Is there not, then, pressing need for an amendment of the laws affecting the proprietary contract—an amendment which shall transform it from an unlimited into a limited contract; or rather—not transform it into such, but recognize it as such? If there be truth in our argument, the absence of any limitation has been the chief cause of the manifold evils of our railway administration. The share-trafficking {108} of directors; the complicated intrigues of lawyers, engineers, contractors, and others; the betrayal of proprietaries—all the complicated corruptions which we have detailed, have primarily arisen from it, have been made possible by it. It has rendered travelling more costly and less safe than it would have been; and while apparently facilitating traffic, has indirectly hindered it. By fostering antagonism, it has led to the ill laying-out of supplementary lines; to the wasting of enormous sums in useless parliamentary contests; to the loss of an almost incredible amount of national capital in the making of railways for which there is no due requirement. Regarded in the mass, the investments of shareholders have been reduced by it to less than half the average productiveness which such investments should possess; and, as all authorities admit, railway property is, even now, kept below its real value, by the fear of future depreciations consequent on future extensions. Considering, then, the vastness of the interests at stake—considering that the total capital of our companies will soon reach £300,000,000—considering, on the one hand, the immense number of persons owning this capital (many of them with no incomes but what are derived from it), and, on the other hand, the great extent to which the community is concerned, both directly as to its commercial facilities, and indirectly as to the economy of its resources—considering all this, it becomes extremely important that railway property should be placed on a secure footing, and railway enterprise confined within normal bounds. The change is demanded alike for the welfare of shareholders and the public. No charge of over-legislation can be brought against it. It is simply an extension to joint-stock contracts, of the principle applied to all other contracts; it is merely a fulfilment of the State’s judicial function in cases hitherto neglected; it is nothing but a better administration of justice.
POSTSCRIPT.—That the proprietary contract should be {109} strictly adhered to, and no undertakings beyond those specified in the deed of incorporation entered upon, is a doctrine unpalatable to those in authority. A friend who, as chairman of one of our great railway-companies, has been familiar with railway-politics and parliamentary usages in connexion with them, contends that such a restrictive interpretation would be unworkable; and, further, that the legislature would never allow itself to be shackled in the implied way.
That he is right in the last of these assertions I think highly probable. In face of the currently accepted dogma that an Act of Parliament can do anything, it is foolish to expect that Parliament would, by ethical considerations, be restrained from breaking contracts and authorizing the breaking of contracts. When we see this dogma habitually acted upon to the extent of trampling under foot State-guarantees (as in the case of those who purchased land under the Irish Encumbered Estates Act, or as in the case of agreements originally entered into with companies to confer on them certain powers under certain conditions) it would be absurd to suppose that any tender regard for the claims of dissentient proprietors would deter the ruling body from cancelling the understanding under which shareholders consented to co-operate. Men must be much more conscientious than they are before any such check is likely to be effective.
To the other objection—that such a restriction would entail an unworkable complication—I entirely demur. That its consequences would be awkward under our present form of railway-administration may be true; but it is also true that had such a restriction been insisted on, another and better form of railway-administration would have arisen. This will probably be thought an unwarranted assertion. Nevertheless I make it with some confidence, since the form of administration to which I refer is one which was, in a different guise, contemplated when railways {110} were originally authorized. To those whose only conception of the mode of carrying on railway-traffic is that derived from their daily observations, this will be an incomprehensible statement; but those who remember how railways were originally intended to be used will know what I mean.
Novel schemes are always more or less shaped by old habits. At the time when the first railways were authorized, the experience men had of coach-travelling on high roads, affected in various ways the structures of the new appliances and the natures of the new arrangements. The railway gauge was determined by the width between the wheels of a stage-coach. Early first-class carriages were made to appear like the central parts of three stage-coaches joined together: preserving their convex panels and curved outlines, and frequently having, on the centre one, the words “Tria juncta in uno.” The inside of the first-class carriage was fitted up to resemble the inside of a stage-coach; and the original second-class carriage, having bare wooden seats over which, on vertical iron rods, was supported a roof allowing the wind and rain to blow through from side to side, was so designed as to be scarcely more comfortable than the outside of a coach. For some years the guard had a seat on the outside, at the end of a carriage, as on a coach; and for many years the luggage, covered with tarpaulin, was placed on the roofs of carriages, as on the outsides of coaches. Once more the booking-offices were at first like the booking-offices for stage-coaches—places where passengers entered their names to secure seats. Little as the fact is now recognized, this kinship of ideas extended to the contemplated arrangements for working. Men thought that traffic on railways might be carried on after the same manner as traffic on high roads. It was assumed that on lines of rails, where the passing of vehicles going in the same direction is impracticable, the system pursued might be like that in use on high roads, {111} where vehicles can pass and re-pass in any direction and join or leave the stream at will. Does the reader ask proof of this? The proof lies in the fact, well-known to those who were adult in the early days of railways, that in the office or waiting-room of every railway-station was fixed up a table of tolls, like that which was fixed up at every toll-gate; but in this case specifying the rate chargeable per mile for all things carried—passengers, horses, cattle, goods, &c. This table of tolls implied that it was within the power of others besides the company to run vehicles on the company’s line, and pay them at such and such rates for the privilege of doing so—a privilege which, so far as I know, was never made use of, for the sufficient reason that it would have been impossible to carry on business amid the confusion which would have resulted.
But while this arrangement, in the form implied, would have been impracticable, it foreshadows an arrangement which would have been practicable; and one which would have grown up had each railway company been limited to the undertaking specified in its deed of incorporation. After experience of inefficient co-operation, when so many independent bodies owning branches and extensions had to adjust their train services, &c., there would, in all probability, have been formed what we may call running-companies or traffic-companies, separate from the original railway-companies. Each one of these would have proposed to the companies owning the various main lines, extensions, and branches, within some large district conveniently delimited, to undertake the working of their various lines: either taking them severally on lease, or agreeing to give a specified share of the net returns annually received, or agreeing to pay certain tolls for passengers and goods. Under such an arrangement the original companies, standing in the position of landlords, would have had for their chief business to keep the embankments, cuttings, bridges, permanent way, stations, &c., in working {112} order; while the running-companies, standing in the position of tenants, but owning the rolling-stock, would have had for their business to conduct the passenger and goods traffic throughout the whole area, with power to arrange the workings of the various subdivisions of the system in a harmonious manner. Clearly, if there is an advantage in division of labour in other cases, there would have been an advantage in this case. The fixed works constituting each of these inter-connected railways would have been kept in more perfect repair, had preservation of them been the exclusive business of the companies owning them; while the running-companies, with nothing to attend to beyond the keeping in order of their rolling-stock and the management of train-services &c. would have done this more satisfactorily.
A further reason for believing that better results would have been achieved than are now achieved, is that under such circumstances there would have been no absorption of directors’ time in carrying on railway-wars and getting new acts of parliament—a business which, under the existing system, has chiefly occupied the attention of boards.
The enforcement of equitable arrangements is often fraught with unanticipated benefits; and there seems reason to think that unanticipated benefits would have resulted in this case also.
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