., has already accrued to the main line at a lower point) the Nanu-oya section is credited its own mileage proportion only, instead of with the gross earnings (less actual cost of transit. over the main line), as in the case of the Haputalé Extension, a ratio of 35 per cent. working expenses to gross earnings can well be understood.

16. The estimate of Rs. 275,000 was arrived at by taking the actual cost per mile of line in working the Nanu-oya section during the year 1885, which was Rs. 5,000 per mile of line (in 1886 it was still less), and by adding to this a further sum of Rs. 2,500 per mile per annum to cover the eventual cost of relaying, in addition to the present actual cost of maintenance. This gave an expenditure for total working and maintenance of Rs. 7,500 per mile of line. The larger amount of Rs. 8,000 per mile of line was taken, which, multiplied by the number of miles, i.e., 25, of the Haputalé Extension produced the result of Rs. 200,000 as the gross expenditure per annum for maintaining and working that extension.

17. The expenditure on the Haputalé Extension having been thus arrived at, it became necessary to ascertain what would be the expenditure involved in conveying the new Haputalé Extension traffic over the existing lines, viz., the Nanu-oya and Nawalapitiya sections and the main line; and this was arrived at as follows: No extra outlay was provided for down traffic, the reason being that the up traffic over the existing lines is from two to three times as heavy as the down, whereas more down traffic than up traffic can be taken with the same locomotive power, and consequently the extra down traffic of the Haputalé section would simply be met by some of the waggons which now run down empty being loaded and running down full without any appreciable expenditure.

The up traffic would be more than met by the running of an extra train every other day (Sundays excepted) from Nawalapitiya to Nanu-oys, which would entail an actual expenditure of Rs. 75,000 per annum.

18. The estimate of an additional train three times a week from Colombo to Nawalapitiya, and once a day from Nawalapitiya to Nanu-oya, is founded on the fact that twice as many waggons can be run on one train over the first section as over the second section.

19. We thus arrive at the result that the total expenditure per annum entailed on working and maintaining the Haputalé Extension and working the Haputalé traffic over the existing lines of railway may be estimated on a liberal basis as follows:-

For maintaining and working Haputalé Extension

Rs. 200,000

75,000

Rs. 275,000

For additional expenditure in conveying the Haputalé traffic

over existing lines

Total expenditure

20. There is another method of arriving at the probable working expenses, which I will now prooced to explain, in order that a comparison may be made of the two results.

21. On the Nanu-oya section three trains a day each way are run, and the total expenditure for 1886 is under Rs. 2:50 per train mile.

On the Haputalé section the same number of trains (and to a great extent the very same trains) would be run, Consequently the same expenditure of Rs. 2:50 per train mile would be incurred,

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Three trains each week day and one on each Sunday at Rs. 2-50

per train mile

Cost of re-laying

Cost of transit over existing lines

as compared with Rs. 275,000 in the former estimate.

Rs.

123,375

62,500

75,000

Rs. 260,875

22. I therefore do not think the Commissioners were mistaken in the result arrived at, or that it is safe to conclude, à priori, and without examination of details, that a certain ratio between working expenses and earnings, calculated by shrewd business men, must be wrong because it is so unusually and unexpectedly low as not to be justified by experience. As regards the test of experience, however, I may add that (whatever may be the case ". expenses and earnings obtained on the East Indian Railway.* and that out of 15 other elsewhere") 35 per cent. is the ratio between working Indian railways, nine show a lower ratio of working expenses to profits than that estimated by the Secretary of State, while in Ceylon itself it has been on the Colombo- Kandy line below 31 per cent., and for some four years out of 14 did not exceed 35 per cent.

But though not prepared to accept the 60 per cent. of Mr. Stanhope, I am ready to waive the exact accuracy of the Commissioners, and to add 5 per cent. to their calculation. I am also ready for the present to accept Sir C. H. Gregory's estimate of cost.

We have then--

Total cost of construction (departmentally)

Revenue

·

Less working expenses

Profit

Rs,

774,183

·

Rs. 6,500,000

288,750 (an addition of 5 per cent. to the

Commissioners' figures).

485,433 equal to 7 per cent. on capital

Cost.

Deduct for interest and sinking fand 325,000 5 per cent. on capital cost,

Rs. 160,433 equal to about 2} per cent, on

capital cost.

That is to say, even assuming Sir C. H. Gregory's high estimate of cost, and, adding to the working expenses 5 per cent. above what calculation has shown to be their probable amount, not only would the payment of interest and sinking fund be guaranteed, but a small profit would remain, providing always that the work is departmentally executed.

23. I have shown that even if the cost is to be taken at Sir O. H. Gregory's estimate the margin of profit is sufficiently great to permit the construction of the work without probability of loss. But is Sir C. H. Gregory's estimate of cost other than a safe maximum one? Is it not rather an estimate of what the construction of the line may cost, but is unlikely to exceed, than an estimate of the probable cost of the work under ordinary circumstances? I am entirely in favour of large and safe estimates, and I think Sir C. H. Gregory far from wrong in using the figures he has done, and for which he is ready, so to speak, to guarantee the construction of the line, but bearing in mind the important fact that the Nanu-oya Extension, constructed by contractors who were under no inducement to save money for the Colonial Government, was completed for a sum of considerably over Rs. 1,000,000 less than the amount of the loan which was deemed needful to secure its completion, I am unable to divest myself of the idea that considerable reduction may be effected. with regard to structures which have nothing to do with engineering or scientific This is specially the case features of the line. My ideas are, I confess, altogether at variance with those of Sir C. H. Gregory as to the character of the stations, sheds, engine-houses, &c., which should in the first instance be provided. A residence of some years in North America has fully convinced me that the erection in the first instance of cheap and temporary stations, platforms, goods-sheds, engine-sheds, &c., and their gradual replacement, as funds permit, by more permanent structures, is a sounder course of action than the construction, in the first instance, of solid and handsome buildings, although I fully admit that much may be said in favour of the latter mode of proceeding.

¡ 23$33.

* Last year it was, I understand, as low as 83 per cent,

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