CNR may be short $25,000,000

Revenues drop

The CNR's revenues this year will probably decline by $60,000,000, Donald Gordon, president, told a meeting of the Canadian Club of Toronto and the Empire Club of Canada yesterday at the Royal York Hotel. The railway is likely to fall short of meeting interest on outstanding debts by $25,000,000.

Mr. Gordon attributed the anticipated loss to a sharp decline in freight revenues experienced by both Canadian and U.S. railroad. And 1955 doesn't look hopeful to the CNR president, either. Even if the present reasonably favorable outlook for the Canadian economy in 1955 is justified by events, all indications point to a continuing, if lessening, decline in railway earnings.

More than most other Canadian businesses, we have been suffering from a severe squeeze between rising costs and revenues held down by less elastic railway rates, said Mr. Gordon. Our physical plant and operating efficiency are good by any standard. They have never been better than they are right now.

But every improvement we have made has gone either to our employees as higher hourly earnings, which have risen 132 per cent since 1939, or to our customers through the maintenance of relatively low level of rates—our revenues per ton-mile of freight have risen only half as much as wholesale prices in the same periods. These groups, not the company, have been plucking the fruits of increasingly efficient management. Our problem is essentially to get into our own orchard for a share of the crop.

The CNR, he said, had saved $85,000,000 in operating costs, to date, by replacing steam locomotives with dieselsA purchase of 127 diesel locomotives was announced 1954-09-07[The Globe and Mail (Toronto), Wednesday, September 8, 1954, p. 2].. By 1957, he estimated the total saving would be $145,000,000, and there would be an annual saving as a result of the program of about $35,000,000 a year—a return of 20 per cent on the capital investment in dieselization.

All railways keenly aware of the value of good public relations and naturally would like to meet all demands for service. We do the best we can, and have made recent and expensive improvements in, for example, equipment on the Oakville-Toronto run.All-steel coaches specifically designed and built for commuters entered service 1954-07-27[The Globe and Mail (Toronto), Wednesday, July 28, 1954, p. 4].

But even the recent 100 per cent fare increases (authorized by not effective)The Board of Transport Commissioners approved a 100% hike on 1954-08-05 to be implemented as follows: 50% on 1954-09-30, 25% on 1955-03-31 and 25% on 1955-09-30[The Globe and Mail (Toronto), Friday, August 6, 1954, pp. 1-2]. will still leave us about $200,000 short of even out-of-pocket expenses on the Oakville-Toronto run, and this figure excludes general system charges which by rights this line should also share.

How far can a national system go in subsidizing suburban life? I feel that the Metropolitan areas are going to have to solve their own transportation problems in the long run and the CNR, of course, is anxious to do all it can to co-operate with Metropolitan authorities on these problems. Railways are not designed or intended to provide service for short-haul passenger traffic. At present we are, in effect, using a steam roller to crack walnuts.

Railways: C.N.Rys.

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