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Against Home Rule (1912) by Various

V >> Various >> Against Home Rule (1912)





PURCHASE BY STATE PAPER.

It may be said that the nationalisation of railways could be carried
out, not by a cash payment, but by a paper exchange of existing Railway
Stocks into newly created Irish Government Stock, the amount of the
existing net receipts being guaranteed. But, unless the Irish Government
could actually borrow in cash the sum required, at a rate equal to that
nominally put on the new stock, the shareholders would be robbed of a
capital sum equal to the amount of the discount on the stock, _i.e._ the
amount of the market quotation below par, or issue price. There will be
sellers of the new stock from the beginning, and what the public will
give for it, and not the nominal figure put upon it by the Irish
Government, will be its real value. The Irish Government may issue the
Railway Stock at 3-1/2 per cent., but if they could borrow the sum
required only at 4-1/2 per cent., the new stock will at once find its
level at about 77 instead of 100, and the capital value of Irish
railways will be reduced from, say, L45,000,000 to L35,000,000, and the
difference, L10,000,000, would come out of the pockets of Irish
shareholders. The Irish Government would be, however, in this unpleasant
dilemma, that if they issued the stock at a rate per cent, nominally
higher than the present return in railway capital, namely, 3.77 per
cent., the annual charge for interest would be greater than the net
receipts, and so from the beginning there would be an annual loss; and
the fact of this annual loss would be another factor tending to
depreciate the new Railway Stock. The alternatives before an Irish Prime
Minister, pressed to carry out a "Nationalisation" policy, are not
enviable. He will either have to provide by taxation for the annual loss
involved in taking over the railways on a fair basis, or to deprive the
most thrifty and industrious classes of his fellow-countrymen of a large
slice of their savings and investments. In either event, the new
Government will have received a serious blow to its credit at the outset
of its career.


EFFECT OF REDUCTION OF RAILWAY RATES.

There is, moreover, a special reason why such a stock, from its
inception, would tend to depreciate in value; namely, that from the
moment the Irish Government or their nominees became the owners, there
would be almost irresistible pressure put upon them to reduce the
railway rates, and generally (as indeed the Majority Report recommends)
to work the railways on other than commercial lines.[99] A reduction of
rates has been held out as the great resulting boon of nationalisation
ever since the Irish Parliamentary Party specifically raised the
question in Parliament in 1899. A 25 per cent. reduction in rates and
fares (suggested by Nationalist witnesses) would involve an annual
diminution of net receipts to the Government of over L1,000,000 per
annum, and if the reduction were in goods rates alone, the loss would be
L568,000 per annum. It would be years, if ever, before such a loss could
be recouped, however the traffic was increased. Experience has shown
that in recent years running expenses tend to increase nearly parallel
with the gross receipts, and a large increase in gross traffic would
involve enormous capital outlay for rolling stock, engines, sidings,
etc. It is unnecessary to comment upon the suggestion that the railways
should not be run on "commercial principles." The Irish ratepayers and
taxpayers, who would have to bear the loss, would loudly call out for
business management when it was too late.

It is hardly necessary to add that another result of such an operation
would be to prevent the Irish Government raising the very large sum
necessary for improving and standardising the light railways and for
extensions, except at an unremunerative rate of interest. Even if
shareholders be put off with State paper, contractors will have to be
paid with cash. Moreover the creation of such a large amount of debt at
the beginning of the new regime would render it difficult, if not
impossible, for the Irish Government to raise sums necessary for other
public works and services of a pressing character, arterial drainage,
canals, education, and other objects, not to speak of migration,
congestion, and land purchase. The conclusion, in fact, is inevitable,
that without the security of the United Kingdom, and the market of
British investors willing to lend, it is idle to think that either State
purchase of railways, or any other of the boons mentioned, are
reasonably possible. Mr. Erskine Childers, though a Home Ruler, does not
fail to perceive, to use his own words, "that financial independence
will now mean a financial sacrifice to Ireland."[100]


EFFECT OF NATIONALISATION ON TRADE RELATIONS.

There are other important considerations which confirm the view that, if
the control of Irish railways were taken away from the Imperial
Parliament, and placed under a Parliament sitting in Dublin, and if the
general code of railway legislation now binding on both countries could
be altered by a Home Rule legislature, results disastrous to the trade
between the two countries would probably follow, whether
"Nationalisation" were carried out or not.

The Majority Report recommends, as one of the chief objects of
"Nationalisation" under an Irish authority, the reduction of _export_
rates, both local and through rates, on the Irish railways, as
"essential to the development of Irish industry," and this seems the pet
project of a large number of witnesses, and of Irish local authorities.
Import and export railway rates are now the same for the same classes of
produce, and no Irish railway company could now differentiate between
them, without being pulled up by the Railway Commission at the suit of
British traders, or British railway companies. The policy suggested is
practically to use railway rates as a system of local protection,
similar to the existing practice and policy on the continental, and
notably the Prussian State Railways. It is easy to see that without any
Customs barrier between the two countries, such a policy would
inaugurate practically a tariff war between Ireland and Great Britain,
which would be disastrous to both. That such a policy should be
subscribed to by Free-traders, and that a Free-trade Government should
advocate a change in the relations between the two countries, under
which such a system could be possible, is indeed surprising. To use
Imperial credit for such a purpose would be midsummer madness. Even
without any scheme of nationalisation, the establishment of a separate
Executive and Legislature in Ireland might have sinister effects on
traffic arrangements between Great Britain and Ireland and on the
harmonious administration of the railways.


THE RIGHT SOLUTION.

The truth of the matter, and the inference to be drawn from the above
considerations and the whole trend of modern trade, is that to break up
the railway systems of Great Britain and Ireland into two rival and
hostile systems of transit, working for different objects and by
different methods, would be to stop a natural and healthy process of
uniform working and harmony, which has enormously advanced in the last
decade, to the great advantage of Ireland.

Almost every scheme of amalgamation in Ireland has been connected with
the opening or development of a new cross-Channel route, as the history
of the Fishguard and Rosslare and the new Heysham routes fully shows. As
part of this process, English companies, like the Midland and the Great
Western, are either acquiring Irish lines or making special traffic
arrangements with them. Enormous sums have been spent on harbours and
steamers by English companies for the purpose of developing traffic with
Ireland, and the increased interchange of goods has been of great
advantage to both countries. The ideal put forward by advocates of
railway nationalisation and Irish independence, that in respect of trade
and traffic Ireland should be a sort of watertight compartment,
self-supporting and self-contained, is, I submit, a mischievous delusion
which, if put into practice, would undo much of the good progress
Ireland has recently made. Such an ideal would also be the exact
contrary of the line of national development as based on transit and
transport followed in almost every other civilized country. In Germany,
Canada, the United States, and Australia, we see the policy consistently
pursued of amalgamation, consolidation, and facilities for long-distance
traffic, so that between all parts of each State and Empire there shall
be the freest and most perfect interchange of traffic. Canada and the
United States have been so far inspired by this principle as to spend
countless millions first on East and West (and now on North and South)
lines, even before there was traffic to carry, and in order to create
traffic; and the principle has been justified in its results.

From this point of view St. George's Channel and the Irish Sea should be
a means of communication, constant and in every direction, between the
two Islands, and not a sort of boundary ditch to be deepened and
rendered difficult of passage.

If Ireland wishes to share England's prosperity she must not build up a
wall against the credit, trade, and special products of her richer
sister. If England wishes to have and to foster a magnificent source of
food supply, well and strategically secured against continental foes,
she also must do all that can be done to encourage intercourse. To
develop traffic between Great Britain and Ireland is the policy which
both experience and theory point to as advantageous to both countries;
to subvert this policy and make Ireland's commerce local and
self-sufficing, seems to be the narrow and mistaken ideal of Nationalist
aspirations.


UNIONIST POLICY.

It follows that the Unionist Party must oppose any plan for
"nationalising" the Irish railways, whether by the credit of the United
Kingdom, or otherwise. The policy we advocate is to be found in the
Minority Report of the Viceregal Commission, signed by Sir Herbert
Jekyll, Mr. W.M. Acworth, and Mr. John Aspinall, not as politicians, but
experts; and in the Report of the Royal Commission on Canals and Inland
Navigation dealing with the question of canals and water transport in
Ireland.

In the case of railways, the aim should be to amalgamate them into two
or three large companies to standardise as far as possible the light
railways, and level them in respect of gauge, gradients, works, and
rolling stock with the larger companies. Unquestionably many of the
smaller railways to be amalgamated, though not light railways, need
large expenditure for the purpose of duplication of running lines,
straightening of curves, stations, stores, and conveniences, and many
extensions and cross-lines will also be needed to connect them with the
trunk lines, and to open out districts now unprovided with railway
facilities. Many of these projects, though industrially remunerative to
Ireland and advantageous to England also as tapping new sources of food
supply, would not be, in strictness, commercially remunerative in the
sense of giving fair return on capital over working expenses, and it is
idle to expect that private capital will ever be subscribed for these
purposes. They can only be undertaken either directly by State funds, or
by money provided by the State, and lent to the large amalgamated lines
at low interest. This is the policy inaugurated by Mr. Arthur Balfour,
which has been of untold benefit to many districts in Ireland. Probably
a public grant of, say, L2,000,000, and loanable money available to the
extent of L8,000,000, would largely solve the problem. For the reasons
already given it is only by Imperial credit, and under the aegis of a
united Parliament and Government, that capital on this large scale can
be available for these purposes.


CANALS AND NAVIGATION.

The problem of canals and inland navigation in Ireland is a minor one,
but the same principles largely apply. The Royal Commission[101]
recommended that all the chief waterways, canals, and rivers necessary
for inland transport should be purchased and remain under the control of
the State, the controlling authority, however, not themselves, to become
carriers on any waterways. At the same time, they strongly urged that
the problem of arterial drainage and relief from floods should not be
treated separately, but that the control of drainage works should be
under the same central authority as that which is to control waterways
and navigation.

It is not necessary to refer in detail to the Report. Apart from the
sum necessary to buy out the existing owners of canals and waterways,
towards which L2,451,346 had been contributed from private sources, the
Commissioners contemplated a further expenditure of about L200,000 on
new works. In addition the sum of L500,000 would be required, on a
moderate estimate for drainage and the prevention of floods. The
pressing nature of the latter problem is once more emphatically
evidenced by the wholesale injury to property and the public health by
the recent flooding of the basins of the Shannon, Barrow, Bann, and
other rivers. Here, again, we have problems which it is idle to expect
an Irish Parliament to solve satisfactorily for years to come, or,
indeed, ever. Ways and means must be an effectual bar. Drainage and
navigation form only one problem out of a dozen facing a Home Rule
Government needing the raising of enormous capital. Probably the
Commissioners conducting the Canals inquiry, who were persons of all
shades of political opinion, were well aware that only under the present
system of State credit could the financial difficulties be overcome.
According to their report, the State (_i.e._ the Government of the United
Kingdom) were to acquire the control, which was to be carried out by an
Act of Parliament, naming the Waterways Commissioners, "who should be
persons disassociated from party politics."

The one dissentient out of twenty-one signatories, Lord Farrer,
significantly adds that he does not favour a "charge on the public purse
and new Boards of Management _until a purely Irish elected authority has
agreed to pay for them_." Precisely; Lord Farrer has looked ahead. Will
an Irish elected authority agree to pay for these boons, and will they
be able to pay? That is a question which will cause some searching of
hearts amongst all interested in Ireland's welfare;--in these pages we
have attempted to give an answer.


CONCLUSION.

The conclusion is in fact inevitable. Ireland cannot have it both ways.
She cannot have financial independence and financial dependence at the
same time. No Colony has ever claimed or been granted these inconsistent
conditions. If Colonial precedents are cited, their essential
limitations should also be borne in mind. Colonial loans are not charged
on the Consolidated Fund. Nor have Colonial railways been nationalised
with the money and credit of the United Kingdom, in order to favour
local exports at the expense of imports from England.

Our examination of the question brings us to the clear conclusion that
it is only under the existing system of a single Parliament and
Executive for the United Kingdom that the problems of transit and
transport in Ireland, or between Great Britain and Ireland, can be
satisfactorily solved, whether from the point of view of finance,
justice to shareholders, or advantage to the trade and convenience of
both countries.

NOTE.--It has been suggested, since the above was written, that the
balance in the Irish Post Office Savings Banks (now about
L12,500,000) might be available to the new Irish Government, for
advances to farmers and other public purposes. The suggestion
involves the applicability of such advances for the purchase or
amalgamation of the Irish railways under an Irish public authority.
Such a proposal will not bear close examination.

It is an essential condition of the existence of Savings Bank
deposits that the deposits should be always available on the call
of depositors; and this condition would no longer be fulfilled if
the balances were locked up in Irish railways. In fact, if there
was any suggestion that these balances should be used for the
purpose of enabling the Irish Government to run the railways on
uncommercial principles, the deposits would very soon diminish or
disappear--and this apart from the question whether under Home
Rule, the deposits would in any event remain at anything like their
present high figure.

FOOTNOTES:

[Footnote 92: Viceregal Commission on Irish Railways, Final Report, 1910
(Cd. 5247). Final Report on the Canals and Inland Navigations of
Ireland, 1911 (Cd. 5626).]

[Footnote 93: "The Framework of Home Rule," p. 174.]

[Footnote 94: Figures are taken from Viceregal Commission Reports, p.
78, Report.]

[Footnote 95: Page 78, Report.]

[Footnote 96: Page 58, Report.]

[Footnote 97: Final Report, pp. 76-83.]

[Footnote 98: We have taken the Act of 1844 as the basis referred to by
the Commissioners, though it is very doubtful (having regard to the
great variety of railway share and loan capital), if the terms of sect.
2 are now suitable; moreover sect. 4 requires a special Act of
Parliament to be passed to raise the money, and settle the special
conditions of the purchase option.]

[Footnote 99: Majority Report, p. 76.]

[Footnote 100: "Framework of Home Rule," p. 281.]

[Footnote 101: Final Report on the Canals and Navigations of Ireland.
1911. (Cd. 5626.)]

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