Evening star., 1938-07-03
State and Private Railway
Management
BY FREDERIC J. HASKIN.


the proposition of Government owner
ship ard management Of railways has
been agitated in the United States. Dur
Ing the World War the Government did
assume the railways and created the
United States Railroad Administration.
While nothing could have been q failure
during the emergency Of the war because
OF the patriotic inspiration behind tho
issue, studies made afterward revealed
that Government management was much
inferior to private management. There
was tremendous waste, and more espe-
cially, what was regarded contempo-
raneously as pernicious patronage sys-
tenn. Wages were raised to unprece-
dented levels and men who held certain
jobs were able to sell them, 1t being
thought that the carriers would never be
turned back to private ownership and
possession of good railroad job was
something like a life pension.
The railroads were turned back and.
for a season, did well. but it was neces-
sary for them to repair the damage
which had been done under public con-
troll. This necessitated extensive bor-
rowings and extra operating expense.
4
While much has been written about
the competition of the motor truck and
bus traffic, the fact is that the steam
railroads and the electrified ones are
carrying an enormous volume of freight
and that the country cannot get along
without this system of transporta ton,
The situation has become progressively
worse. For the first quarter of 1887 the
class l carriers, the large trunk lines and
the short busy lines. reported net operat-
ing revenue of $l47,515,OOO. For the first
quarter OF the current year they reported
net operating revenues of only SIG, ,277, 900.
The fact that any net operating reve-
nue. was realized was in itself an indica-
ton that the steam railroads were climb
ing back, but the recent decline seems
10 indicate that the climb has been in
terrupted. During the depression years
there were only eight railroad companies
IN the entire country which could nav
any dividends at all. They were chiefly
short lines serving congested territories.
indeed, during the depression, if one
man had owned the entire PENNSYLVANIA
Railway system, which has been referred
10 as the standard railroad of the world.
and If he had no job with the company
he would not have had a single cent of
income. OF course, had he been an Off
Ger OF the company or even a locomotive
engineer he would have had his wages.
put as owner of the entire outfit with its
thousands OF miles of track and service
ne would draw no dividends. Every cent
went to the employees.
-
Such a situation suggests to come
minds Government ownership and it is
likely that great many stockholders
and railway officials would welcome such
a departure. But would the taxpayers?
II the railways are running in the hole,
the inevitable conclusion is that, under
Government ownership a fresh burden
would fall upon the taxpayers There
are many taxpayers who do not use rail-
roads at all. They pay neither freight
rates nor passenger fares, yet they would
be called upon to help support the rail-
ways.
There are number of nations which
have adopted state ownership of railways
and other public utilities Yet there
always has been controversy over which
system should be adopted. The United
States and Great Britain today are the
only two great nations which retain pri-
vate ownership and operation In 1920
there was an unusually strong movement
TO obtain government ownership in the
United Kingdom. At that time Sir Eric
Geddes was minister of transport Of the
Kingdom and handed down the decision
that
Inc experience of other lands proves
that state management would never pay
the market price for the best brains
which is handicap you could never get
over. The evidence that have collected
SHOWS that state management is costly.
lacks initiative and becomes red tape,
Another thing which must impress every
one was summed up in the report of the
royal commission in Italy which said
That politics corrupted railway manage
ment and railway management corrupt
ed politics. do not believe that in this
country with our national characterts-
tics, with our constitutional practice, it
would be possible for the state to run
and manage the railways as we'll as pri-
vate ownership"
Aside from theoretics the best test IS
PROBABLY the test of cost to the public.
Out OF long list of nations 1T is found
that the highest railway rates are those
charged in Switzerland, where the car.
rlers are owned and operated by the
state. The freight revenues are 4.66
cents per ton mile, while the passenger
fares are 2.21 cents per passenger mile.
Contrast this first with the privately
owned British railways The freight
revenue per ton mile is 243 cents and
the revenue per passenger mile is under
a penny. Then contrast further the
situation in the United States where the
carriers are privately owned. The aver
age per ton mile for freight is 98/100ths
OF l cent, while the passenger revenue is
only 1.8 cents per passenger mile.
Japan is an outstanding case of sue
cessful state operation so far as cost to
the customer is concerned. The average
revenue per ton mile for freight is only
68/1OOths of cent and the average reve-
nue. for passenger traffic is only 49/l00ths
OF l cents per passenger mile. But it
must be borne in mind that wages and
materials in Japan amount to but 4
small fraction Of what they do in Occi-
dental countries
look at the net revenue Of various
state owned and operated systems is
illuminating. Japan operates 10,20s miles
OF railway and, in spite of the low rates.
shows net revenue Of $4,927 q mile. ac-
cording to the most recent report. This
Is the top mark. The Union of South
Africa stands next. She operates l3, ,45y
miles and shows q net income Of a 023 q