same period the decrease in the net profit was 73 per cent., while the operating ratio reached the enormous figure of 95 per cent.

CONCLUSIONS

1. The purchase of the Western Railway was a political measure, designed to conciliate the Socialists. 2. Presented in the light of an operation that would cost the state nothing, an "opération blanche," it has wrought serious harm to the state. The sole beneficiaries have been the stockholders of the Western company.

3. The employees of the state railway instituted a strike, and their exactions have resulted in increased expenses, which have not been offset by improvements in the service.

4. The issue of state railway bonds at 4 per cent. has caused a fall in 3 per cent. rentes.

5. The operating costs are even higher on the old state system than on the newly acquired Western line.

CHAPTER IX

PUBLIC VS. PRIVATE OPERATION

Public vs. Private Initiative.-Extent of Railroad Lines Operated by the States and by the Companies.-Operating Ratios.-Government

Profits.-Reduction

of

Rates in Great Britain.-Difficulties in Fixing Responsibility in State Railway Operations.

The advocates of State Socialism say with admirable assurance: "Wherever private initiative has proved inadequate the state must step in."

Has the spirit of initiative been lacking in private management of railways? Private companies have been forced to struggle for a long time against government opposition, but to-day, although Prussia is a flat country, where not a single tunnel is to be found, and where the lines are much easier to construct than in Great Britain, the British have a system of more than 19 miles per 100 square miles, while the Prussian system has only 16 miles, or II per cent. less.

Did the United States government build the daring lines which have joined the two oceans?

Edwin Pratt, in his Railways and Nationalization, has demonstrated that private companies possessed more than 69 per cent. of the entire length of line of the existing railways in 1908.1 And, following a seRailways and Nationalization, by Edwin A. Pratt, 1908.

1

ries of debates with German publications, he brought his figures up to date in the London Times, of October 1, 1912. Here they are:

Thus, over two-thirds of the railways of the world belong to private companies. Moreover, of the 24,500 miles of railway belonging to the state of British India, 18,000 miles are operated by private companies. In Holland all the lines are operated by companies. In Belgium the tramway lines are longer than the state railways, and they are operated by private companies. Lines in Great Britain, which have three, four, or even more tracks, are included in these figures on the line and not the track basis. The total length of line is 23,287 miles. The length of main track, however, is 39,851 miles, and of main track and sidings, 54,311 miles.

The greatest system in the world, that of the United States, is owned by private companies. Mr. Bryan, on returning from Europe in 1903, introduced nationalization of railways into his platform, without informing any of the members of the Democratic party of his intention. This brilliant inspiration helped to destroy his chances for the presidency. The operating ratios suffice to show that superior

administrative capacity is not to be found on the side of the several states which exercise it in this direction.

We have seen that the state railways of Prussia have yielded revenue to the state budget. But in Belgium, Italy, Austria, and Hungary they have only been a burden. The partisans of socialized railways in France have neglected to tell us what the French government railways have contributed to the state.

In the various countries state railways are exempt from general taxation. The amount, however, that would be collected from them were they private enterprises should, in all justice, be added to their expense account. In France passengers and shippers upon the state railway lines are taxed for speed. They pay a stamp tax on baggage and other receipts, and way bills, taxes upon vouchers, and custom duties on pit coal. The saving resulting from economies in transportation, as given in the following table, are reckoned, and with reason, among government profits:

Old system

System bought from the Western company 41,422,500

Total

10,511,900 fr.

51,934,400 fr.

The following sums represent the contributions made by the French (private) railway companies to

This burden per kilometer is a very heavy one.

Such contributions to the state are not to be despised, and, in any comparison between the profits per kilometer of the government railways and those of the railways operated by French companies, they should be taken into account.