Contrary to the predictions of Sanderson & Porter and Howard Abel, the New Hampshire Traction Company was anything but a profitable enterprise. To say that its earnings had been grossly overestimated by these "experts" would be putting it mildly. While the EH&A had reported a net income of $6,450 for the year ended June 30, 1902 and had paid an unearned dividend of $8,250, it had a net loss of $29,323 the following year and the deficit on its leased lines was $78,883. The EH&A's deficiency for the year ended June 30, 1904 was $10,210 and the loss from operating the leased roads was $72,204.
One reason for the large deficit.in 1904 was a series of heavy snow storms in January 1904, beginning with a 12-inch fall on the second day of the new year. More than 32 inches of the great white cold were measured during the month and some of the Eastern Division's lines were clogged for days. Large crews of shovelers had to be hired to clear away the drifts which the railway's plows could not penetrate.
The loss of revenue during the enforced shutdown, coupled with the heavy cost of clearing the tracks, forced the New Hampshire Traction Company to seek ways of boosting its revenues. An increase in the zone fare was considered but finally it was decided to retain the five cent rate and to increase the number of zones.
Effective June 1, 1904, the number of zones between Haverhill and Hampton Beach was increased from six to seven, and between Exeter and Portsmouth Plains, from three to four. There was a temporary increase to five in the number of zones between Amesbury and Exeter but the new arrangement proved unsatisfactory and the original zone limits soon were restored.
The increase in the number of zones between Haverhill and Hampton Beach raised the through rate between these points from 30 to 35 cents but during the summer of 1904 - and in the 1905 and 1906 seasons as well - special Haverhill-Hampton Beach round trip excursion tickets were sold for a half dollar. Similar tickets good between either Exeter or Amesbury and Hampton Beach were available for 25 cents. Provided throughout the year were workingmen's reduced rate tickets, good only for multi-zone rides and selling for 31/2 cents each. These were replaced on December 1, 1905 by a new form of coupon book, containing 125 five-cent tickets and selling for $5. Unlike the earlier coupons, the new tickets could be used for either single or multiple zone rides.
At Amesbury, in accordance with the 1901 order, free transfers continued to be exchanged with the Citizens' Electric and Haverhill & Amesbury Street Railways, the central transfer zone being extended by the town fathers to include the Alms House on Friend Street on the Amesbury & Hampton extension. In Haverhill, Eastern Division passengers desiring to ride to White's Corner instead of the B&M station could, after August 1903, transfer at Winter and Locust Streets to Western Division cars, which continued to have their terminal at Main, Merrimack and Water Streets.
Regrettably, the various fare zone adjustments and the changes in ticket rates had little effect on revenues, which continued to fall far short of meeting operating expenses and fixed charges. The EH&A's deficit for the year ended June 30, 1905 was $13,858 and the loss from the leased roads was $40,889, producing an overall deficit of $230,544 for the 1903, 1904 and l905 fiscal periods.
Because of its losses, the EH&A did not have the funds to meet the annual interest payments of $12,250 on its $225,000 in first mortgage bonds and in order to prevent default and possible foreclosure action, the railway was forced to borrow the needed cash from the New York Security & Trust Company through the New .Hampshire Traction Company. As of June 30, 1905, the Traction Company held $17,935 in demand notes pay able of the EH&A and by August 1, this debt had increased to $23,332.
A major factor in the financial difficulties of the system was the small permanent year-round populations of most of the communities served. Haverhill and Portsmouth were good-sized cities but among the towns, the largest were Amesbury and Exeter, with respective populations (in 1900) of only 9,473 and 4,922. For a few months in summer, when riding to Hampton Beach was heavy and there was substantial pleasure traffic on the various routes, the Eastern Division did a large and profitable business, but in other seasons, when there was only the ordinary day-to-day travel to be accommodated, none of the roads earned costs of operation, not to mention bond interest, taxes and other assessments. In short, the railways had to realize enough profit during the short summer season to offset the losses incurred during the rest of the year - and this they were unable to do despite energetic promotional activities, widespread advertising and the like.
The same situation had prevailed when the EH&A and the Amesbury & Hampton were by themselves but both railways were new in those years and maintenance expenses were low. Then too, the novelty of the new electric cars had stimulated riding even in the off season: by 1902 and 1903, much of the novelty had worn off and the trolleys were simply accepted as part of the everyday scene, to be patronized or not.