The Gisborne Times PUBLISHED EVERY MORNING. WEDNESDAY, SEPT. 16, 1908. THE MANAWATU RAILWAY.

Gisborne Times, Volume XXVI, Issue 2297, 16 September 1908, Page 2

The Gisborne Times PUBLISHED EVERY MORNING. WEDNESDAY, SEPT. 16, 1908. THE MANAWATU RAILWAY.

The purchase of tho Matiawalu Railway by the Government, is so, .notable an event, in the political history of this country that no excuse need be given for directing special attention to the details of the purchase. Briefly summarised tho position is as follows; —Tho State i* to invest £1,000,000 in purchasing the railway. From £900,000 Ho £930,600, .according to circumstances, goes to the company which owns the lino. The balance is for stores, sundries, and additions to rolling (dock, etc. Tho lino needs moro rolling-stock, amd tho balance is nolle tbo much to como and go on. The rate of interest to be giveni ind received by the Government, in connection, with tho purchase is sot down at 4 per cent (though the money may be borrowed' at up to 41 per cent.), and tho £1,000,000 will cost 'at 4 per cent £40,000 a year. During the last, few yeans tho company has had l a, net revenue approximating £60,000 —a 'little loss or a little more; and apparently thero will be no difficulty in maintaining that figure. So the State stands to make the difference between £40,000 and £6o,ooo—roughly £20,000 a year—as much more as it can and as much less as it must. From this sum, to make the parallel with tho company complete, may hare to bo deducted-, charges on general management account corresponding with tho amounts appropriated by the company —nearly £BOOO. • Out of its not revenue of £62,000 (last year) tho company pa-vs these management charges; pays £34,CpO interest to its capital creditors; se.ts aside £9OOO for reserve; and has 1 £II,OOO loft for a dividend on its paid-up capital. If (remarks the Wellington “l’ost”) tho Minister for Railways has as much left after paying interest and all charges, that will make the nucleus of an annual payment to the sinking fund which Parliament should insist on attaching to tho new debt. The Minister is taking over .a profitable line, and the least he can do is to make provision for repaying the money which is given him to buy it with.

The company’s net revenue has been maintained and increased ,n spite of a. large recent increase in working expenses. The company, however, did last year what the Minister for Railways docs not do —it bought new rolling,stock, etc., to the value of £8587, and paid for it out of revenue; while the Minister, having all /the resources of the State at his back, is able to borrow more money every year in-., order limit posterity may pay for the locomotives (and foot-warmers) by which ho earns money to-day. When -the Minister’s ratio of expenses to earnings is applied to the Manawatu line it, may make a difference to the dividend. Every £IOO of its revenue cost the Maiinv.atu Compauy last year £Ol in working expenses; and the Man-a-watui Company paid £8587 for new roiling stock and gave £SOOO to its employees’ superannuation fund in order that they might boon the same footing as Government employees. But every £IOO of the Government, railways revenue last year cost the Government on. the average £70 —or £9 more; although the Minister’s bill for new 'Tolling stock will only be paid by the next generation, unless the next generation, contrives to dodge it. If the company’s working expenses last year had borne the same ratio to .its revenue as the Minister's bore, the company’s net revenue would have fallen., from £62,000 to £47,ooo—wiping out the little dividend. .-And the dividend' is wanted. If it is set to work now as an. annual payment to sinking fund at 4 per cent., it will pay off tho Minister’s borrowed million in 38 years approximately. Probably tho Minister will wish to get out of debt sooner. But certainly, now that ho is given a mo-ney-making enterprise that in the hands of a company has beem paying splendidly, he wid .wish to utilise a portion of tho revenue to pay off the principal amount he is borrowing; and Parliament should emphatically insist upon tho provision of some sinking fund. Tho Manawatu Company has reason to be satisfied. Its railway and rolling stock are valued in its list of assets at £828,376. For that asset it is paid £900,000. It makes the traur saotion on excellent terms. Its flouting debt is paid without trouble or cost of further borrowing, and the shareholder® will receive 45s or more for their £1 shares. Tho company’s country lands .are now all' sold off; but it has about £9OOO worth of city lands remaining. For fuitlure profits it would! have had to rely upon its railway, though it had accumulated £IBO,OOO to pay off that amount of its debentures, and stood a. good chance of earning a larger dividend than the 7 per cent 'hitherto penmlifted by its prudent policy. AYo doubt whether the Government could have got a bettor bargain by proceeding to arbitration, and the bargain is good enough4f Jt is properly handled in the management of the line. The company now puts a period to a creditable and successful enterprise, undertaken and carried forward in. the teeth of many difficulties; and itfc is to be congmitmlated upon the legitimate profit- of the issue.