The Rail Transport Tale of Woe
The Ministry of Transport last week issued a communiqué on the "critical condition of the railways from the economic, financial, technical and operational point of view." The communiqué appears to be a summary of a more complete document.
Heavy emphasis is laid on the fact that the grave deficiencies of the railway services, especially as regards goods traffic, are mainly attributable to inadequate traction facilities. Of the total stock of locomotives in the country, numbering some 4,068 units, it is pointed out that no fewer than 1,121, or 28 per cent., are out of service, undergoing repair or otherwise unserviceable, this as compared with what is considered a usual margin of lay-off under normal conditions of railway operating of 10 per cent.(1) 28 per cent, however, is an average reckoning; within that reckoning there are instances of individual lines where the shortage of traction is still higher. In the case of the General Mitre line, for example, the position, when the present authorities took over alter the Revolution, was that, out of total locomotive stocks of 692, those out of service numbered 263, or 38 per cent.(2) Nor, it seems, are there grounds for hope of much in the way of speedy improvement. Indeed the fact probably has to be faced that the situation is a progressively deteriorating one. This is so partly because of the precarious condition of such a high proportion of the units in service but mainly perhaps, it is due to low efficiency in the railway maintenance and repair workshops.
The Ministry communiqué seems to contradict the generally held view that the present deficiencies of the railway goods services are attributable to a serious shortage of waggons. This shortage, the communiqué suggests is more apparent than real, the true villain of the piece, it is claimed, being traction, as shown by the fact that the average run per waggon today is only 12,000 kilometres per annum as compared with approximately 25,000 kilometres at the end of the war.(3) From this it is reasoned that if the movement of the railway waggons in use could be speeded up (through more efficient traction) the waggon supply problem which has assumed the proportions of a nightmare, especially in rural districts, would virtually disappear. (When one considers the dilapidated condition of the majority of the railway waggons in service, however, and the low functional efficiency deriving from that condition, it seems permissible to ask whether it may not be an over-simplification of a highly complex problem to suggest that for its solution all that is required is more locomotives).
Railway waggon stocks, the communiqué states, total 91,395, of which 11,157 are out of service.(4) Global figures in this connection, however, mean little. The usefulness of a railway waggon depends on whether it is the right type for a given purpose and whether is in the right place at the right time. Apart from data on the number of waggons oi the different types in service today (the last official information published of this kind being now nearly a decade out of date) it would be interesting to have a break-down of the general total according to age groups. The assumption is that the 91,395 railway waggons in stock today must include a distressingly high proportion of the 86,149 that were in use twenty years ago. No less marked are the deficiencies of the equipment in the passenger services operated by the railways, according to this memorandum, due primarily to the fact of the enormous growth of suburban movement in the past decade, which, it is pointed out, has necessitated "the diversion of locomotives and other elements to make good the deficiencies of those services, to the detriment of transport facilities for general goods and cattle."
Without going into details, the memorandum refers to the deficiencies characterising the upkeep and renewal of the permanent way and fixed installations and which, it is indicated, date from "long before the State took over the railways." The rate of deterioration of these assets increased latterly, however, on account of inadequate renewals, and it is estimated that the shortfall in capital expenditure, during these latter years in respect of this item, was of the order of 3,500,000,000 pesos.(5)
The deficit on the operation of the railways-- i.e., presumably, in the absence of more precise information, the deficit between revenue and current expenditure has been rising year by year since 1947. In the latter year it was 167,318,000 pesos and for the current year, on estimated 1,400,000,000 pesos (According to a reference made by the Minister of the Treasury in connection with his announcement last week of the 1956 budget estimates, the deficit for 1955 is expected to be approximately equal to the purchase price of the British railways, or some 2,200,000,000 pesos,(6) while it is estimated that the 1956 deficit will be some 2.500 million).(7)
Bigger Volume of Traffic Needed
The problem to which these deficits, past, present and prospective relate, requires for its solution, as the Ministry memorandum frankly admits, 1) increased revenue from a greater volume of traffic, 2) an increase in tariffs or 3) economies in the operating of the services through "controls on purchases and a reduction in the number of personnel, the latter being clearly excessive." The volume of freight has been adversely affected by the decline of Argentine agriculture in the past decade, and it must be hoped that the new policy which is intended to provide the necessary incentive for increased and more efficient production in the "camp" will, in time, be reflected in an improvement in the economic situation of the railways. This, however, will not happen unless the other deficiencies are also progressively repaired. The memorandum rules out the possibility of anything approaching a commensurate increase in tariffs on the grounds, presumably, of the cost-inflation implications of such a step, while as regards large-scale dismissals, this recourse is resolutely shunned on the grounds that it would result in unemployment and a lowering of the general standard of living, which would be at variance with the aims and purpose of the Revolution. The memorandum thus implies that, for a solution of the grave economic defects of the railway services, there is not much that can be done meantime beyond hoping for the best from the new agricultural policy, rationalising working arrangements and striving for a higher degree of productivity per capita among the personnel employed.
The importance of a greater volume of traffic is obvious, when one compares the general statistics of railway movement of nearly two decades ago with those of more recent date, the difference is not as marked as one might expect to find. In the four pre-war years the freight total for all lines averaged 45 million tons per annum, the ton-kilometre reckoning being 12,500 million. For the four-year period 1951-54 the approximately comparable totals were 39 million tons (13 per cent, less) and 16,400 million ton kilometres.(8) The disparity characterising the ton-kilometre reckoning implies that a far closer analysis of the subject is required than the statistical information available renders possible, while the fact that the tonnage transported by the railways should be only 13 per cent below the pre war position despite the fact that there has been a crisis of sub-normal production in the "camp" during the whole of the later period also suggests that more detailed figures of the composition of railway freight is required for a true analysis.(9) It is to be hoped that the new authorities at the Ministry of Transport will, in the not too distant future, follow up this narrative statement of rail transport difficulties with the up-to-date and detailed statistics which the previous authorities so efficiently suppressed.
So far as concerns the hope that the rail transport economic crisis may be a less ugly spectre as soon as the farms begin to produce abundantly again, a doubt is inevitably prompted by the recollection of the reference to railway decapitalisation in Dr. Prebisch's cryptic analysis of the country's essential problems at the beginning cf his recent Report in which he says:
... Firstly, it is not possible to expand imports of raw materials and fuel to the extent required in order to raise the rate of production. Secondly raising the rate of production implies the need for imports of machinery and equipment, and the country's precarious foreign exchange situation renders it impossible to grant exchange permits for the introduction of capital goods. Thirdly, even though such goods could be imported in substantial quantities, the necessary electric power would be lacking for running the machinery and equipment thus acquired owing to the gravity of the power crisis. And fourthly, the increased production could not be moved owing to the serious decapitalisation of the transport system."(10)
Coal Supply Crisis
Decapitalisation, however, is not the only problem by which the rail transport authorities are bedevilled. The more immediately pressing one is fuel. According to this memorandum the railways' coal stocks are critically low and unless they are substantially replenished before next February the traction bottleneck may have narrowed considerably before then by reason of the enforced idleness of many of the coal-burning locomotives. It must be fervently hoped that the efforts of the Naval Purchasing Mission in the United States to arrange for an emergency supply of some 300,000 tons of coal will be successful and there will be no hitch in the delivery and maritime transport of other overseas purchases which have been distressingly delayed since the events of June 16 last [the first attempt to depose Perón]. In the best of cases, however, the need for economy in coal consumption in railway locomotives until the situation becomes easier probably betokens an accentuation of the traction problem in the period immediately ahead.
The memorandum, not without reason, stresses the need the authorities feel for the goodwill and forbearance of the public. The appeal "not to shoot the man at the piano" has its peculiar cogency, and the authorities are wise in their decision to release some of the facts of the appalling deficiencies of a transport service which, whatever the faults found by critics of British ownership prior to 1947 was, judged by any fair standard, an efficient service then, and a particularly efficient one considering the handicaps and difficulties under which the railways were operated during the decade or so before the take-over.
The memorandum under reference also appeals to railway workers and personnel for their collaboration in the task of "rehabilitating the railways." A few figures are furnished to indicate the importance of the railways as an employer of labour: "210,000 men and women whose wages and salaries account for 68 per cent, of operating costs and in 1954 totalled 3,159,000,000 pesos " (Gross revenue receipts in 1954, according to the railway transport section of the "Síntesis Estadística Mensual," totalled 3,956,292,000 pesos, and, according to the Minister of the Treasury's recent statement, the railway revenue deficit for the same year was 1,700,000,000).(11)
Hare-brained Adventure Ends
The authors of this memorandum are to be congratulated on their decision to include in it a brief factual and explanatory reference to the unhappy though not surprising fate of the locomotive manufacturing plant which the deposed government set up in 1950 and which, "according to official propaganda was to solve the country's rail traction problem."(12) That, however, was the fiction of the matter; the truth was, as the memorandum says, that the scheme proved a "resounding failure." Even this, however, may be an understatement for we are further told that "in the whole time the plant was working it only produced two units whose cost was prohibitive," the present authorities, having decided "to end this adventure, have ordered the liquidation of the factory which cost a mint of public money."
The memorandum ends with a warning that 1956 and 1957 may be critically difficult years for the rail transport services and seeks to reassure public opinion that everything will be done that can be done with the resources available and within the possibilities of a crucially difficult situation, to meet and surmount the difficulties ahead.
(The Review of the River Plate, 30 December 1955, pages 14-17; with footnotes by Sylvester Damus.)
1. The authors of the communiqué assumed a percentage of engines that would normally be out of service that is unusually low and at variance with the historical experience:
| Locomotives in Stock, in Service, and out of Service - 1921 - 1946 | |||||||||||||
| Financial Year |
Private Railways | State Railways | Total | ||||||||||
| Stock | In service |
Out of service |
Stock | In service |
Out of service |
Stock | In service |
Out of service | |||||
| No. | No. | % | No. | No. | % | No. | No. | % | |||||
| 1921 | 3339 | 2552 | 23.6 | 503 | 406 | 19.3 | 3842 | 2958 | 23.0 | ||||
| 1922 | 3341 | 2575 | 22.9 | 590 | 452 | 23.4 | 3931 | 3027 | 23.0 | ||||
| 1923 | 3328 | 2617 | 21.4 | 596 | 462 | 22.5 | 3924 | 3079 | 21.5 | ||||
| 1924 | 3350 | 2534 | 24.4 | 655 | 511 | 22.0 | 4005 | 3045 | 24.0 | ||||
| 1925 | 3355 | 2556 | 23.8 | 657 | 486 | 26.0 | 4012 | 3042 | 24.2 | ||||
| 1926 | 3404 | 2660 | 21.9 | 657 | 485 | 26.2 | 4061 | 3145 | 22.6 | ||||
| 1927 | 3382 | 2728 | 19.3 | 682 | 502 | 26.4 | 4064 | 3230 | 20.5 | ||||
| 1928 | 3414 | 2574 | 24.6 | 683 | 506 | 25.9 | 4097 | 3080 | 24.8 | ||||
| 1929 | 3398 | 2644 | 22.2 | 686 | 507 | 26.1 | 4084 | 3151 | 22.8 | ||||
| 1930 | 3381 | 2629 | 22.2 | 751 | 503 | 33.0 | 4132 | 3132 | 24.2 | ||||
| ... | ... | ... | ... | ... | ... | ... | ... | ... | ... | ||||
| 1936/7 | 3285 | 2968 | 9.6 | 643 | 568 | 11.7 | 3928 | 3536 | 10.0 | ||||
| 1937/8 | 2912 | 2654 | 8.9 | 1036 | 922 | 11.0 | 3948 | 3576 | 9.4 | ||||
| 1938/39 | 2909 | 2726 | 6.3 | 1045 | 938 | 10.2 | 3954 | 3664 | 7.3 | ||||
| 1939/40 | 2907 | 1888 | 35.1 | 1028 | 813 | 20.9 | 3935 | 2701 | 31.4 | ||||
| 1940/41 | 2890 | 1845 | 36.2 | 1024 | 823 | 19.6 | 3914 | 2668 | 31.8 | ||||
| 1941/42 | 2868 | 2511 | 12.4 | 1023 | 826 | 19.3 | 3891 | 3337 | 14.2 | ||||
| 1942/43 | 2866 | 2600 | 9.3 | 1029 | 962 | 6.5 | 3895 | 3562 | 8.5 | ||||
| 1943/44 | 2890 | 2669 | 7.6 | 1029 | 953 | 7.4 | 3919 | 3622 | 7.6 | ||||
| 1944/45 | 2878 | 2102 | 27.0 | 1029 | 667 | 35.2 | 3907 | 2769 | 29.1 | ||||
| 1945/46 | 2876 | 2198 | 23.6 | 1042 | 667 | 36.0 | 3918 | 2865 | 26.9 | ||||
| Source: | Ministerio de Obras Públicas, Dirección General de Ferrocarriles, Estadística de los ferrocarriles en explotación, various issues, Table No. 8. | ||||||||||||
2. The official statistics for 1955 do not show the number of engines out of service. In 1956 the Mitre Railway's number of steam engines in stock was 691, the number out of service was 167 or 24.2 per cent.
3. The highest average annual kilometrage per wagon ever reached by private railways was 19,483 in 1943/44. The actual average annual kilometrage per wagon during 1955 (including wagons out of service) was 15,153. Figures are from official statistics published by the Ministry of Transport.
4. The actual stock of wagons in public service (excluding company's service) at the end of 1955 was 83,699. The number in service was 76,093.
5. Regarding track renewal: The tonnage of rails and accessories employed during the four years from 1952 to 1955 was 329,449, against 276,868 laid during the seven years from 1924 to 1930. The number of hardwood sleepers laid was smaller: 3,344,406 during 1952-55 and 5,493,531 during 1924-1930.
6. The comparison of figures from years that were far apart and taken from a period of very high inflation is inadmissible. From July, 1947, to July, 1955, the official consumer price index increased by 421 per cent, from 4.705 to 19.803 (1960 = 100).
7. The actual operating deficit (after minimal provision for renewals) of 1956 was 2,415 million pesos.
8. That was a 31 per cent increase in the work done in freight traffic. The 12.5 billion ton-kilometres is the average of the years 1936/7 to 1939/40.
9. The required analysis has not been made officially in the course of drafting several transport development plans. For a first cut at such an analysis see Argentine Railways, Seven Papers on the Economics and History (Ottawa, DIA Agency Inc., 2008), chapter 2, which shows what great change in the composition of traffic explains why the ton-kilometrage increased although the tonnage decreased. Chapter 3 of the same book explains how the rationing of scarce transport capacity worked. Taken by themselves, the tonnage figures are misleading.
10. After equal or increasing goods and passenger transport, the stated decapitalisation of the railways implied an undisputable increase in the productivity of the remaining capital. That increased productivity has never been considered in connection with the increased employment of labour, except in chapter 1 of the book referenced in note 9.
11. The actual operating deficit of 1954 was 1,139,463,000 pesos.
12. The "plant" in question was the "Fábrica Argentina de Locomotoras" (aka FADEL) located in the Liniers workshops of the former Western Railway and under the direction of Pedro Celestino Saccaggio.