The "Bullet" Is Broke, Too

In the minds of downtrodden U.S. commuters and rail travelers, the very mention of Japan conjures up visions of superfast trains and a superefficient railroad system. To a degree, the image is justified. The futuristic Shinkansen, or "bullet" trains, whisk passengers as far as 735 miles from Tokyo to Fukuoka City in the southernmost main island of Kyushu in six hours flat amid plush comfort. That trip costs only $31.15 for a one-way economy-class ticket with a $20.70 surcharge for first-class.

Yet behind this fac,ade of luxury and speed lurks a grim reality. Like many of the railroads of the world, the Japanese National Railway is on the brink of bankruptcy. Last week the line was barely saved from defaulting on $138 million in debts to 10,000 private companies when it canceled maintenance and construction contracts and received a $138 million stopgap loan from the Finance Ministry. Even so, more huge debts fall due next month, and the government is in no mood for another rescue. The Finance Ministry and private banks, which in the past have generously bailed out the railroad, are opposed to further advances unless the railroad puts through some basic reforms.

Among the J N.R.'s 256 separate rail lines, only the bullet trains and two of Tokyo's urban services turn profits. The rest lose money at a rate that makes the old Penn Central's losses trivial by comparison. One example: the Biko line, which serves a sparsely populated area on the island of Hokkaido, has outlays of $11 for every 34-c- it earns. In the past twelve years, the Japanese National Railway has piled up a staggering debt of $34 billion; at present it is losing money at the rate of $8.6 million per day.

The Japanese are caught in the classic cost-fare squeeze that has ruined rail service throughout much of the world. The J.N.R. is the nation's largest employer with 430,000 workers on its payrolls. Because the seven railroad unions are among the most militant in Japan, they have prevented the line from cutting jobs in order to save money. At the same time, the railroad has been barred by the Japanese government from eliminating unprofitable service in rural areas and from raising fares to bring them in line with operating costs; fares are so unrealistically low that last year they did not even cover the payroll cost, let alone pay the bills for maintenance and new construction. Yet, the J.N.R.'s trains and buses, which carry 19 million passengers a day, are so overcrowded that new construction is becoming more urgent every year.

Political Roadblocks. The government's official audit committee recently recommended that the railroad be granted greater subsidies, a temporary moratorium on debt payments and the right to hike fares. For its part, the J.N.R. management postponed $155 million in construction projects, and pledged to improve its efficiency and labor-management relations.

Unfortunately, the rescue operation is complicated by bickering within the sharply divided Cabinet. Among the most powerful enemies of Premier Takeo Miki is Finance Minister Masayoshi Ohira, and the speculation in Tokyo is that his delay in bailing out the railroad was intended to embarrass Miki, who faces national elections. Indeed, a national rail system on the verge of collapse could hurt Miki's chances for retaining the leadership of his party.

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