Canadian Transport Sourcebook

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Canadian Transport Sourcebook > All works> 52 Questions on the Nationalization of Canadian Railways > Chapter 14


Is Public Ownership, Then, Always a Failure?

Certainly not.

There are circumstances in which, to my way of thinking, it is necessary and logical.

(1) In combatting arrogant monopolies whose charters have not expired and who can be dealt with in no other way.*

(2) When the work to be done is of a special, confidential nature—such as the carrying of mail, the keeping of records and the care of Government property, or the government of subject races as in India.

(3) When the work is purely routine, requiring disinterestedness and dignity rather than alertness, enterprise, resourcefulness.

(4) When the service to be rendered lies within one locality, with one standard of judgment, capable of being applied by any one in the community (such as street railway or waterworks systems).

(5) When public opinion is muzzled and powerless—in a Bureaucracy such as Prussia once was.

Public ownership has probably three changes of success in an old, thickly populated country to one in a young, sparsely-settled country such as Canada.

Where men are crowded together opportunities for employment are likely to be scarce. The opportunity to satisfy personal ambition in private enterprise is limited. A large percentage of the young and ambitious cannot find careers in private business and are glad to fall back on Civil Service employment.

For the ambitious man Civil Service is everywhere in democratic countries second choice! Only in Germany is it First. As a rule in this Canada only the weakling, the man with a social ambition or the seeker after an easy berth really wishes to enter the Civil Service.

In Canada private enterprise can and for many a year will have first choice of the men. It offers "the open top," the possibility of becoming master! Civil service gets the men who are left over.

The army is an exception to the rule. The business of dealing in wounds and death overawes the politician. A leader in the field is above and beyond public control until some disaster or serious break-down calls for investigation. His successor at once assumes the same freedom from control. The morale of armies, moreover, is the morale of destruction, not construction, the morale of spending, not the morale of maintaining and conserving. Armies in peace times (except in a Bureaucratic state like Germany) tend to go the way of all departments of Civil Service. Red tape flourishes. Initiative and enterprise die prompt deaths.

Lastly: exceptional men sometimes occur who are able to combine great executive ability with political ability. But almost invariably they get into the business thus controlled from the political end, not from below. "The top" in such organizations is closed!

Personal affection for an exceptional politician, as in the case of Sir Adam Beck in Toronto, may, for the time being, inspire in his officers enthusiasm equal to that in a well-conducted private corporation. Though "the top" is closed they work long and hard for this striking figure who is able to do with the public—at present—what he pleases.

Great railways and their public cannot rely, for cheapness of service, speed and reliability—for alertness, enterprise, energy, initiative—year after year and generation after generation on the accidental occurrence of a great personality.

In old countries,
In armies in war time,
In certain classes of work,
And under exceptional men—
Public Ownership ventures may and do often succeed.

The conditions in the management of railways are different: they promise only calamitous failure.

But what about the State Railways of Germany, Austria, Belgium, France and Australia?

Two factors make the German, Austrian and Belgian conditions incomparable to Canadian conditions.

1st. The great density of population has three favorable effects on those foreign roads: (a) It produces finished or nearly finished materials along every mile of line. The roads haul, therefore, high class commodities over short distances. (b) It provides plenty of labor at low wages—lower in Germany before the war than in England. (c) The heavy population provides more young, ambitious men than can find careers in private enterprise. Great numbers remain available, therefore, for Government service—the treadmill of the less ambitious all the world over.

2nd. These countries are under Bureaucratic Government or "Government by officials." (See last chapter.)

The State railways of France, in spite of dense population and dense traffic, had a doubtful record prior to the war. At least as many critics condemned the French State railways as approved them.

The same is true of the Australian railroads. Quality of service, rates and net earnings, when studied together, show for the Australian roads a very uncertain "success."

What About the Canadian Post Office? Three Cents on a Letter Carries it to the Ends of the Earth! That is Public Ownership!
And it Pays!

It is, first of all, fair to judge the Post Office by the same standards that a bank manager would use in judging your business if you wanted a loan.

It should be.

Is it fair that in reckoning the alleged profits of your business the bank should insist on knowing your real costs, including any portion which your father, uncle, brother or grandfather may have paid as a gift for you?


That is, if I show a profit selling cordwood at ten dollars a cord because I am able to buy it at five dollars less than it actually costs my rich grandfather to produce—and another merchant just comes out even selling at fifteen dollars a cord, that, you admit, is no special credit to my skill in merchandising?


That, then, is the position of the Canadian Post Office when credit is claimed for it on the grounds of economical or profitable operation. According to an exhibit* before the Dominion Railway Commission the Post Office pays only a nominal rate for the carriage of mail, a rate less than cost. The Canadian traveller and shipper pay the difference.

"A carload of mail," said the document referred to, "moving from Montreal to Ottawa would bring the railway a revenue of $17.76, or, for a ten-ton load one and six-tenth cents a ton-mile (a mile per ton), and this for a movement on a high speed passenger train."

On the other hand:

"A car of first class freight," said the document, "with a minimum of ten tons load, moving between Montreal and Ottawa, would bring a revenue of $74.00, or 6.67 cents a ton-mile, and this for movement on a freight train at freight train speed."


"A carload of parcels post moving between Montreal and Ottawa with a minimum of ten tons to the car would yield the Government $1,280, or $11.53 per car mile (per mile per car) as against $17.76, or sixteen (16) cents a car mile that the Railways would receive for the haulage. Based on the English system of renumeration the railway would receive $704.00, or $6.34 a car mile."

"A special mail train moving between Montreal and Ottawa would yield $1.24 a train mile, or $138.75.

"A special passenger train between Montreal and Ottawa at a minimum charge of $2.50 a mile could not yield less than $280. This might be increased materially by the number of tickets over the required minimum."

If the Canadian Post Office was on a par with other businesses—would it then really pay?

Is the Canadian Post Office making a high enough profit considering these advantages?

May not two cents or three cents be, in reality, an absurdly high rate compared to what it might be if the Post Office was efficiently run?

Is the Canadian Post Office, then, such a sure success as to be cited in support of Railway Nationalization?

* It is cheaper to refrain from establishing monopolies, private or otherwise.

† India is, of course, a Bureaucracy.

* "Exhibit B, Board of Railway Commissioners of Canada, reference as to compensation for carriage of mails; comparison of Mail Rates with those on other branches of traffic."

[Public Domain] Copyright/Licence: This work was first published in 1964 or earlier, and the author of the work was anonymous. To the best of my knowledge, the author of the work was unknown at the end of the year 50 years after the work was published, meaning that this work would be in the public domain in Canada, per section 6.2 of the Copyright Act. Note also this link. See disclaimers.