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Cost of repairs, which has much to do with cost of transportation, depends, in like manner, to a considerable extent upon the character of the soil of which the road-bed is formed.
Cost varies with the seasons.
In no portion of our country, perhaps, is this more patent to every observer than here in Wisconsin. During our beautiful summers and magnificent autumns, railroading is ordinarily as inexpensive as any where, so far as climate goes. But when winter comes, with its sudden cold, and occasional changes of temperature of 40 to 50° Fahrenheit in a few hours, and with its snow-drifts, impeding the movement of trains at times for days together, the profits of an autumn's work are badly eaten into.
Cost also varies with the times.
It is manifest that when times are hard, and prices of all material consumed, as well as the prices of all kinds of labor, are low, the operating expenses of a railway are correspondingly diminished. This is remarkably illustrated at the present by the almost universal diminution of such expenses, as compared with a few years since. Moreover, since the hardness of the times has also the effect to depress the industries of a country and render them less productive in the aggregate, it also has the effect to increase the economy management, and so diminish the expenses common to more prosperous times.
Relative cost varies with the productiveness of the year.
When agriculture produces great crops, for example, so that a railroad employed in moving them is crowded with traffic, the operating expenses, other circumstances remaining the same, will be a less per cent. of the total earnings than during an unproductive year, wherein the income is proportionally lessened, while the fixed expenses, which constitute a large share of the whole, remain the same.
A like variation will be liable to follow the success or failure of foreign crops, as well, where they exert any considerable influence upon the great markets for breadstuffs, since this fact may determine the rapidity or regularity with which the road in question may be called upon for transportation service.
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The expenses are the same for receiving or delivering goods, whether the length of haul be ten miles, or one hundred, or one thousand. It has been shown, for example, that the Massachusetts roads, with an average haul of 49 miles, have an expense per ton 30 per cent. greater than the Illinois Central with an average haul of 142 miles, although the Massachusetts tonnage of miles (tons carried one mile) was 560,000,000 and that of the Illinois Central railroad only half that amount. So that, when an estimate is made of the rates that may be charged upon any road, the average haul must be considered.
This length of haul may be determined by the length of road in one case principally, and in another by the proportion of through business to the local or way business. For a road but fif y miles long, so situated as to be a connecting link in a trunk line doing a through business chiefly, might show an average length of haul greater than a road of a hundred miles long doing a business almost exclusively between stations on its own line.
Cost varies according as there may or may not be loads both ways.
This elt.Lent in the calculation of cost of transportation, although one of the most important, is often quite entirely overlooked. And yet what can be more apparent, on a moment's reflection, than that a road extending into a new section of country, with only a population exclusively productive and barely large enough to supply the road with out-freight in the form of lumber, mineral or other products of their industry, would have to run its trains one way comparatively empty? The difference in the results of operation between such a road and one having loaded trains both ways might, and very often is, the difference between a handsome profit on the investment and an accumulation of deficits ending in bankruptcy. Says a competent engineer, "in some cases the charges might be reduced one-half, if cars could be loaded both ways." The fixed expenses remain, whether trains run loaded or empty. The only increase of cost in running loaded trains is in a slight increase of fuel, wear of track, and expense of handling the freight. The running of the train being a necessity, the receipts on the freight it carries are almost a clear gain. On the other hand, the running
of an empty train is not simply at the loss of what the company might have received had the train been loaded, but at an absolute loss of the expense of running it.
Cost varies with uniformity of freights in kind, and with terminal facilities.
A freight business of one uniform kind, or confined to a few principal articles, involves less expensive preparation for handling, and less cost of service in handling than a miscellaneous business. It is no less apparent that the cost of doing a business must depend to some extent on terminal facilities. And whether these are good, or are capable of being made so without great expense, must be considered in calculating rates.
The cost of the road itself must vary the chargeable rate.
Rates that would yield a fair return on an investment of $25,000 per mile of road would prove the early ruin of a road the cost of which was $50,000. Indeed it is plain that in such case the earnings of the road costing $50,000 must be twice as much as the earnings of the cheaper road in order to yield the same amount of returns per cent.
Commenting on this question of cost in a general way, a distinguished authority* on matters of transportation, says:
"The great difference in cost referred to in this report occurs in the average cost per ton-mile of transportation during the period of a whole year; but there is still greater difference in the cost of transportation of one ton one mile on the same road, varying with the conditions under which the service is performed, according to the length of train, the quantities in which freight is transported, and whether the freight is carried in cars that would have to return empty or in special trains. I have mentioned that according to these and other conditions it may cost one-seventh of a cent only in some cases, and seventy-three cents in others, to transport one ton of freight one mile."
WHERE SEVERAL ROADS ARE INVOLVED,
the difficulty of determining cost and proper rates of transporta
* Mr. Albert Fink, Vice President and General Superintendent Louisville & Nashville and G. S. R. R., Report of 1873-74, p. 53.
tion applicable to all roads in common, or to classes of roads however carefully grouped, is so far increased that it may be considered practically insurmountable.
Let us glauce at some of the elements which increase the complexity of the problem.
Difference in necessary cost of roads.
It is true, as was pointed out in our first report, that the high reported cost of many roads is attributable to incapacity, recklessness or fraud in their construction, and that the interest on all amounts over and above honest cost or a fair valuation, is not justly chargeable to the public in the form of increased rates of transportation. But, throwing out the elements of fraud and mismanagement, it will require no argument to show that the cost of roads built at different times, or in different sections of country, must be various. Two roads, one built in a hilly or mountainous country far from supplies, with a necessity for much excavation, numerous bridges, and a large amount of masonry, and the other built across a smooth prairie, and at the very gates of a commercial city supplying material of every sort at the minimum cost, will illustrate the two extremes of necessary cost of construction under different conditions of locality; while the variable condition of the money market, and hence the different amounts that must be discounted in negotiating securities, will suggest yet other elements of difference in the necessary cost of roads constructed at different periods, or in different localities, as well as the consequent necessity for rates of transportation somewhat proportioned to the interest accounts of the various roads constituting a system.
These circumstances constitute one general element of the problem relative to cost of transportation.
Next after cost of road, comes cost of doing the business,
separately considered. Up to this point the problem is simple enough. If actual cost of road equipment cannot be reached, the difference in value may be estimated. But the expense of operation, depending on a multitude of considerations, as already shown in discussing the rates justly charged on a single road, is a very different matter. Among the differing elements we have
1. Maintenance of roadway, bridges, and buildings, and the force of men necessary thereto;
including: Adjustment of track, ballast, ditching, culverts; repairs occasioned by accidents to road-all more or less differing in cost according to soil, climate, conditions, etc.-repairs of cattle-guards, hand and dump cars; repairs of road-tools; replacement of ties; expense of running repair trains; bridge repairs; shop-building repairs; water-station repairs; road and bridge watchmen, etc.
2. Station repairs;
including: Repairs of stations and depots, according to their number and extent as compared with earnings; labor of loading and unloading freight; general station expenses, in so far as they are variable elements.
3. Movement expenses;
depending on: Climatic interference; road characteristics, especially such as curvatures and gradients; proportion of passenger to freight business; general character of freight as to uniformity or diversity; amount of business as compared with cost of road and unavoidable operating expenses; length of haul, and direction of haul; also, various items relating to repairs of track, locomotives and roling stock, and to economy of working force.
A striking illustration of the views here presented is found in the case of the Louisville, Nashville and Great Southern Railway. This road consists of a main stem and six branches, and has a total mileage of some 900 miles, constructed under a variety of circumstances, and for the accommodation of portions of the southern country quite different in the amount and kind of business furnished. It is one of the few roads in the country, if not the only one, in which the account with each branch is so systematically, fully, minutely and accurately kept that the officers can make a just comparison of the actual cost in detail of the business done on the several lines.
According to the last report of the able general superintendent-Mr. Albert Fink, to whom reference has already been made, —“the variation in the real cost per ton mile is from 1.78 cents on the main stem, to 19.09 cents on the Glasgow branch."