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T?€E RAIL ri’--l JI’S A.\%, TffE STATE.
Barriers, far worse thnu any toll-bars, .would bo tlrus erected
between town and country, and bet.meen one district and
mother.
One very plausible argument in favour of tho transfer of
t.he railways to the State is the profit which, it is represented,
may be made out of the cmqlloyment of public credit. Tllo
Chancellor of the Exchequer can borrow money nt about
3$ per cent. per annum, whereas a railmay company cannot
borrow under 4 per cent., and the average rcturn to railway
investments is about 4& per cent. It seems, t,hon, that by
borrowing money at 3), and cmploying it in LL business which,
even when badly managed, pays 4$, there mould Lo a clonr
profit of 1$, which, upon a property of t,he valuo of fiv~
hundred millions, would give a clear ~CVCIIUO of six millions
and a quarter mnually. Nothing, howcvcr, could be mor0
fallacious and unsound in every respect than such sugpstiona.
The good credit of the English Trertsnry merely means
that all engagements will be paid. Railway cornpanics are
obliged to borrow on higher terms, because it is not sure
that they will be ab10 to declare dividends or pay interest
on debentures when due, as many people havo found to their
cost. Now, if a Government Department undertakes to
manage the railways they are bound to pay dividends, but
unless they manage better than the companies they are
likely to incur losses in some part of the business, which
losses must be borne by the general revenue. The apparent
net revenue of six millions and a quarter represents approximately
the amount of loss to be expected. If the
State mauages the railways just with the mmc degree of
skill and success as the companies, there mould then be no gain
or loss; if better, there would be gain accruing, not from good
credit, but from good management; if worse, there would
be certain loss. Thus, in theory, the use of the publio credit
proves to be a, pure fallacy, and, if it were not ao, there would
be no reason why the Treasury should not proceed to invest
money in many kinds of industrial enterprises besides railways
and telegraphs.
When we come t.o look into the details of the financial
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