[ [48] This capital relates to the principal lines only.
[ [49] The Report of the French railway Commission of Inquiry appointed in 1880 states: “Our railway companies have been largely subventioned for the construction of their lines, almost all receive annual subsidies, without which they could not meet the charges of their working expenses; all enjoy a monopoly which shelters them from internal competition; we have the right to demand from them, to force upon them, reforms that public and parliamentary opinion deem indispensable.” And again—“* * * * In certain countries, England for example, where the system of liberty and commercial competition is largely in vogue, it is right that the railway companies, who have received nothing and from whom nothing is demanded by the State, and who may be considered only as belonging to the category of private merchants and manufacturers, should have greater freedom in dealing with their traffic and tariffs than is enjoyed in this country (France).”
But it is added: “It is not the same with Continental European nations. The Governments of Belgium, Holland, Bavaria, the Grand Duchy of Baden, Austria, Italy, Hungary, Russia, Sweden, and Norway are wholly or in part proprietors of the railway system.”—Appendix 31 to Report from the Select Committee on Railways (Rates and Fares) 1882, Vol. II., pages 453-4.
[ [50] “La dépense tout à fait stérile des 500 millions pour racheter des lignes ferrées improductives, les exagerations du projet Freycinet lors de sa naissance et les extravagances de développements posterieurs qu’on lui a donnés, des sommes énormes dépensées en des canals de transport, qui, pour beaucoup du moins, font double emploi et jouissent d’aucun trafic, toute cette mauvaise direction a absorbé les resources de l’État en sacrifices inutiles et ne lui a pas laissé le loisir de supprimer l’impôt sur la grande vitesse, les timbres sur les récepissés des chemins de fer, et d’obtenir, par un juste retour, des réductions de tarifs qui n’auraient été accompagnées d’aucune augmentation d’impôt.”—M. Leroy-Beaulieu in L’Économiste Francais, February 27th, 1886.
[ [51] It is generally assumed that the railways in Germany were purchased with the view of more effectually utilising them, and the rolling stock for military purposes. The Government in this country are under no necessity to undertake the liability of acquiring the railways and guaranteeing the dividends for such a reason; the number of lines of railway and routes are so ample, and the number of engines, carriages, and wagons so great, that any movement required for the defence of the country can be carried out within any reasonable time, while under the Regulation of the Forces Act, 1871, Her Majesty, by Order in Council, may empower any person or persons, named in such warrant, to take possession of any railroad and of the plant belonging thereto, and to use the same for Her Majesty’s Service at such times and in such manner as the Secretary of State may direct; and the directors, officers, and servants of any such railroad, shall obey the directions of the Secretary of State.
[ [52] See note, page 118.
[ [53] In the Report of May 3, 1882, made by Sir H. Barron to the then Minister for Foreign Affairs (Earl Granville) (part 4 of the “Reports by Her Majesty’s Secretaries of Embassy and Legation on Manufactures, Commerce, &c.,”) on the subject of the Belgian Budget, the former stated that “The 5 years from 1876 each closed with a deficit rising in 1881 to 6¼ million francs (£250,000), the main explanation being the ever-increasing burden thrown on the Treasury by the extension of the railway, which undertaking has ceased to cover its charges and completely disturbed the financial equilibrium of the State. The first lines constructed and worked by the State, being great trunk lines, gave every year an increasing return which enriched the Treasury. To these were first added conceded lines, which had to be purchased from companies at high prices; then secondary lines, whose traffic was unremunerative. After many previous experiments, the accounts of the railway have been since 1878 drawn up on a new and presumedly more accurate principle. The Treasury is now considered as the bankers of the railway; it is assumed that all funds advanced by the former are chargeable with an interest of 4 per cent., and repayable within ninety years. According to this new method of book-keeping, it appears that the railway contributed largely to the revenue until 1872 inclusively, but that since that year it has, on the contrary, entailed an annual loss. Thus, the deficit of 1881 is for the greater part (4,861,725 fr.) due to the insufficiency of the railway revenue. Fortunately Belgium has a resource at hand.”
“The Minister of Finance in the debate on the Budget of Public Works, points to that resource in the following pregnant words: It is proved that the railway fails to cover its charges by about five millions (£200,000). We are informed that this year the deficiency may be seven millions; in 1883, possibly even ten millions. What will it be in 1884? No one knows, but the progression is ascending. Must we follow it without counting the cost? Must we raise the tariffs or throw on the Treasury the burden caused by the insufficiency of the railway receipts? Either the railway must be worked on a principle which shall allow it to cover its charges or the taxpayers must make up the difference.”
He further added that in his report of 1876 he recommended “a raising of the tariff.” Sir H. Barron goes on to state “that the inferior productiveness of the Belgian Railway was due to the inadequate tariff, which, for passengers and merchandise, was much lower than those prevailing in the rest of Europe.” He further remarks, however, that “notwithstanding all this it has been held that the experiment is a great success, and bears evidence in favour of State ownership, because, as the railway is worked in the interest of trade, &c., it is considered that the benefit thus indirectly accruing to the public at large, is greater than that which might be realised by aiming at a commercial profit for the direct and immediate benefit of the taxpayers.”
The construction of railways in Belgium has, no doubt, developed the commerce and industry of the country to a remarkable extent. It was stated by Sir Bernhard Samuelson (page 9 of Report) that the receipts of railways had increased from £1,815,000 in 1870 to £4,880,000 in 1883, or 168 per cent.; but he omitted to point out that the length of the railways had increased by more than 250 per cent.