each branch of business in succession till all was in Government hands
we should arrive at Communism. For each successive interference of
Government a reason from economy can generally be found: as in the case
of telegraphs, so in the case of tea. The real objection to Government
monopolising the retail of tea is, that so long as we live under a
system of competition we had better stick to that plan altogether. At
every turn of our present struggling system there is waste; but the
ultimate effect of competition is to reduce the waste to a minimum. In
the extreme case of tea it is pretty clear that the system of stores
will, when fully developed, give the public all or nearly all they might
hope to get from Government retailing, and at the same time will reduce
the loss by competition among tea-retailers.
But there is one industry, one branch of the public service, which
should be the very last to be monopolised or restricted by Government,
viz., the carrying of passengers and goods from one place to another,
especially carrying by railway; and yet this particular industry is
hampered by law and restricted by monopolies above all others--as I
suppose, most unnecessarily; but I will take a few cases in detail
before arguing from the general principle of Free Trade.
There is one railway from London to Brighton: there are two railways
from London to Exeter. There are fewer quick trains daily from London to
Brighton than from London to Exeter. There are third-class carriages
at a penny a mile on all the quick trains from Waterloo to Exeter: from
London to Brighton the only penny a mile train starts at an inconvenient
hour and travels exceedingly slow. The Brighton charge express fares on
every convenient quick train they run; the South-Western have no express
fares at all. The South-Western third-class carriages are padded, and as
comfortable as the first; the Brighton third-class carriages are bare,
very long, and run so badly that the shaking, the rattling of glass, and
the draughts, keep everybody (who can possibly afford it) out of them.
Naturally there have been numerous schemes for a second railway from
London to Brighton in the course of the last twenty-five years. The
present railway company has (they are not to blame for it) opposed each
scheme tooth and nail. They have shown that they themselves satisfy the
requirements of the public, and at the same time do not make a very high
dividend. If a new grocer required an Act of Parliament to set up as
a tea-retailer in Canterbury, could not all the existing tea-retailers
there prove most triumphantly that an additional grocer was not wanted,
and that their own profits were reasonable? It is not too much to
say that the greater part of the evidence admitted by Parliamentary
Committees against proposed new railways is foolery: without wasting
time on it, the Parliamentary Committee might assume as proved that no
monopolist trader wants a competitor. But the only safety for the public
is in competition. In railway competition the public always profit: if
the two companies agree to run at the same fares, the public gain
in number and speed of trains, better carriages, and attentive
consideration of their comfort. Moreover, in the case of two railways
between London and Exeter, or between London and Brighton, the two
lines only meet (not then quite) at the two termini; and the public is
accommodated at all the new intermediate stations where there was no
station at all before.
The North-Western Railway was many years ago opposing a directly
competing scheme. They brought before the Parliamentary Committee the
late Mr. Horne, whom they justly credited with ability enough to throw
dust in the eyes of almost any Parliamentary five. Mr Home's evidence
was: "I understand railway traffic as well as anybody; the public are
deluded in thinking they would gain by competition: the two companies
might fight for a week or two, then they would more wisely agree, and
put up their fares above the present North-Western fares, till they had
recouped themselves out of the public all they had lost by their fight."
This did very well for the Parliamentary Committee; but it is a fallacy.
At present the North-Western Railway, though empowered by law to
charge three-pence a mile first-class, charge twopence a mile only:
why?--because twopence a mile they find to be on the whole the most
paying rate. Ergo, after the fight with their directly competing brother
was over, they would settle down to twopence a mile again. The public
could not lose by the competition; they might gain. All experience shows
that they invariably do gain.
In France, Government has restricted the construction of railways very
greatly, and protected the monopoly of each existing company closely.
The mileage of railway open in France, in proportion to area and
population, is very small in comparison with that in England. Moreover,
the French lines are worked by quasi-Government officials, whose object
is to avoid work, and still more to avoid responsibility, and who will
not make the slightest effort to accommodate the public: they do not
wish the trade at their station increased. Under this system the traffic
on the French railways is low; especially when we consider how little
each is interfered with by other lines, and what a broad band of country
it has to drain.
The immense progress made by England since 1846, as compared with the
progress of France or of Germany, is often attributed _solely_ to Free
Trade. I believe Free Trade has done much for us: but I am sure that
our railway superiority (to France, Germany, etc.) has done much also.
Probably no one who has not _resided_ some time in a French town (say a
station on a main railway 150 miles from Paris as the least favourable
case for my argument) can realise the enormous disadvantage by loss
of time that a French business man is under, as compared with the
Englishman. To get some necessary manufactured article from Paris is
a matter of days; during which his machinery may all stand still. The
communication with Paris, however, is where the Frenchman suffers least:
the number of trains is so small, and the slowness of all (but the
express) is such that the "local" traffic is nothing: unless a man
intends to go a good many miles he would ride or even walk rather than
go by train. He does not mind getting up at 2 a.m. to go to Paris; but
he will not get up at that hour to go six or eight miles, especially if
he is given no choice as to the hour at which he must return.
But the usual remark about the French railways is, "See how much better
they manage these things in France. While our railway companies are all
spending their money in fighting and in competition, and pay dividends
of 4 or 5 per cent, the French railways have their routes settled by
Government engineers, and pay 8 or 10 per cent." I am going to propose
a plan for stopping all company fighting in England for ever: but--as to
the dividend--it can only mean that, like any other Government monopoly,
the French public are being made to pay more for travelling than they
need.
As regards the interest of the public, the rate of dividend paid by a
great railway company is of very small importance. For many years the
South-Western Company paid double the dividend the Great Western did.
How did this affect the work each did for the public--the conveyance of
passengers and goods? Many common highways have been made by parishes
and landowners combined for the public convenience; the capital so laid
out paid no direct interest (the road was a highway, not a turnpike):
how does this case differ from a railway that pays no dividend on the
original stock? If the railway carried me from Exeter to London in five
hours for thirteen shillings, what does it matter to me whether
the company pays 2-1/2 per cent or 6-1/2 per cent to its original
shareholders? In a very few small and special cases we have seen a
railway line not pay for the working, and be closed. In a few other
cases, where the dividend paid is less than 4-1/2 per cent, it is
possible that the utility of the line to the public is less than the
loss of the shareholders in a non-paying investment. I say this is a
possible and conceivable case--in some very short lines or in some very
thinly inhabited districts. Such cases I believe rare. Not rarely the
initial cost of the line has been seriously increased by promotion,
legal and parliamentary expenses, enormous sums extorted for land,
severance, etc.; if these expenses can be done away with, these cases of
railways constructed at a loss _on the whole_ to the nation may be made
fewer still.
The way in which the railway monopoly, the monopoly of the great
companies, has grown up is noteworthy. To enable a company to take
the land of a private man compulsorily a private Act of Parliament was
necessary. The Parliamentary Committees then said, We will not enable
you to dispossess forcibly private owners of their land for "a public
purpose" unless you further shew that this includes a public advantage.
Private owners were of course let in to show cause against a new
railway; they always talked like Naboth (the Parliamentary Committees
must have been wearied by the continual references to Naboth), but the
genuine private owners sold themselves at the last minute; after they
had pushed the company up to the highest bid, they well knew that this
was above what they could get in the after arbitration, and "closed,"
withdrawing their opposition the last day in the Committee room. The
opposition company, besides the grounds of insufficient need for a new
line, etc., always supports and comforts the opposing landowners: but
the great resource of the opposing company is to hire a landowner to
oppose, especially a local attorney or agent who owns land proposed to
be taken by the new line. Such an attorney, employed professionally by
the opposing company, cannot be bought off at any price; he is a real
Naboth, and in his character of a dispossessed landowner he will
fight for the company every point that they cannot decently fight for
themselves.
Opposing a railway bill in Parliament has thus become an art; so much
so, that no independent small line can be made unless they can get the
support of one (at least) of the great companies that are supposed
to occupy the area. The lines made (economically often) by the great
companies themselves are not primarily designed for the accommodation of
the public, but for the private purposes of the great company; sometimes
they are made merely to diddle another great company.
It is well to compare the law regarding making a new railway with that
for making a new main-drain in the fens. In the latter case the new
drain company receives extraordinary powers and may put a rate on the
land benefited. In the case of a railway passing through a farm, the
common estimate is that it adds a shilling an acre value to the rent of
the farm; if there is a station on the farm it often adds much more
to the agricultural value. Landlords are up to this: a landlord
triumphantly told me, "I got £7000 from that company for cutting me up;
but I would have given them £14,000 to cut me up more." (In this case,
however, building value came in.) But the disgraceful squabbling of
companies, who "sell" any owner without scruple when they come to terms
among themselves, has disgusted landlords from actively supporting
railway schemes.
A great deal of the opposition between rival companies has been from
their point of view an error, as they have subsequently discovered for
themselves. When the Great Western Company first opened their station
at Basingstoke there was war between them and the South-Western, who
thought all their London West-End passengers would transfer themselves
to the Great Western at Basingstoke in order to avoid a cab drive from
Waterloo to Paddington. Some passengers do so transfer themselves. But
_via_ Basingstoke a fine trade sprang up between the south of England
and the Oxford and Leamington route, which far more than compensated
the South-Western Company for the London passengers they lost at
Basingstoke. So in a very few years there was peace at Basingstoke, and
a through-carriage daily from Birkenhead to Southampton. I think it
is impossible to estimate how much one railway company profits by the
facilities afforded by all the surrounding companies. The loss at a
limited number of competing termini is seen; the gain in the local and
cross-country traffic is not.
I propose Free Trade in Railways. I mean that any person or company
shall be free to make a railway wherever they please. They will have,
before commencing the line, to lodge with the Board of Trade the cost of
the land they take as valued in the National Rate Book, with the 30
per cent for compulsory purchase. They will not have to lodge the money
where they have come to terms with the owner; and the Board of Trade
will allow them to construct the line in reasonable sections. Having
lodged their money, the company (or private speculator) will only have
to go to work under the (amended) Lands Clauses Consolidation Act.
If this scheme were sanctioned we should have in the course of the
next twenty years, _as I estimate_, £100,000,000 additional invested in
England profitably--not under Government pressure, but by business men
to get interest. Even where the new lines paid little interest we should
get the accommodation of the public. We should have no big village
without its railway; and we should have a great extension of private
sidings. On the eastern half of England we might get a great number of
narrow gauge steam trams running along the present trunk roads. (Suppose
a steam tram from London to York by the Royston route, going through
all the towns, running trams an hour apart all day, going eight miles an
hour through the towns, sixteen or twenty miles an hour in the country,
taking up and setting down everywhere, would it not pay?)
The only objection to Free Trade in railways is that it would injure the
existing railway monopoly. Under this principle no monopoly ever would
have been or ever will be put down. But I believe the existing great
companies would very generally gain by Free Trade in railways.
For, first, few new railways would be in direct competition with the
old. The old lines have level roads; they can run quicker and with less
wear and tear than the new ones, which would generally have steeper
gradients. The new Free Trade lines would be in the main a network in
the interstices of the present lines. By this the existing companies
would gain enormously; they would be the trunk lines which the network
would feed. It is true that there would soon be a second line to
Brighton; the present Brighton Company would possibly pay as good a
dividend then as they do now. But if they did not, it would only show
how they tax the public now as well as hinder trade. I am not bound to
show that the monopolists would profit by Free Trade; I deny that
the monopolists have any vested interest in their monopoly, or that
Parliament, i.e. the nation, has made any covenant with them that their
monopoly shall never be invaded.
I have suggested three great changes: (1) Perfect Free Trade at all our
ports; (2) The exploitation of the land through the National Rate Book
machinery; (3) Free Trade in Railways. Of these the last is clearly
advisable, nor is there anything (in my opinion) to be urged on the
other side. At the same time it is not less important than either of
the two other suggestions. But the three would work best together--each
aiding and reacting on the other; they would thus provide "progress"
(which means comfort to all classes) in England for at least two
generations of men. If there was no National Rate Book, the new railways
would have to pay exorbitantly for the land they took up under the
existing arbitration system; they would be relieved merely from the
parliamentary opposition of other companies and of private individuals.
The private owner must be deprived of his present privilege of
parliamentary opposition, which gives him the power to extort an
exorbitant price for his land--because a company can always oppose in
the garb of some private owner whom they have hired.
A less but important branch of this reform is the narrowing of
Government interference under pretence of protecting the public. Great
expenses are thus thrown on railway companies. The companies cannot,
therefore, charge increased fares, but such expenses diminish the number
of new railway schemes brought forward. Nor do Government rules protect
the public so well as the old plan (abolished by Chief-Justice Cockburn)
of making the railway company pay for killing or injuring people. Now,
after a great railway smash, the company comes forward and shows that
there was no negligence on their part; that in the signals, breaks,
etc., they had satisfied all the Board of Trade regulations, and
the injured passengers can get nothing. The real way to protect the
passengers is to allow the company to make their own arrangements, and
to compel them to pay heavily for killing and maiming passengers. This
is quite defensible in theory, as in the case of manslaughter by an
individual we give him some punishment out of our civilised respect
for human life, though he may have been little to blame. Great cost is
thrown on railway companies (i.e. much injury is done the public) by
standing orders (cast-iron orders) about gradients, etc. The company's
solicitors order the company's engineer to comply with standing orders
at all costs rather than introduce any special clause. The consequence
is that we see much money spent and a most inconvenient level-crossing
placed at the entrance to some large town, where a steep gradient for
two hundred yards on a straight piece of road (to which there is no
objection) would have avoided all difficulty. The responsibility in all
such cases should be thrown on the company, and Government interference
abolished.
7. REFORM IN LAND LAW.
The transfer of stock in the name of two trustees in the funds is
done in a few minutes at small expense. The transfer of land in South
Australia is done in a few minutes at small expense at the Government
registry. The transfer of land in England requires an uncertain time
and cost--usually some weeks, and 5 per cent on the purchase money;
sometimes months, and 10 to 25 per cent on the purchase money. It
is equally expensive and slow in the register counties of York and
Middlesex. The Acts of Brougham, Bethell, Cairns, to facilitate transfer
have not materially reduced the evil. In many cases, however much the
land may be wanted for public or other purposes, the lawyers tell
you that no title can be made without a private Act of Parliament--so
effectually has the land been tied up.
The common idea is that this peculiar difficulty, delay, and cost in
the transfer of land arise from the law of inheritance and the legal
machinery of entail; but stock in the funds can be virtually entailed
and made to "follow the estate," and yet this stock can be transferred
just as readily as any other stock.
The explanation is known to every lawyer; but I have met with more than
one Member of Parliament who, though blatant about entail, understood no
more about the matter than a chimney-sweep.
The point is that, under English law, the trusts in the case of stock
attach to the trustees, not to the stock; in the case of land, the
trusts attach to the land itself as well as to the trustees. Hence, when
I purchase stock of trustees I need not trouble about how they apply the
purchase money; in the case of land I have to go into the whole title.
A simple illustration. I provide for a daughter £300 a year by putting
£10,000 in the hands of two trustees in the funds. Should the trustees
prove rascals, sell the stock, and decamp with the money, my daughter
will lose everything; the purchaser from the trustees can hold the stock
clear of all charges or liability. But if I provide for my daughter by
charging an estate with £300 a year for her, then however wrongfully
that estate may be sold, mortgaged, or otherwise dealt with, she gets
safely her £300 a year. If the bank B has advanced money on mortgage on
that estate, not knowing the existence of the charge of £300 a year for
my daughter's benefit, the law simply says to the bank, "It was your
business to know; you should have completely investigated the title
before you advanced your money."
It follows, therefore, that if, with a Government Land Registry Office
(say one for each county), you required the purchaser only to get in the
legal estate, _i.e._ holding him not responsible for the trusts or
the application of the purchase money, then land could be transferred
exactly as money in the funds is now, in spite of all the complications
of our law (or rather custom) of entail.
The law of entail in England (so called) is not what the popular orators
suppose. The eldest son inherits really; that is, if there be no will,
no settlement, or other disposition of the property. But there nearly
always is. It is a very rare thing for the heir-at-law to take land
(except some very small pieces) by the law of inheritance. As to entail,
it is practically carried out by a continued system of surrender
and re-settlement--a device of lawyers which is, in its historical
development, an evasion (rather than a part) of the law. Nevertheless,
I think it is a matter of importance that the shackles which fetter land
should be loosened, and that the present powers of owners to tie up
land legally should be very much curtailed. It is a sad proof of the
way riches cling to the heart of man even when he is leaving this world,
that, whatever powers of tying up land are sanctioned, an owner will
usually exert them to the uttermost. He is leaving his property, but he
will keep a hold on it fifty years after he is dead if he can. He will,
after exhausting his powers in life interests, leave the residuum to
an unborn child "in strict tail-male so far as the rules of law will
permit;" and he will stick in a springing use to effect that, if his
greatnephew, the Rev. George, should ever from an Anglican become a
pervert to Roman Catholicism, he shall take no benefit under the will.
Now the fact is that all tying up is to the detriment of the public. No
man can provide for all contingencies. Indeed he can see so little a
way ahead that in a few years it frequently happens that all the careful
provisions of the will are working exactly as the testator would have
desired them not to work. Land tied up is always worth less to the
owner because it is tied up; and we have seen that the interest of the
commonwealth is the sum of the interests of all its component members.
When you tell me that an estate is now of small value to its life-owner
and unget-at-able for any public purposes, in consequence of a will made
by a man who died twenty years ago, it appears to me that you shew me
convincingly that we have not Free Trade in land.
I would propose that, either by will, settlement, or other instrument,
an owner should be able to give any number of life interests, and
nothing more; all trusts being placed outside the law. The first
objection will be that if the powers of owners are so restricted, the
desire for the ownership of land will be lessened: the value of all the
land in England will fall. This might be so, I admit, to some extent;
and it would favour the employ of the land for agricultural profit.
The next objection is that it would become necessary to give land (and
money) directly to women without the intervention of trustees: that
women do not understand business and require to be taken care of. My
reply is that they always will require to be taken care of unless they
are entrusted with the management of their own affairs. The loss to the
nation, the expenses, the sacrifice of time and labour in trusteeships,
have now assumed gigantic proportions. If women were given their own
property to manage, some would (at first) fool it away: we know what
high interest, adventurers, unprincipled persons, etc., can effect. But
each woman defrauded or stripped of her property to starve would be
a warning to all the rest: in a few years women would manage their
property just as well as men. I believe they would manage it better.
A smaller percentage of women would gamble on the Stock Exchange, the
Mining Exchange, Austrian and Spanish lotteries, and horse-races; and
a much smaller percentage of women would embark in desperate "business"
speculations, heavy purchases of foreign produce, etc.