The record-union., 1891-06-19
THE RAILWAY PROBLEM.
A Question to be Kept Wholly Out
of Politics.
Objections to Government Ownership
and Management of Railroads In
This Country-Joseph Nimmo, Jr..
Writes Strong Letter.

.
Editor Post: In your issue of May
9th there appeared an article favoring
the ownership and management of the
railroads of the United Utates by the Ma
tional Government. / can conceive of
no proposition more revolutionary in its
Tendencies. But the question has been
forced upon the public attention, and it
may be well to discuss it.. In this con-
nection can only state a few of the more
important facts bearing upon the subject.
l. The opinions which have been ex-
pressed in favor of Government owner
ship and management of the railroads are
all characterized by a failure to appre-
hend the overshadowing and all-impor-
ant fact that the commercial and indus
trial forces of the country are much more
potential in determining rates than are
all the railroad managers of the country,
either when acting separately or in con-
cert. Before the age of railroads, each
commercial city of the country had
trade area determined mainly by its
facilities for transportation by water.
Freight charges were then in each case
determined by the conditions of COMPETE
ton which characterized such areas. But
our splendid railroad system has changed
oil tlllS. IL 1ldS l)TONlu6u h IHSdllS OF
transportation vastly superior to water
lines in the possibilities Of collection and
distribution, and now constitutes one
closely connected system of transporta-
ton. Thus the former segregated trade
areas have been broken up. At the same
time the commercial and industrial forces
of the whole country have been brought
into constant and intense competition
with each other. This struggle imposes
restraints upon freight charges which the
railroad manager is powerless to with
stand. In fact it has much more to do
with the determination of freight charges,
and especially relative rates, than any
volition which it is possible for the rail-
road manager or for any traffic aSsocia-
ton to exercise. Under this tightening
grasp of competition freight charges have
falIen on the great trunk lines of the
country to half what they were only thir-
teen years ago.
Government management of the rail-
roads would clearly involve a govern
mental determination of the relative
strength Of the commercial forces of the
country In their constant upheaval and
evolution. The only recourse from this
hopeless task would be general leveling
process under horizontal freight tariffs.
But the people of this free and enlight-
ened country who carry on its produc-
tive and commercial enterprises will sub
NIT to no such despotic interference with
the course of the development of their
industrial interests.
The value of the commodities moved
over the trunk railroads of the country
annually is four or five times the value
of those railroads, including both realty
and equipment. This alone indicates the
overpowering influence of commercial
over transportation forces.
Do not the foregoing facts clearly indi-
cate that the governmental management
of the railroads would involve the gov
ernment management of commerce and
industry? But what man in his senses
would for moment entertain such a
proposition as this?
2. The argument drawn from the sue
cess of the Government in conducting the
postal service is utterly inconclusive as to
the advisability of placing the railroads
under Government management. The
success of the postal service would be i'm
possible were it not for the fact that
private capital and enterprise have pro-
Vided the railroads, and the cars and the
train service. Besides, a hard and fast
leveling statute determines what COM
pensation the railroads shall receive for
the transportation of the mails. Such
power exercised over the agricultural
the manufacturing or the commercial in
terests of this country would create a
revolution within five years. Besides.
the cost of the postal service above postal
receipts during the last twenty years
amounts to SS5, ,535, ,078, an average annual
subvention of 81, ,276, 753. This is well on
the safe side of the rule that the Govern
ment can acquire no interest for profit in
any sort of business enterprise. The
annual cost Of operating the railroads of
the country is eleven times that of con-
ducting the entire postal service. What,
then, would be the amount of taxation
which would be required in order to sub
< hn rlIl lrTo SNff
States? Why, we should be compelled
to restore our war tariff and internal tax
alton In order to meet the new demands
upon the public treasury.
3. Your correspondent infers the sue
cess of Governmental ownership and
control of the railroads of the United
States from the experiences of Australia
That assumption does not bear the slight
est touch of investigation. The con-
struction of railroads in Australia failed
as private enterprise. Then each one of
the five colonies took the matter up sepa-
rately as Governmental enterprises. The
railroad system of each one of these colo
nies has different gauge, and therefore
there is no general Australian railway
system. The various lines have been SO
located as to avoid competition. Railway
competition on the other hand is the pre-
dominant feature of our American rail-
road system. The railroads of Australia
II.
construction has been source of grave
charges OF dishonesty, and their manage
ment IS subject of popular complaint,
especially among the farmers. Freight
charges on the Australian railroads are
much higher than on our American rail
roads. The Australian Colonial Govern
ments have been obliged to place their
roads in the hands of commissioners, or
general managers" as we would style
them, independent of Parliamentary
control. So that the Australian system
is really one Of quasi-governmentalm man
agement. In word, the Government
has been forced TO relieve itself of the re-
sponsibilities attaching to ownership.
But how absurd to compare these
Australian colonial railway systems
none of them embracing more than 8. 600
miles of railroad-with our magnificent
railroad system, embracing l65, 900 miles
OF road, and so differently conditioned.
4. The policy OF governmental owner
ship and management of railroads pre-
walls in certain of the countries of Europe
but only as military measure, and as a
part of the scheme of armament for the
maintenance of the peace of Europe. Be-
sides, the average cost of transportation
on European railroads is nearly twice
that on American railroads, although the
rates of wages paid TO employees are only
about half the rates paid in this country.
The fact that it requires three or four
times as many officers and laborers to
operate a Government railroad as are
employed on railroads operated by
private capital explains the greater cost
of transportation on the former. Again,
the facilities for railroad Transportation in
Europe are not to be compared with those
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