STATE-OWNED RAILWAYS.

Dominion, Volume 2, Issue 465, 25 March 1909, Page 4

STATE-OWNED RAILWAYS.

The encouragement which the suspicion of Ministerial approval has given to the advocates of railway nationalisation in Great Britain has brought the question of State ownership of railways into the forefront of current topics. As a result, an extensive literature is growing up around the subject, from which many profitable lessons may bo learned by this country. One of the most useful contributions to the question is a report issued bv the British Board of Trade, from which Me. C. S. Vesey Beown has compiled for Gassier's Magazine a table showing at a glance the financial working of all the State-owned railways in the world. The results, as might be expected, are diverse in the extreme. The ratio of working expenses to revenue ranges from 3G.9 per cent, in the case of Siam to 370 per cent, on the Donna' Christina railway in Brazil! The revenue per mile on the Donna Christina section is only £93, as against £3902'0n the Belgian lines. Such sharp contrasts as these cannot possibly be duo to differences in the methods of management; they are chiefly duo to differences in the conditions encountered. In Belgium, for example—where the ratio of expenses to revenue is G3 per cent.—the management might bo bad and wasteful. It could easily bo bad, and yet show fine results, seeing that the country is the richest in the world from the railway point of view, as the high revenue per mile clearly shows. The length of the Belgian system (2-190 miles in the year 1905) is practically the same as that of our own railways (2471 on March 31 last), but the Belgian lines earn £9,7i5,073 against our £2,761,938, and in 1905 they paid £3,333,790 in interest, repaid £5-19,322 of capital, and wound up with a profit of £372,572.

For purposes of comparison with New Zealand, we cannot make many selections outside the Empire. The State lines in British India cost £252,190,195, and in 1905, owing to the economical methods of working—the expenses ratio was <17 per cent.—they yielded a gross profit of £ti,965,010, of which £9,G15,.177 was absorbed in interest, leaving a final credit of £2,1)20,1-12. Canada owned 1415 miles of line in 190G, and the management of the State's railways there is notoriously corrupt. As a result the working expenses were 99 per cant, of the revenue, leaving only £12,727 to pay the interest on £]0,099,072 capital. In Australia, as we have often skowu, tho low ratio of expenses

enables most of the lines to pay their way, and leave something over. The conspicuous example of failure is afforded by Tasmania, which alone clings to Ministerial control. While the expenses ratios in Queensland, Victoria, South Australia, and New South Wales in 190 C were respectively SG, 52, SG, and 51 per cent., the ratio in Tasmania, an easily-worked country, was 71 per cent., with the result that the gross profit was less than half the amount required for interest, Our own sad story needs no. repetition here. The lesson from the table given in Cassicr's is that, excepting in such extreme cases as Belgium and Brazil, success or failure depends upon the ratio of working expenses to revenue. Where, as in New Zealand, it is far higher, despite the favourable conditions of the country, than it is in other countries that arc proper for comparison, the result is loss where gain should bo expected.

We are by no means advocates of private ownership of railways. Experience has shown that in private' hands the railNvays of any country can be used against the public interest. Estimating the merit of Slate as against private enterprise, State action is preferable when private action would be the greater evil. But State action can bo made a greater evil than what it is created to cure. It is no better to have State-owned railways when they are managed in the New Zealand style than to have the railways in private hands. State-owned railways can be a very good thing, as in India.' They can he a very good thing, as in New South Wales, when they arc placed beyond the reach of political designs. Mn'. W. M. Acinvoimi, the eminent authority on railroads, states the real issue very well in the Economic Journal. Railway nationalisation, he says, may bo well enough for an autocratic country like Prussia, but it becomes less desirable as the Government "develops in the direction of democracy," and he cites Switzerland on this point. It is interesting to note that Switzerland is not so happy as she is generally represented to be in this respect. Last month British newspapers published an extract from a report by the British Minister to Switzerland, in the course of which it is stated that the railways finances there are going wrong: ''These losses arc not occasioned by a falling off of traffic, but are duo to an abnormal increase of expenditure." We know that disease very well in New Zealand. The chief clanger of a national system of railways, as Professor Gustav Kohn, who is a supporter of nationalisation, points out in the Economic Journal, "is the demand that, owing to its public character, it should bo run at a financial sacrifice, while the responsibilities which the State thus incurs are liable to be overlooked." But that is a danger which can bo guarded against by placing the State's railways under independent management by a Board responsible, not to the Government with its special ends to serve, but to Parliament alone.