1947-1948 — Page 4

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the ratio being the same as the division of through receipts. Coaches and wagons in excess of the quota were paid for at the rate of $50.00 per coach day, and 50 cents per ton capacity of the wagon per day increasing to $1.00 per ton for delays above certain periods. This arrangement commenced from March 1st, 1948. The balance accruing to the British Section for that month was $12,860.

12. In some respects the year was disappointing.

It was hoped that the link established with the C.H.R. in July, 1946, would have resulted in a steadily increasing volume of goods traffic between the Colony and the interior. Unfortunately, these hopes failed to materialise owing to the continuous restrictions which were placed on imports and exports from China by the Chinese Government while the decline in the value of the Chinese dollar made normal trading difficult. In consequence there was a decline in the quantity of through goods traffic, the drop in revenue from this source being $103,667.

13. A further cause for disappointment was the absence of a Working Agreement with the Chinese Section. Joint traffic working between the two Sections was carried out by adhering as closely as possible, so far as changed circumstances would permit, to the basis of the former Working Agreement. This method necessitated an increase in correspondence and meetings between the officials of the two Sections in order to arrive at a settlement of the various difficulties which arose from time to time. An agreement was reached on most problems, but considerable time was often wasted owing to the absence of a recognised formula for dealing with situations, and the frequent necessity for referring matters to headquarters at Hengyang before a final decision could be made.

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14. The outlook for the future is difficult to forecast. Railway suffered heavily during the occupation and orders already placed in Great Britain for the replacement of worn-out and looted rolling stock and machinery, and materials for re-railing the track involve a capital expenditure of several million dollars. maintain the present level of revenue may be difficult as there will undoubtedly be increased competition from river shipping resulting in a possible reduction in fares, and consequently in passenger train revenue. Air travel has already caused a decrease in the number of first class passengers, but it is hoped to speed up the passenger train service within the next few months, and this may stimulate passenger travel and off-set to a certain extent the competition from river and air.

Freight traffic would undoubtedly move in considerable quantities to and from the interior were the present restrictions removed, Chinese currency stabilised and economic conditions. become more settled. There are, however, no indications of this at the moment, and the immediate prospects cannot therefore be viewed with optimism.