The Nineteenth Century , No 182, Apr 1892 [‎64v] (133/244)

the nineteenth
April
represents a clear gain of capital wealth to tlie extent of 425,000,000^
notwithstanding that the net receipts in this year only contributed
3,176,096L or 71 "43 per cent, of the interest on capital. It must
be borne in mind also that this estimate does not include any
portion of the great though unascertainable proportion of wealth
which has been added to the country by the facilities which railways
afford in opening up virgin lands to cultivation, and in utilising
natural products which, without railways, would be unproductive.
Moreover, although during the last seven years the average net
receipts from railways only contributed 74-34 per cent, of the interest
charge, it must not be forgotten that, in that time, railway construc
tion has increased 75-60 per cent. In England, where the population
is very dense, it is estimated by good authorities that it takes seven
years for a line to develop a profitable traffic in the sense m which
profit is regarded by the railway shareholder. Surely , in the almost
virgin districts of Australasia, this margin should be extended. But
even if we only allow seven years for railways extended into new
districts, it follows that a development to the extent of 75-60 per
cent, in seven years would have the effect of concealing what the
true profits are on the older lines, and what the later lines may
yield after a proper period of development.
Thus, in the year 1889, of the 16,827 miles open for traffic, only
57 per cent, were open for seven years and upwards, and 43 per cent,
for varying numbers of years below seven. It is estimated that in a
new country, a mean return of about 1-5 per cent, would accrue as
interest on the capital invested in respect of the latter. It is required,
therefore, to show what return has been yielded by the older lines.
This is shown as follows :
—
Capital Invested
Proportion of Net
Receipts
Proportion of Net
Eeceipts to
Capital
Lines seven years old (67 per cent.)
Lines under seven years old")
yielding on the average 1-5 J>
per cent, on capital . . j
£55,910,000
£46,024,000
£2,450,640
£690,360
4-38
1-50
All lines
£101,934,000
£3,141,000
3-08
• By this computation it is proved that the lines over seven years
old, representing railways at the full stage of development, have yielded
a profit of 4-38 per cent, on capital invested, and this pleasing result
shows that they more than pay interest on capital invested. It may
be confidently expected, therefore, that when the younger lines arrive
at the same stage of development, a like profitable result will be
obtained. In every sense, therefore, it has been fairly demonstrated
that the railways of Australasia are most profitable investments^