ARGUMENT FOR THE BILL CONCERNING THE ACQUISITION BY THE STATE OF SEVERAL PRIVATE RAILROADS.

THE PAST RAILROAD POLICY OF PRUSSIA.

The present condition of railroad affairs in Prussia renders the completion of the State railroad system absolutely necessary. The idea of consolidating the whole of the railroads of the country into one enormous net of iron roads, connected together for the facilitation of travel and forming a single transportation establishment under government control, was, under the former condition of the Prussian code of railroad laws, incapable of expression. Although the nature of railroads as public highways was never ignored, and is indeed plainly affirmed in the law of Nov. 3, 1838, yet their real importance as great highways for the movement of armies and for universal intercourse did not become fully apparent until they had reached a later period of development. The inconveniences caused by the private management of railroads in consequence of the existence of a number of different enterprises of doubtful solidity and restricted working capacity, the abuse of their privileged position by their managers; the oft recurring resistance to reforms of public utility; the complication and for the most part arbitrary differences among the various administrative and working arrangements; the intricacy of the tariffs; the quarreling and extravagant expenditure accompanying the bitter competition existing among such a number of corporations have altogether caused the widespread injury to the public welfare that is inseparable from an extended private management of railroads. Meanwhile, on the other side, by the extended development of the government railroad management, another and a more favorable solution of the question was in preparation. The considerable increase in the government railroads that occurred on the annexation of the provinces acquired in 1866, and the establishment of connecting lines between the Eastern and Western railroads have proved the government railroad system to be unequivocally the best for Prussia, and it has gained thereby considerable ground against the so-called mixed system. The necessity has therefore become apparent

for providing fully for the public interests, not by regulating the operation of the private roads through legislative reform · and state supervision, which do not promise to be effective, but by the abolition of the private railroad system and the union of all the principal inland railroads in the hands of the government. The conditions which, under the old railroad laws, would have rendered such a solution of the question impossible, have fallen into the back-ground. The greater extension and compactness of the territory of the country, the development of its financial strength, and the fortunate state of the national credit have proved favorable to those ideas which deal with a question of such weight and importance to the state.

As long ago as 1873, in the report of the special commission appointed to investigate railroad charters, we find these ideas expressed in the following words:

"In consequence of the extension and perfection of railroads that have already occurred, and that may be expected to a greater extent in the future, economical reasons and considerations point to the desirability of the ultimate consolidation of all railroads in the hands of the government." Since that time this result has been greatly favored by the further improvements effected in the condition of railroad affairs. The extent of the government railroads has been nearly doubled-the extent of the roads worked by the government already exceeds the total length of the roads under private management; the inadequacy of government supervision, which can hardly be remedied, in regard to the groving inconveniences characterizing railroads under corporate direction, has added largely to the numbers of those in favor of a state railroad system, while the attempts to bring about reform by laws have shown the futility of hoping for a satisfactory improvement through legal measures, without trenching materially on established rights and interests. The government, therefore, did not hesitate during the debates over the budget at the last session of Parliament to intimate to the members of the investigating committee that the ultimate aim of the railroad policy was the realization of the state railroad system, with a prospective view to the introduction of an act empowering government to acquire such private railroads as might be desirable.

It may be safely said that, to an impartial judgment, it is certain that the question whether the state railroad system is desirable for Prussia is no longer an open one; it is already

decided in the affirmative. And although the unsettled state which the existence of powerful independent corporations in competition with the normally growing governmental railroad system will cause must be tolerated for a longer or shorter time, in consideration of the financial convenience of the government, it is impossible, as well as incompatible with the interests of the country, to maintain them permanently, and they would in addition be a source of economical injury of serious import.

Although after the above justification of this system it may hardly be thought necessary, we will endeavor in the following explanation to pass in review the chief points which have influenced the government to adopt and carry out the state railroad system.

I.

THE STATE RAILROAD SYSTEM AND ITS DEVELOPMENT IN GERMANY AND PRUSSIA.

The development of the railroad in modern civilized countries has been dissimilar and disproportionate, according to the conditions and peculiarities of the various nations.

The wealth of the country and the density of its traffic have determined the extent of the outward development; while its natural conditions, its relations, the peculiar characteristics of its people and the nature of its institutions have determined the method of that development.

In England and the eastern portion of the United States, the extensive commerce and great wealth prevalent have developed the railroad system to an extent that Germany in its present condition cannot attain, nor do her necesssities demand it. The magnitude of the arrangements for the dispatch of traffic, the frequency and high speed of the trains and many other of the operating arrangements of the railroads in those parts, are only warranted where the wealth of the country furnishes the means for such an outlay, and the augmented expense is covered by a corresponding increase of business.

The extent of this development is by no means to be ascribed to the effects of the system under which it has occurred. The latter is the result of the domestic and foreign conditions and relations of these countries, of the national character and state institutions, and, in fact, of the internal economy of the countries. The geographical positions of both England and North America render the national defence

of secondary importance in considering the system of railroads, when compared with the requirements of commerce -the commercial and industrial element in the population of both countries is vastly the most influential. In both countries, the government's care for the public welfare is narrowly limited. The furtherance of personal interests is left to the individual, the advancement of common interests to the narrow circle of those immediately concerned. In both these instances, the great independence and capacity for action of the individual gives the widest scope to private initiative, and renders the intervention of the government superfluous. It may thus be understood how private railroad management, in spite of the efforts made of late years to combat the theory, is thus credited with being most favorable to the perfection of railroad development.

It is otherwise in Germany, where different conditions have altogether changed the direction of development. The national defense, which, owing to the geographical situation, is of grave importance, the influential, if not paramount, military and official element in the population, the fostering care of the government for the public welfare in every department, the lesser effective capacity of the individual-all these circumstances point to the government as the most suitable conductor of enterprises, particularly as the political constitution of Germany presents grave difficulties to private railroad undertakings. As early as Nov. 3, 1838, this view occurred to the revisors of the law regulating railroad enterprises, and they were only influenced by political considerations then existing, and ignorance of the importance and financial range of railroads, in giving scope to private railroad ventures provisionally. Formed by circumstances, 'state railroad management has manifested a more vigorous development as compared with private railroad management. Until the year 1850 the railroads in Prussia were under private control exclusively, with or without financial assistance from the government; from that period, with the removal of the before mentioned political difficulties, the government makes its appearance as a railroad proprietor, partly by building or purchasing on its own account considerable lines of railroad (often because no capitalists could be found willing to take up the enterprise), and partly by assuming the management and control of private railroads for account of the owners. Thus we find by the side of the private railroad management a state rail

road property of growing proportions, though not formed into any system. Out of this confused state of affairs arose gradually the so-called "mixed system," which owed its origin to the efforts made to transform this disjointed, unsystematic condition of the state railroads into a well arranged and serviceable transportation system of leading lines, securing to the state a controlling influence in the conduct of transportation. The necessitous condition of certain private roads, in themselves eminently unfitted for private management, as well as the liberal means placed at the disposal of the government in 1870-71, in the shape of the war indemnity, favored the tendency toward a well-planned extension and constitution of the state railroad system. In this manner, out of the so-called "mixed system” arose naturally a majority of roads under state management, bearing in itself the reasons for its progress, and which will eventually result in the final transfer of the great controlling lines of private railroad into government hands. According to the

method of development which is demonstrated in the foregoing explanation, the pure state railroad system for all leading Prussian roads will be the ultimate phase into which the present unsettled condition of railroads will find its solution.

DEVELOPMENT OF THE RAILROAD IN MODERN CIVILIZED COUNTRIES-TENDENCY TO CONCENTRATION.

In order to recognize the final aim of the national railroad development as an absolute necessity demanded by circumstances, the evolution of the railroad system in the principal civilized countries necessarily comes under observation.

At the first origin of railroads, the extent of the individual lines was confined to a length of barely 90 to 140 miles. The number of these independent corporations was rapidly increased, however, as soon as they were found to be paying undertakings, the rate of increase being about proportionate to the increase in mileage. The necessity for the establishment of direct communication between the chief traffic centres, by agreeing upon through trains and tariffs, and the consequent negotiation necessary between the different corporations respecting interests and arrangements com mon to all, soon made manifest the difficulties connected with a large number of separate managements. To this came the experience that with the extension of the administration the general expenses were proportionately reduced, and the