VI.

THE STATE IN RELATION TO RAILWAYS.

THE writers of this volume I understand to be in agreement on this main principle-that individual initiative, or where that is from the nature of the case impossible, the initiative of bodies spontaneously organized on a voluntary basis to meet each new necessity of civilization as it arises, is, unless in exceptional circumstances, and then for due cause shown, to be preferred to State management. It falls to me to apply this general principle to the particular case of railways.

The relation of the State to the railways in any given country may take one of five forms.

(1) The State may both own and work.
(2) It may own and not work, but lease.

(3) It may work without owning.

(4) It may neither own nor work, but merely control. (5) It may let the railways alone altogether.

Of these various forms No. 3, working without ownership, practically only arises in countries where the State, already owning and working some lines, agrees for convenience' sake to work certain other lines which it does not care to purchase. No. 5, which may be described as laisser faire pure and simple, has practically never existed except in the United States; even there it is now obsolete. In fact, a state of things in which a stockbroker and two of his clerks could register themselves as a company desiring to build a line from New York to Buffalo, and thereupon ipso facto obtain powers to take compulsory possession of any house that might happen to be in the way in the course of a 400 miles

progress across country, with further powers, if and when they opened the line, to run what trains they pleased, over bridges as shaky as they might see fit to build, charging such rates and fares as they thought proper-such a state of affairs could evidently only exist in a new and unsettled country where the great object was to get railroads-proper railroads, and in a proper manner if possible, but by all means to get railroads.

The second alternative, that the State should own the railways and lease them to operating companies, is out of fashion at the present time in this country, not being a sufficiently root and branch reform for our modern State Socialists. But it enjoyed at one time considerable popularity, and was, indeed, recommended by no less a person than Sir Rowland Hill in his minority report as a member of the Royal Commission of 1865. Moreover, it was the principle adopted after the most exhaustive inquiry by the Italian Government as recently as the year 1885. Still more recently the same policy has been systematized in Holland. Indeed, it might be said to be the French policy also, for French law regards the soil on which the French lines are laid as part of the public domain, and the railway companies as only the occupants on a terminable lease. And France is a type of not a few other continental countries. But we need not concern ourselves with the political problems of our neighbours; we have quite enough to do to solve our own; and may therefore pass by the question of the State owning and leasing. There remain therefore for consideration but two possible methods; and for us the alternative is between Government railways pure and simple, such as those of Prussia or Victoria, and railways as we have them now, owned and worked by private companies and subject to a State control of more or less stringency. We have, therefore, in the first place to consider the arguments for and against Government railways; and if these lead us, as I think they will, to conclude against them, to go on further and discuss the principles on which State control of private lines should be based, the end at which it should aim, and, in broad outline

of course and not in detail, the methods which it should adopt.

It is impossible within the strict limits of an essay such as this to do more than touch the fringe of the subject of State ownership. A very recent writer has indeed published a tolerably bulky book on the subject, and yet found no space in it to come to the actual point at all1. An adequate treatment of the question would evidently imply, in the first place, an exhaustive consideration of the proper functions of the Executive Government as a general principle, and of such modifications of that principle as the varied forms of the Government (despotic, aristocratic or democratic, as the case might be), and the different genius and quality of the nation concerned might seem naturally to suggest. Secondly, it would imply an equally exhaustive consideration of the nature of railways and railway transportation. Such questions as, for instance, whether railways should compete with or only supplement water carriage; whether the cost of the railroad itself, as distinguished from the expenses of carriage along it, should be charged against the individual users as on the old turnpikes, or paid for out of general taxation, as being public necessities like any other highways; whether rates and fares ought to be fixed on what may be called the postal principle, ignoring distance altogether, or on the opposite principle of charging so much for each mile travelled, or again, on the merely commercial principle of charging what the traffic will bear'-in other words, endeavouring to lay on the consumer of each kind of railway service the least possible burden consistent with the raising from the traffic as a whole the revenue necessary to pay working expenses and interest on capital-questions such as these must evidently be faced and solved at the outset, for on the solution arrived at will largely depend whether we finally decide for State or private ownership of railways.

Nor could any treatise on this subject be complete which failed to supplement these two heads of more or less abstract inquiry by a history tracing the experience of the civilized

1 National Railways, by James Hole. London: Cassell & Co., 1893.

world in the last half-century, showing the progress of railway development in the different countries, and indicating which of the failures of the one or of the successes of the other might fairly be ascribed to the management of that system by the State or private enterprise, as the case might be. To write such a book would be the work of a lifetime, and when written its author would probably be the only person to feel bound by its conclusions. For the facts under each of the suggested heads of inquiry are so multifarious and so obscure that no writer, however capable and conscientious, could ever count on getting them all in front of him, still less on appraising each of them at its precise value. We must be satisfied here with presenting the outline of the abstract arguments upon the question, and sketching in as few words as possible the history of State-owned lines in other countries.

It is equally impossible to deal here with the general question of State Socialism. The delegates, for instance, who at the Trade Union Congress of 1893 voted, after five minutes' discussion, for the nationalization of all the means of production at one gulp, will evidently not be deterred by a mere mouthful such as the thousand millions of capital represented by our English railway system. We must confine ourselves here to arguments that apply to railways more particularly. Now there is no reason to praise the existing system too highly. It gives us unquestionably in some instances what it is common to describe as the waste of competition. That waste, however, is by no means so large as is believed by the public unfamiliar with practical railway accounts. To take the stock instance of the London and Dover expresses. Whenever either of the competing trains is carrying as many as four first class passengers-and it is difficult to believe that they often run with less-it is earning a net profit. Further, we cannot ignore the question whether two simultaneous trains, both run under the stimulus of competition, may not carry twice as many passengers as one train run without this stimulus. If X be the gross revenue and Y the cost of earning it, 3X-2 Y is greater than X-Y, whatever values be assigned