Canadian Transport Sourcebook

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Canadian Transport Sourcebook > All works> 52 Questions on the Nationalization of Canadian Railways > Chapter 2


May not Railway Nationalization Reduce Railway Costs?

1. By a central management, as in Great Britain and in the United States? That centralized management, I discover, has existed in Canada since October, 1917, in the form of the Canadian Railway War Board.

2. By eliminating duplication of service? Such elimination has already taken place under that War Board, much to the discomfort of amiable persons who live far from Toronto.

3. By making one staff do the work of several? This is not impossible. I can see where, if properly carried out, such an arrangement would be highly economical. Two factors impress one unfavorably, however: first, the universal over-staffing of Government railway departments; and, second, the present under-staffed condition of the private roads due to labor shortage.

4. By returning to the railway users or to the public Treasury the profits now earned or likely to be earned by private railway companies? A vitally important point from the citizens' outlook. This, certainly, would be the great desideratum. But investigation and careful scrutiny of the facts lead me to believe that with the reduced efficiency of Government ownership, even at existing rates, there would be no profits to rebate unless the Government, as it does in the case of the Intercolonial Railway, paid the fixed charges of its roads out of General Revenue and charged the loss to the Canadian tax-payer. That, of course, would save nothing to the tax-payer.

But assume the roads did not lose in efficiency by being brought under Government ownership. Assume that they continued to earn the same yearly average dividend earned by the Grand Trunk and C.P.R. since 1880 and 1883 respectively (the earliest years for which reports are available). There would have been no saving to the Canadian people. The Grand Trunk shareholder has never received more than 5% in any one year (the Canadian Government is now paying 5½% for its borrowings), and on the average, taking all classes of issued stock into consideration, has received much less than common bank interest. Even with no fall in efficiency the Canadian people would be committing themselves to an annual loss now borne by hopeful shareholders.

The Canadian Pacific shareholders have received since 1883 an average of a little less than $7,000,000 a year—larger dividends have apparently been the exception, not the rule—from the operations of the railroad, or say 4% on an investment of $175,000,000. On the basis of the actual physical value of the Canadian Pacific Railway to-day this average yearly dividend would pay nearer two per cent. than four. The Canadian people, borrowing to buy the C.P.R., would have had to pay the difference between net earnings and the interest charges. At a rate of earnings based only on the recent prosperous years of the C.P.R. the calculation would be more favorable to the purchaser—still assuming, of course, that Government management, direct or indirect, would be as efficient as the present management. Even that profit would not make up all the loss on the G.T.R. And if the C.P.R. efficiency fell—what then?

Further: take away the annual bonus paid the Government by the roads in the form of mail carried at less than cost and officials carried for nothing—consider the reduced alertness, energy and enterprise of the officials which follows their transfer from Private to Public management—and the saved Profit vanishes!

5. By doing away with the evil of routing goods indirectly? Here we amateur railroad experts must study geography. This evil has never existed in Canada as it has in Great Britain and the United States. In most of Canada practically all roads run, I observe, in straight lines, parallel, east and west. The C.P.R., Grand Trunk, or C.N.R., I learn, handle goods between any of their competitive points in practically the same mileage. Unlike Great Britain and the United States, the geographical configuration of the country does not, at the present state of settlement, encourage the building of triangular railroad routes. Canadian cities, with a few exceptions, tend to lie in a straight line. There is thus no indirect-routing evil to be dealt with!

Or May Not Nationalization Increase Railway Speed?

1. By routing goods over the shortest line? According to the reports of the Canadian Railway War Board inter-routing is already in operation under that Board to the fullest possible extent.

2. By making one road share with another its surplus of locomotive power, or repair facilities, or rolling stock? This has long since been provided under the War Board whenever necessity demands it.

May Not Nationalization Increase Railway Reliability?

1. By making all lines co-operate in relieving a congested district? This is already done, as, for example, when, in the winter of 1917-18, C.P.R., G.T.R., and T. H. & B. all carried coal from the Niagara Frontier to Toronto, and the G.T.R., C.P.R. and C.N.R. carried eastbound goods from Toronto irrespective of the original routing.

2. By offering the facilities of one road to another, short of facilities? That also is one of the functions of the Canadian Railway War Board.

If Nationalization can do no Good it can do no Harm?

In this I believe you err. Nationalization, I am convinced, will shatter in a few years the MORALE now maintained by the privately-owned roads and which is to-day the pace-maker for the Government roads.

† See pages 113 and 114.

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