The railroad

Media

Part of The American Chamber of Commerce Journal

Title: The railroad
Language: English
Source: The American Chamber of Commerce Journal Volume XIII (Issue No.9) September 1933
Year: 1933
Rights
Fulltext: 10 THE AMERICAN CHAMBER OF COMMERCE JOURNAL September, 1933 the single item that increased over the previous year. With a dry August and the beginning of a dry September, bound to shorten the rice crop, the following table from the 1932 yearly report illuminates the freight situation: REVENUE FREIGHT TONNAGE Commodities American Commerce DIRECTORS AND OFFICERS H. M. Cavender, President C. S. Salmon, Vice Preident JohnL. Headington,Treasurer Leo K. Cotterman W. L. Applegate J. C. Rockwell Kenneth B. Day E. M. Grimm P. A. Meyer ALTERNATE DIRECTORS Verne E. Miller S. R. Hawthorne F. H. Hale L. D. Lockwood. John R. Wilson, Secretary James C. Ross,General Conusel Rice.................................................... Palay.................................................. Sugar, crude...................................... Sugar cane......................................... Copra................................................. Coconuts............................................ Hemp................................................. Tobacco.............................................. Livestock............................................ Mineral products............................... Lumber.............................................. Other forest products....................... Manufactures..................................... All other, including L. C. L........... Total .... .............................. 1932 1931 1930 96,122 173,478 162,653 14,028 24,863 29,883 280,784 195,658 208,809 742,269 477,684 482,782 95,944 116,676 116,*900 13,680 22,994 22,268 1,654 2,467 3,789 5,730 6,713 6,562 1,302 1,962 2,755 110,116 91,759 111,75?= 52,200 57,656 60,113 41,992 39,122 46,714 214,562 203,052 227,424 138,017 172,912 184,909 1,808,400 1,586,996 1,667,315 EXECUTIVE COMMITTEE: H. M. Cavender C. S. Salmon Paul A, Meyer RELIEF COMMITTEE: J. Gordon J. R. Wilson MANUFACTURING COMMITTEE: K. B. Day F. H. Hale F. N. Berry LEGISLATIVE COMMITTEE: H. M. Cavender Paul A. Meyer E. E. Selph J. R. Wilson FINANCE COMMITTEE: C. S. Salmon Verne E. Miller FOREIGN TRADE COMMITTEE: H. B. Pond Paul A. Meyer L. Spellman COMMITTEES PUBLICATIONS COMMITTEE: H. M. Cavender K. B. Day R. C. Bennett J. R. Wilson BANKING COMMITTEE: C. M. Cotterman W. K. LeCount J. R. Lloyd RECEPTION, ENTERTAINMENT HOUSE COMMITTEE: L. M. Hausman LIBRARY COMMITTEE: S. A. Warner SHIPPING COMMITTEE: E. M. Grimm G. P. Bradford E. W. Latie INVESTMENT COMMITTEE: H. M. Cavender C. S. Salmon Paul A. Meyer J. L. Headington THE RAILROAD The capital of the Manila railroad is 1*25,127,000. It is owned by the Philippine government. Total long term debt of the road is 1*53,408,198. There are 1*26,472,000 of 5% mortgage bonds due July 1, 1956. There are 1*21,172,000 of 4% gold mortgage bonds due May 1, 1939. There are 1*2,138,000 of 4% gold mortgage bonds due May 1, 1959. There are 1*3,000,000 of 7% sinking fund bonds due May 1, 1937. There is a 6% note for 1*50,000 of the Benguet Auto Line, and there are advances of 1*576,198 from the Philippine government, some at 4% and some at 7%. Last year, though only for the second time since the government bought it in 1917, the road had an operating deficit. Its revenue was 1*8,963,858.96 against P10j341,576.17 for 1931, a drop of Pl,377,717.31 or 13.32%. As is the case with most railroads, sinking funds to retire bonds when due are not carried. The road lost money last year because traffic fell off, but also because several rates were reduced in order to get the patronage it actually received. It is alarming when for any reason a railroad fails to earn profits, they have a tendency to keep on downhill to eventual bankruptcy; it is therefore interesting to see what the Manila railroad is doing to avoid this habit of decline, and first of all it is fair and gratifying to note that operating expense is being reduced, whereas the average expense‘1927-1931 was P8,041,103.80, last year’s was P6,797,547.67. The reduction in a single year of 1*749,845.81 shows com mendable thrift in the road’s administration, such as anyone who knows Manager Jos6 Paez would expect. It was ef fected while more than 70 kilometers were being added to the lines, and it involved pay cuts and reduction of personnel. It brought the year’s net loss down to P97,377.17. The road has no bright outlook this year and should sur prise no one if it turns up another deficit. Of its earnings, almost F9,000,000, last year 52% was from freight, 36% from passenger service, and 1*475,641.78 came from the express service, 1*291,151.27 from boats operated, 1*130,986.15 from mail charges and 1*201,176.21 from other operating revenue, Now a short rice crop is a brief incident in a railroad’s career. Something more permanent promises to limit the road’s freight business, a quota on Philippine sugar given free entry in the American market; and something more besides, if the Hawes-Cutting bill comes into effect, quotas on rope and coconut oil allowed to go duty free into the United States. Rates tending downward, to get what freight is to be had, can hardly be escaped. Thus the road hauled last year 221,404 more tons of freight, or 13.9%, than it hauled in 1931, “but the increases were principally in items of freight carried at low average rates, such as sugar cane and crushed rock for road building, which were more than offset by decreases . . . of rice, copra and miscellaneous freight which are carried at comparatively high rates.” Freight in less than carload lots, paying high rates, has been diverted to truck lines running into Manila, to a large extent. Drivers act as agents for shippers, no regular rates are maintained and no bills of lading issued. Both in freight and passenger business the road feels the competition of trucks, as railroads do everywhere. Public interest attaches to what the road is doing to extricate itself from the slump in its trade. Parallels between this road and great roads in America that have got back to a paying basis by thorough modernization of their service can’t be exact, yet they do have some applica tion. Manager Paez’s policy is, however, and necessarily, one of gradual improvement; he must do piecemeal what a great trunk line in an industrial country might do, as the Pennsylvania did do, with a single issue of credit. The road has begun operating its own truck lines, aside from the old Benguet Auto line. It has 2 such lines in Cavite, coordinated with its rail lines. It also has joint schedules north with the Northern Luzon Transportation company, south in the Bikol region with the Ammen Transportation company. This incursion into the truck traffic is favorably reported upon and is planned to be extended. Revenue of the old Benguet line at Baguio, to Damortis, making train con nections, grew 1*78,419.86 last year. The investment at stake is P346,175.87. A fourth truck line is operated at Pasacao. An interview was had with Manager Paez about faster passenger trains north, between Manila and Damortis, 222 kilometers, or 163.75 miles. When the government bought the road that schedule was 8 hours; it has been reduced to 5 hours, not much less than the ordinary motoring time clear to Baguio from Manila, but if it could be cut to 3 hours pas sengers could reach Baguio from Manila in 4 hours and there should then be a tendency to use the trains in preference to automobiles—as now there is a tendency to use automobiles in preference to the trains. To speed its trains as well as reduce operating costs, the road has converted many of its coal-burnipg engines into oil-burners. Coal cost last year 1*0.224 per locomotive kilometer, oil cost 1*0.166. Oil eli minates the soot nuisance and dispenses with the services of 1 fireman per engine, but doesn’t mitigate the nuisance of dust and heat. September, 1933 THE AMERICAN CHAMBER OF COMMERCE JOURNAL 11 To eliminate dust and heat, the road is working around to air-conditioned coaches, which have won back to the railroads much traffic in the United States. That fast passenger trains pay is indicated by experience with the La Union Express, 6 hours lacking 3 minutes between Manila and San Fernando; this train earned 1*1,392.19 more last year than in 1931, and made it necessary to run fewer express trains to Damortis, which were only run during the Baguio season, March, April and May. Rails on the Manila-north line are only 60-pound metal, but they will suffice, it is contended, with stone bal lasted roadway, to support trains running to Damortis in 3 hours; and the essential stone ballast, supplanting gravel and sand, is being adopted. Over lines of 60-pound rails, Japan manages very fast strains; and in England, over stone ballast, arc run some of the world’s fastest trains. From a 4-hour schedule to Baguio, 3 hours by train to Damortis, the railroad may expect much third-class patronage now given truck lines and very material first-class traffic besides. Little patronage can be diverted from the airplane line to Baguio, the trip in an houi, but patronage will surely come from folk who now motor between Baguio and Manila in their own cars because the train trip is several hours longer. Manager Paez recommends completion of the Bicol ex tension, in which there is still a gap of 40 kilometers between New Aloneros and Port Ragay that involves a boat portage of 2 hours 25 minutes and makes the time 20 hours between Manila and Legaspi. Seventy-one kilometers of the extension were built last year, chiefly under the administration of Harry V. Campbell, railway construction engineer and at the re markably low cost of P60,000 a kilometer, “including cost of land, grading, track, sidings, station buildings, bridges, water supply systems, the whole road complete and in operation.” The estimate had been P 100,000 a kilometer. The people have 1*4,200,000 invested in this unfinished improvement, for which that much additional stock of the railroad was bought by the government. Work has now been suspended, as the work on the spur from Tarlak to San Jos6, a fine pros pect for rice haulage, has been suspended at Munoz, for want of funds. There can be no remarkable returns from the Bikol invest ment until markets for hemp and copra improve, for the farmers and merchants in that region are too poor to pay their taxes: while they still dry copra and have it to ship, hemp fields are widely abandoned. But the railroad taps much fertile country open to settlers and it believes settlers will go there and found communities and raise crops that will give it trade. The fact can’t be evaded, however, that with independence and a curtailed American market better average business conditions will be far in the future, should they ever be reached at all. It is this dilemma of the railroad the people should understand. They own the road, the road’s debt is theirs. Bank Commissioner Garcia’s Yearly Report Consolidated Statement of Resources and Liabilities of All Banks and Trust Companies in the Philippine Islands at the Close of Each Fiscal Year Indicated. ItESOUIiCKS 1932 1931 1930 ‘ 1929 1928 Pesos Pesos Pesos Pesos Pesos Loans and discounts................ 73,227,262 66,793,634 7(>,848,062 80,391,413 109,308,937 Overdrafts.................................. 61,972,547 66,561,202 67,915,296 65,912,938 60,200,523 Stocks, securities, etc............... 36,899,718 32,266,179 22,913,308 11,524,591 12,247,640 Banking house, furniture and fixtures.................................... 4,443,264 2,574,385 2,423,011 2,352,453 2,387,478 Other real estate and chattels owned...................................... 4,740,199 3,990,011 3,639,670 3,629,034 3,054,534 Due from head office, branches, agents and correspondents. . 23,743,597 16,299,810 38,478,877 47,146,267 34,536,818 Due from other banks............. 7,496,501 4,903,592 3,059,635 5,398,558 8,198,375 Bills of exchange....................... 5,090,059 8,616,973 20,883,441 26,219,055 18,347,694 Cash on hand........................... 16,261,503 19,568,927 17,487,351 18,972,575 15,224,113 Checks and other cash items.. 597,170 420,807 877,146 1,665,435 1,413,382 Profit and loss accounts.......... 15,457 33,949 34,162 1,978,537 1,003,316 Other resources......................... o 10,645,628 «13,544,273 7,660,654 7,447,418 6,469,278 Total resources.................. 245,132,905 235,573,742 262,220,613 272,638,277 272,392,088 °Includes Customers’ Liability Under Trust Receipts. LIABILITIES Capital........................................ 24,463,300 Surplus........................................ 8,879,411 Reserves..................................... 8,199,062 Undivided profits...................... 959,035 Bank notes in circulation........ 16,319,283 Due to head office, branches, agents and correspondents. . 21,934,510 Due to other banks................. 3,786,061 Dividends unpaid...................... 448 Demand deposits....................... 47,016,850 Time deposits............................ 55,874,079 Savings deposits........................ 43,548,841 Bills payable: Domestic............................. 385,447 Foreign............................... 152,056 Cashier’s checks........................ 50,842 Certified checks......................... 363,666 Suspense accounts..................... 2,027,126 Other liabilities......................... 11,172,888 Total liabilities.................. 245,132,905 235,573,742 262,220,613 272,638,277 272,392,088 24,463,300 26,484,550 25,484,550 25,478,150 7,858,208 7,811,899 8,340,220 6,237,145 7,575,189 6,142,132 2,107,152 1,580,332 9,866,983 8,672,485 15,469,176 17,049,453 18,989,754 24,017,003 25,416,639 41,619,314 49,945.794 27,386,495 3,132,491 3,847,798 3,921,986 5,417,919 465 338,343 337,744 50,954,239 60,868,276 60,492,789 69,078,633 42,657,128 35,815,001 30,723,692 33,035,045 43,135,103 47,874,363 54,986,822 62,554,310 34,270 28,358 20,341 7,008 184,059 606,298 459,941 392,994 667,311 613,357 638,491 119,893 180,249 376,231 616,673 572,233 1,279,663 694,415 77,682 1,119,236 9,694,069 10,713,823 8,499,247 8,060,808 The general business of banks and trust com panies during the year under review showed a marked improvement over that of 1931. The increase in their total resources by 1*9,559,163, in spite of the world-wide economic disturbance, is an indication of an attitude of continued confidence in these institutions by the people of this country. While in many parts of the world the year 1932 was one of serious derangement of credit giving rise to a series of reported bank failures, in this country, on the other hand, activities in banking and credit were quite normal, with the exception of the transactions in foreign exchange which, in a minor degree, dropped from their 1931 level. It is evident, therefore, that the tidal wave of fear and uncertainty which has been sweeping the world over, tearing down old established banking institutions and leaving financial bank ruptcy and economic misery in its wake among nations and peoples alike, did comparatively little damage in this country. The statement presented above shows that while overdrafts decreased by 1’4,588,655, loans and discounts increased by 1*6,433,628 or a net gain in these two items of Pl,844,973. Cash on hand was P3,307,424 less than reported in 1931. This decrease, however, was more than offset by an increase in security investment of P4,633,539 indicating a certain trend in policy to put the available funds of the banks into pro ductive use. Likewise, deposits during the year registered a net gain of 1*9,693,300 over those of 1931. In this connection, it will be noted that while demand deposits decreased by P3,937,389 at the same time there was registered an increase in the time deposits by 1’13,216,951, with savings accounts remaining at almost the same level as that of 1931. The unprecedented rise in time deposits during the year is a sure indication that on ac count of the dull business conditions people preferred to put their money on deposits which would assure them of a steady return while waiting for better business opportunities. It is not to be expected, however, that the character of this account can be anything but temporary and at the first manifestation of the advent of better times a big portion of this fund would undoubtedly be put to more productive uses. Surplus for the year made a gain of 1’1,021,203 over that of the previous year while undivided profits dropped by 1’1,148,117 during the same period. The decrease in the latter item was a result of the cleaning up of the portfolios of some of the banks of bad and undesirable papers so that they may be able to face the new
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