The State and the Railroads


AMONG all the subjects which have been discussed, during the last ten years, has there been any one which has excited an equal degree of attention over the same area with that known as the railroad problem ? Many other things have eclipsed it in the intensity of the interest they have excited. We have had war, panic, and pestilence; but these have been local, and have gone as well as come. This discussion has been at once ubiquitous and unending. While every country in Europe has taken part in it, here in America it has been so earnestly and incessantly dwelt upon before the people, in the halls of legislatures and in the press, at the bar of the courts and on the exchange, that every one—including at last even the demagogues and the lawyers — is heartily weary of it. Unfortunately, however, this weariness is not due to the fact that the subject is exhausted or that a generally accepted conclusion has been reached. On the contrary, the difficulty is that the discussion does not seem to move at all. It tends rather to wear itself out through a wearisome process of repetition. This, however, is true only of the discussion; the problem itself is as fresh, as importunate, and as omnipresent, as ever. It is one of those problems, also, which in some form or other is perpetually presenting itself; and, when separated from the wordy debate in which it is involved, its gradual, quiet, irresistible tendency to a solution, which does not yet wholly reveal itself, is full of interest. Its proper consideration involves a most suggestive study in political and economical science, the wide scope of which may be stated in very few words.

About half a century ago a new force was let loose upon the world at large as it then existed; a force the ultimate perturbing effect of which, socially, politically, economically, no one then dreamed of, and no one even yet can fathom. This element of innovation struck the different systems of government in use at about the same time. The result could hardly fail to be singular, for it so happened that the new power was one of those which made all human theories and institutions conform to it, instead of mildly conforming itself to them; and when it came, as it oftentimes did, in contact with economical or social principles or political formulas which were supposed to be well established, it was apt somewhat unceremoniously to modify or even overthrow them. It has, indeed, been through the many and severe perturbations involved in this process that the railroad problem has made its presence manifest. The different forms these perturbations have taken, and the different ways in which they have been met, in accordance with the political habits and favorite economical theories of the several nations, make not only an interesting study, but, curiously enough, a novel one. In this and in another paper it is proposed to discuss very briefly not only the American, but the English, Belgian, French, and German phases of the railroad problem; and, finally, to state the conclusions in respect to it upon which each of these communities seems, for the time being at least, to be settling down.

In England the railroad system originated; and in England it has undergone its most complete development; the English system and the English experience must, therefore, be described first.


The Duke of Wellington is reported to have said, in one of the early railroad debates in the House of Lords, that in dealing with the new system it was above all else necessary to bear in mind the analogy of the king’s highway. Parliament did bear it in mind, and upon this analogy, naturally enough, the railroad was first established. The proprietor of the road-bed and the carrier over it were to be different persons. Provision in this respect was especially made in all early charters, and it was supposed that the power of using the road, which was reserved to all the world on certain fixed terms, would make impossible any monopoly of the business over it. Experience, of course, quickly showed how utterly fallacious this reasoning was. The analogy of the highway was, however, not at once abandoned. Recourse was had to a system of fixed maxima charges, and the old tollboards of the turnpikes were incorporated at enormous length into the new charters as they were granted. One of these, for instance, which went through Parliament in 1844, consisted of three hundred and eighty-one distinct sections, in which, among other things, it was prescribed that for the carriage of a “ horse, mule, or ass ” the company might charge at a rate not to exceed three pence per mile, while for a calf or a pig or “ other small animal ” the limit was a penny. Naturally, this attempt at regulation proved no more efficacious than the other, and with it the analogy of the highway seems to have disappeared. The chaotic condition of the English railroad legislation had already begun to attract public notice, and led in 1840 to the reference of the whole subject to the first of the many special parliamentary committees which have taken it into consideration. Sir Robert Peel was a member of this committee, which apparently fell back on a reliance upon the principles of free trade as affording all necessary regulation of the railroad system. It was argued that “ an enlightened view of their own interests would always compel managers of railroads to have due regard to the general advantage of the public.” At the same time, to afford railroad managers a realizing sense of what the principles of free trade were, numerous charters were granted and liberal encouragement given to the construction of competing lines. Then came on the great railroad mania of 1844, and, as other countries have since done, England awoke one day from dreams of boundless wealth to the reality of general ruin. Free trade in railroads was then pronounced a failure, and in due time another parliamentary committee was appointed, and the whole subject was again taken into consideration. Of this committee Mr. Gladstone was the guiding spirit. Meanwhile Sir Robert Peel, who was then prime minister, had changed his mind as respects the efficacy of " an enlightened self-interest” stimulated by competition, and had come to the conclusion that railroad competition was an expensive luxury for the people indulging in it, and that there might be something in state management of railroads. Accordingly Mr. Gladstone’s committee made a series of reports which resulted in the passage of a law looking to the possible acquisition of the railroads by the state at the expiration of twenty-one years from that time. With this measure as the grand result of their labors the committee rested. Not so the railroad system. The twenty-one years elapsed in 1865, and during that time Parliament sat and pondered the ever-increasing complication of the railroad problem with most unsatisfactory results. Competition between railroads through all those years was working itself out into combination; and, as the companies one after another asked and secured acts of amalgamation, obstinately refusing to compete, it was clearly perceived that something was wrong. The parliamentary mind was sorely troubled, but the way of deliverance was not revealed. In 1865 a new commission was appointed, which went again over the familiar path, this time in the direction of state ownership. The cry now was that the process of amalgamation, or consolidation, as we in America term it, had gone so far that the time was close at hand when the railroads would manage the state, if the state did not manage the railroads. In truth there was something rather alarming in the speed at which this was going on. For instance, one committee pointed out, as an example of what the process might lead to, that a single amalgamation was suggested to it through which a union of 1200 miles of railroad would be effected, bringing under one control £60,000,000 of capital with £4,000,000 of annual revenue, and rendering impossible throughout one large district the existence of an independent line of railway, A few years later, when the next committee sat, all this had become an established fact, only the mileage was 1500 instead of 1200; the capital £63,000,000 instead of £ 60,000,000; and the annual income £7,000,000 instead of £4,000,000. Nevertheless the commission of 1865 followed closely in the steps of its predecessors. It dumped on to the tables of Parliament an enormous “blue-book” which left the matter exactly as dark as it was before. Still the amalgamations went on. All England was rapidly and obviouslybeing partitioned out among some halfdozen great corporations, each supreme in its own territory. Then at last, in 1872, a committee on railroad amalgamations was appointed, including among its members the Marquis of Salisbury and the Earl of Derby, which really-gave to the whole subject an intelligent consideration. Unlike its predecessors, that committee did not leave the railroad problem where it found it. On the contrary-, theyadvanced it by one entire stage on the road to its solution. In the first place, after taking avast amount of evidence, they proceeded to review the forty years of experience. The result of that review maybe stated in few words. They showed with grim precision how, during that period, the English railroad legislation had never accomplished anything which it sought to bring about, nor prevented anything which it sought to hinder. The cost to the companies of this useless mass of enactments had been enormous, amounting to some £80,000,000; for these were 3300 in number and filled whole volumes. Then the committee examined in detail the various parliamentary theories which had, at different stages, marked the development of the railroad system. The highway analogy was dismissed in silence; but of the “ enlightened view of self-interest ” theory it was remarked that experience had shown that as a regulating force this was to be relied upon “ only to a limited extent.” The principle of competition was next discussed, and the conclusion of the committee was “ that competition between railroads exists only to a limited extent, and cannot be maintained by legislation.” Of the great Gladstone act of 1845, looking to the ultimate purchase of the railroads by the government, it was remarked that “ the terms of that act do not appear to be suited to the present condition of railway property, or to be likely to be adopted by Parliament, in case of any intention of Parliament at any future time to purchase the railway’s.” Having disposed of this measure, the committee addressed itself to the amalgamation panic, which through so many years had rested like a nightmare on the slumberous discussions of Parliament. They cited the case of the NorthEastern Railway, which was composed of thirty-seven once independent lines, several of which had formerlycompeted with each other. Prior to their consolidation these lines had, generally speaking, high rates, and they had been able to pay but small dividends. Now, the North-Eastern was the most complete monopoly in the United Kingdom. From the Tyne to the Humber it held the whole country to itself, and it charged the lowest rates and paid the highest dividends of all the great English companies. It was not vexed by litigation, and whilst numerous complaints were heard from Lancashire and Yorkshire, where railway-competition existed, no one had appeared before the committee to refer any complaint against the North - Eastern. In view of such facts as these the committee reported that amalgamation had “ not brought with it the evils that were anticipated, but that in any event long and varied experience had fully demonstrated the fact that while Parliament might hinder and thwart, it could not prevent it, and it was equally powerless to lay down any general rules determining its limits or character.” The statute-book was full of acts regulating the rates at which the poorer classes should be carried by rail, and these acts at least had always been pointed to as indisputable evidence of the virtue and efficacy of railroad regulation by Parliament. In their day they had perhaps done good service, but yet even of these as a whole it was reported that “ the ill success of this attempt may well justify hesitation in entering upon further general legislation of the same kind.” Finally, the committee examined all those various panaceas for railroad abuses which are so regularly each year brought forward as novelties in the legislatures of this country. To one familiar with the subject, the simple faith in which each lawmaker brings forward, as a new and hitherto unthought-of solution of the whole trouble, some old familiar expedient which has been tried and has broken down time and again would have in it something quite touching were it not so very tedious. All these the English committee now passed in merciless review. Equal mileage rates they found inexpedient as well as impossible; the favorite idea of a revision of rates and fares with a view to establishing a legal tariff sufficient to afford a fair return and no more on the actual cost of the railroads, they pronounced utterly impracticable; tariffs of maxima charges incorporated info laws, they truly said, had been repeatedly enacted and as often had failed; periodical revisions of all rates and fares by government agents they found to be practically impossible, unless some standard of revision which had not yet been suggested could be devised. There is in the French law a provision that whenever the profits on any road shall exceed a certain percentage on its cost, such excess shall be divided between the corporation owning the railway and the government. This plan, also, the committee took into careful consideration, only to conclude that in Great Britain it would be attended with “ great if not insuperable difficulties.” Finally, the owning of the railroads by the government was referred to as “ a state of things which may possibly arise,” but one which the committee was not at all disposed at present to recommend.

At first glance, therefore, it seemed as if this committee had arrived at only negative results; but in truth they had reached positive conclusions of the first importance. They had, indeed, clearly stated the problem; a thing never before done in Great Britain. The natural development of the railroad system as a system was recognized, and the folly of restrictive legislation demonstrated. A new policy was thus established, at the base of which was the principle of private ownership and management, which was to be left to work out its own destiny through that process of combination in which competing monopolies always result. The members of the committee saw perfectly clearly where their process of reasoning would bring them out. It could result only in a tacit assent to the growth of private corporations until they became so great that they must, soon or late, assume relations to the government corresponding with the public nature of their functions. This was obvious enough. Meanwhile the committee also saw with equal clearness that this was a question of the future,— perhaps of the remote future; a question which certainly had not yet presented itself, and which they had no disposition to precipitate. They accordingly fixed definitely the policy of Great Britain as an expectant one. The railroad system was to be left to develop itself in its own way, as a recognized monopoly, held to a strict public accountability as such. Whenever it should appear that it abused its privileges and power, then the time for action would have arrived. As yet this was not the case in any such degree as called for a decisive and far-reaching measure of reform.

In Great Britain, therefore, the discussion of the railroad problem may be considered as over for the time being. It is quiescent, not dead. The period of meddlesome and restrictive legislation is passed, and the corporations are now left to work out their own destinies in their own way, just so long as they show a reasonable regard for the requirements and rights of the community. The time may not be remote when, for instance, all England will be served by three or four gigantic railroad corporations, or perhaps by only one; just as many cities are now furnished with gas by a single company. Nor is this ultimate result any longer viewed with apprehension. The clearer political observers have come to realize at last that concentration brings with it an increased sense of responsibility. The larger the railroad corporation, the more cautious is its policy. As a result, therefore, of forty years of experiment and agitation, Great Britain has on this head come back very nearly to its point of commencement. It has settled down on the doctrine of laissez fat re. The river is not to be crossed until it is reached.


Turning now from Great Britain to Belgium, an opportunity is offered to observe the practical working of a wholly different policy. The famous Belgian railroad system originated with King Leopold, and bears to this day the marks of the creating mind. When the Manchester & Liverpool Railway was completed, the Belgian revolution had not yet taken place, and Leopold was still a resident of England. His attention was strongly drawn to the possible consequences of this new application of steam, and when, a few years' later, he was called to the throne of Belgium, one of his earliest projects related to the construction of railroads in his new dominions. He, was strongly persuaded, however, that the English system of private construction was not the correct one. He, as well as the Duke of Wellington, strongly adhered to the analogy of the highway; but, more logical than the duke, his was the king’s highway and not a turnpike. Accordingly he planned a system of railway communication in which the roads were to be constructed, owned, and operated by the state. With some difficulty, legislative assent to his scheme was obtained, and the earliest lines were undertaken in 1833. The government then went on year by year developing the system, but failed to keep pace with the public demand. Accordingly, in a few years, though not until after the principal and more remunerative routes were occupied, concessions, as they were called, being the equivalent of English charters, were made to private companies, which carried on the work of extension.

One peculiar feature in all these concessions had, however, a direct and sagacious though somewhat distant bearing on the fundamental idea of the Belgian railroad system, — that of ultimate government ownership. They were all made for a term of ninety years, at the expiration of which the railways were to become the property of the state, which was to pay only for their rollingstock, The right was also reserved to the government of buying back the concession at any time, on assuming payment of an annuity to the owners equivalent to the payment, for any unexpired balance of the concession, of a yearly sum equal to the average net receipts during the seven preceding years.

During the period of the concession, the private companies owned and operated their several roads in much the same way as English or American corporations; although the greatest benefit from their construction resulted to the state lines, which, holding the centre of the country and the main routes of communication, kept the private lines necessarily tributary. In 1850 the government owned about two thirds of all the railroad mileage then in operation, and private companies the other one third. Ten years later, the proportion had changed, two thirds of the system being in the hands of private companies. It so happened, also, that, as the government in making the concessions had followed no plan of districting the country, but had rather adopted a policy of competing lines, these lines competed not only with each other but also with the state lines. From this fact there resulted a condition of affairs which was wholly unanticipated, but which has since constituted the very essence of the Belgian railroad system. For the first and only time in railroad history, a case was presented in which competition did not result, in combination. The one system of lines being owned by the state, and the other by private companies, no consolidation of the two was practicable as against the public; and accordingly the government found itself in a position to regulate the whole system through the ownership of a part of it, and in consequence was able to establish a policy of cheap railroad transportation, under the influence of which the country developed with amazing rapidity.

The action of the government, however, practically forced the various independent companies to unite among themselves; until, about the year 1860, they had become consolidated into trunk lines sufficiently powerful to compete with the state on equal terms. Under these circumstances, in order to maintain the principle of its railroad system, the government was forced into further development. Other roads were accordingly constructed and leased, until, at the commencement of 1872, the state controlled about forty-two per cent, of the entire railroad mileage of the country, and ten private companies, operating from twenty to six hundred and fifty miles of road each, controlled the other fifty-eight per cent. This condition of affairs still continues. Practically these companies operate their roads with the same freedom from governmental interference as English or American companies. They raise and lower their rates at discretion, and give special rates, while no limitation is put on the amount of dividends they may declare. In respect to questions of police and safety only does the government formally interfere with them; and with the exception of certain guaranteed lines, it has no power even of supervising their accounts, or, indeed, of compelling them to render any.

Of late years, therefore, Belgium has simply presented the spectacle of the state, in the character of the richest and most powerful railroad company of its system, holding in check and regulating other companies, not greatly inferior to it in power, which were competing with it for business and dealing with it on terms of equality. The effect of this on each system of roads was most excellent. At times, when the government has been attempting certain great measures of reform or bold experiments in transportation, its course has been vehemently criticised by the private companies, who have complained that their property was being unjustly depreciated by tariff reductions made upon unsound principles, but which,from their position, they were compelled to adopt. This was perfectly true; but, on the other hand, the government was so largely interested in railroad property that it felt no disposition to persist in any line of experiment which seemed likely to reduce the value permanently; and in the long run the private companies found that the experiments of government were far less to be feared than the wild and ruinous fluctuations of railroad competition as it was experienced in Great Britain. These they were exempt from. The competition they had to meet was decided, but of a wholly different character from that of the English or the American system. It was certain, firm, and equably distributed. Those managing the state roads acted at all times under a heavy sense of responsibility; they did not dare to show preference to persons or localities; they could not do business for anything or nothing one day, and the next combine against the public to make good their losses through extortionate charges. In a word, it was found that while the competition between private roads disturbed and disorganized railroad traffic, that between public and private roads regulated it.

The government, meanwhile, in its turn pressed by the competition of the private lines, found itself compelled to work its roads on regular “ commercial principles.” In order to get business it made special rates, and, if necessary, entered into joint-purse arrangements with its adversaries. It made bold experirnents, and through those experiments established what are now universally recognized principles of transportation. At other times its experiments resulted in failure and were abandoned. Yet little doubt can be entertained that it was the constant pressure of competition which kept the state lines up to their work and in the advance of railroad development. The tendency in Belgium now is for the government to absorb all the remaining lines. Should this be done, it will then remain to be seen whether by so doing that equilibrium to which has been due the success of the whole system will not have been destroyed. Competition, certainly, will then no longer exist, and with its disappearance may also disappear a strong incentive to activity.

It would of course be most unnatural to suppose that the state roads of Belgium have always given perfect satisfaction to the community. There have, on the contrary, been very grave and distinct complaints in regard to their management, but nothing which will compare with those constantly made both in Great Britain and in America. To satisfy every one always is a result not likely to be attained under any system or in any country; meanwhile, it may with tolerable safety be asserted that the Belgian system is as satisfactory to the people of Belgium as the nature of things human permits that it should be; certainly the public feeling points very distinctly towards the acquisition of the remaining lines of the system by the government, while the sale of the government lines to private corporations has never been urged by any considerable party. Financially the undertaking has proved a decided success, the government roads netting an annual profit of late years of about six per cent., which is equivalent to at least ten per cent, in this country.

While in Great Britain, therefore, the railroad problem seems entering upon a period of comparative quiescence, — a phase of expectancy, as it were, — in Belgium the contrary would seem to be the case. Should the government of that country now adopt a policy of expansion, and proceed to acquire the remaining lines of the system, it will enter upon the very doubtful experiment of exclusive state management. The problem will then assume wholly new phases, the development of which will everywhere be watched with deep interest.


If confidence in the natural development of events, or at least resignation to the inevitable, is the order of the day as respects the railroad problem in Great Britain, and preparation that in Belgium, the moment the French frontier is crossed a third aspect of affairs presents itself; an aspect best expressed by the single word perplexity. Certainly the railroad world in that country is in a condition of very considerable if not unhealthy activity, and seems to an outside observer to be rapidly forcing the government into a curiously untenable position. Apparently it must either discourage, if not actually forbid, further railroad construction, or else it must see the essential principles of a railroad system long and carefully built up pract ically abandoned. Nor is the question merely a theoretical one. The French nation, as such, has a large pecuniary interest in its railroads. They are, in fact, a sort of vast sinking fund for the possible ultimate extinction of the national debt. Anything, therefore, which threatens to impair them money value is matter of national concernment. That money value seems now to be threatened by a danger with which the private corporations of Great Britain and America are sadly familiar, — the danger of an unregulated competition.

This is a difficulty against which the French railroad policy has ever sought most carefully to provide. It now comes from an unexpected quarter. In spite of the political changes and the turbulence which have characterized the history' of the country, the French mind is essentially conservative; it loves order. It looks naturally to the government for an initiative, and not only submits to, but craves, minute regulation from a central authority. Accordingly, when forty years ago England and America caught eagerly at the idea of railroad development, and rushed into this with all the feverish ardor which ever marks private speculation, France hung back. The government did not take the initiative; private enterprise would not. It was not until 1837, when already what are now the great trunk routes of Great Britain and of America had assumed a definite shape, that the French system began slowly to struggle into life. Even then the first attempts resulted only in failure. The government, after hesitating long, recoiled from the idea of following the bold precedent which Belgium had furnished, and decided in favor of a system of concessions to private companies instead of construction by the state. Private companies were organized at last, and an appeal was made to the public. The public, still timid, and lacking confidence in itself, failed to respond. The necessary support was not forthcoming, and the companies, frightened at the liabilities they had incurred, renounced their concessions. Then at last, but not until 1842, the government definitely took the lead. A division of risk was effected. Nine great lines were mapped out, seven of which were intended to connect Paris with the departments of the frontier or the sea-board, while two were provincial. As respected some of these the state assumed the expense of acquiring the necessary lands and building the stations, while the companies undertook the superstructure, material, and operation; as respected others the companies took upon themselves the whole burden. The political disturbances of 1848 and the years immediately ensuing greatly retarded French development in railroads, as it did in everything else. It was not until 1859 that the system assumed a definite shape. Then at last, under the inspiration of the imperial government, a now and final arrangement was effected. The existing lines were consolidated, and France was practically partitioned out among six great companies, to each of which a separate territory was allotted. The fundamental distinction between the French and the English and American railroad systems was now brought into sharp prominence. Not only was no provision made for competition between routes, but every precaution was taken to prevent it. No line was to trench upon the territory allotted another, and, in consideration of this immunity, each line undertook within its own district a railroad development proportionate to all reasonable demands. Again, however, the companies found the burden they had' assumed out of proportion to their resources. Once more they went to the state. The necessary assistance was forthcoming, but on condition. The lines to be constructed and operated by each company were laid down, and arbitrarily divided into two classes, designated as the ancien réseau and the nouveau résean, the first of which included the older and more profitable, and the latter the additional routes, the construction of which was deemed essential. Upon the securities issued to build the latter of these, the government guaranteed a minimum rate of interest, which the companies undertook ultimately to reimburse. The material of both the aneien and the nouveau réseaux was also pledged as security for any advances which the state might be called upon to make. The amount of advances made on this account up to the present time somewhat exceeds $60,000,000. The concessions are for ninety-nine years, at the expiration of which time the roads will revert to the state, which is bound, however, to purchase the rolling-stock at a valuation, after deducting advances made. The right is also reserved to the government of purchasing the lines on payment of an annuity for the unexpired portion of the ninety-nine years’ concession, calculated on the average profits of the lines during the seven years previous to the act of taking.

The French system of operating the railroads is as far removed from the English or American as is the system under which they were constructed. The supervision of the government is ubiquitous. Every tariff, every time-table, has to be submitted for approval, and there are public agents at every principal station. The accounts of the companies are subjected to an annual examination, and the most rigid police regulations are enforced. If questions arise between companies, they are settled not by might, asserting itself through competition, but by a board of arbitration, with an ultimate appeal in matters of graver importance to the Central Railroad Commission.

Thus it is that, in theory, the railroad system of France is purely and essentially French. The government initiated it, supervises it, has a large ultimate pecuniary interest in it. At the expiration of some sixty years more it may yet be made to pay off the national debt. At present, however, it is accumulating it. The guaranteed interest is a constant burden on the revenue. And it is in this connection that the French railroad problem asserts itself. The essence of the system lies in regulation, as a substitute for competition. One railroad war, such as annually vexes America, would make the guaranty of the government assume proportions calculated to appall the most daring minister of finance. One can imagine the fury of American railroad struggles if the payment of interest was guaranteed from the public treasury! Competition, therefore. cannot be tolerated among the railroads of France. The French public, nevertheless, like the English and the American, is constantly demanding more railroads. It asks for them, too, not because they are profitable in themselves, but because of the incidental advantages to be derived from them. The great established companies naturally say that there must be some limit to construction. They can ruin neither themselves nor the government by building railroads intended merely to improve the value of adjacent property. To this those demanding the additional roads simply reply that if the great companies will not supply them, they desire the privilege of supplying themselves.

Yielding to this plausible argument, and to a feeling of political necessity, a law of the empire, known as the railroad law of the 12th of July, 1865, undertook to create a third réseau called the réseau vicinal. It was a French approach to the American idea of a general railroad law. The departments and communes 'were empowered either to construct certain local railroads themselves or to grant charters for their construction by others. It was erroneously supposed that these roads would be insignificant affairs, and act as mere feeders to the great companies. The French do not move rapidly in enterprises of this description, but still they move. The door was now open; competition soon entered through it. At first few local concessions were made, and those in good faith. Then the demands began to flow in, and they rapidly assumed a new phase. The contractor, the speculator, and the black-mailer made their appearance in rapid succession. Railroads were built to be sold. The old established lines were victimized by being forced to buy off competition, or they saw, through the rapid consolidation of petty local roads, bankrupt rivals — and rivals the more formidable because bankrupt—permanently established beside them. Indeed, the construction of these local lines seems to have developed into a railroad mania, threatening very alarming consequences. Like all such manias, its development has been very rapid. It dates from the close of the Prussian war. In 18 70, the local lines constructed under the law of 1865 aggregated but 180 miles. This number of course remained the same so long as hostilities continued. Since the peace, however, it has increased to 930 miles of completed road, while 1730 additional miles are in course of construction; and yet 756 other miles are already authorized. Altogether, the local roads already built or authorized involve an estimated outlay of $130,000,000. Thus not only is the very basis upon which the permanent value and prosperity of the French railroad system rests in jeopardy, but, if we may judge by recent experience in this country, a railroad panic is impending over France in the near future.

This, then, is the French railroad problem of to-day. It is the old question in a new guise. How is railroad competition to be held in check? The hands of the government are tied. It does not dare to repeal the law of 1865, for it is dangerous to run counter to a mania. No French government ever yet succeeded in doing so. It is not surprising, therefore, that those upon whom it devolves to suggest a solution of the problem pronounce it at once most urgent and most complex. In all probability it will be found to admit only of that costly solution with which both America and England are so painfully familiar. The mania must run its course, and result in collapse, its ultimate effect on the French railroad system as a whole, and upon the relations it bears to the government, cannot now be foreseen. But it is safe to predict that the element of governmental control will in France be developed rather than diminished. Meanwhile, among the many problems now engaging the attention of the French people, that connected with its railroad system may in a not remote future prove fraught with the gravest political consequences.


If there is, indeed, an inherent and irresistible tendency in the railroad systems of all countries to assume closer relations with governmental systems, if, as so many are inclined to believe, transportation is such an important and complex element in modern life that it must ultimately find its place among the functions of the state, then it is safe to say that in no other country does the railroad problem present so interesting a phase of present development as in Germany. The inclination of the German mind, especially the North German mind is, bureaucratic. It takes naturally and kindly to this method of development. This seems the natural mode in which the political genius of the people works. With us in America, it is just the opposite. The commission is our bureau. We are continually driven to a recourse to it, but we always accept the necessity with reluctance, and the machine withal does not work well. Where it is not corrupt, it is apt to be clumsy. We get from it no such results as are obtained by the Germans. The reason, if we choose to seek it, is obvious enough. The bureau is a natural outgrowth of the German polity; it is the regular and appropriate form in which that effects its work. With us it is a necessity, but none the less an excrescence. Our political system has come in contact, through the complex development of civilization, with a class of problems in presence of which it has broken down; such questions as those of police, sanitary regulations, education, internal improvements, transportation. At first we always try to deal with these through the machinery of parliamentary government, a sort of sublimated townmeeting. The legislative committee is the embryolie American bureau; as such it serves its purpose for a time, doing its work in an uncouth, lumbering sort of way, and then, its insufficiency becoming manifest, it makes way for the commission. The American commission is, however, by no means the Prussian bureau. It is at best a very poor substitute for it; a thing suddenly improvised in place of one gradually developed.

When a community comes to dealing with such a problem as the gradual political development, it might almost be said the political evolution, of its railroad system, this distinction becomes important. In the one case the question is approached by a patient, trained professional; in the other by an eager, overconfident amateur. If, therefore, the problem of reëstablishing the state in new and more effective relations with the agencies of transportation is to be solved in our time, it is pretty safe to predict that the solution will be reached in Germany long before it is in America. Not only do they approach it there in a more practical and scientific spirit, but the ground is better prepared. The material is more ready to the hand. For, almost necessarily, the German railroad system reflects the condition of the German political system. It is a curious complication, very diflicult to understand,— a mass of raw material, out of which order is to be deduced. Particularism ruled supreme; each petty sovereignty had a policy of its own. Yet certain fundamental principles asserted themselves everywhere. The system, for instance, was originally established on the principle of concessions to private companies, usually for from thirty to fifty years, and the idea of competition found no place in it. On the contrary, the building of competing lines was expressly forbidden. As the several lines extended themselves this restriction so impeded their development that in Prussia a few years ago it was repealed. The results which have just been described in France then ensued. A mania of railroad construction and expansion developed itself. Dr. Strausburgh burst upon an astonished world. The usual result followed. A panic and collapse took place, and railroad property depreciated in value as much in Prussia as recently it has in America.

But throughout Germany the relations between the state and the railroads had always been very close. Those building the roads under concessions had received liberal aid from government, sometimes in the form of a subsidy, at other times through a guaranty of interest or dividends; while in yet other cases the state itself became a large stockholder. The tendency towards a closer connection between the government and the railroads has constantly been apparent, and in consequence of the recent railroad mania is more pronounced now than ever before. Prussia, always a large, if not the largest, owner and manager of railroads in North Germany, has lately purchased new lines; while the government of Bavaria has at last acquired all the railroads within the limits of that country, and is indeed thus the first considerable governmentin the world to both own and work its entire railroad system. Whether actually owning and operating the railroads or not, however, the hand of the German governments has ever been present in their affairs, regulating everything, from the rates on merchandise to the safeguards against accident. Starting from the fundamental German principle that it was not only the right but the duty of the state to interfere in every matter of public interest, it assumed the power as a matter of course, until in practice the will of the minister was able to make itself felt in every direction.

Owing to the lack of cohesion among the political organizations of the Germanspeaking race, the necessities of their position long ago caused the railroads of Central Europe to form a union among themselves. In this there were included, in 1873, nearly one hundred managements, operating 26,000 miles of track, the governments being represented in the same way as private managements. This union settled questions of fares and freights, and made all necessary traffic arrangements. Through it combination was made to take the place of competition, and in case of controversy t he roads had recourse to arbitration, directly under the eye of the government and of the public, instead of to wars of rates. As a result, tariffs at once intelligible and equal, things unknown in English-speaking countries, are not only in general use, but are universally observed. Before the battle of Sadowa brought the North German empire into existence, this union was, under the conditions there existing, a necessity. It then became firmly established, and is now recognized as a most useful part of the railroad organization. It introduces into the system uniformity and stability, causing a direct contact with the government. In all probability it is now paving the way to merging the two.

This result is only a question of time, and is already actively discussed. During the present session of the imperial parliament, the government was formally instructed to cause a regular inquiry to be made into the expediency of acquiring the remainder of the private lines. The matter was referred to the Imperial Railroad Commission, which has not yet reported. German investigations are not rapid, and at present the imperial government is not financially in a situation to justify large outlay. The tendency is, nevertheless, all one way, and the report when it comes will probably initiate a well-matured movement in the direction of state railroad ownership and management on the largest scale. This is as it should be. For the reasons already stated, in Germany this great experiment can be tried on a large scale and under conditions most favorable to success; in Germany, therefore, it ought to be tried first.

The English, the Belgian, the French, and the German are the four great railroad systems. With many points in common, each has peculiar features deserving of careful study. In their political relations they are divided into two groups by a broad line of demarkation. On the one side of that line are the systems of the English-speaking race, based upon private enterprise and left for their regulation to the principles of laissez faire, the laws of competition, and of supply and demand. On the other side of the line are the systems of continental Europe, in the creation of which the state assumed the initiative, and over which it exercises a constant and watchful supervision. In applying results drawn from the experience of one country to problems which present themselves in another, the difference of social and political habit and education should ever be borne in mind. Because in the countries of continental Europe the state can and does hold close relations, amounting even to ownership, with the railroads, it does not follow that the same course could be successfully pursued in England or in America. The former nations are by political habit administrative, the latter are parliamentary; in other words, France and Germany are essentially executive in their governmental systems, while England and America are legislative. Now the executive may design, construct, or operate a railroad; the legislative never can. A country, therefore, with a weak or unstable executive, or a crude and imperfect civil service, should accept with caution results achieved under a government of bureaus. Nevertheless, though conclusions cannot be adopted in the gross, there may be in them much good food for reflection. It may, perhaps, in the present ease be found that Belgium, France, and Germany have each and all worked out principles the application of which has a direct bearing on questions now perplexing America. In another paper an attempt will be made at the practical application to our own circumstances of this experience of others.

Charles Francis Adams, Jr.