(2) Abuse by the concessionaires of their privileged position;

(3) Opposition to desirable reforms;

(4) Complicated and arbitrary variations in their methods of organisation;

(5) Chaos of tariffs;

(6) Quarrels and waste resulting from the fierce competition of numerous separate administrations.

'The State system of unified management offers the llowing advantages:

(1) Avoidance of the construction of competing lines; (2) A reduction in the numbers of officers and staff and in the amount of correspondence;

(3) Unification of tariffs and train schedules;

(4) Simplification of dealing with damage claims;

(5) Provision of interchange stations;

(6) Better use of equipment;

(7) Avoidance of duplications of service and of roundabout routing of traffic, which result in higher operating costs and consequently higher rates.'

Over against the Prussian conclusions we may put ose of the Italian Royal Commission, which was quiring at the same time as the Prussian Ministry as reporting, and published its proceedings in seven arto volumes in the year 1881. They are summarised follows by Hadley (op. cit., p. 223):

1. Most of the pleas for State management are based on the idea that the State would perform many services Each cheaper than they are performed by private companies. is is a mistake. The tendency is decidedly the other way. ivate companies can do for their patrons many things which e State cannot; but it is doubtful whether the State would justified in doing anything of the sort which private comnies cannot. The State is much more likely to tax industry an to foster it. And, when it attempts to tax industry, is more omnipotent and less responsible than a private rporation.

2. State management is more costly than private.

3. The political dangers would be very great. Politics uld corrupt the railroad management, and the railroad nagement would corrupt politics. These effects have eady been seen in actual working. Changes of rates are de for the sake of influencing elections.'

the

THE S

These Reports are now nearly forty years old. It is the firm belief of the present writer that the additional experience attained since then strongly confirms the conclusions of the Italian Commission. One caveat ought, however, to be entered: generalisations from the experience of one country cannot be applied without qualification to other countries where conditions are fundamentally different. Prussia is-or rather was-& country despotically governed by officials ultimately responsible to the King; and they controlled the railways as absolutely as they did the Army and the Navy. Prussians instinctively submit to authority. The same thing is true of Japan. Prussian railways, it should in fairness be acknowledged, have been moderately successful. To discuss where and how far they have succeeded is beyond the scope of this article; but their success, such as it is, has been due to the fact that they have been managed by an efficient and autocratic Civil Service. The third argument of the Italian Commission against State ownership should then be qualified by some such introductory words as: In a democratic State, where Parliament is supreme, and where an ill-informed body of voters ultimately controls policy.'

Reverting to the point already emphasised, that nationalisation is always a question, not of historical precedent or of abstract argument, but one that has to be decided at some immediate juncture according to the practical necessities of the moment, perhaps I may be forgiven for introducing a personal note. The railway problem has been in the forefront of political discussion in the United States for a good many years. In consequence of a Presidential message in December 1915, Congress appointed a joint Committee of both Houses to investigate the whole subject with special reference to the question of Government ownership, and its history in other countries. I was asked to prepare and submit to the Committee an historical sketch of Government Ownership of Railroads in Foreign Countries. What I wrote was only a sketch compressed into some sixty pages. It was as objective as I could make it; and, so far as I am aware, no fact or figure in it has been challenged. But I did not attempt to suppress my own reading of the

facts, that in a democratic State the balance of argument is strongly against Government ownership. My paper was hardly completed when, in the late autumn of 1916, I was appointed by the Canadian Government as a member of a Royal Commission to report on the general problem of transportation in Canada, and especially as o the acquisition of railways by the State. After Bome months spent in the study of the conditions on the -pot, I signed a Report recommending that the Dominion

overnment should take over the whole of the railways in the country with the exception of those belonging to The Canadian Pacific Company; and this, in face of the act that Canada had had a long experience of Governnent railways, that the financial results had been leplorable, and that for that result the intrusion of olitics was primarily responsible. Facts are stubborn hings. With the strongest prepossession against the ourse which we ultimately recommended, my colleague nd I-for the third member, the Chairman of the Commission, dissented-came to the conclusion that the facts nd figures of the case proved that two great railroad ompanies, controlling some 15,000 miles of line between hem, were unable to maintain an independent existence, nd that their undertakings must be transferred to the overnment, which alone could carry the burden. I hall have a word to say later on as to the subsequent ction taken by the Government.

I have told the foregoing story, not for the sake of indicating my own personal consistency, which is quite nimportant, but because the Canadian experience is ery strictly germane to the situation in which the nglish railways are at the present moment. Before he war, with a long career of moderate financial rosperity behind them, the English railways had already very serious problem in front of them. The staff, who were receiving an average wage of slightly over 28s. a reek for work, which after all even in the lowest grades not entirely unskilled, were profoundly discontented. arge advances in wages were imminent and, if dividends yere to be preserved, could only be met in two ways— y considerable increase in rates and fares, and by fareaching economies in operation. Traders were fiercely pposed to any increase in rates; and the experience of

1913, when small concessions to the companies only got through the House of Commons with difficulty, even though a definite Government pledge had been given, had shown pretty clearly that Parliament sympathised with the traders rather than with the companies. As for economies, there was no sign that they were likely to be effected on any considerable scale. To carry them out implied an amount of harmony and co-operation between the companies that was not apparent. The staff were certain to object strongly to their life-long habits being disturbed. The traders were equally certain to resist the withdrawal of facilities, however economi cally unjustifiable, which they had long enjoyed.

mer

50

Upon this state of things the war suddenly broke in Within a few hours the Government took control of the whole railway system under an Act of 1871, which em17 powered His Majesty 'in case of emergency' to take possession for one week, and to retain such possession from week to week 'so long as the Secretary of State shall by warrant under his hand certify that the emergency continues.' The Act provides for arbitration under the Land Clauses Acts to settle the amount to be paid to the companies in full compensation for loss or injury they may have sustained by the exercise of these powers. But actually it was agreed in advance that the amount of compensation (ignoring elaborate details) should be a sum equivalent to the net revenue of the companies for the year 1913, roughly 46,000,000Z.

any

Under this agreement, which neither the contracting parties nor the legislature which authorised it expected to be more than temporary, the railways have been run for nearly five years. So far as finance is concerned, they will be continued under it for another two years by the Ways and Communications Bill now passing through Parliament. The White Paper recently published shows in outline what has happened during the period of control. Government traffic has been carried free. The companies have retained their receipts from ordinary traffic, and out of these receipts have paid their working expenses. And to this net operating income the Government has added each year whatever sum has been required to make up the guaranteed revenue available for interest and dividends.

took

not!

to

COL

Broadly the history has been this. Dealing first with evenue:-The receipts from passenger-train traffic renained for the first half of the period at the pre-war evel. As the result of the 50 per cent. increase in fares the January 1917, they are now far higher-70,000,0007. s against 54,000,000l. in 1913. Goods-train traffic has reained practically stationary in value. It was 69,000,000%. 1913, and for the last four years it has varied between 1,750,000l. and 75,000,000l. But the estimated value of he Government traffic carried free rose from 10,000,000Z. 1915 to 42,000,000l. in 1918. The upshot is that, ckoning, not in tonnage or number of passengers rried, but in value, and assuming that everything and verybody carried had been paid for, the total revenue rned rose steadily and rapidly from 130,000,000%. in 15 to 178,000,000l. in 1918, an increase of 27 per cent. But, during the same period, working expenses rose om 85,000,000l. to 131,000,000l., an increase of 35 per nt. And even this is not the worst. The working penses include allowance made for deferred mainteance of road and rolling stock-that is, for repair work verdue, which, owing to the lack of men and materials, uld not be carried out. And, having regard to present sts, it is very doubtful whether the allowance is fficient. Further, the wage increases which began in 15 only reached the final figure of an average of 33s. the end of 1918; and the eight-hours day and other toportant concessions were only granted in 1919. So e working expenses for the current year will show immense increase over those of the previous year. oreover, the value of Government traffic will have llen from 42,000,000l. by at least one-half.

ROLL

tam

On the whole, the probability is that, for the year 19, far from the railways earning a net revenue, their Oss receipts, which will include those from Government affic (which since April 1 is being charged for), will some 20,000,000l. short of their out-of-pocket workexpenses. And on the top of this comes the entire t revenue guaranteed to the shareholders. The Budget timate made early in this year was that the railways ould cost the Exchequer 60,000,000l. in the financial ar 1919-20. If the country gets off for as little as this, is quite as much as can be hoped. The most sanguine

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