Edwin A. Pratt

“ Judging from the example of the Prussian State Railway administration it is extremely doubtful if, had the British railway system been constructed, owned and operated by the State, instead of being left to private enterprise, any responsible Chancellor of the Exchequer would have authorised so great a degree of expenditure, in the interests of an absolute perfection of construction under all possible conditions, as that which has been forced upon commercial companies dependent for their capital on the money they could raise from investors. ”

“ Economic considerations, again, apart altogether from those monopolistic tendencies on the fear of which the policy of the State had been founded, were quite sufficient to account for the absorption of one company by another, and especially of small companies by larger ones, not so much to avoid competition as to ensure the provision of through routes operated under one and the same management, involving less outlay on working expenses, and providing greater advantages to the public than if the same length of line belonged to a number of different companies. ”

“ The desirability of reducing the risk of railway accidents to an absolute minimum is beyond the range of all possible dispute. Yet, as a matter of detail, the substantial cost of ensuring this all-important element of safety, no less than the exceptionally heavy outlay on the lines themselves, has helped still further to increase that capital expenditure a return on which is only to be secured by the investors from the revenue the companies can get from the railway users. ”

“ If the Great Eastern did not take people to East-coast resorts at reasonable rates, or if the Great Western charged excessive fares for the journey to Cornwall, holiday-makers would, in each case, go elsewhere. If either company, or any other company, sought to get too much for carrying milk to London, milk would be obtained by the metropolitan dealers from other districts, instead; and so on with most other commodities.
Indirect competition, on sound economic lines, may, therefore, still exist even when a railway company is, after many amalgamations, in the possession of an apparent monopoly. ”

“ There are still various small and even diminutive companies which have escaped the fate of being swallowed up by their big neighbours. One of the smallest engaged in a general traffic—as distinct from dock or mineral lines—is the Easingwold railway, Yorkshire, which connects with the North-Eastern at Alne, but still maintains an independent existence. According to the Board of Trade Returns for 1910 the Easingwold Railway consists of two miles of line, or three miles if we include sidings, and it owns one locomotive, two carriages for the conveyance of passengers and one goods waggon. ”

“ The advent of the new means of transport was, in fact, marked by the complete absence of any centralised effort with a view to securing the network of a railway system, so planned or so co-ordinated as to make the best possible provision for the country as a whole, and especially for the rapidly increasing necessities of trade, commerce and industry. ”

“ The Committee entertain very strongly the opinion that in the future proceedings of Parliament railway schemes ought not to be regarded as merely projects of local improvement, but that each new line should be viewed as a member of a great system of communication, binding together the various districts of the country with a closeness and intimacy of relation in many respects heretofore unknown. ”

“ The capital sunk alike in obtaining a railway Act, in acquiring and adapting land, with provision of embankments, cuttings, viaducts, bridges, tunnels, etc., for the railway lines, and in supplying the various necessary appurtenances, railway stations, and so on, was irredeemable, since, in the case of failure of the line, due to competition or otherwise, the capital invested could not be realised again, the land, rails, buildings, etc., on which it had been spent being of little or no value for other than railway purposes. ”

“ By an inconceivable want of statesmanlike views and foresight, no effort was made to connect the isolated railways which then existed by new links into one great and combined system in the form in which they would be most subservient to the wants of the community and to the great ends of domestic government and national defence. ”

“ That the conveniences of travel and the advantages to traders have been greatly enhanced by the substitution of these few great companies for a large number of small ones is beyond question, and actual experience has shown that the fears of grave evils resulting from prospective abuses of the railway "monopoly" brought about by amalgamations such as these have been mainly imaginary, notwithstanding the fact that they have formed the basis of so much of the policy of the State in its dealings with the railways. ”

“ The laissez faire system which is pursued in this country to such an extent that it has become an axiom with the Government to undertake nothing and to interfere with nothing which can be accomplished by individual enterprise, or by the associated means of private parties has been pregnant with great loss and inconvenience to the country in carrying forward the railway system. ”

“ At first it was assumed that competition in rail transport would be assured, and the dangers in question proportionately reduced, by different carriers using their own locomotives, coaches and carriages on the railway lines, which alone, it was thought, would be owned by the railway companies constructing them. In some of the earlier railway Acts there was even a provision that the railway companies could lease their tolls, as turnpike trustees were doing. ”

“ The Royal Commission of 1865 summed up the position thus:—"No sooner were railways worked on a large scale with locomotive power than it was found impracticable for the general public to use the line with carriages and engines, and railway companies were compelled to embark in the business of common carriers on their own line, and conduct the whole operations." ”

“ Whilst the State was thus maintaining its own policy of competition, the railway companies were equally persistent in keeping to their policy of amalgamation; so that, as the Joint Committee of 1872 remarked, "A new line was sure sooner or later to join the combination of existing railways, and to make common cause with them."
Practical railway experience was showing that the ordinary ideas of competition, as regarded commercial undertakings in general, did not and could not be made to apply to railways beyond a certain point. ”

“ No man knows better than yourself that these works, if they are at all likely to be beneficial to the nation—which everyone in his sober senses admits—will form a great and brilliant era in its prosperity. ”

“ A railway company which controls, or practically controls, the traffic in a certain section of the country is especially interested in developing that traffic because it will enjoy all the advantages thereof, without having to share them with a rival. ”

“ As regards the revision of rates, no Government would undertake to try experiments in reducing rates on an independent company whose income they must guarantee; and efficient or economical administration could scarcely be expected from a railway company whose rates were cut down and whose dividend at ten per cent was guaranteed by Government. ”

“ Five specific grievances were dealt with, and the first of these was "The Tendency of Parliament to concede competing or otherwise unnecessary lines." Under this head the memorialists state:—
"It is not our desire that the railway system should be legislatively restricted within its present limits, or that existing shareholders should by any process whatever be nominally or practically gifted with a monopoly of the means of railway transit. We should submit to the introduction of new lines of railway wherever called for by absolute public necessity.... ”

“ The Great Western had remonstrated with the President and the Vice-President of the Board of Trade, and, left to their own resources, they had been compelled, in self-defence, to look after their own interests by getting hold of all the rival or contemplated rival schemes. ”

“ As regarded railways sanctioned in the Session of 1844, or subsequently thereto, it was enacted that after the lapse of fifteen years the Treasury might acquire them for twenty-five years' purchase of the average annual profits for the preceding three years; but if those profits were less than ten per cent, the amount was to be settled by arbitration. It was further enacted that no railway less than five miles in length should be bought; that no branch should be acquired without purchase of the entire railway; that the policy of revision or purchase was not to be prejudiced by the Act ”

“ Comparisons with other countries may be misleading unless we remember that published statistics as to the cost of construction of the world's railways apply to route mileage—or, otherwise, "length of line"—and that the English lines have a large proportion of double, treble and other multiple track, while in more sparsely populated countries the railways, except in and around the large towns, consist to a far larger extent of single track. ”

“ Within two years of the opening of the Liverpool and Manchester line, a tax of one-eighth of a penny per mile for every passenger conveyed on the railway was imposed, and the directors of the Liverpool and Manchester, then struggling into existence, announced that, in consequence of the tax, they would be obliged to charge the public higher fares. ”

“ If this course had been adopted before any of the numerous projects were brought forward for the construction of lines of railway between all imaginable places, and if it had been laid down as a rule by the legislature that no such projected line could be sanctioned or even entertained by Parliament which was not in accordance with the reports and recommendations of the Government engineers, the saving of money would have been immense. The expensive contests between rival companies in which large capitals had been so needlessly sunk would then have been wholly avoided ”

“ How the ultimate result of railway policy, as here described, has been to bring about the creation of great systems out of small ones may be seen from the following typical examples, showing in each case the number of lesser companies absorbed, leased or worked as the result of amalgamations, of leases in perpetuity, or otherwise ”

“ Apart from a feeling of jealousy entertained by members in general and Private Bill Committees in particular towards any curtailment of their powers, privileges and functions by departmental officials, experience had shown that the Private Bill Committees, after examining witnesses, getting expert testimony and hearing counsel, were better able to ascertain the facts of particular schemes than the special department, while the latter had lost credit, also, on account of its recommendations in regard to amalgamations. ”

“ The possession of the best, or, it may be, the only practicable line, and the vast capital required for the formation of new canals, have enabled the associations in question, unchecked by competition, to maintain rates of charges which have realised enormous profits for a long series of years. ”

“ Apart, in fact, from any question as to expenditure on Parliamentary proceedings and on the acquiring of land, the cost simply of building the railway itself has, generally speaking, been far greater in this country than, under corresponding geographical and traffic conditions, has been the case elsewhere. ”

“ Among the conclusions at which the Committee arrived were the following:—
"Past amalgamations have not brought with them the evils which were anticipated."
"Competition between railways exists only to a limited extent, and cannot be maintained by legislation."
"Combination between railway companies is increasing and is likely to increase, whether by amalgamation or otherwise." ”

“ When we look for the ultimate and combined results of the various conditions touched upon in this and the preceding chapter—excessive cost of land, abnormal expenditure on Parliamentary proceedings and various aspects of State policy and control—we find them in the fact that, whether or not the British railways are really the best in the world, they have certainly been the most costly. ”

“ In January, 1846, in his place in Parliament he had predicted the results if some steps were not at once adopted to put a curb upon reckless speculation; but most unfortunately for all parties that was not the view which was taken by the House of Commons. Mr Hudson and other gentlemen maintained that the course he recommended would be an unfair interference with private enterprise, and the consequence was that schemes involving altogether the sum of £125,000,000 passed through the Legislature in that year. ”

“ Rather, I believe, by the intolerable and vexatious oppositions permitted in passing the bills, have been the cause of spending many hundred thousands, which, like another national debt, will prey to the end of time on the vitals of public industry. ”