Railroads

3919

Railroad*

ulate franchises, prescribe rates, prevent dis-
crimination, regulate accounts and reports,
and in a number of States to supervise the
issue of stocks and bonds. The commission
may invoke judicial processes for the en-
forcement of its orders, and its decisions are,
of course, subject to review by the State
courts in case complaint arises that rates pre-
scribed are unduly low, and therefore confis-
catory. The tendency in recent years has
been for the Interstate Commerce Commis-
sion to gain in power and control at the ex-
pense of the State Commissions, a develop-
ment which has been considerably accentu-
ated by the Transportation Act of 1920.

Other Countries.—Railroads in Great Brit-
ain are privately operated, subject to a gen-
eral system of government supervision much
less elaborate than that of Interstate Com-
merce Commission control in the United
States. The major railroad systems number
only five in number, there having been a
compulsory consolidation of the British rail-
ways shortly after the war. These five sys-
tems are permitted to earn net income
equivalent to that earned in the year 1913,
which is taken as a base because it was the
last normal year before the war and because
it was a year of fairly good earnings. Rate
matters are determined by the Railway Rates
Tribunal composed of representatives of the
railroads, the shippers and the government.

In France both the construction and oper-
ation of private railroads are under the
strict surveillance of the Minister of Public
Works, who has extensive powers of control
over all matters of public safety and over
the commercial and industrial features of
railway development. While he may not
himself fix rates, all rates are subject to his
approval. The actual details of control are
carried out by the several departments of the
Ministry of Public Works.

In Canada a regulative control over both
the 22,500 miles of Dominion-owned 'Canad-
ian National Railways/ operated as a Com-
pany with a Board of Directors appointed
by the Federal Government, and the pri-
vately owned railways of about equal length
is vested in the Canadian Railway Commis-
sion, established in 1903.

Government Ownership of railroads has
attracted wide-spread attention in the past
50 years. Before the Great War, in the coun-
tries of Continental Europe, it had largely
supplanted the older policy of private own-
ership and operation under governmental
regulation and ia Great Britain and the

United States, it has been seriously agitated
as a practical solution of the railroad prob-
lem, and during the Great War government
operation of the privately owned lines was
undertaken as a military measure.

The adoption of government ownership of
railroads is due to various causes. The deter-
mining factor in the case of Prussia and ihe
other German states was military necessity,
although the advantages of a unified railroad
system and a hesitancy of private capital
were given due weight, and similar reasons
led to the policy of state railroads in Russia,
Austria, and Hungary. In Italy, Belgium,
and other of the European countries, the
difficulty of creating private companies with
sufficient capital to undertake the construc-
tion of railroads, and indisposition on the
part of the government to leave the field to
foreign capitalists, played an important part
in the introduction of the policy. The same
lack of private capital and private enter-
prise is mainly responsible for public owner-
ship in Australia, South Africa, and in those
cases where it exists in Spanish America,
though in the case of the Australian states,
as also in Switzerland, an important factor
was the popular belief that under public
ownership the roads would be made better
to subserve public interests.

Belgium was the pioneer country in the
adoption of government construction and
ownership of railroads, Leopold i. having in-
itiated the policy shortly after the country
had won its independence of Holland.

In Germany state railway development
dated from the end of the Franco-Prussian
War and the formation of the Empire.

In Switzerland governmental regulation
was first exercised by the cantons, and was
later transferred to the Federal government.
A referendum taken in 1898 provided for
the purchase of all the lines by the state. In
1860, when Italy became a kingdom, some
of the railroads were publicly and some pri-
vately owned. By 1875 three-fifths of the
mileage had been taken over by the state,
but, state operation having proved unsatis-
factory, the lines were leased in 1885 to
private companies under a plan whereby
earnings and expenses were shared and pro-
vision was made for repurchase by the state.
After a period of serious mismanagement and
poor service the lines were taken back by
the government in 1905.

The agitation in favor of government own-
ership in the United States has been of long
standing and was evident in particularly