1 JANUARY 1910, Page 13

THE CANALS COMMISSION. T HE Report of the Royal Commission on

Canals and Inland Navigation, which was published this week, .13 a most interesting, we might almost say a fascinating, Document. Where is the man with soul so dull that his fancy would not be engaged by the possibility of reopening to the full range of national traffic the great inland water- ways which have so long lain comparatively idle ? Econo- mists of every school will be agreed on this : that they would like to see these waterways once again playing as important a part as a means of transport as they did at the end of the eighteenth and the beginning of the nine- teenth centuries.. But when we come to the practical question of how this regeneration is to be effected there are bound to be acute differences of opinion. Some people no doubt will think it quite enough to say that the State could. revive the canals if it liked, and that there- fore the State ought to do it. We, who profess to be as much attracted as any one could. be by the idea of having every part of England accessible to water-borne traffic at a cheap rate, and who recognise fully that it would be a thousand pities not to use a system of water- ways which are actually in existence and are from every point of view a great national asset, still hold that we must restrain our sentimental prepossessions and examine the matter severely as a business proposal. We must put to ourselves the brutally plain question : Will it pay ? We must say at once that if the only condition on which it would be possible to rehabilitate the canals were proved to be a, very considerable expenditure by the State—an expenditure on which the return would be doubtful, which might not be counterbalanced by the improvement in trade, and which in effect would be an interference by the State in the domain of private enterprise and a virtual subsidising of one kind of trade at the expense of another— we should reluctantly be compelled to oppose any proposal of the sort. We think it quite conceivable that much might be done for the canals on other conditions. We do not venture to dogmatise on this most difficult question, but such suggestions and comments as we have to make will appear in their natural order when we examine the Report of the Commission. The history of artificial canals, as distinguished from the mere improvement of rivers, begins with the construction of the Duke of Bridgewater's Canal from Worsley to Manchester. From 1761 to 1830 there was a feverish period of canal-building, which was checked only by the application of steam to locomotive engines and the arrival of the railway epoch. The total mileage of usable water- ways, including rivers and canals, in England and Wales is now about three thousand six hundred and thirty-nine miles. Since 1830 the use of these waterways has not only not developed, but has notoriously diminished. Long-distance traffic by water has become quite insignifi- cant in amount. But meanwhile a curiously different phenomenon has been observable on the Continent. Mr. W. Lindley, an English engineer of much European experi- ence, who is an enthusiast on canals, and gave his profes- sional services free to the Commission, has written an admirable Report on this subject. In France, Belgium, and Germany large sums have been expended by the State, and water-borne inland traffic has practically kept abreast of the railway- traffic. There is no sign of any slackening in the development of these schemes. As one of our British Consular Reports says, " the Germans consider that in the great commercial struggle of to-day the agriculture and industry of those nations will be best equipped for the combat whose conditions of production owing to cheapness of transport are most favourable." Nobody could dissent from that principle as such, but it is to be noted that in France, Belgium, and Germany the whole waterway system is under the direct administration of the Central Government:. Herein lies a marked and initial difference between _the conditions abroad and in Great Britain. There the waterways are worked_ in sympathetic conjunction with railways which are for the most part State-owned. Here we hope that the railways will long continue to be worked under the healthy competitive influences of private enter- prise, and we confess that so long as that remains it will be impossible to draw any exact analogy from Continental experience. But that is not the only difference between ourselves and the rest of Europe. There is also a geographical difference. Our insular position makes it possible for imports from foreign countries to be landed very much nearer to their destination than the points of disembarkation are to a great many of the large towns of France, Germany, and Belgium. In England waterways, with the exception of a few rivers, have never received assistance from the State or from local taxation. In Ireland assistance has occasionally been given by grant or loan, and in Scotland the Caledonian Canal is national property. English canals were constructed by private companies, and as no amalgamation on a large scale has taken place, the owners of canals are a diverse and dis- united class. In the early part of the railway era the railway companies bought up a considerable portion of the canals in order to abate competition. The Commission points out that if the railway companies possessed water- ways conterminous with their lines, they might use the water freely for slow and heavy traffic ; but as it is, they do not use them seriously, and are not concerned to do anything more than discharge their mere obligations of upkeep. And of course the railway companies would have no monopoly of carrying by water, even if they wished to develop this side of their traffic. They are mere toll-takers. It is therefore only fair to admit that it has been quite natural for the railway companies not to pay very much attention to the canals. As to the independent canal companies, they have hardly been able to keep their heads above water, and in most cases their property has deteriorated. The total net revenue of the waterways irt, declining, and among the investing public there has long been a complete lack of faith in the future of canals.

On this state of affairs two remarks may be made. One is that the prosperity of canals would not necessarily mean, as is sometimes assumed, a reduced prosperity for the railways. Cheap and easy transit by water would be a great impetus to trade, and all carrying companies would profit by such an impetus. It is one of the chief heresies of Protectionist economists that the success of your competitor means the failure of yourself. The second remark which ought to be made is that the failure of private enterprise in canals is perfectly explicable, and that, like most explicable failures, it could probably be modified, if it could not be ended. The canals came into existence under an utterly haphazard system, and this system was petrified by the brilliant inauguration of the railway era. The canal companies, all at sixes and sevens, and almost wholly inarticulate, have remained in what the Commission calls " a position of arrested development." The chief practical symptom of all this is the absence of standardisation. You can start a truck of goods on any railway in England and it can travel over the lines of all the other 'companies without the least difficulty because they are all built to the same gauge. In the case of canals it is quite otherwise. Barges which navigate one waterway are unable to pass the locks and bridges of other waterways, and thus " through " traffic is out of the question. The conclusion of the whole matter is that the Commission is convinced that private enterprise cannot be expected to take the improvement of canals in hand because there is no prospect of adequate remuneration. Abroad canal-tolls are either absent or very small, whereas in England the canal companies depend upon their tolls for revenue ; yet while the tolls are retained at their present figure the traffic of the canals is unlikely to increase. The Commission has not recommended State-aid without a struggle. It examines the argument that manu- factures ought to be produced at places where the natural conditions are most favourable ; that under modern con- ditions it is impossible artificially to revive the canals in order to feed the Midland industrial centres with raw materials at a cheap rate ; and that even if this artificial process were undertaken, the manufacturing districts nearer the coast would always have the advantage, and the money spent on the canals would be in any case thrown away. But the Commission rejects these arguments :- " The reply to these objections is, in our opinion, that although, from an abstract economic point of view, it might make no difference to the country at large whether works remained in the Midlands or migrated to places more suited to existing conditions, such a vast dislocation of industry would in practice be attended by so much waste and loss, and so much suffering to the working classes, that., if the State can do anything, with reasonable consideration for all the interests involved, to prevent or to moderate the process, such steps should be taken. It is obvious that the process might take the form, not of removal of the works to the sea-coast, but of the closing down of the works altogether, and the emigration of the floating capital now engaged in them to other parts of the world, to which the labour engaged in them could not follow it. It may fairly be held that the State is concerned in ensuring to its citizens by its own action, if private enterprise fails to accomplish this end, the best and most economic modes of transport, so that industry and commerce may be carried on as effectively as possible, especially in view of tho strong competition now taking place in tho markets of the world. The coalfields of the Midlands give facilities for manufacturing which should be utilised to the utmost. Even if new industries and manufactories tend to establish themselves on the coast, rather than in the interior, it appears to be desirable that those now existing in the interior districts should be saved from the uprooting which apparently threatens them, if that saving can be effected by sound measures which will effectively reduce the rates of transport."

These words are perhaps the most important in the Report, for they are the underlying principle on which the majority have made their recommendations. From this principle, as such, we must wholly dissent. The canals have so long been comparatively idle that we cannot bring ourselves to believe in the vast dislocation of industry which the Commission foresees as the result of a starved canal service. Nor do we admit that the State should ensure its citizens the best and most economic modes of transport so that the stern conditions of modern competition may be met. This is simply, under one of its numerous aliases, the old delusion that the State knows how to spend money on behalf of its citizens better than the citizens know themselves. If water-borne traffic between inland towns and the coast would pay, is it not likely that private enter- prise, always anxious to turn new capital to account, would seize the opportunity ? If it can be proved to the various members of a disunited class of owners that their capital already sunk in canals could be made remunerative, is it inconceivable that by State suggestion, or by State help to a reasonable extent, they could be induced to create a thorough scheme which would put into their pockets the money said to be waiting for them ? The argument we have quoted would end logically, not only in the purchase of the canals, but in the nationalisation of the railways. The Majority Report recommends that a central Waterway Board should be formed, consisting of three or five Com- missioners, and that this Board should control all the State-owned waterways. As the Development Scheme proposed by the present Government contemplates "the construction and improvement of inland navigation," the Report suggests that part of the functions of the Waterway Board might be vested in the Development Commissioners. To begin with, the Waterway Board would have the control of what is known as " the Cross,"—the network of water- ways which join the Humber, the Mersey, the Severn, and the Thames with the Midlands. When the Board thought that other canals ought to be acquired, it would have power to submit the necessary proposals to Parliament. It is calculated that the improvements required on the four great lines of " the Cross " would cost £17,500,000, and the annual expenditure would be increased to £1,098,000. To meet that there would be an existing revenue of only £567,000.

We cannot help confessing to have read this Report, interesting and exceptionally well written though it is, with some disappointment. As we said at the beginning, there is no exact analogy from Continental experience, as abroad nearly all the railways are State-owned. The fact that railways are not State-owned here is surely an essentially distinguishing fact, and yet, as a few members of the Commission point out, very little attention has been bestowed on the probable effect of having State-owned canals alongside privately owned railways. The whole canal question is so complicated that a most careful examination of the evidence now placed before us will be necessary before we can hope to penetrate the obscurity. It would be ridiculous to pretend to have a ready-made scheme. We still trust that it may be possible to bring into common and easy use once more a system of transport which has the enormous preliminary advantage of being in existence. But we could not possibly approve the vague estimate which the Commission has offered of the profit and loss account of acquiring the canals. Let us express, however, our belief that if Mr. Asquith's Development Scheme should ever come into being, and the State should decide for Englishmen how they ought to spend their money in order best to secure their material advancement, public money would be spent less disadvantageously on the rescue of canals from their present decay than on ahnost any object on which the money would be likely to be lavished.