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consider the cost of running these coaches and maintaining these horses, against the fact that locomotive expenses on railways do not, on an average, exceed 94d. per mile. The railway receipts for passengers have been in the following proportions:— £ In 1845 - - - 3,976,000 1850 . - - 6,827,000 1854 . . . 9,174,000

The total receipts for goods, passengers, and from all other sources, were for the same years: — £ In 1845 - - . 6,209,000 1850 - - . 13,204,000 1854 - - . 20,215,000

There has been no instance in the annals of any railway, where the annual traffic has not been of continuous growth. Some remarkable facts illustrate this truth. At one period the Midland Railway had the monopoly of the whole traffic to the North; that line being “the route” to the North of England and to Scotland. When the Caledonian was opened, some years ago, the North Western Railway, working in conjunction with it, was able to abstract the bulk of the Scotch traffic from the Midland line. Nevertheless, the Midland traffic continued to increase. At a later period the Great Northern was opened, affording almost a direct route to Nottingham, to Leeds, to York, and to Edinburgh. The Scotch traffic of the Midland was thereby annihilated, and its trade to the large towns named almost entirely abstracted; yet, with all this, the Midland receipts continued to increase largely, chiefly in consequence of its local growth and the development of its mineral traffic.

This is one only of the many illustrations that might be offered of the rapid progress of a system which is now producing a gross annual revenue exceeding Twenty MILLIONs STERLING.

Looking at all the circumstances of a Railway, the nature of its component parts, and the enormous amount of traffic over it, the constant depreciation necessarily becomes a source of serious consideration.

A permanent way may be said to consist of sleepers, chairs, and rails. The rails, it has been already stated, are 30,000 miles in length; which, at a reasonable average weight, will give about 2,225,000 tons of iron laid down in rails alone; resting upon not less than 50,000,000 iron chairs, weighing nearly 750,000 tons. So that you have, in the whole, not less than 3,000,000 tons of iron on the permanent ways of the United Kingdom. Estimating the waste of iron, from wear and tear, oxidation, and loss in re-manufacture at (say) half a pound per yard annually. there cannot be less than 20,000 tons of iron to be every year replaced, and 200,000 tons of rails to be re-rolled. The sleepers, of which there are not less than 26,000,000 on our lines of railway, perish still more rapidly. What with decay from wet and other causes, the sleepers disappear at the rate of 2,000,000 per annum, at the least, and require to be wholly replaced every twelve or fourteen years. It is curious to consider the effect of this annual demand for sleepers. To provide 2,000,000 of new sleepers, 300,000 trees must every year be felled, supposing that each tree will yield as many as six good sleepers. Now 300,000 trees can scarcely attain growth and maturity on less than 5,000 acres of forest. Consequently, 5,000 acres of forest must be annually cleared of timber to provide sleepers for our lines of railway. . A very important question presents itself as to the mode of meeting this heavy annual depreciation. The practice of some Railway Companies has been to set aside a fund, to make good the waste of material in the permanent way. With many Companies the amount which has been, or which ought to be thus set aside, as a Renewal Fund, has frequently occasioned great conflict of opinion. Among engineers there is, no doubt, much discussion on the details and various bearings of the question. Perhaps, however, it may be well to consider, whether there really is any good argument for a renewal fund at all. When a railway is first opened, every thing being new, the annual depreciation will for some time go on in an increasing ratio. But it is obvious, that there must be a period in the age of the railway, when that annually-increasing ratio of depreciation must cease, and when the sum required for regular restoration and repair must become fixed and (except under extraordinary circumstances) almost certain. This may be illustrated by the case of an Insurance Company. Probably in the first year of the


existence of such a company it sustains no loss by death, and in the second and third years only one or two lives drop. For some succeeding years the losses from this source increase in an augmenting ratio. But a period arrives, when the annual decrement of life becomes fixed, and except in the case of pestilence or other extraordinary occurrence, nearly certain. As it is with humanity, so it is with rails and sleepers. The depreciation, small at first, increases gradually, until at length it arrives at an average, and becomes fixed and nearly certain every year. This being so, why should an extraordinary special fund be set aside to provide for renewals and repairs ? Those renewals and repairs are, under such circumstances, as well established a charge as the salaries of officers or the cost of fuel. If there is to be a Renewal Fund, the true principle would seem to be, to set aside a considerable sum in the earlier years of a railway, until the period when the average is reached, after which time the repairs should be a regular charge upon receipts. The argument by which a Renewal Fund is supported, is the assumed desirability of equalising dividends; but it has been already stated, that there has never been a case where the gross annual receipts of a railway have diminished. The growth of a railway is, and must be, progressive, save under very exceptional circumstances. Not only does the very existence of a railway furnish excitement for trade and create taste for travel, but our population increases at the rate of 15 per cent. in every decade, which of itself affords assurance that, apart from transitory causes of disturbance, the traffic of railways must increase. The ground for a Renewal Fund is removed by these considerations; and if Railway Companies would only, honestly and fairly, keep their roads in sound and substantial condition, the better system, probably, would be to make the annual costs of repairs a charge on revenue, and to entirely dispense with such a Renewal Fund. Let it be observed, that the arguments which apply to the permanent way, apply equally to the Rolling Stock of Railways. Accountants and Committees of Investigation have been in the habit of calling for annual valuations of rolling stock, as if such valuations threw any light upon the real state of the affairs of a Company. The truth would seem to be, that a valuation of rolling stock is a fallacy. Suppose a Railway Company commences with 100 engines, costing £2,500 a piece, its locomotive stock will


be of the value of £250,000. At starting, these 100 engines are, of course, in complete order; but from the day they begin running, deterioration commences. At the end of four or five years, probably 20 or 25 of them are always in the workshop. If the traffic of a line requires 100 engines to do its work, it is obvious that the Company must at that time provide 20 or 25 new engines to supply the place of those which are undergoing repairs. But having done this, they are only just in the same position as they were in at starting; that is to say, they have 100 effective engines at work. Let them continue to keep this number of engines in good working order, as a current expenditure for a like amount of traffic, and it is clear that the machinery of the railway requires nothing more. As for a money valuation, such a proceeding must obviously be unproductive of beneficial results. Not only do engines depreciate, like everything else, but their price varies with the supply and the demand, with invention and its application, and from many other causes. Within the last ten years, the market value of engines has fluctuated about 25 per cent. ; so that a railway which had engines valued at £100,000 in January, 1850, might have found those same engines valued at £75,000 in January, 1851, even although they had not worked an hour. Or, to put the case the other way: a stock, valued at £75,000 in 1851, might have been re-valued at £100,000 in 1852. In either case it is obvious that, for any practical purpose, the valuation must be fallacious, and that to allow it to affect the dividends, with which it has no concern, must be wrong in principle. The truth would appear to be, that the only useful valuation is that of the condition of the engines for working purposes, in order to show the extent to which they may have deteriorated by working within a given length of time. But it may be urged, that this argument presupposes the same class of engines and the same weight of rails to be continued for ever on a railway; whereas, owing to the demands of increasing traffic, and for high rates of speed, heavy rails are obliged to be substituted for light, and engines of greater for those of less power. The real question then is, what portion of the cost of such improvements should be charged to capital? In respect to these improvements many fallacies have undoubtedly crept into railway accounts. The only sound and rational principle seems to be, not to charge the whole sum to capital, but


simply the difference. If, for example, a rail weighing 100 lbs. per yard be substituted for one weighing 70 lbs., the fair proportion to charge the capital would be, not the entire cost of the 100 lbs. of iron, but the cost of the 30 lbs. additional weight. The same with the engines. If an engine of improved construction be purchased to replace a less effective one, or for the purposes of increased traffic, capital should bear the proportion of cost which is due to its future efficiency, or to the accommodation of increased traffic, and that proportion only. It may be further urged, that there are extraordinary circumstances under which the average repairs of permanent way and works will be disturbed: and, no doubt, inevitable fluctuations must occur over which the greatest experience and foresight cannot exercise control But here, again, the question arises, is a Renewal Fund, in the form it is now made to assume, necessary to meet such cases? Surely, perfect security might be attained with respect to such causes of disturbance, by setting aside an Equalising or Differential Fund, of small amount, whence the casual excess of expenditure required might be drawn. Whatever system may be devised by the most skilful accountant, to place this question upon an unexceptional basis, it must be borne in mind, that the feelings of Shareholders and the opinions of Directors will always practically control the effect of any such suggestions. Influenced, therefore, by the recollection of what has so repeatedly occurred in Board Rooms and at meetings of Shareholders, I have arrived at the conviction that the only sound policy will be to adhere rigidly to the suggestions here made respecting Renewal Funds. But whatever may be determined on this point, undoubtedly, the only method of keeping railway accounts on a proper basis, must be to make them show whether the annual revenue is made to bear its fair charge of upholding the permanent way and rolling stock in complete efficiency; and it would appear that this would be most effectually accomplished when Renewal Funds were almost entirely dispensed with, and the charges for repairs and improvements were treated as standing charges against revenue. It may be thought, that, with respect to fares, the interests of Railway Companies and of the public are antagonistic. Regarding the question, however, with a more enlarged view, it will be readily seen, that so far from those interests being opposed, they are in all respects identical. Fares should be regulated by

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