GOVERNMENT
RAILWAYS.
»
BY
WM. ENTWISLE, Esq., M.P.
" The roads of a country, from the very nature of things, are public
concerns ; they are as necessary to a people as the air they breathe."—
Second Report of Select Committee of the House of Commons,
p. 3.—1846.
LONDON:
W. MARSHALL, 21, EDO WARE ROAD.
1847.
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RAILWAYS.
Defects of the Present System,
The purchase by Government of the existing Railways
in this country, as well those which are already opened
and in full work, as those which are in progress of forma¬
tion, so as to bring the entire system under the direct and
immediate control of the Government, has been brought
more than once under the notice of committees of the
House of Commons ; more especially before Mr. Gladstone's
committee in 1844, by Captain Law.a, then Manager of the
Manchester and Leeds Railway. ' (See Appendix to their
6th Report, p. 406.) It was also considered as desirable
by other witnesses, as Messrs. Laing, Baxendale, and Gait,
the latter of whom indicated a method in which this pur¬
chase might be accomplished (ib. p. 450) with mutual ad¬
vantage to the public and the proprietors, by means of the
increased value which would at once attach to that pro¬
perty, when it became Government security. His proposal
is, however, liable to the objection of an estimate, founded
partly on the cost, and jrartly on the market value as
tested by the share list, neither of which, for obvious
reasons, can afford a true criterion of what their value
would be when absorbed into a general system, and
worked with reference to that system, and not to the
interests of individual lines.
But before discussing the merits of any scheme of pur-
a 2
4
chase, it will be advisable to examine the defects of the
course hitherto pursued, which, although admitted on
all hands to have been extremely beneficial to the com¬
munity, by stimulating enterprise and exercising an ener¬
getic and economical superintendence over the construction
and management of Railways, so long as many districts of
the country remained unsupplied, and the net-work was still
incomplete,may yet be found to labour under serious difficul¬
ties, when, by the formation of connecting links through¬
out the kingdom, isolation shall cease, independent action
become impossible, and the harmonious co-operation of the
whole system shall be essential to the public security and
convenience. It is indeed quite possible that the above
consideration alone would be sufficient not only to warrant
but even to require that all Railways should become the
property of the public, who are principally interested in
their efficiency, and have a right to expect that those
means of conveyance which, by superior speed, cheapness,
and safety, have now superseded all those formerly existing,
wherever they have been fully introduced, should be ren¬
dered as effectual, as cheap, and, above all, as safe as the
most complete and systematic management can accomplish.
But there are several other considerations all tending towards
the same point, which it may be well to mention, without
entering into greater detail than is absolutely requisite.
The first that occurs as most striking at the pre¬
sent moment is the injury arising, not only to the in¬
dividual shareholders (though, in the aggregate, they
would form a large portion of the community), but to
all the trade and business of the country, from the
excessive speculation and the gambling spirit manifested
during the last two years, and the pecuniary pressure and
probable crisis consequent thereupon. It is perfectly clear
that if the result of the inquiry, by the committee of 1844,
had been the recommendation of the purchase of all the
Railways then existing or sanctioned by Act of Parliament,
coupled with the subjection of all new schemes to Govern¬
ment examination, and rejection if disapproved by their
officers, and to ultimate purchase after completion on
favourable terms for the public, there would have been
no opportunity afforded to those reckless or designing
schemers who, by a plausible prospectus and an appeal
to the ascertained success of the Railways then existing,
were enabled to induce all classes to engage in the same
perilous search for a short and easy way to wealth. It is
deeply to be regretted that the committee entered upon
their inquiries (as it is stated in the Fifth Report, p. 7,)
" with a strong prepossession against any general inter¬
ference by the Government in the management and work¬
ing of Railways and that such prepossession appears to
have blinded them to the practicability of a scheme of
Government purchase, without entailing upon the Execu¬
tive the necessity of becoming the actual managers of their
property, and conducting the traffic of the country under
the direction of their own officers, or even incurring any
risk of loss to the Exchequer.
But it is not yet too late. The evil has in some measure
worked out its own cure ; and the nation at last aware of
the magnitude of the undertakings to which it stands com¬
mitted, pauses for breath in its career. Speculation is less
rife, though not extinct, and the great companies are seeking
to consolidate and secure their interests by union with their
less important neighbours, and amicable arrangements with
those who might become, or threaten to become, their com
petitors.
The consequence of this prevailing spirit is, that railway
6
interests have now, to a great extent, become aggregated
into large masses, and a similar process is daily in action,
thus affording the most favourable opportunity that can be
expected for arranging the terms of Government purchase
with a comparatively small number of managing bodies,
so far as the lines already completed or sanctioned by
Parliament are concerned ; while out of the multitude of
new projects it is notorious that many—perhaps most—
are only brought forward by the existing Companies, with
the purpose of fortifying their own position against rival
attacks, and would consequently be rendered, for the
present at least, unnecessary, by a declaration on the part
of Government of an intention to purchase, and the re¬
mainder might be at once postponed until the arrange
ments were complete. We have quite enough on our hands
already, without undertaking the additional burthen of
either investigating or finding the funds to complete lines
designed only in many cases to extort advantageous bar¬
gains from others whose traffic is threatened by their con¬
struction. Such a measure would thus tend greatly to
restore public confidence, not only in railway investments,
but in the healthy state of our resources, to meet the large
demands of the next few years, unencumbered as we should
then be by a yearly increasing amount of liability and cost,
and a yearly decreasing security of a beneficial return (bene¬
ficial in a national view) for the capital expended.
This leads naturally to the second prominent defect of the
existing system, which would be greatly, if not entirely,
obviated by Government purchase, viz : the excessive cost
at which Parliamentary powers are obtained, land bought,
and works executed, under the present system of leaving
all to private enterprise, subject only to Parliamentary con¬
trol by ex post facto regulations, often ineffectual in prac-
7
tice, and always objectionable in principle. On this bead,
it will suffice to quote the words of the Committee of 1846
(Mr. Morrison's), to shew the magnitude of the evil. In
their Second Report, p. 19, they say, "Some idea may be
formed of the sums absolutely wasted in this country be¬
fore Bills can pass through Committees, from a Return
just made by the Eastern Counties Railway to an order of
the House. The line, which is fifty-one miles in length,
cost 45,190/. in Parliamentary expenses. The other pre¬
liminary expenses, such as cost of engineering, &c.,
amounting to 48,650/. are separately stated. The Par¬
liamentary expenses of the London and Birmingham have
been stated at 650/. per mile ; of the Great Western, at
1000/. per mile. No wonder that foreigners hold up their
hands in astonishment, when they hear of this enormous
waste. The sums paid for land by the Eastern Counties
amounted to 809,950/. or about 12,000/. per mile,* alone
exceeding the whole cost per mile on most of the German
lines, and on several of the Belgian. The London and
Birmingham, and Great Western paid 6,300/. each per
mile, for lands." No wonder, indeed ! But does any
one suppose that such sums as these would have been
" absolutely wasted " in the purchase of land, had not
something more been included iu the bargain? Is it not
perfectly notorious that in many, very many cases the
bargains are made beforehand, in order to silence Par¬
liamentary opposition, not by the landowners themselves,
but, under cover of their names, by rival parties anxious
at any cost to obtain possession of the line ; while the
landowner, whose case has been thought of sufficient
hardship to call for the especial protection of the House
* There seems to be some discrepancy in these figures, as the line
is Said to be only 51 miles long.
8
of Lords, uses one party as a band of mercenaries, by
whose aid he levies black mail on all who pass through
his territories. Nay, not unfrequently large sums are paid
under this head, not for " lands," nor for anything else
valuable, or even tangible, but as fines for permission to
approach within a given distance of the park, mansion, or
property, of an individual, who can, if not propitiated,
exercise (by his own vote possibly) an adverse influence
upon their application for powers.
It is foreign to our present purpose to contrast these
payments with those made in other countries for similar
purposes, though it might be hinted obiter to Mr.
Morrison, that the public, which has permitted, not to say
encouraged, such plunder and extortion both directly and
by means of its representatives, is hardly justified in
pointing to the low scale of fares in France or Belgium,
where the lines were, from the commencement, under the
immediate management (as to their course, scope, and
construction), of the Executive department of Government.
The point now to be remarked is, that ever since the
success of the Railway system as the means of transit^
which must ultimately prevail throughout the country,
was fully established (of which Mr. Gladstone's com¬
mittee in 1844, seem to have been quite aware), the whole
of this enormous "absolute waste" might have been pre¬
vented, if the Government of that day had fairly grappled
with the diflSculty, and, instead of delegating its re¬
sponsibility to a committee of the House of Commons, or
diluting its force through the Board of Trade, had put in
their claim on behalf of the public to the absolute control,
such control as can only arise from actual ownership, of
those highways, which, as Mr. Morrison's committee
forcibly urge, "are as necessary to a people as the air
9
they breathe." That such a result would have followed
the purchase by Government of the then existing Railways,
and, as matter of course, the refusal of any further grant
of Parliamentary powers for the formation of lines, dis¬
approved by the Executive as inconsistent with the scheme
which they had adopted after most mature deliberation,
that such would have been the result, no one can doubt
who looks at the items above mentioned, and considers
how the cost of formation of Railways has been further
increased by the necessity of constructing enormous
bridges, tunnels, viaducts, and other works, in order to
comply with conditions imposed upon them, under the
same penalty, viz., the loss of their bill.*
This will be m.ore clearly seen in considering the third in¬
stance of the injurious effect of the present system, or rather
want of system. But here, again, it may be observed, that
it is not yet too late. Much still remains to be done. If the
existing Railway companies (including, of course, all those
already sanctioned, whether opened or not), are permitted
to extend their branches, and complete their com¬
munications with the whole of the district, whose traffic
will naturally flow towards them as the main channels,
without the necessity of contesting every yard of ground
before a Parliamentary committee, and being for that
purpose dragged up to London during a great part of
every year, to the serious neglect of their own business,
and therefore great public loss and inconvenience, and
without being compelled to buy up rival lines (formed
for no other purpose), at 100 per cent, premium, they
would be enabled to carry out the remainder of their
plans at a greatly reduced rate of cost, and thus, in no
* On this point see Mr. Reed's Evidence, App. to Report, 1846,
No. 676.
10
inconsiderable degree, relieve both themselves and the
public purse from the injury, the permanent injury, of
an extravagant outlay of the national capital. The
average cost per mile might still he largely reduced,
and there would exist not only the desire hut the power
to give increased public accommodation, at reduced fares,
without a confiscation of private interests.
Let us now see what these reports say with regard to
the want of any uniform plan in the allotment, of powers
to take land, and to construct Lines of Railway, by Par¬
liament itself.
In the 5th Report of 1844, p. 6, they say, "The
committee entertain very strongly the opinion, that in
the future proceedings of Parliament, Railway schemes
ought not to he regarded as merely projects of local
improvement, hut that each new line should he viewed
as a member of a great system of communication, binding
together the various districts of the country, with a close¬
ness and intimacy of relation in many respects heretofore
unknown." And with this view, they recommend that
previous reference to the Board of Trade for their report
upon each scheme as a component part of the general
system, which was, almost immediately on the meeting
of Parliament in the ensuing session, attacked, and after
a feeble defence on the part of Government, unworthy
both of their own position and the ability with which those
reports were drawn up, altogether abandoned to its fate by
those who were responsible for its introduction, and utterly
neglected in practice by the committees on the various bills.
Again, Mr. Morrison's committee of 1846, p. 9, says,
" In this country no comprehensive system has ever been
traced. The lines promising the most ample returns were,
as a matter of course, first selected by companies; but the-
11
best mode of communicating the benefit of Railways to
the kingdom, considered as a whole, was only inci¬
dentally considered by committees, in deciding between
rival projects. The committee of the Board of Trade,
in some of its reports, first attempted to lay down
principles more worthy of the Legislature of a great
country, by which it should be governed in regard to
its Railways." What a severe and self-inflicted censure
upon that powerful body, which suffered a great
opportunity to be lost, and by their over-eagerness to
assert their own paramount authority, refused to adopt
those " principles more worthy of the Legislature of a
great country," or to accept advice and information
tendered to them by a Board acting under the full au¬
thority of their own resolutions ! The Report proceeds
thus—"Your committee conceive that the advantages
of system in determining on Railways are sufficiently
obvious. The best system is that which, at the least
expense, and with the least sacrifice of soil, affords the
greatest facilities to intercourse, and the greatest en¬
couragement to industry. By selecting an injudicious
line, the capital of the country may be unnecessarily
wasted, and the population of a district may not derive
all the benefit from it to which they are entitled.
By constructing two lines where one would suffice, there
is not only an unnecessary outlay of capital, but a waste
of a portion of our territory. Besides, as the cost of
conveyance diminishes with every increase of traffic,
competing lines, by dividing the traffic, add to the cost
of conveyance on the separate lines. In private concerns
no sensible man employs more mechanical power than he
conceives necessary for his purpose ; but it is now
almost universally admitted, that not a few of our lines
12
have been injudiciously traced, both with reference to
expenditure of capital and local accommodation, and that
in the fruitless hope of competition, rival lines have been
sanctioned where they were not wanted."
The above extracts so strongly point out the advantage
of some uniform and well-concerted plan for Railways, as a
whole system, that nothing need be added on that score.
It only remains to show that such uniformity is not likely
to be attained by any means short of Government purchase,
to make tiiese arguments bear with irresistible force upon
the conclusion at which several of the witnesses, and some
of the members of the committee of 1844, seem, by the
appendix of evidence, to have arrived. It certainly ap¬
pears rather strange that so little attention should have
been paid to this part of the subject by Mr. Morrison's
committee (1846), especially as the ideas of the chairman
were well known, by his previously published pamphlet, to
be founded chiefly on a comparison of the advantages de¬
rived to France and Belgium, where the lines were laid
out, and in one case partly, and in the other almost
wholly, constructed by Government, with those of this
country, where private enterprise has been entirely unre¬
stricted, so far as any Government authority or national
scheme was concerned.
If, however, the conclusion deduced from the evidence
laid before them, on which most of the force of their argu¬
ments, and in fact the substance of their report, depends, be
really well-founded ; if it has been really " ascertained that
the hope of relief from the objectionable course pursued on
one Railroad, by having recourse to a competing line, must
in a great measure, he abandoned;" and that their dc
facto monopoly " can only be rendered innoxious by
subjecting it to rigorous control and supervision;" if
13
this be really the case, it does seem strange that no
investigation should have taken place on the point—
whether it is not still practicable for the Government of
this country to exercise a control of the same nature
over its Railroads, as that of those countries whose well-
digested plans, cheap construction, and low fares are
the objects of Mr. Morrison's especial admiration, viz.,
the control of actual ownership. And it surely might
have occurred to that Committee that the railway com¬
panies would much prefer selling their interest at once
on terms decidedly favourable to the public, and would
have given every facility to an open and straightforward
proposal of that kind, rather than submit to a gradual
encroachment, under the name of a " rigorous control,"
upon those privileges and conditions which had formed
their inducement to embark their capital, and be com¬
pelled to subject their property to a vague and dangerous
experiment, in order to determine the minimum fares at
which they could work without absolute ruin. But the
committee contented themselves with recommending the
appointment of a Government Board, which was accord¬
ingly constituted, and its functions defined by an act (9 8t 10
Vict. chap. 105), dated 28th August 1846, and entitled,
"An Act for constituting Commissioners of Railways."
The powers granted by that act were (perhaps neces¬
sarily at first) quite insufficient to enable them to interfere
with any great effect, or to prevent the existing abuses of
Railway legislation, further than by some alteration in
the mode of passing through the standing orders of
both Houses, which has hitherto worked extremely well,
and has been productive of general satisfaction. But a
Bill has been recently laid on the table of the House of
Commons, by the Chief Commissioner, to constitute and
14
define their powers and functions, which, although not in¬
tended—as, indeed, they could not have been carried
through in time—to come into operation upon the Railway
Bills now before the House of Commons, will, no doubt,
exercise considerable influence upon all future extensions
of the system. Now, the first question that arises upon
this Bill is, how far that object, which was described as
being of " immense importance" by Mr. Morrison's com¬
mittee, viz., the selection of a judicious system of Rail¬
ways, is likely to be attained ?
One of the objections made to the present mode of pro¬
moting Railway bills in Parliament, in the Report of the
Committee of the House of Lords upon this subject last
year, was, that Parliament is only called in to decide be¬
tween the rival claims of competing companies, or, in other
words, has only an option between schemes, neither of
which may be really the best for the accommodation of
the district to be provided for. How far such apprehen¬
sion is likely to be realized must be obvious to any one
who knows the eagerness with which lines are planned by
all the established companies in self-defence, to occupy the
neighbouring district to the exclusion of all competitors.
But if it be really intended that any comprehensive view
should be taken, not only of the interest of one particular
locality, but of the general bearing of its proposed line of
Railway upon the rest of the system, it would surely follow
that the survey by the officers of this Board, which, under
this bill (clause 32), is only to take place after de¬
posit of plans and sections, and in such cases as the
commissioners shall think fit, should be made indepen¬
dently of the views or plans of those who have their own
particular interest to serve, and should in all cases pre¬
cede the consideration of any new line by a committee of
16
either House. Now this would amount to a general offi¬
cial survey and plan for the remainder of the required lines.
It might be reasonably asked, why should we continue to
incur a double expense for the survey of a drstrict by the
employment of two (or sometimes more) rival engineers and
surveyors, with all their staff, and this too at the risk, or
rather the certainty, that instead of such additional expense
tending to ascertain what line is really most advantageous
for the country, it will only be employed to promote indi¬
vidual interests ?
Again : as the Railway Board will not have, under this
Bill, the power of originating any scheme that may be de¬
sirable, so neither will they have any power of rejecting
absolutely those of which they decidedly disapprove, so as
to prevent their appearance in Parliament. It has been
stated that such a power, amounting to an absolute veto,
would be inconsistent with the jurisdiction of Parliament;
but this I hold to be a misconception of the scope of that
jurisdiction. It is quite true that no such interference with
private property, or exercise of powers over the public, as
are implied in a Railway act, can or ought to be au¬
thorized hy any other tribunal than a committee of either
House ; but to insist that no decision against schemes
the most wild, fraudulent, extravagant, or useless, can
take place but under the immediate investigation of Par¬
liament, without interfering with its jurisdiction, would
be, in my opinion, to lay down a rule both inconvenient
and at variance with practice. In all cases affecting har¬
bours or navigable rivers, the Lords of the Admiralty
have a summary authority to prohibit all further proceed¬
ings, which is never disputed by Parliament. Even as a
theory, however, their jurisdiction would be sufficiently pre¬
served by giving an appeal (to carry costs if confirmed) to a
16
committee of Parliament. But this Railway Board is only to
report for the guidance of the Parliamentary Committees,
in the same manner as the Board of Trade did two years
ago, under an express resolution of the House of Commons.
And what was the result? The absurd jealousy of the
House of Commons for its absolute jurisdiction in all such
cases, at once on the meeting of Parliament, annihilated all
authority attached to these reports of the Board of Trade :
the Government declined to support a department of their
own body; the committee abandoned their own offspring
(Mr. Gladstone, the chairman, being no longer in the
House) ; and the House of Commons rescinded its own reso¬
lutions, by declaring and practically carrying out the doc¬
trine that their committees were in no way bound by those
reports, which were accordingly treated as so much addition
to the waste paper annually distributed among its members.
Thus terminated that effort which is now described
(in the Report of 1846) as a nearer "approach to prin¬
ciples more worthy of the Legislature of a great country
than had yet been made." What certainty have we that
the new Board will substantially exercise a more salutary
control over the capricious and wilful bodies who will,
after all, dispose of the disputed lines brought before
them according to their own supreme pleasure? What
security have we that the schemes intrinsically best for the
country will be brought forward at all? And, in any case,
what prospect is there of escaping from a continual repeti¬
tion of those committee-rooni contests between powerful
companies which waste their resources, prevent their atten¬
tion to their own business, and are utterly useless to every
one except the parliamentary agents, counsel, solicitors, en¬
gineers, witnesses, and all that array of hostile retainers
that beset the avenues of the scene of action?
17
This, then, is all the advance we have made under Mr.
Morrison's auspices towards a "judicious system of well
selected Railways;" and, without disparaging his efforts to
take advantage of the experience of other nations (who
themselves profited largely by our example), it may be
fairly asserted, that by attempting only to establish a
"rigorous control" by Government over the exercise of
powers granted by the Legislature to private companies,
he has shaken confidence in that species of property, at
the same time that he has lost sight of bis models for
imitation, so far as respects the means by which their con¬
trol has been acquired. It may now be asked, whether
the entire failure hitherto of any attempt at a uniform and
connected plan does not clearly prove, that, until an abso¬
lute central authority shall be empowered not only to de¬
clare, from actual survey by its own officers, what lines are
requisite to form a complete system, and to put their velo
upon all schemes brought forward without their approval,
we can have no hope that any material change will take
place either in the mode or objects of the proceedings of
railway speculators and projectors, or that the decisions
of committees will bear any reference to a "judicious
system," or be at all more consistent with one another than
hitherto ?
If this be the case, and if, in spite of all that has been
done, there still remains abundant room for the exercise of
a sound judgment in deciding upon the selection of con¬
necting lines and branches to complete the system of in¬
ternal communication of the country, the conclusion is
surely justified, that by Government purchase alone can
any such interference with the present confusion, and utter
disregard of all systematic design, take place. From what
has been said, it will sufficiently appear that by this means
B
18
order and method might prevail ; and the opportunity may
still be seized, before it is lost for ever, of preventing any
enormous waste of capital, and obviating the serious injury
to the country arising from unnecessary multiplication of
lines of intersection.
We then come to their proposed "rigorous control"
over the fares, rates, and charges on the lines of Railway ;
or, in one word, the limitation of the profits of that " pri¬
vate enterprise" which it lias hitherto been the boast of
this country to leave entirely unrestricted, and which has
not, in any other case, been crippled and restricted by ex
post facto legislation. The plea put forward is " monopoly,"
although it is clear that the system is only iialf completed,
and that its ultimate effects, as to competition, are yet to
be learned. Even now the public has small cause for com¬
plaint. But it is to the perpetual interference and en¬
croachment, the bit by-bit legislation on such a subject
of national interest, that I, in common I believe with all
who have taken any part in these undertakings, do most
decidedly object; and the whole aim and object of these
arguments is, to point out the fair and legitimate conclu¬
sion to which the present abuses and defects, both in prac¬
tice and principle, would lead us to seek for a remedy.
We all remember the " final settlement" by Mr. Glad¬
stone's Act, in 1844. Well, we are now, in 1847, going to
make another final settlement. It seems the terms of the
last were " extravagant," and the " power of revision" is
itself to be revised, within one-seventh part of the period
for which each revision was to have held go d. (2nd Re¬
port, 1846, pp. 6, 7.)
What, then, are the terms now proposed for the encou¬
ragement of the principle of private enterprise? In clauses
48 to 60 of the bill brought forward by the Chief Commis-
19
sioner, which are those particularly affecting the tolls, fares'
and charges, of existing Railway Companies, we may pre¬
sume that we have the full enunciation of the mode and
extent of that " rigorous control," recommended by Mr.
Morrison's committee. The four first of these clauses
merely direct the companies to make periodical returns,
and to maintain at all their stations tables of their charges,
&c. ; that they shall give notice of all alterations, though
they are graciously permitted to reduce them without notice,
in special cases ! By clause 52 the Commissioners are
directed to make an annual report of the powers, and actual
charges under their powers, of every Railway company, to
both houses of Parliament. By clause 53 they are to " call
attention," as the marginal note has it, " to inequalities in
tolls." But it will be better to let this and the following
clause speak for themselves :—
Clause 63. " In such report the Commissioners shall
point out any inequalities or discrepancies in the tolls,
fares, and charges, taken either in different parts of the
same line of Railway, or on different lines of Railway ;
and shall point out any tolls, fares, or charges, on any
of such lines of Railway which appear to them to be
excessive, or otherwise to require the interference of Par¬
liament ; and any other matters relating to such tolls,
fares, or charges, to which, in the opinion of the commis¬
sioners, it is conducive to the interests of the public to
direct the attention of Parliament."
Clause 54. " Where by any Act of Parliament the
authority of any Railway Company to take tolls, fares, or
charges upon any Railway is granted for a limited time,
and until other provision in respect thereof he made hy
Parliament, the commissioners shall, before the expiration
of such limited time, in their said annual report, point out
B 2
20
the approaching expiration of such limited time, and shall
state whether in their opinion any and what alterations
ought to be made in such toils, fares, and charges."
We may fairly presume that the object of ihese reports
is not merely to make Parliament aware of (he opinions of
the Board for the time being on these matters, but that
some practical result is intended to follow ; and it may be
safely concluded, from past experience, that whenever the
Board does call the attention of those serenely deliberative
bodies to a case of " inequality," or cliarges in their opinion
excessive, or any other matters relating tliereto; and when
they shall also point out the approaching expiration of the
limited time, for which powers have been granted (a re¬
striction now for the first time thus dimly foreshadowed),*
in such a case it may be safely concluded, that no very long
time will elapse before some " other provision in respect
thereof will be made by Parliament." Beyond tiiis all is
vague conjecture (for the two remaining clauses merely
relate to disputes with the Post-office, and the definition
of express trains), so far as this Bill is concerned. Regu- ^
lations for punctuality, cheap trains under Mr. Gladstone's
Act, conveyance of military, cases of dispute between com¬
panies, returns, inspection, bye-laws, police, recovery of
penalties; in short, all the machinery of most vexatious and
perpetual interference, without incurring any responsibility,
the whole of which will be generously left to the undivided
enjoyment of the Railway directors,constitute the remainder
of the Bill. But in the speech of ihe Chief Commissioner,
when he introduced this measure, we have an intimation
* The power of revision after twenty-one years, under Mr. Glad¬
stone's Act, was to be exercised on a fixed principle, that dividends
should not exceed 10 per cent. This Bill proposes an absolute ex¬
piration of the powers of every company under their Act, at the end
of every ten years.—See Mr, Slrull's speech^ Feb, Wth.
21
of their ideas upon this rather important point, which has
been omitted in the Bill, and is, as Mr. Strutt said, " left to
the discretion of Parliament."
Here observe the modus operandi:—In the case of new
Unes, it is proposed to grant powers only for a limited time,
say ten years. But in spite of the original grant to the
existing companies, and Mr. Gladstone's final Settlement
Act, it is now plainly stated that the price of any future
extension of powers to existing companies, even for the
purpose of effectually carrying out the objects already
within the scope of their undertaking, will be submission
to the same provision as to limitation. And here the Chief
Commissioner begged not to be misunderstood : He did
not mean that at the end of that limited period " the pro-
pertyofRailwaycompanies should be thrown entirely open,"
(and what a measure must that be, where such an expla¬
nation could be required I) " but simply, that Parliament
should have the power at (say) the end of ten years, to
consider and revise the powers given to a Railway, in re¬
spect of fares and tolls." Simple enough, certainly, for the
Railway companies to admit, and no doubt exceedingly
simple for Parliament to enforce, but surely it cannot be
seriously intended thus to announce an indefinite intention
of limitations, the powers for which are capable of most
unlimited extension. However plausible or moderate may
be the present views of the Railway board, I do not hesi¬
tate to express my firm conviction, that an enactment so
vague, with powers so unlimited, would give a heavier blow,
and greater discouragement, to the principle of private
enterprise, than the most " rigorous control " exercised
under well-defined powers, with objects more distinctly
avowed, on principles more clearly recognised, and by an
authority somewhat less capricious in its actions, than
that to whose discretion a final appeal is to be made
22
every ten years. What more popular topic than " Railway
Reform," could be advocated on the eve of a general elec¬
tion, or upon the hustings? And in this case, where the
affluence or ruin of many thousand families might depend
on the degree of discretion exercised, there is no mention
of any guarantee against loss beyond a certain limit, as
in Mr. Gladstone's Act,
But we may assume, as it is of course intended, that these
powers will be exercised with moderation, and that no
revision will take place calculated to reduce the dividends
of any company, not exceeding 10 per cent, on the outlay,
or any other rate that may have been specially provided in
their act ; or, to state it more plainly, that some rate of re¬
turn will be assumed as equitable, and that no revision will
be made so long as the dividends do not exceed that rate.
This is exactly the same principle as that of Mr. Glad¬
stone's Act, and we need only refer to the report of Mr.
Morrison's committee, to learn its complete failure in prac¬
tice. There can, in fact, be no doubt, that so long as the
means can be devised of eluding such a provision, the prin¬
ciple of " private enterprise" willdevelope itself by evading
all control; and whenever the door shall be effectually
closed, so as to prevent the possibility of any increased
distribution among shareholders, there will be extrava¬
gance, patronage, and plunder, at head quarters, so as to
keep down the dividends ; and lastly, that by putting an
end to all such abuse and evasion, we should destroy the
life and energy of the management of the companies, who
would no longer have any new object to attain, or any in¬
ducement to serve the public effectually. Where, it may
be asked, would directors of character and station suitable
to siicb a position be found ? It is perfectly certain, that
under such a system the management would gradually
deteriorate, until the public should call, with one voice.
23
upon the Government to relieve them from the intolerable
oppression of a badly conducted and inefficient inter-com¬
munication, by at once assuming that responsibility, the
due discharge of which they would have rendered imprac¬
ticable by others.
The preceding considerations are all grounded upon the
actual results which have followed from the working out,
to its full extent, the principle iiitherto universally recog¬
nised in all matters affecting the commercial undertakings
of this country—viz., that of allowing entire freedom to
private enterprise. We now approach the discussion of a
defect in the present system, which, though at present
theoretical rather than practical, has caused a loud outcry
from a large portion of the public, unsatisfied, it appears,
with speed thrice as great, and fares half as large, as before
the introduction of Railways, and has given occasion to
several very plausible speeches, and a good deal of gradual
encroachment, indicative of a desire to attempt more, in
the House of Commons. This defect—and a defect in prin¬
ciple it is fully admitted to be by all parties—is, that the
powers of a Railway Company confer a " practical mono¬
poly" of the traffic on that line. It is argued that, when
Railways were first made, it was intended that they should
be open to all like highways, and that, when experience
showed that it was impossible to work a line with security
to the passengers (to say nothing of economy and speed
and general convenience), except under the exclusive
management of the Company itself, it became necessary
to the public, and therefore the duty of Government, to
impose such restrictions and conditions on the Company
as to give the public their fair share of advantage from the
new invention. The demand has generally been rather
vague; and whenever an answer has been attempted, by
suggesting that the public derived all the advantage for
24
which they stipulated in the original contract, and would
have done so whether the Company had made any profit,
or become all but insolvent ; that the public have partici¬
pated to a much larger extent than they bargained for, in
consequence of the success of Railways, and, in fact, to
a much larger extent than the companies themselves,
wiiose dividends amount, in the average, to very little more
than five per cent, upon the capital actually expended ; and
that, if the public not only originally admitted, but has,
since the practical monopoly was demonstrated, continued
to sanction schemes brought forward, and of course mainly
produced by the expectation of profit on a commercial
enterprise, they have, in fact, surrendered all fair claim to
interfere with the profits of the Companies, and ought to
content themselves with proper regulations for security and
convenience ; that, in short, where they have thrown the
burden and risk, they ought to allow the advantage—
when such reasoning, founded on all previous practice, is
alleged, the reply is simply,—" Railways are a monopoly ;
monopolies are odious, and must be abolished.'' Ergo—
and the logic of the conclusion is remarkable—we will 7iot
resume our unwary grant of excessive powers on fair terms,
and relieve you from the risk you run ; we will not, in fact,
abolish your monopoly, but while we leave you to bear all
the burden of management, as well as all the risk of any
future falling away of your present traffic, either by the
competition of other lines or new means of communication,
or by the removal of traffic by other causes, such as a
decline of any particular branch of trade in any given
locality, we will take advantage of the present moment,
while yet you can be charged with a practical monopoly,
to inflict on you a " rigorous control" by Government, and
compel you to make experiments by reducing your fares
to the lowest point at which you can exist in a solvent
25
state, and to encounter a perpetual and most expensive and
injurious contest before an annual committee, in order to
retain any chance of a profitable return.
This is, if not in words, in effect, the remedy to be
applied under the advice of Mr. Morrison's committee,
who might surely, as before intimated, have paid some
regard to the example set by those other countries which
are held up as models for our imitation ; and if they
had looked at the evidence given before the Committee
of 1844, might have seen what a fine opportunity was
then lost by neglecting to follow up the suggestions
then made, and to disarm monopoly by making the Rail¬
ways national property. Instead of that, they content
themselves with denouncing the terms of purchase at the
option of Government, under Mr. Gladstone's Act, as
" extravagant,"—terms which were then expressed by the
Government and Legislature, and accepted by the Railway
Companies as a settlement of the question ; and, omitting
all further idea of purchase, either present or prospective,
confine their investigations to a comparison of the fares of
different countries, where the system and cost have been
entirely on a different footing, and their recommendations
(with one remarkable exception) to the superintendence
and control to be exercised by a Board of Railway Com¬
missioners. What the powers of that Board are, and how
far they are likely to attain the chief objects of the Com¬
mittee—viz., a judicious selection of future lines, and a
proper scale of rates and fares—may be seen by the brief
sketch given above of the Act by which they were consti¬
tuted, and the Bill now before Parliament. They will, in
fact, have no power effectually to remedy the defects of
the present Railway system already enumerated, and will
therefore merely complicate the proceedings before Parlia¬
ment with no substantial advantage to the public. The
26
exception to this lame conclusion consists in the first of
the points, which, as they say, " ought to be aimed at in
our future Railway system"—that no future lines, either
for main trunks or branches, should be ceded, except for
terms of years. Well, and what is to become of them
at the expiration of these terms? Is the Government
then to enter the field as a competitor, and all the
machinery of a central management by a Government
Board to be put in action for conducting the traffic of
sundry detached trunks and branches, which will have
lost half their vitality by being severed from the other
main lines, or the trunks with which they are respectively
connected ? Or is the Government then to put them up
to auction, as if there could be an indefinite number of
aspirants for a lease ? There can be no doubt that every
trunk-line will find its natural allies, as every branch will
have its main trunk, from which, if torn away by any such
process as is implied in this clause of their recommenda¬
tions, the new acquisition of public property would soon
be found to be nearly valueless. Unless this clause were
intended only as a step towards a complete transfer of the
Railways to the nation in course of time—which is kept
carefully in the back-ground, or rather out of sight alto¬
gether, in this Report—it is difficult to understand how the
recommendation could stop there, and thus attempt to
introduce a system, half English half French, without the
advantages of either.
The absurdity of this part of the Report became so
clear when its application in practice was considered,
that the Chief Commissioner declined to make any " pro¬
posal of that nature" to tlie House, adopting, instead of
it, the idea of limiting the period of any grant of powers
in respect of tolls, fares, and charges. The inevitable
tendency of this scheme has been above pointed out ;
27
but it may be remarked that the distinction attempted to
be drawn between such a limitation and the power of
periodical revision taken by Mr. Gladstone's Act is only a
distinction without a difference; unless, indeed, it is now
openly designed to subject the Company's powers to indefi¬
nite restriction and reduction at the "discretion of Parlia¬
ment," without any fixed principles laid down, or even
pretended, for their future guidance.
Assuming that an equitable arrangement could be
made, by which all the existing Railways (including
those in course of construction) would become national
property after a certain number of years, let us consider
what effect j would be produced on the present sys¬
tem, with regard to all the foregoing defects, real and
imputed. It can hardly be necessary to do more than
barely mention the immense saving in all preliminary
expenses towards obtaining any extension of main lines or
branches; or in the cost of executing works by compa¬
nies relieved from the stringent conditions, and often ex¬
orbitant fines, imposed upon them by the landowners as the
price of their Bill, besides the enormous amount always
spent in securing (or buying off) the services of eminent
counsel, when once the lines had been sanctioned by a
board possessing effectual powers, as recommended by
Mr. Cubitt in his evidence. (See Appendix to Report,
1846, No. 757.) It would be equally superfluous to point
out the inevitable decay of scrip gambling, and all its
attendant evils, or to insist further upon the advantages
to be gained by some approach to unity of design in all
the ramifications still required to [^complete the system of
internal communication, instead of continuing to " scram¬
ble in the dark," as Mr. Reed forcibly expressed his
opinion of the progress of Railways consequent upon all
previous attempts at legislation. All these defects were
28
so clearly exposed by the examination that took place
before the Lords' Committee on Railways in 1846, of
which Lord Rossie was chairman, and their injurious
effects so ably and succinctly pointed out in the Report of
that Committee, that I may be excused for extracting a
few sentences that appear strongly corroborative of the
views here advocated. First, as to the preliminary ex¬
penses, the Report says (p. 3), that
" Objections to Railway Bills for noncompliance with
standing orders are generally brought forward either
directly or indirectly by competing companies, and almost
always by parties who have no real ground of com¬
plaint, on the score of want of due notice as to the
nature of the intended measures, but who for other rea¬
sons object to them. T/iis is a mode of opposition just as
likely to succeed against the best as against the worst Rail¬
way Bill; and, in point of fact, it has been stated to the
Committee, that bills, which it would have been highly
for the public interest to have passed, have been thus
defeated."
It is true that their recommendations to remedy this
glaring defect have been adopted, and are in a great
degree effectual; but may not this serve to show how far
the legislation on this subject is in arrear of the public
wants, when the remedy is only applied after such a
session as that of 1846? Also it is useful, as indicating
the. manner in which the purse of a rival company is
drained to baffle or defeat an intrinsically good scheme,
either on standing orders, or at any other point of its
passage through the ordeal of Parliament. Horses hired
along a whole line of road, special engines granted to one
party and refused to another, agents bribed, witnesses
spirited away, plans and sections stolen or defaced after
their deposit witli the clerk of the peace : these are a few
29
examples of the fruit of our legislative wisdom with re¬
gard to Railroads. Again the Report, says (p. 6),—
" It appears to the Committee, that, according to the
present system, the selection of the line does not rest with
the Parliament as a body, but virtually with a committee
of five members of that House in which the Bill is intro¬
duced, whose attention is necessarily confined to a single
district, and without the information necessary to enable
them to judge of the effects of the particular undertakings
on the general Railway system of the whole country ; the
other House having only the power to approve or reject the
scheme so sent to them, not to select that which may be
considered the best.
" The Committee have taken into their consideration
the very serious extent to which the projection of new
lines has been carried, without any well-defined system
for the accommodation of the country being laid down.
Schemes have been frequently got up, and Acts obtained
by parties, for the mere purpose of speculation, without
any definite object beyond that of selling them to com¬
panies with which they may compete ; and existing com¬
panies have been compelled to project new lines, before
either their own means would warrant their undertaking
them, or the necessities of the district call for them, in
order to protect themselves from rival schemes.
" The Committee have had their attention especially
directed to the fearful amount of gambling consequent on
the existing state of things, by which many persons have
been entirely ruined, and a demoralizing effect extensively
produced upon the liumblest as well as the highest
classes of society, while the trade of the country has been
injured, owing to capital being diverted from its ordinary
channels."
30
These extracts unfortunately require neither proof nor
comment, but call imperatively for the adoption of such
measures as may effectually put an end to the whole of
this reckless and vicious system ; and although it may be
alleged that the evil is already abated under the influence
of the newly constituted Board, it is clear that nothing
hitherto done is adequate to account for the change that
has come over the public mind, which is rather due to the
exhaustion consequent on long and excessive excitement.
If, then, it has been satisfactorily shown that Government
purchase would produce the effect above anticipated, the
arguments in its favour would appear to be perfectly
conclusive.
To the above may be added two other considerations,
which, though directly affecting the Railway companies
only, are by no means without an important bearing on
the public interest. The first is the security of property
invested in Railways, which, apparently lightly valued by
Mr. Morrison's committee, is yet worthy of some con¬
sideration in a national point of view, even if we should
admit that no pledge was given or implied by the original
grant of powers, under express stipulations more than ful¬
filled, their subsequent renewal and extension, even after
the practical monopoly was demonstrated and acknow¬
ledged ; or, finally, by that comprehensive measure passed
by Mr. Gladstone, and now repudiated, in express terms,
by Mr. Morrison's committee. The other is, that immense
advantage, yet imperfectly appreciated, of enabling com¬
panies to retain their managers, officers, and inspectors,
at home, and attend to the management and general
business of their lines, without the necessity of occupying
one half of the year in negociating with otiier companies,
and planning fresh schemes either of attack or defence,
31
and the other half in a ruinous and most useless and hope¬
less contest before Parliamentary committees in London,
to the utter neglect of the means, either of improving their
traffic, or effectually serving that which they already
possess.
But the chief objection, the justice of which in principle
has been already admitted—that of monopoly—would be
completely obviated by the purchase of the lines ; for
although it might still be as impossible to establish an
effectual competition by different lines throughout the
country as it is to work competing trains on the same
line, yet, wherever any line reverted to the nation at the
expiration of the allotted term, all the advantages of com¬
petition might he secured by annexing it to that system
of lines that could be most conveniently united together
in one lease under the same management, and leasing the
whole,by public tender to any company or body of indi¬
viduals, associated for the purpose, who would offer the
best rent, or undertake to work it on terms most favourable
for the public.
Probably the best method would be for the Govern¬
ment in each case to appoint the terms (as a maximum)
on which passengers, parcels, mails, and goods should
be conveyed, and to allow the competition to take
place as to the money-rent alone ; otherwise it might be
almost impossible to adjudicate amongst the various and
often local advantages offered for their acceptance. I shall
hereafter state my reasons for believing that even concur¬
rently with a gradual reduction of fares and rates, the full
present value of the line would be derived by the Govern¬
ment, hut at present only wish to point out the distinction
between this case and that which might arise, as before-
mentioned, under the recommendation of Mr. Morrison's
committee, to grant no future lines except for terms of
32
years. Instead of isolated and insignificant lines and
branches, which alone (in England at least) could now
become the property of the State according to this exqui¬
site device, the tenants under Government would have
secure possession during a term of years of the whole dis¬
trict comprising the sources and springs of their traffic,
together with all the minor channels of communication
down to and including the main arterv through which it
O ^ O
would flow. For it would obviously be at once the duty
and the interest of the Government so to apportion the
lines embraced in one lease, as to bear a resemblance to
the manner in which a tract of land is drained of water—
by ascertaining, in fact, the natural flow of trade ; and
thus secure, as far as possible, the greatest amount of
public convenience, and the harmonious co-operation of
the whole system.
We are thus brought back to the point of starting.
Whatever be the mode or principle of their construction,
public convenience, if not safety, demands union among
the " disjecta membra" of the Railway body ; principle
requires that '• practical monopoly" should be abolished ;
and these two objects can only be united by their absorp¬
tion into a national interest.*
Purchase proposed.
Before proceeding to make any suggestions as to a
scheme at once fair as regards the companies, and prac¬
ticable for the Government, for carrying into effect the
conclusions thus deduced, and fully admitting that unless
some such scheme can be devised the whole case falls to
* Mr. Cubitt's evidence, given fully before the Lords' Commilfee,
proposes a general amalgamation of all lines of Railwa\% which
meets some of the objections but not all of those urged above, par-
ticularly that of monopoly.
«
33
the ground, it is yet desirable to have it well understood
that the whole force of these arguments remains untouched
as to its desirability, whatever may be the defects either
as to equity or practicability of the particular plan which
I now propose to discuss.
The former consideration, that of equity as between the
companies and the public, evidently depends on the
details of the terms of purchase to be ultimately fixed
upon between the State as the purchaser and the share¬
holders of the Railways ; which would, of course, when¬
ever the measure should be decided upon, receive ample
attention, and be determined on equitable principles by
a general Act of Parliament. Nor can I apprehend that
any valid objection could be raised on the part of those
who have themselves, by their arbitrary intersection of
the country, interfered to a far greater extent with pri¬
vate property, rights, convenience, and affection, than
any other interest that has ever grown up in this na¬
tion. Nothing, in fact, could have justified such inter¬
ference and the reduction of all interest, whether present
or contingent, whether measured by actual value to the
proprietor or by the peculiar tie of affection, to one uni¬
form money standard, except a paramount interest amount¬
ing to a necessity on the part of the nation. And the
same argument will, I believe, apply with even greater
force to the resumption by the nation of those extraor¬
dinary powers, the full extent of which was certainly
unknown at the time when they were first granted, al¬
though the claim may appear somewhat tardily advanced
after repeated confirmations and renewals of powers whose
"practical monopoly" was demonstrated and acknowledged.
The latter difficulty, that of devising a scheme prac¬
ticable in itself both with regard to the public means
of purchasing a property already so large and daily in-
c
34
creasing ; the time and manner in which lines so variously
constituted, and of ages and characters so different, should
revert to the State ; the mode in which they should be
worked under the superintendence and control of the
Government, and the future extension of the system—on
all such points of detail the diíBculty is at once apparent ;
and it is with tiie view of promoting discussion and elicit¬
ing public opinion thereupon that these pages are offered
to the public, under a strong conviction that a general
impression favourable to these conclusions has been made
by experienced evils and abuses on the minds of most of
those conversant with railway matters—that, in short,
public opinion as to the desirableness of the object here
advocated has been already in a great degree formed, and
only waits an occasion for its expression.
Means of Purchase.
First,—The most obvious difficulty is that of providing
funds for so large a purchase, without a serious interference
and derangement of all our monetary system. So far as I
am aware, Mr. William Gait—who was the author of a
pamphlet upon " Railway Reform," and was examined
before Mr. Gladstone's Committee in 1844—was the first
who drew attention to the facility offered for such a pur¬
chase by taking advantage of the difference of value of
Government securities, from the price at which invest¬
ments could be effected in the best established Railways ;
a difference amounting, according to his computation, to
one and a quarter per cent, on the capital stock.* Although
there has been a considerable depreciation in the public
funds since Mr. Gait assumed the three per cent, consols
* See his evidence, App. to 5th Report, 1844, p. 454.
35
at par, yet, as this is principally due to the fluctuation in
the value of money and the apprehension of pressure, and
as a corresponding effect to fully^s large an extent has
been produced upon Railway stock in general, the relative
proportions are not much altered ; and for our present
purpose, the difference may be assumed at one and a
quarter per cent, without embarrassing the statement
with a long array of figures, which, if correct now, might
very probably be again superseded by a new fluctuation
from causes either external to both or peculiar to one of
these interests.
Mr. Gait proposed to make use of this difference in
the following manner :—Having stated the market price
of that day of forty principal Railways, " Calculated,
on the 6tli April 1844, three per cent, consols at par,"
as being 76,734,OOOZ., he assumed that the price of
forty-two other lines, the value of which was not exactly
known, would be increased in about the same propor¬
tion (viz., thirty per cent, upon their capital authorized
by their acts of Parliament), and would thus amount
to 15,436,000/. ; making a total value of 92,170,000/.
Mr. Gait proposed then to create stock to this amount
bearing interest at the rate of three per cent, per annum,
so that " the Government would require to pay to the
stockholders 2,765,100/. per annum."* And he proceeds
* In Appendix of Evidence, 1846, p. 451, Mr. Gait states the
actual cost of forty principal Railways as 59,630,000^., and "the
market price of that day as nearly as it could be calculated,
76,734,000¿,," " taking three per cent, consols at par." This
would imply that the actual dividends were taken as the basis,
and their value determined from that of consols—which would,
in fact, bring his plan under the same principle as that advo¬
cated by Captain Laws. But this inference seems inconsistent
with a subsequent answer. No. 5715, p. 454, where being asked,
C 2
36
to show how this arrangement would leave a large margin
for the reduction of fares ; into which I do not propose at
present to enter, as i^ must be sufficiently clear that if
Government pays only three per cent, for a property which
returns 4/. 7s. per cent., after deducting all charges, they
will have a surplus of 1/. 7s. per cent, on some 92,000,000/.
(not to mention the reduction in the rate of interest on
loans) to deal with either in that or any other way they
may think fit.—(See Mr. Gait's Evidence, Appendix to
5th Report, 1844, pp. 450, 454.)
This is " reform" with a vengeance. While it appears
to give the shareholders the full value of their improved
investment in Government stock, it does, in fact, cut down
their income by about thirty per cent., and leaves them
with a rate of interest upon their original capital hardly
greater than they could have obtained for their money
without any risk, loss of time, or trouble, in any other
than a Government investment. If this be " railway
reform," let us have " private property reform" also ; and
let the State confiscate all investments whose returns
are above three per cent., and where the security is un¬
objectionable.
But it was not thus that parliamentary powers and lands
were acquired by the companies, or that compulsory pur-
" Pour and a quarter is the result you arrive at by comparing the
returns of the existing railways with their market value?" he says,
" Yes, it is about Al. 7s., there is one and a quarter per cent, profit
on capital clear to the Government to meet any loss by the reduc¬
tion of charges." This market value must be the value by the share
list, for if the value were that of the actual dividends capitalized at
three per cent., the returns of course could not be Al. 7s. on that
amount. The defect in Mr. Gait's plan is, that while professing to
give the companies the full value of their property in eapital, he
does in fact confiscate about thirty per cent, of their dividends.
37
chases for a public object can ever be fairly effected. Sup¬
pose a shareholder discontented with his reduced income :—
" Well," says Mr. Gait, "he can sell it for its full present
value."—And what is he to do with llie money when he
has it in his pocket?—Buy in again? Or what if all the
shareholders wanted to sell,,or in other words, the State
were called on to redeem its liability, and pay them off at
par?—Could they borrow the money at 3 per cent. ? Be¬
sides, it is clear that the market price by the share list is
not a true test of value for such a purpose, from being
under the influence of many temporary and partial causes
which might cease to aflect them at any moment, and
which would unquestionably disappear almost entirely upon
the prospect of their becoming Government property.
The principle propounded by Captain Laws (App. to 5th
Rep. 1844, p. 406) is a more fair and certain guide, namely,
that their net annual income for an average of three (or
more?) years should be taken as the basis of value, and
that proper precautions should be taken to prevent the
companies from making dividends beyond their fair earn¬
ings, as well as for keeping up the full value of the working
stock or " plant," as it is technically called. The same
witness subsequently gave it as his opinion that a period of
ten years from their opening would be sufficient to test the
value of Railways in this manner.
But I am by no means prepared to maintain with Cap¬
tain Laws that an income should be granted by the Govern¬
ment to the full amount of the dividend so ascertained,
even though the State might still derive a large profit from
an improved and concentrated management, from the
gradual growth of traffic, and from reduction of the rate of
interest on all borrowed money. As it would be unfair to
take them upon their net income within a period after their
38
opening too short to allow them to economise their man¬
agement, and to develope their resources either internal or
by connection with other lines, so also it would be more
than fair, that is unfair to the public, to give them the whole
advantage derived from the grant of a government annuity
equal to their net revenue prpperly determined, thus secur¬
ing them against competition for ever, exonerating them
from all trouble or responsibility, and, if they choose to sell
their stock, putting a bonus of 25 or 30 per cent, into their
pockets. Still, in this case, the public, like all compulsory
purchasers, ought to give somewhat beyond the then actual
value (airly tested, in consideration of the actual dimtnu-
tion of income if the investment be retained, and the pos¬
sible loss by change if sold, as well as for the price of com¬
pulsion and the loss of all contingent advantage.
For this purpose the margin of profit above mentioned
affords an ample and secure provision ; and before entering
into further details, I may remark that, with those who
maintain that by such a step the State would run any risk
of loss, who argue that as roads and canals have been
superseded by Railways, so Railways may in their turn be
superseded by other inventions, or that particular lines may
be rendered useless and become a dead loss by the extension
of the Railway system itself—with them I do not here enter
into any argument, assuming that the conclusions deduced
by Mr. Morrison's committee, as the foundation of their
report, are correct as to the immense superiority of the rail¬
way to every other known mode of conveyance, the conse¬
quent certainty of their gradual extension into all parts of
the kingdom, and the possible effects of their practical
monopoly. But I cannot omit to notice the inconsistency
of any such arguments as these with the outcry that has
been raised against Railway companies on the score of
39
monopoly and exorbitant profits. Either they are secure
investments, and therefore could cause no loss to the
Government if purchased (more especially as I shall pre¬
sently show that nearly all the present risk would thus be
obviated), or they do not deserve the character of mono¬
polies, and their profits, being only of a temporary nature,
cannot be charged as exorbitant, and ought never to have
been restricted. Their security is in fact the sole ground
for the restriction, which is not enforced in other cases.
On this supposition, then, I found my proposal. Instead
of offering to the shareholders the option of a certain amount
of stock barely equal to their present market price, as
Mr. Gait does, I propose to create an amount of Govern¬
ment stock bearing interest at the rate of 3^ per cent,
guaranteed against reduction for a certain number of years
(say 35 years, for instance), and allot to every shareholder
100/. of such stock for every 4Z. of net annual dividend out
of the profits of his Railway, after deducting all charges
both for interest of money and for depreciation and super¬
annuation of working stock ; the profits being ascertained
on an average of years as above mentioned. This stock,
though producing a dividend less by 12| per cent, tban
that which he now enjoys, would give him the option of
either resting satisfied with a permanent Government secur¬
ity as a compensation for the reduction, or selling out at a
price better than he can now obtain by about the same per¬
centage. These terms would in fact almost equally divide
the profits arising from the conversion of the stock, and are
proposed as being some approximation at least to a fair bar¬
gain, whereas Mr. Gait would give all the profit to the
State, and Captain Laws to the Railway companies.
But this is by no means the whole of the case as regards
the profit to the public. By giving stock bearing a rate of
40
interest higher than that which has now for some years
been the ruling rate, and in spite of the present unfavour-
able appearances as to the money market, looking forward
to a slow but certain progressive diminution of that rate, we
should gain the advantage, without injury to the present
proprietors, of an ultimate further reduction to a consider¬
able aggregate amount—probably to 3 per cent, at the
expiration of the term for which it was guaranteed. But
for this very reason the term ought, I think, not to be less
than that above mentioned, viz., 35 years.
Again, there would be a very large source of profit from
the reduction of the rate of interest on all borrowed money,
which has hitherto been only incidentally alluded to.
It might appear at first sight as if the whole of this ad¬
vantage should necessarily belong to the State on whose
security it depends, and, as a general rule, undoubtedlysuch
ought to be the case. But while appropriating a share of
profit so considerable as this would evidently be, it would
be well to recollect that the resumption of powers formally
granted, and the extinction in many cases of hopes long
delayed, ^nd thus finally doomed to disappointment, might
press with great severity on those less fortunate companies
whose very poverty compels them to pay a higher rate of
interest on borrowed money than their richer neighbours,
and thus still further to attenuate their already slender-
dividends. As ail difference of security would disappear
when all alike should merge into one common stock, it
would perhaps be only fair to adopt a rate of interest at
which in ordinary times any well established Railway com¬
pany can obtain their loans, 4 per cent, for instance, and
to appropriate all the profit, arising from the reduction of
interest down to that point, in aid of the dividends to be
calculated as above mentioned, (according to which the
41
purchase-money is to be determined) after which all fur¬
ther reduction from that rate down to the point at which
the State could from time to time obtain loans should
belong to the State.
Thus the already successful companies who have derived
an ample return for their outlay, and are consequently in
high credit, would derive very little advantage from this
source, while there would be some consideration shown for
those whose comparative failure of success to themselves
has yet probably been equally beneficial in a national
point of view. From what has been said, it is, I think,
perfectly clear that a very large and constantly increasing
profit would accrue to the Government, without regarding
the natural growth of traflSc which has hitherto far outrun
all expectation, and which seems destined still further to
advance with every extension of the system, and comple¬
tion of the network of internal communication. Before
quitting this part of the subject, it may be remarked that,
to the State, as possessor of all the lines, it would be im¬
material by which channel the traffic should flow, and that,
having it necessarily in their power to prohibit any line
which was not likely to be remunerative on its own account,
all risk of loss from competition of the lines amongst
themselves, in whatever manner they might be worked,
would be obviated. Thus a large fund of perfectly secure
profit would remain, which might be applied either to¬
wards a gradual reduction of the charges on all the lines
in the kingdom, or as affording the means of extending
Railways into unoccupied districts, where there was little
prospect of a profitable return sufficient to induce private
enterprise to embark in their construction; or lastly, if, as
I firmly believe, both these objects might be attained
without drawing upon this fund, it would remain as a per-
42
manent, and a very considerable, addition to the public
revenue of the State.
Mode of Working the Existing Railways when Pur¬
chased.
Supposing the terms of purchase settled, we come now to
consider how far it would be either practicable or desirable
«for the Government to undertake the management of all
Railwaycommunication,in the same manner as it has taken
charge of all the correspondence of the kingdom. The
objections to such a course on principle are too well
known, and the distinction between this case and that of
the Post-office, in many points, is too obvious to require
much explanation; and I think it will be conceded that, if
a distinct and simple method can be devised for trans¬
ferring their management into the hands of those who,
having an interest in their success, shall devote themselves
in earnest to make them as efficient as possible, and at the
same time reserving the ultimate control in the hands of
Government, it would be far more desirable that such a
course should be adopted.
Let us take, first, the case of the existing companies,
including of course under that name all those which
have obtained powers for the formation of Railways,
whether completed or not. The chief difficulty, and
one that meets us in the very outset, is that, in pro¬
bably every case over the whole kingdom, each main line
has several offshoots, which, although not essential to its
own existence, are yet entirely dependent upon the parent
line for their prospects of success, or even of efficiency in
working. And, as these lateral branches are in most
cases unfinished, and in all it may be alleged with
43
some truth, that they will not have shown their true
result by the time when the trunk line shall become pur-
chaseable, according to the terms above proposed, it will
be necessary to make some provision for their absorption
into the system to which they belong. But in my opinion
it would be perfectly fair, and in fact absolutely requisite,
to exclude from this consideration all those independent
extensions of any company with which they are only
connected by some agreement as to future amalga¬
mation, provision of capital, or guarantee of interest ;—
such a line, for instance, as the Holyhead line from Ches¬
ter, to which the London and North-Western contri¬
buted a million of the capital. This is an independent
scheme, and ought evidently to be valued on its own
merits, and not as forming any part of the London and
North-Western system.
No doubt, an objection may be raised as to the diffi¬
culty of drawing the distinction in all cases, which is
sufficiently obvious in this, and it is impossible to lay
down any principle in the abstract which shall not be
open to cavil. But by keeping steadily in view the point
of real importance — viz., whether the value and effi¬
ciency of the new or incomplete line is essentially in¬
volved in its union with that from whose line or funds it
forms an offset—and deciding all cases which do not come
within this description upon their own merits, we should
have a safe guiding principle to apply to every individual
case. Even then there will remain many cases of sufficient
complexity. But if ten years be taken, as proposed by
Captain Laws, for the period necessary to arrive at the fair
result of an undertaking of this description, it is clear that
a much less time would suffice to determine the effect of
lateral branches, or such limited extensions as come within
the conditions above mentioned ; and thus, probably in
44
most cases, by a very slight extension of the period—to
twelve years, for instance—the result of any main line,
together with all its branches and engagements hitherto
sanctioned, might be determined at the same time. I need
hardly add, that any future extension being entirely under
the control and disposal of the State, would, of course,
only be sanctioned on terms and conditions laid down by
the Government, as this subject will naturally form the
next division of the details of this plan.
And inasmuch as these branches and extensions have
been generally designed for the purpose of protecting the
original main lines of the country from hostile attack,
without expectation of an equally profitable return from
them considered as distinct and isolated lines, it might
probably be sufficient to allow three or four years from the
opening of any branch line, and six or seven for any ex¬
tension line, as sufficient to bring it within the conditions
of purchase upon its net annual income. By thus re¬
jecting all those more distant and disconnected exten¬
sions and engagements into which the rage of specula¬
tion or the fear of competition has impelled the older
companies, we should even yet have time enough before
us, within the twelve years from the opening of any line in
the kingdom of great importance, to determine with suffi¬
cient accuracy the actual value of their net income,
including all their branches and any such extensions as
ought to form an element in the calculation, from their
close connection with, and bearing upon, the main trunk
line. Even the London and Birmingham was not opened
throughout until the autumn of 1838, so that there are
still more than three years to run of the period I have
named.
In such cases, however, as might appeardoubtful whether
an individual extension line ought or ought not to enter
45
into the purchase along with its parent line, it might be
placed first within the option of the State either to allow a
period sufficient to include such extension (for instance,
six or seven years from its opening) before purchasing the
main line ; or, in the event of their declining to allow such
period, then the Company to have their option as follows—
either to consent to bring such line at once into hotch¬
pot with the rest of their undertaking upon its then net
annual income, or, if not satisfied with the result already
obtained, to be entitled to a lease of the whole system of
lines included in the purchase at a rent equal to the then
net annual income for the remainder of the period of seven
years from the opening of such extension line. Such a
proviso would of course only come into force when any
company demanded the inclusion of a portion of their
undertaking as being of great importance to the success of
their main line, and it would give them an opportunity, in
case the time required for its development were refused by
the State, to prove their confidence the further resources
of their line by retaining in their own hands for the re¬
mainder of the proposed period the whole of the lines to
be included in the purchase, at a rent which would,
according to their own showing, leave them a considerable
margin of profit, secure from all hostile interference.
This would be, in effect, to give the company so situated a
priority of claim to become the tenants of their own line at
a fixed rent and for a definite period, after which it would
revert to the State.
I do not, however, think it likely that the difficulty would
be in practice so great as it appears on paper, for I believe
that in all cases the Government would be anxious, for its
own sake, to meet in some degree the reasonable demands
of the companies, by allowing time sufficient to enable all
those branches and connections which should form part and
46
parcel of any line to come into full operation ; for it is
evident that by excluding any of its communications, and
making them the subject of not only a separate purchase
but a separate management, much of the advantage to be
derived from uniform and consolidated superintendence and
working would be lost. It appears, therefore, that whether
the principle should be adopted of working all the lines,
after they should become national property, under govern¬
ment management, as in Belgium, or of working them
through the intervention of private companies having a
direct interest in their success, according to the present
French method, there is not any insuperable obstacle,
either as to the terms, the time, or the manner in which the
existing Railways, with all their branches and extensions,
should revert to the nation.
But I wish it to be distinctly understood, that in the
terms and conditions above suggested, I do by no means
imply that the State should relinquish the power under
Mr. Gladstone's Act, in 1844, of acquiring any under¬
taking at 25 years' purchase of their divisible profits,
as I think that, in spite of the denunciation of Mr. Mor¬
rison's Committee of these " extravagant terms," there
might be occasions when such a power might be useful
for the purpose of bringing some essential portion of a
system of lines, whose stipulated term had not yet ex¬
pired, within reach of purchase, together with the rest of
its natural connections. For although this option of pur¬
chase was to be taken after the expiration of 25 years from
the opening, yet as it was the declared intention of that Act
to limit the profits in all cases to a 10 per cent, dividend,
and all the Railway companies in the kingdom have since
come within the scope of that Act, there could be no injus¬
tice in anticipating the period, and allowing the purchase
to be calculated upon at 10 per cent, dividend at once, so
47
as to enable the State to enter i ra med lately upon posses¬
sion of any line which might be of sufficient importance to
warrant a grant of such terms.
To proceed, then, to the mode in which I propose to deal
with these lines, as they successively come into the hands
of Government. The process of amalgamation, which has
already taken place to a great extent, and will doubtless, if
encouraged, still further consolidate the existing lines into
large masses, will of itself have the effect of making each
separate purchase a well defined and independent system
conveniently worked together, with central depots, work¬
shops, and all appliances requisite for separate manage¬
ment. It is evident that this principle of amalgamation
under one management might, in many cases, be usefully
extended still farther by including other lines locally con¬
nected, or bearing some relation to that system as to their
course of traffic. It would be, in short, the duty of
Government, and, as before intimated, it would be their
interest also to connect in this way all such lines as could
be conveniently worked in union ; and I think it would be
desirable that it should be laid down as a fixed principle
that all such apportionment into several systems should
take place under the direction of Government, after proper
investigation as to the natural flow of traffic, and that no
interference with such allotment should be permitted.
Having thus a completely organized system, with dis¬
tinct objects and interests, they should proceed to con¬
sider how far any increased accommodation, reduction
of charges, or general efficiency could be introduced with
a due regard to its safety, income, and economy of man¬
agement; and they should then offer it, under such
stipulations and restrictions upon all those points as
they should decide upon, to public competition for a
48
lease of a given duration. And here I think it important
again to remark, that the competition should be one of
money-rent only ; for if neither boundaries were defined,
nor the conditions as to all tiie above points previously
determined by authority, the offers would be so various and
so complicated, would embrace systems so different in
extent on terms impossible to be reduced to any common
denomination, that decision could take place on no fixed
principle, and would of course never be satisfactory either
to the public or to opposing parties. Moreover, I shall be
able to show that any other course would render any exten¬
sion of the system, if not impracticable, at least a source of
as much contest, misrepresentation, and abuse as the pre¬
sent confused " scramble in the dark;" if, indeed, any
argument be required on such an obviously inevitable
result.
The question now arises — and a vital one it is —
what rent could be obtained for a complete system of
lines so allotted and put up to auction ? I answer at
once, and am prepared to maintain that the Government
would be entitled to expect a rent equal to the full net
annual value of the lines, as calculated for the purpose
of purchase, and I believe that tenants would be found
willing to pay this rent, and to give the best of all
possible security for so doing, viz., a weekly payment
out of their gross revenue, equal to the proportion of
the rent to the annual revenue.
This may seem a bold assertion at first, but upon
examination will, I think, be acquitted of any extra¬
vagance. Let us look back for a moment at those
causes of never ending disputes, contests, and litiga¬
tion, and the enormous annual expense inflicted on the
Railway companies, both in and out of Parliament, which
have been already though very inadequately described,
49
and the difficulties with which they have to contend, and
from which tenants under Government would be free. In
the first place, there would be no occasion to keep up a
large staff of engineers, sub-engineers, &c. &c., clerks and
traffic-takers employed, during the greater part of the
year, in devising schemes of attack upon their neigh¬
bours, or guarding against such on themselves, and all
the long array of Parliamentary agents, counsel, solicitors,
and witnesses, deputations and committees, living in
London for months, at the company's expense, would
disappear at once. Such a consummation may not,
perhaps, be devoutly wished by some of those parties,
or by the owners of houses in George Street or Palace
Yard, but is surely worth some consideration, looking only
at the waste of capital and the time of the Legislature,
not to insist further on the demoralization and scandal
to the whole community by these proceedings.
Perhaps still more advantage than even the above would
be derived from enabling the managers of railways to stay
at home and attend to the business of their lines, which
have never yet been able to keep pace with the de¬
mands made upon them for extended accommodation.
All past experience has tended to show, that every in¬
creased facility and convenience draws forth a large
additional traffic ; and this, I may observe, is entirely
different from that increase which is due to the gradually
increasing trade and population of the country. The
latter is prospective only, whereas the former may be
considered as dormant, and capable of being called into
action whenever the stimulus is applied. Then comes
economy in the actual management and working of a
more complete system, the practicability and certain
effects of which must be too obvious, and are too well
D
50
known to all conversant with railroads, to require more
than a passing notice.
It may also be asked, although at first sight so large an
undertaking requires a proportionate remuneration, why
the. tenants under Government should be entitled to expect
more than the profits from the ordinary growth of traffic.
They would find no part of the capital, beyond, perhaps, a
sufficient deposit, as a security against any depreciation of
the working stock, which would, of course, be valued to
them at the commencement of their lease, and ought
to be inspected every six months by a Government officer,
so that such security would be of small amount, compared
with the vast business placed in their hands ; add to this
a further security for a week's rent (and a stipulation that
payments shall be made out of the weekly receipts), and
there you have all the capital required for a business,
which, if the future shall realize a tithe of the hopes
and fair expectations founded on the past, will eclipse
the most splendid of all other commercial enterprises.
For ihese reasons, I conclude that, so long as the same
powers, as to maximum charges and other restrictions are
continued, the rent which might fairly be expected for a
lease of not less than fourteen years, would be fully equal
to the net annual income of the lines included in the lease
at the time when they became public property ; and I have
before stated, that the large profits which would in such a
case remain in the hands of Government, would serve as a
guarantee fund, to be applied, if necessary, towards any
loss occasioned by such reductions as might be stipulated
by the terms of the lease. But all past experience tends
to show that any such reductions, if gradually and judi¬
ciously introduced, are in a very short time compensated
by the increase of traffic; and it would therefore be de¬
sirable that whenever any considerable reductions were
51
enforced, and any consequent diminution of rent should
be allowed, the period of the lease should be contracted
to ten or even seven years.
Perhaps the best practical guide for ascertaining the
soundness of these conclusions, which I am quite aware
are, as I may say, the pivot upon which the whole scheme
turns, would be to obtain some evidence from Railway
Managers and Boards, in answer to one plain question.
Let it be supposed that, on any given line, every thing
should ^remain on precisely its present footing up to
a certain" day on which the whole undertaking should
cease to belong to its present owners ; I ask, would there,
or would there not, be a sufficient inducement to them to
continue in the management and direction of that line, on
condition of paying over to its new owners the full annual
value, ascertained from an average of three past years, and
reserving for themselves all the surplus profits derived from
the sources I have above indicated, with the certainty of
freedom from all further interference, either by the Legis¬
lature or by other rival companies, and the free enjoyment
of all the advantages and privileges under which the pre¬
vious result had been attained ? If the answer to this
question would, as I imagine it must, be in the affirmative,
I contend that the whole case is proved, and the difficulties
of detail are only minor matters, which would require but
moderate examination to be overcome.
One of the most intricate would be the case of any
undertaking executed under guarantee by neighbouring
lines. It would demand a more detailed plan than is con¬
sistent with the scope of such an outline as this, to enter
fully upon every imaginary case that might occur. But
it is clear that any guaranteed income would require to be
reduced in the same proportion as that of the lines on
52
which it was dependent, and that the deficiency (if any
such there were) to meet that reduced income on the
guaranteed line, must be deducted from the value of those
lines which had entered into the engagement. But neither
in this case, nor in any other, should the Government enter
into possession of a line until it had been opened and its
value and price ascertained by the actual working under
the present ownership and management, for such a term of
years as might be required to indkate the true result.
Conditions and Mode of Construction of New Lines.
We may now proceed to consider the mode in which
any extensions of the lines already sanctioned should be
undertaken, the powers, conditions, and restrictions under
which new lines should be authorized. Adhering strictly
to the rule, that no risk of loss or responsibility of actual
superintendence, either of working or construction, should
be incurred by the Government, there will appear but
little difficulty in this part of the scheme now proposed.
In fact, one great object of the whole is to facilitate
and simplify the extension of the system, and to secure
the selection of the best lines for its completion, without
regard either to the interests or influence of individual
landowners, or the rival efforts of competing companies,
and, at the same time, to remove those causes of mis¬
management, litigation, and expen.se, which so strongly
characterize the progress of Railways up to this time.
In accordance with the apportionment of districts and sys¬
tems of lines to be included in the several occupations of
tenants under Government, it would be the duty of a central
Government Board, acting with the advice and upon the
53
surveys of engineers especially employed for that purpose,
to lay down a complete plan for all future lines and
branches appearing absolutely requisite to the general
system, and these might be separated into so many
divisions, marked as being more or less urgently required,
as they should think proper. They would then declare
what portion of such lines should be executed first, and
appoint a time for their completion, and annexing thereto
such powers and conditions as were calculated to make
the new lines efläcient members of the systems or leases
to which they would respectively belong, after their
ultimate reversion to the State, would offer them to public
competition for construction and management during a
given number of years, after which they would revert to
the Government in the same manner as those hitherto
sanctioned, viz., at a price in Government stock calculated
on their then annual net value. The point on which com¬
petition would take place would, of course, be the pro¬
portion of stock which, at the expiration of the term of
occupancy, would be granted to the shareholders in lieu
of their dividends, and the term fixed would be such as
to bring it into the hands of the Government at the same
time with the particular system of lines in connection
with which the new line could be most advantageously
and conveniently worked. As for mere branches, and
such short lines as would bç too insignificant to form
the subject of a separate tenancy for such a term, their
construction ought to be included in the conditions under
which the main lines or districts were allotted under any
lease.
The entire control as to selection, gradual progress and
completion of all new lines would thus rest with the
Government Board ; and after what has been said, I trust
54
it would be unnecessary to point out how many difficulties
and objections, inherent in the present system, would be
altogether removed. The public mind would be relieved
from the railway mania which has so long agitated all
classes, and would return to the pursuits of ordinary
business, undisturbed by those visions of sudden and
unearned wealth, which have unsettled the usually firm
and sober intellects of English capitalists.
Conclusion.
Having pointed out the chief defects of the present
system of Railways, both as to legislation, and its effect
upon their progress, cost, and efficiency, and having re¬
ferred to that which may be viewed as their great defect in
principle, which alone can justify (if anything can justify)
the perpetual interference with their management and
profits, and that " rigorous control " and restriction over
private enterprise, now sought to be established by the Bill
introduced by the Chief Commissioner of Railways—the
defect, namely, that Railways are " practical monopolies
I have followed out the course of argument to its legiti¬
mate conclusion, by showing that the most direct means
of applying a remedy to existing abuses, bringing into
action the principle of com^tition on behalf of the public,
and at the same time leaving private enterprize unfettered,
are to be found in the purchase of all the existing Rail¬
ways by the Government, and the completion of the sys¬
tem by lines and branches laid out under^the immediate
direction and control of a Government Board.
I am quite aware, that it would have been easy to have
exhibited those abuses and defects at much greater length.
55
and thus made, peihaps, a stronger impression of the
necessity of a radical change ; but it is sufficient for my
purpose to indicate their nature and tendency, leaving it
to those who take an interest in the subject to supply par¬
ticular instances from their own individual experience. If
I am correct in my conclusions, I must again repeat that it
will be no answer to my argument to find fault with the
meanswhich I have suggestedforcarryingthemintopractice.
These I have offered, first, because my case would be ob¬
viously incomplete without them ; secondly, as a ground¬
work for dicussion by those who admit the justice of my ar¬
guments, yet hesitate to aecept them, merely on account
of the difficulty of their practical application ; and, lastly,
because I am strongly convinced, after long consideration
of the subject, that this resumption of our public roads,
" necessary to a people as the air they breathe," and their
conversion into national properly, may be effected with¬
out injustice to the present proprietors, with perfect safety
to the State, so far as the finances are concerned, and
with a certain prospect of large and permanent advantage
to our resources, concurrently with a gradual reduction in
the cost of transit throughout the kingdom.
If the extent of liability be objected, I answer, that this
is not greater, in proportion to our means, than was under¬
taken by other countries, Belgium for instance, at a time
when their result was by no means so certain, and the
prospect of return remote, instead of immediate—that the
success and permanent security of Railways is an estab¬
lished fact, whose acknowledgment forms the only vindi¬
cation of the control now proposed to be exercised over
them by the Government ; and that, so far from shaking
public confidence, either in the public funds or in Railway
property, or creating any embarrassment in the money
market, this would be a measure calculated to increase
- 5d
the public confidence in the resources of the State, to
consolidate and secure Railway property, and to set free
a large amount of capital now engaged in those under¬
takings, by thus opening large additional means of in¬
vestment for trustees, savings banks, and such other
guardians of property as are fiow precluded from avail¬
ing themselves of Railway securities.
I have abstained from any statement of the present
revenue or calculation of the future annual income of
Railways in operation, or in course of construction, be¬
cause the former would be of course only a partial, and
the latter an entirely'conjectural basis, on which to ground
any deductions as to the amount of stock to be ultimately
created for this purpose.
POSTSCRIPT.
I cannot quit the subject of " Government Railroads," without
saying a few words on Lord George Bentinck's measure pro¬
posing the completion of the Railways in Ireland, now at a stand
for want of funds, by means of Government loans. Besides the
financial objections to this measure, it appears to me that it was
defective in making no provision for the future reversion of all
tliose lines on which the public money should have been so
largely advanced into the hands of the State, and that by adopt¬
ing a course similar in principle to that which I have suggested
for the formation of new lines in England, a considerable part
even of the financial difficulty might have been avoided. In all
cases where the amount expended by the Shareholders did not
exceed one-third, or even one-half of the whole capital (while
57
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they are still precluded by their Act of Parliament from borrowing
money on mortgage) and where the Commissioners should have
recommended an advance of public money sufficient to complete
the undertaking, the first condition should have been an absolute
surrender of their powers to the State, with a stipulation that
the amount already expended should remain as a lien upon the
property, the interest of which should be discharged out of the in¬
come, after satisfying the prior claim of interest on the Government
expenditure. To those whose money, already expended upon
those works, is suspended in a state of hopeless inactivity from
their confessed inability either to complete the lines themselves
or to borrow the money for that purpose, and whose prospect of
a profitable return is thus deferred sine die, it would surely have
been a sufficient boon to have offered if the Government had
at once taken up the lines, and engaging to find the funds re¬
quired for their completion, had proceeded to lease them for
construction and working during a certain number of years, in the
same manner as I have proposed for new lines in England, re¬
serving as rent a yearly sum equal to the interest of the
money so advanced by the State, together with the interest
calculated at a fair rate (5 per cent, for instance) upon
the previous expenditure of the present shareholders. At
the expiration of the term they would of course revert wholly
to the Government as absolute owners, subject only to the
charge for interest to the present shareholders, which would be
then converted into Government stock, on the same prin¬
ciple as that above laid down for English dividends. Con¬
sidering that they would receive an immediate benefit, by
being extricated from embarrassment, so far as this un¬
productive expenditure is concerned, and that Ireland would
derive the present employment of large numbers of her people,
and the prospective advantage of a complete and efficient
system of railroads in a much shorter time than can possibly be
hoped by private enterprise, it would not, I think, be un¬
fair, either to the shareholders as individuals, or to them collec-
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58
tively as interested in the prosperity of their country, for the
Government at once to resume those useless powers which have
been granted, and to carry out the work upon such terms as
I have suggested. And here occurs another question, whether, in
granting such a lease for the completion of an Irish railway,
some stipulation might not be introduced for the new tenants
under Government to provide a portion of the remaining capital
required, so as to lighten the burden to the State, and thus
enable the Government to provide more effectively, and to
a greater extent with the same means, for the employment of the
Irish people? It is obvious that some fair arrangement might thus
be made, which would have had the effect of bringing all the lines
upon which the public money had been expended into the hands of
Government, on more moderate terms than those proposed by Lord
G. Bentinck, under whose scheme any increase of income, suffi¬
cient to pay only 1 per cent, above the ordinary rate of interest
upon the whole capital of the line cited by him as an example,
(where only one-third of the whole amount had hitherto been
raised) would in fact, by means of this advance by Government
of two-thirds of the outlay at a low rate of interest, return more
than 3 per cent profit (beyond the interest of their money) to
the fortunate Irish shareholders.
But, on whatever terms, it is clear that an opportunity was
thus offered of bringing at once into action in Ireland that prin¬
ciple for which I have been contending, the gradual absorption
of the Railways in that country into public property, an
opportunity which, in my opinion, ought by no means to have
been overlooked.
JUL 1 1"15
London : Printed by W* Marshall, 31, Edgware Boad.