Evening journal., 1916-06-15
The Failure of Government Ownership in Canada

The results OF government owner
ship and management of railways in
Canada constitutes a powerful argu-
ment in favor OF the abandonment Of
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 ar
ticle on THE Failure Of Government
Ownership in Canada published in
the June issue of the Journal of Po-
litical Economy.
The article analyses the history Of
the Canadian governments ownership
and management Of the Intercolonial
and Prince Edward Island railways,
a total of 1876 miles OF line. and de-
clares that THE Canadian state rail-
ways have been an utter failure" In
25 out OF AZ years the IntercOlonial Is
shown to have failed to earn as much
as its operating expenses amounted
to, while on the Prince Edward Is
land the operating expenses have ex-
ceeded the earnings in every year
that the government has owned 1t.
This condition is ascribed to the
original poor location of the Interco-
lonial and the failure to shorten its
mileage between important terminals
by building a cutoff, to wasteful mis-
management in construction and op-
Grafton. to political interference with
the management. to "pork-barrel
methods Of securing the construction
OF pretentious passenger stations in
small towns, and to the practice of
making rates so low that a part OF
the cost Of transportation is borne by
the taxpayers of the entire country
instead Of the users of the railways.
Mr.. Dunn says in part
zone of the arguments advanced Tor
government ownership in the United
States is that under il the profits
made by the railways would be re-
ceived by the public instead OF going
to private capitalists. Those who iea-
son thus often forget that while rail-
way companies. if successful, yield
profits TO private capitalists, they al
so. unlike state railways, pay taxes
to the public.
THE combined cost to June 30
1914. of the IntercOlOnial and the
Prince Edward Island, as shown by
the official report. was S112,35l.OOO
or S64.7iS per mile Computed in a
more correct way. their total cost to
the public had been 3S0,000000 OF
S2tQOOO per mile. This figure inv
cludes 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-tracb
lines. they are not very we'll con
structed. maintained nor equipped
and vet their cost per mile to the pub
lie. properly computed. has exceeded
the average capitalization Of any rail
ways in the world except those oi
Great Britain. Their losses in the
fiscal year 1914. as shown by the Off
cial reports. were $445,000 this be.
ing the difference between their eX
penses and earnings. Properly com
puted. their losses in that year were
almost sl5,O00000O They can hardly
have a physical value exceeding the
$4,000. 600. or S64,71S per mile
which they are officially represented
to have cost. Assuming that they are
worth this. the difference between
their present value and the tota
amount they have cost the Canadian
public is S26s. 100000. or S154.37S a
mile. This represents the absolute
loss they have inflicted on the tax
payers Of Canada including operating
deficits and unearned interest on the
investment
The management of the Interco-