RAILWAYS AFTER THE WAR. T HE Edinburgh Review for this quarter
contains as article on " The Future of English Railways," obviously written by some one with internal knowledge. The purpose of the article is to consider in what way the various problems of railway management which have arisen through the exigencies of the war will affect the condition of English railways after the war. The problem of Scotch and Irish railways is also touched upon, but that problem. for obvious reasons, is less extensive. It may be remembered that though all the railways of Great Britain were taken over by the Government as early as August 5th, 1914, the Irish railways were not taken over until December 17th, 1916, and that the taking over was not due to war needs but to the clamour of Irish railway employees.
From the financial point of view the step taken in 1914 represents one of the best bargains that the British Govern- ment have made since the war began. The bargain was very simple in its character. It provided that the State should guarantee to the railway companies concerned the same net revenue as they had enjoyed in the year 1913, and that in return the railway companies should carry Government passengers and goods free of charge. At the same time, in order to facilitate the working of the whole railway system of England and Scotland, a Railway Executive Committee was created composed exclusively cf railway managers. This Committee has very wisely left tho detailed work of managing each line in the hands of the men previously in control. Unfortunately no figures have been published to show the precise results of the working of this system, and the writer in the Edinburgh Review contrasts the reluctance of the British Government to publish figures dealing with a purely financial matter of this kind with the completeness of the returns published by the French Government in connexion with their railway system. There are, however, various indications by which it is possible to infer what the results of the bargain have been. As regards 1915, there is little reason to doubt that, owing to the commercial activity of the country and to the freedom with which most classes of the community spent their money in travelling, the commercial receipts of the railway companies were probably as high as or higher than in any previous year, with the result that the net revenue of 1913 was maintained. Consecjuently the Government in 1915 got all their work done by the railway companies without any cost to the taxpayer. In 1916 the situation was appreciably altered by the increased wages granted to the railway workers. These increases took the form of two separate grants of an additional• five shillings a week. The total increase repre- sented an expenditure of not less than £12,000,000 a year. The writer of the article to which we are referring calculates that, as a result of this increased outgoing, the railways did not earn in 1916 the equivalent of their net revenue in 1913, and that a considerable deficiency would have to be made good by the Treasury. Even so, however, there is no reason to doubt that the bargain made in August. 1914, still remains a good one ; for the railways have been doing, as everybody limows, an enormous amount of work on Government account, and if that work had been paid for on commercial terms it would probably have cost the taxpayer very much more than the guaranteed sum.
But though the arrangement with the railway companies is most satisfactory from the point of view of the Treasury and of the taxpayer, it has created conditions which must be re- adjusted when the war ends. It is sufficient for the moment to Lay stress on the effects produced by the increase in rages. This increased charge of something like £12,000,000 ayear would, as matters now stand, wipe out the greater part of the anns available for paying dividends on ordinary railway stock. In 1913 the total sum thus paid in dividends on ordinary stock was £17,700,000. If £12,000,000 be deducted from this, the available balance will not suffice to pay more than about I per cent. on the ordinary stock of the railway companies. It is hardly necessary to point out that these figures are not by themselves conclusive. If, for example, the railway workers were on economic grounds entitled to the increase of ten shillings a week which has been given to them as a result of political pressure, the shareholders cannot justly complain. i It is the essence of what the Socialists call " profiteering " that the investor takes the risk of being able to buy labour at a price which will yield a profit on his investment. There is little doubt that the lower grades of railway workers were in --the past underpaid, and had a good claim for a rise. Whether the upper grades had any claim at all for the increase granted to them is another matter, but the grant having once been made it cannot easily be withdrawn. Indeed it is quite possible that the railway companies may find their wages-bills still further swollen when the war ends. Therefore, if the companies are to continue to pay anything approaching a reasonable dividend upon the large capital invested, there must be far-reaching reorganization.
This is a situation upon which the State Socialist is certain to seize. He is eager at all costs to extend the sphere of State enterprise, regarding that as a good thing in itself, and Socialists of the Fabian school might even be willing to offer a bribe to railway shareholders in order to induce them to consent to complete expropriation. They would argue that under present conditions the railway shareholder cannot look forward to more than 1 per cent., and that therefore he will profit greatly if he consents to surrender his property in return for Government stock which would yield him 2 per cent. on his original investment. It would be a tempting offer, and a good many holders of ordinary railway stock might conceivably jump at it. What we have to consider is whether such a bargain would be good for the nation as a whole. From that point of view the fatal objection to the proposal is that it would, on the one hand, add a terrific source of corruption to our political system, and, on the other, greatly imperil the finances of the State. No fewer than six hundred thousand voters would be placed upon the paysheets of the National Exchequer, and that Exchequer would at the same time incur a new -liability amounting to not less than £1,000,000,000. To realize what the first fact means it is sufficient to quote an illustration given of the interaction of politics and railway management in Belgium before the war :— " In every country with a democratic constitution politics corrupt the railroad management and the railroad management corrupts politics. Everywhere wages are the sport of politics. They are regulated quite as much by the voting posVer of the employees as by their reasonable sights and their technical qualifications. Belgium offers a locus classicus. One fine day in June, 1912, there were sent out by telephone from the Cabinet of the Mini.ster of Railways orders that a substantial advance in their wages was to bo made to a large number of employees. The *thence was antedated to the previous 1st of January and Was paid that very day. The following day the elections took place. The result, which had been regarded as doubtful, was that the ministerial majority was re-elected."
Turning next to the financial issue, it is unnecessary to look beyond our own country. We have before us the example of the State telegraphs and the State telephones. Both telegraphs and telephones were flourishing financial concerns as long as they were in the hands of private companies. They are now run at a heavy loss by the State. It is true that the Post Office proper yields a large profit, but that is only because the State charges a penny for a service which costs it a halfpenny. Practically every branch of the Post Office work except the letter post is run at a loss. -Yet the work of the Poet Office and of the telegraph and telephone service is simplicity itself compared with the work of the railway 'service. Railway managers must of necessity make all kinds of commercial arrangements with their clients, taking into oecount both the volume of business-, the possibilities of sea competition, and the _possibffities of extension of business in the future. No Government Department has sufficient elasticity of action 'to enable it to undertake such work as this. Inevitably political influence would be brought to bear, in fixing railway rates as well as in fixing railway wages, and the result would be that railway revenue would be sacrificed to political exigencies. The writer in the Edinburgh Review, after illustrating these considerations, briefly sketches out various proposals for reform to meet the necessities which lie ahead of us. His main proposition is that we must abandon the pretence of competition between different railway companies, and divide England into five or six railway districts, each served, as is the case in France, by one railway company. Scotland would make a, district by itself, and presumably Ireland also. This would mean the frank establislunnt of a railway monopoly in each railway district, and of necessity monopolies must be controlled, or at any rate supervised, by the State. The definite suggestion made in the Edinburgh Review (a sug- gestion which has been discussed a good deal in connexion with Indian railways) is that the State should become a shareholder in railway companies or groups of railway com- panies, and as a shareholder should appoint representatives on to the Board of Management. It would thus have some power of control over the management, and would be finan- cially interested in the success of the companies, but political interference would be more difficult than in the case of railways entirely owned and managed by the State. Quite apart from this crucially important question of the future control of our railways, there are the detailed questions of a more economical management. We cannot expect to work our railways so cheaply as they are worked in a country of long runs and heavy loads like the United States but we can undoubtedly do a. great deal to economize rolling-stock and railway labour by a better organization both of the passenger and of the goods services. It is in these directions that the shareholders 'of the railway companies must look to recoup themselves for the necessary increase of expenditure through the raising of railway wages.
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