Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1916-06-15
FAILURE OF GOVERNMENT OWNERSHIP

lue INSULTS VI EONS- pwhVi
ship and management of railways in
Canada constitute powerful argu-
that policy in the Dominion and
against its adoption in the United
States, says Samuel o. Dunn, editor of
the Railway Age Gazette, in an article
on The Failure of Government Own
ership in Canada" published in the
June issue OF the Journal Of Political
Economy.
The article analyses the history Of
the Canadian governments ownership
and management of the Intercolonial
and Prince Edward Island railways,
total of 1,736 miles of line, and de-
clares that the Canadian state rail
ways have been an utter financial fall
ure." In 25 out Of AZ years the Inter-
colonial is shown to have failed to
earn as much as its operating ex-
penses amounted to, while on the
Prince Edward Island the operating
expenses have exceeded the earnings
in every year that the government has
owned it.
This condition is ascribed to the
original poor location of the lntercol-
onial and the failure to shorten its
mileage between important terminals
by building a cutoff, to wasteful mis-
management in construction and oper-
alton, to political interference with the
management, to "pork-barrel meth
DDS of securing the construction of
pretentious passenger stations IN
small towns, and to the practice of
making rates so low that part of the
cost of transportation is borne by the
taxpayers of the entire country in
stead of by the users of the railways"
Mr.. Dunn says in part: Zone of the
arguments advanced for government.
ownership in the United States is that
under it the profits made by the rail-
ways would be received by the public
instead of going to private capitalists.
Those who reason thus often forget
that while railway companies, If sue
cessful, yield profits to private CAPT
| talists, they also. unlike state rail-
ways, pay taxes to the public.
THE combined cost to June 30, 1914,
| of the Intercolonial and the Prince
| Edward Island, as shown by the Off
cial reports, was s112,351 900, or S64,-
| us per mile. Computed in a more cor
rect way, their total cost to the public
had been s3S0,000,000 or $4,000 per
mile. This figure includes expenses
and interest which they had failed to
earn, but nothing for the taxes which
| the public would have collected from
them if they had been privately owned.
| These railways are almost entirely
| single-track lines; they are not very
well constructed, maintained. nor
equipped; and yet their cost per mile
to the public, properly computed has
exceeded the average capitalization OF
any railways in the world except those
! of Great Britain. Their losses in the
fiscal year 1914, as shown by the off
cial reports, were s445,000, this being
the difference between their expenses
and earnings Properly computed
their losses in that year were almost
Sl6OO0.0O0. They can hardly have a
physical value exceeding the $112,O0O,-
0OO. or S64.71S per mile, which they are
officially represented to have cost. AS
Stunning that they are worth this, tins
difference between their present value
and the total amount they have cost
the Canadian public is s26S,000, 600, o:
$154,37S a mile. This represents the
absolute loss they have inflicted or
the taxpayers of Canada, including op-
Grating deficits and unearned interest,"
on the investment.
The management of the lntercolon
ial by the Dominion government has
covered At years. The official figures
show that in % of these its earnings
have exceeded its operating expenses
its combined net earnings in these
years having been S1,967 900. In th5
other 25 years its operating expenses
have exceeded its earnings, and Its
combined deficits from operation il
in these years have been over $11 500
900. Therefore, under government
management its net defcit-allowine
nothing for taxes nor interest-ha:
been S9,500,000 Still worse has beer
the plight of the Prince Edward Isl
and The deficits from operation Of
the two roads under government man
agement have been s12,S00,000.
There is in Intercolonial history 6
minor illustration of the fact that gov
eminent ownership is less fatal t
financial success than government
management The Windsor branch, {
part of the road 80 miles long, Is
owned by the government, but has
been operated under lease by private
companies since 1881. Since 1911 il
has been operated under lease by the