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Company as the railway company could possibly arrange." And Sir Alfred Hickman declares that though technically the Chatterly won everything, they could not compel the railway company to afford them ordinary facilities, such as were necessary to carry on their business, so they were obliged to compromise the matter upon worse terms than the Commissioners had allowed. This result had deterred him from challenging the railway companies, because if he beat them on one point, they could beat him on the others. Sir Benjamin Hingley has given similar evidence, and asserted that the Chatterly experience had caused him and many others to bear much that they thought unreasonable and unfair, lest worse befel them.
Recent experience has more than confirmed this opinion. Under the Act of 1894, a case was taken before the Railway Commission by the Mansion House Association on behalf of its members in Northampton, who urged that a certain rate, which had been increased, should be reduced to the 1892 level. After nearly two years' delay and the expenditure of several thousand pounds, the railway com panies were defeated, and the traders believed that they had settled a test case which would rule the others. Not so, however ; the companies philosophically accepted the decision as applying to the particular rate, and smilingly await proceedings from other traders who desire to challenge any of the remaining millions of rates and have the temerity to run the responsibility of the expense. As Mr. C. Edwards says in his Railway Nationalisation : “So that it simply comes to this, every case of excessive or preferential rates will have to be separately challenged at an expense of some hundreds of pounds, or the traders will have to continue under the grievance. When we remember that there are 250,000,000 separate rates, and if we only allow that a small proportion are excessive or preferential, and if we only assume a cost of two or three hundred pounds in challenging each, it will be seen that either the traders will have to grin and bear the burden, or spend, in attempting its entire removal by litigation, a sum probably greater than the whole amount required for the complete acquisition of the entire railway system. Thus, with competition dead, with the interest of the companies opposed to that of the public, with coercion through revision a failure, and through the Railway Commissioners impossibly costly and futile, I am surely justified in definitely saying that, from the standpoint of the public and of national trades, the present system is hopeless beyond redemption."
Relative Cost of State Administration. With the present system hopeless, then, from the point of view of the public, we may definitely ask whether the time has not arrived when the State should step in and acquire the Irish Railways, and own them for the public advantage? Before we answer this momentous question, let us turn to the experience of our neighbors and see how, in certain vital respects, they have fared under State ownership of railways.
The question as to whether the cost of administration is greater under State or private management is one of vital importance. There are, doubtless, a very large number of people who are prepared to nationalize the railways on principle, even if their cost of administration should be greater than under private ownership. And there is certainly a very great deal to be said for their contention, for the railroads have become the virtual highways of the country, and the theory of using the highways for the development of the country, regardless of whether they "pay," might not unreasonably be applied to the railways, if necessary, as a final resort. But, on the other hand, there are a great many people-probably a large majority of the business classes—who are only prepared for the State to take over the railways as a purely commercial transaction; and who would certainly oppose the transfer if they believed the State would be more prodigal of expenditure than the administrators of the present system. It will, therefore, be of advantage to take the question out of the realm of abstract principle and refer it to the test of experience for a moment. The proper basis of comparison for this purpose is, of course, the cost of administering, not a State line in one country with a private line in another, but the State and companies' lines respectively, side by side, in the same country. And this comparison has been most effectively made by Mr. J. $. Jeans. He gives this comparative statement, showing the percentage of total working expenses expended on administration on the State and private lines respectively of different European countries :COUNTRIES.
STATE LINES. COMPANIES' LINES.
10:80 Russia ....
13.70 It will be noticed that in France alone is the cost of State administration considerably greater than private administration. This difference, Mr. Jeans tells us, is explained by the fact that the State only owns the feeders, and companies the main trunks. France, therefore, is exceptional. But in the case of countries where the conditions of the comparisons are more parallel, the State lines will be seen to be invariably the more economically managed as regards administration."
State Railway Rates. The next and most important point is the question of transit rates and charges. This aspect of the problem has been comprehensively investigated by Sir Bernhard Samuelson, so far as Holland, Germany, and Belgium are concerned ; and the following table of comparative rates is taken from the masterly report which he presented to the Associated Chambers of Commerce :
For same Distance. HARDWARE :
BRITISH. GERMAN. BELGIAN, DUTCH Birmingham to London
13/11 11/3 COTTON Goons : Manchester to London
301- to 33/- 18/1 14/4 GENERAL MACHINERY : Leeds to Hull
8/0 Wool: Liverpool to Manchester
4/11 Cattle: Hull to Manchester
29/6 Allowance has been made for the difference in systems of calculating
" terminal charge," &c
The German Railways. Let us take the two cases of Germany and Belgium, where the State railway policy has been most highly developed. As yet, the dream of Bismarck' to get a complete Imperial system of railways has not been realized, owing largely to the jealousies of the individual States which go to make up the Fatherland. Sir Bernhard Samuelson, already quoted from, states that “the net returns on the cost of construction of the railways in the hands of the Governments, after payment of preference shares, debentures, etc., were 5'01 per cent., reduced, however, on the actual cost to the Govern-, ments, in consequence of the premiums paid on the purchased railways, to 4:65 per cent. On the private railways, these figures were respectively 4.93 and 4:61 per cent. On the Prussian State Railways, taken by themselves, these returns were 5.55 per cent. on cost of construction, and 5'09 per cent. on the cost after including premiums on purchase. The purchased lines were paid for by consols, bearing 4 per cent. interest, and the money employed in the construction of the lines by the Government itself was borrowed at about the same rate, hence there appears to be a clear profit to the Government of i per cent. on the capital invested in its railways, after setting aside an amount, which is, however, not very large, as a sinking fund." And 'dealing with the effect of the transfer to the Government, he says that "the transfer of the railways from private management to that of the State, administered as above described, was intended to produce, and has produced, decided economy in the cost of working the traffic, greater uniformity in rales, and increased accommodation to the public; and the result of the inquiries which I instituted in numerous centres of trade, manufactures, and consumption, enables me to state that these advantages have been secured without any drawbacks."
State Railways in Belgium. The State Railways of Belgium have proved a great success in every respect-in cheapness of rates, in efficiency of service, and as an investment of public monies. While up to 1894 the State lines cost $32,000,000 to construct, they earned a net profit of £60,000,000, or just double their cost price. And this is, too, the very smallest part of their gains. The Government have always treated the question of earning a profit as of quite minor import
ance. The policy has been to constantly use surpluses for cheapening rates and increasing facilities. This policy was first adopted in 1856, and the effect was immediate. In the first eight years the traffic increased by 106 per cent., and the receipts by 49 per cent. From 1870 to 1883 the receipts increased by 168 per cent. Nor are the traders and farmers troubled with the practices which mar our English system. Differential rates between individuals are known, and the complete publicity secured by State ownership has prevented the unfairness of secret rebates and special contracts.
In spite, however, of low rates, the State lines still earn a handsome profit. In 1894 the gross income was £6,118,996, while the working expenses were £3,461,499, thus leaving a net profit of £4:46 per cent. on the cost of construction, and 4:43 per cent. on capital.' In addition to this, it should be borne in mind that the Belgian Government pays nothing for the conveyance of its mails, while we have to pay about a million a year to our railway companies. Sir H. Barron, in an official report, ventures the opinion that “it is certain that if managed solely as a commercial enterprise, the Belgian State Railways would not have proved such a stimulus of national prosperity.”
Colonial Experience. The advocates of the existing order of things admit the success which has attended the State ownership of railways on the Continent. They try to discount it, however, by declaring that the Celt and the Anglo-Saxon have no genius for “bureaucratic administration." Let us, therefore, turn and ask our Australian brothers for their experience in the matter. All the Australian colonies have adopted the policy of State Railways. Says the Year Book for Australia: “The result of the railway system of the Colonies must be considered as very satisfactory. Already, as a whole, they pay a fair return for the capital that has been expended, while the benefits they confer in opening up new lands for settlement and development, in providing a cheap and convenient mode of transit, and generally in furthering the trade and interests of the colonies, are incalculable." And again, the Australian Year Book for 1893, observes that: “The railways of Australia represent the assets for the national debts of each colony, and, to-day, would probably realize, if they were to be disposed of, ful the amount of the national indebtedness. It is, however, improbable that the people concerned will ever allow these great possessions to pass into private hands, believing that they should be retained to open up and develop the resources of the Colonies, and aid in the material progress of Australia.” A striking illustration of the jealousy with which the Colonists view their valuable possessions was supplied in 1882 in Queensland. Sir Thomas McIlwraith, the Premier, and his Government, entered into negotiations with a British capitalist syndicate, to whom they promised a free grant of a large tract of country, in return for which a private railway was to be constructed. As soon as the negotiations leaked out, the indignation of the Colonists became so powerful that the Government were compelled to resign, were badly beaten, the syndicate was left in the cold, and the State system of railways remained intact.
What are the Objections ? There are three main objections urged by the spokesmen of the present system against the State acquisition of the railways. They are :
(1) That the service will be inefficient.
The author of Railway Nationalization has dealt at length with and effectively disposed of these objections. With regard to the first, he points to the greater efficiency of the State as compared with the private lines in the same countries. He also points out that in the acquisition of the railways by the State there is no idea of staffing them with amateurs and political tide-waiters, but that the existing practical staff will be utilized. With regard to the second, he shows that strikes are not accidental, but are due to unjust treatment, and that the need for them will be reduced to zero by the more humane treatment of the railway employees under State ownership. As to the third, he points to the political jobbery involved in the 140 definite railway interest men now in Parliament, voting for and protecting their respective companies as against the commonwealth, and further points out that the Post Office, ever subject to the light of publicity, has been practically free from scandal and corruption, which cannot be said for our present railway system.
Terms of Purchase. The terms under which the State can compulsorily acquire the railways from the present companies are fixed by Mr. Gladstone's Act of 1844. This provides that the price payable shall be twentyfive years' purchase of “the annual divisible profits, estimated on the average of the three next preceding years."
Let us see what sort of a bargain this will mean for the Irish railways. The average annual divisible profit for the three years ending 1898 amounted to £ 1,521,717. Twenty-five years' purchase of this will give £38,042,925 as the price of acquisition by the State. This is just £1,300,000 less than the paid-up capital value of all the Irish railways. The Government would be easily able to get their State Railway Stocks taken up at of 25 per cent. But against this, a big saving in working expenses, consequent upon unity of management, would be effected. A late manager of one of the English railways has estimated this saving at 20 per cent. This will give us an annual saving of £414,000. Thus: Present profits ....
£1,521,000 Saving by unity of management
£1,935,000 Less annual interest of 2per cent. on Government railway stock of £38,042,925
951,000 Leaving a net annual profit of £984,000 With this sum, goods rates and passenger fares could be reduced by 20 per cent.
706,000 Still leaving