length of railway which it was proposed to purchase was 3,382.33 kilometers, about one-third of the railways still remaining under private management. The bill was accepted with a vote of 226 ayes to 155 nays. The following brief description of the above-mentioned lines will manifest their importance in perfecting the state railway system. The Berlin and Stettin Railway connects Berlin with Stettin and the Prussian Eastern Railway, which is state property. The state thus obtains possession and management of all the lines along the Baltic from Königsberg to Stralsund. This is an important military consideration. The Stettin harbor is the most important port on the Baltic, which renders the railway of importance commercially and lends the state no inconsiderable power in regulating railway tariff. It fills an important gap in the state railway system, as it connects the state railways in the northeastern part of the monarchy with those in the southwestern-the Prussian Eastern and NiederschlesischMärkische Railways with the Berlin and Dresden and Berlin and Wetzlar. The termini of the principal lines are Berlin, Stettin, Danzig, Augermünde and Stralsund. The lines of the Magdeburg and Halberstadt Railway Company connect the eastern state railways with those in the western and northwestern parts of the kingdom, viz, the Hanoverian and Westphalian state railways, by a state railway. The Niederschlesisch-Märkische from the southeast is continued in a northwesterly direction to the two chief harbors of Hamburg and Bremen, which, with the other importing harbors on the North Sea (Harburg, Bremerhafen, and Geestemünde), are thus connected directly with Berlin by means of state railways. The termini of the principal lines are Magdeburg-Leipzig, Magdeburg-Halberstadt, Halle-Vienenburg, Berlin-Lehrte, Stendal-Uelzen-Langwedel, and Magdeburg-Wittenberge. The purchase of the Hanover and Altenbeeken Railway was an almost necessary consequence of the purchase of the lines of the Magdeburg and Halberstadt Company, inasmuch as the latter company worked the lines of the former on permanent lease. This railway rounds out and completes the state railway net in that part of Germany. The Westphalian state railways from Oberhausen via Dortmund to Altenbeeken are thus continued towards the northeast to Hanover; the Hanover state railway from Rheine to Löhne, and from Bremen via Wunstorf to Hildesheim, is continued via Vienenburg and Aschersleben to Halle and Leipzig. The termini of the road are, as its name indicates, Hanover and Altenbeeken. One point connected with the purchase of the Magdeburg-Halberstadt and the Hanover-Altenbeeken railways was not mentioned in the papers presented to the landtag by the government, though it has been discussed by the newspapers. The future of the Duchy of Brunswick, as is well known, is uncertain. The present duke has no direct heirs, the nearest being the son of the late king of Hanover, Duke of Cumberland and pretendant to the throne. It is altogether improbable that Prussia will ever consent to the Duke of Cumberland's becoming Duke of Brunswick; certain that she will not, unless he renounces all claims to the crown of Hanover, and this he does not appear disposed to do. Besides this, the majority of the citizens of the duchy are said to be opposed to the succession of the house of Hanover, while the present duke and a part of his people protest vehemently against being swallowed up by Prussia. Although the duke is old, matters are still, as far as is known, as unsettled as ever. Now it will be seen by a glance at an atlas, that the above-mentioned purchases put Prussia in possession of railways leading into Brunswick from every side. She is thus enabled, in case of any future difficulty, to be at hand almost on a moment's notice. The lines of the Cologne and Minden Company connect the Hanoverian and Westphalian state railways with Cologne and give the state a second connection with Holland, i. e,, via Arnheim. The connection already in possession of the state was via Salzbergen. This is deserving of notice in connection with the rumors and uncertainty about the succession of the Dutch throne. Harburg, a terminus of the Hanoverian Railway, is connected with Hamburg by a state railway. The termini of the principal lines of the Cologne and Minden are Cologne Minden, Deutz-Giessen, and Venlo-Hamburg. The second bill presented to the landtag October 29 concerned the extension of the state railway system, and the participation of the state in several private railway undertakings. As accepted by the parliament, the government is authorized to build the following railways: 1.) A railway from Erfurt to Grimmenthal and Ritschenhausen, at a (2.) A railway from Güldenboden to Mohrungen, at a cost of.. (4.) A railway from Schneidemühl to Deutsch-Crone, at a cost of........ Marks. 27,250,000 2,730,000 2,454, 000 9,250,000 706,000 (5.) A railway from Herschberg to Schmiedeberg, at a cost of.... (8) A railway from Neil to Praben, at a cost of.. (9.) A railway from Wengerohr to Berncastel, at a cost of..... Total...... Marks. 571,000 687, 000 4, 000, 000 821,000 950,000 49, 420, 350 The total length of these proposed railways is 484 kilometers. No. 1, the railway from Erfurt to Grimmenthal and Ritschenhausen is built as a continuation of the line Magdeburg and Erfurt-not yet entirely completed—and consequently of the Magdeburg and Halberstadt Railway. The Prussian state railway system is thus continued through the Thuringian forest and connected with the Bavarian state railways. It is to be noticed that this railway passes through three states outside of Prussia, Saxe-Meiningen, Saxe-Coburg-Gotha and Schwarzburg-Sondershausen. It is calculated that it will compete with the state railways of the monarchy of Saxony for traffic to the western part of Bavaria. Thus is Prussia making her influence as a railway power felt all through Germany. The length of this railway is to be 86 kilometers. The other eight undertakings are railways of secondary importance (secundärbahnen) built with the intention of opening up and developing parts of Prussia not yet provided with satisfactory means of transport. The places directly benefited by these local railways pay for the right of way and otherwise contribute towards defraying the costs of their construction. The government is also authorized to assist the following railway undertakings in the eastern and northern parts of the monarchy by the purchase of shares to the amount of 2,288,000 marks. (1.) A railway from Alt-Damm to Colberg, 121 kilometers. (2.) A railway from Stargard to Cistrun, 95.8 kilometers. (3.) A railway from Neustadt to Oldenburg (in Schleswig-Holstein), 21.5 kilometers. These are also local railways and built from the same motives as the other eight. The government has, during the last session of Parliament, been authorized to purchase three private railways and a part of a state railway, besides those already mentioned. The three private railways are: (1.) The Homburg. (2.) The Berlin, Potsdam and Magdeburg. (3.) The Rhenish (Rheinische). The state railway is the Main-Weser, of which the Prussian Government has been authorized to purchase the part situated in the Grand Duchy of Hesse. This railway runs from Cassel to Frankfort-on-the-Main via Marburg and Giessen. Its total length is 198.79 kilometers; 133.84 kilometers are in Prussia and owned by the state; the 64.95 kilometers in Hesse, and owned by that state, are to be purchased by Prussia, according to contract between the two governments, ratified by the parliamentary bodies of both states, at a cost of 17,250,000 marks. The government is also authorized to build a short branch railway from Cölbe to Laasphe, at a cost of 1,600,000 marks. The Homburg railway extends from Frankfort-on-the-Main to Homburg and has a length of 18.1 kilometers. The price agreed to be paid was 1,800,000 marks. The Berlin, Potsdam and Magdeburg Railway has a length of 269.36 kilometers. The state obtains possession by this purchase of the shortest route to Magdeburg, the most important city of the province of Saxony, to the Hartz and to Brunswick. It comes also into possession of one-half of the shares of the former Brunswick state railway, which have a nominal value of 18,000,000 marks. The length of the Rhenish Railway is 1,348.64 kilometers. The Rhenish and Berlin, Pottsdam and Magdeburg were two of the most important private railways remaining after the purchase of the first group of four by the law of December 20, 1879 (bill of October 29), and embrace considerably over one-fourth of the railways then remaining under private management. The lines of the Rhenish Railway Company extend from Cologne to Coblentz, Tréves, Aix-la-Chapelle, Düsseldorf, Herbesthal, Bingen, Zevenaar, Crefeld, Dortmund; in fact, to all places of importance in the Rhine Province. They extend to the mining district of the Ruhr and have great importance in that industrial region. In three places they touch the Dutch frontier at Zevenaar, Nijmegen, and Venlo. Germany can therefore pour troops into Holland at five different points on state railways, if she should ever find it necessary to do so. The Rhenish Railway touches the Belgic frontier at Verviers. The Prussian railway minister becomes thus director-in-chief of some 15,000 kilometers of railway, or three-fourths of all Prussian railways. It was intended to present a bill to the landtag, authorizing the government to purchase one of the most important private railways still remaining, the Berlin-Anhaltische (Berlin, Halle and Leipzig), but a satisfactory contract could not be concluded. This company, will, however, soon share the fate of the Rhenish Railway Company. Prussia is now so powerful in railroads and Maybach so skillful a manager, that no Prussian railroad can withstand the government. In fact, before the government entered into negotia tions with the railways last year, they were given to understand that it was for their own interest not to make exorbitant demands, as the government in that case would apply to them that "competition principle" which they praised so much. To prevent an abuse of the immense power of the minister of public works or railway minister, as he is also called, the Landtag made its acceptance of the railway bills dependent upon certain conditions or guarantees. Other guarantees were added to prevent the government from using the railway earnings to meet general government expenses without the consent of Parliament, since that would, of course, make the budget-rights of that body of no avail. The principal points of the guarantees are as follows: I. All profits derived from state railways are to be used (1) in meeting obligations arising out of contracts already concluded with private railway companies, or out of any contracts to be concluded in future; (2) to pay the interest on the railway debt: (3) the maximum sum which may be taken from railway earnings to meet a deficit in the state's budget is 2,200,000 marks. This can happen only in case a loan would otherwise have to be contracted to meet the deficit; (4) a further surplus is to be used in forming a reserve fund of one per cent. of the railway debt. The object of this is to prevent perturbations in the budget. One per cent. of the railway debt is twice as large as the perturbations in the railway profits are likely to be in one year as compared with another. This reserve fund is to be used when necessary, i. e., when the receipts from the railways in any year are not large enough for that purpose to pay the interest on the railway debt. Any surplus above one per cent. is to be used in amortization of the railway debt up to one-half per cent. of said railway debt; any further surplus is also to be used in amortization of the railway debt, unless Parliament consents to its being employed otherwise. II. For the purpose of making the above reckonings the railway debt is fixed at 1,396,000,000 marks, and the interest at 59,800,000 marks per annum. The above sum is the entire debt of Prussia on April 1, 1880, according to the budget of 1880-'81. It is, too, the capital value of the Prussian state railways as near as can be calculated. The idea is to show that the state debt of Prussia is covered by her railways. Every increase of the state debt consequent on the conclusion of contracts before April 1, 1880, for the purchase of private railways is also to be added to the railway debt. III. The minister of public works presents to the Landtag every year the normal passenger and goods tariff. IV. A state railway council and provincial railway councils (Landeseisenbahnratk and Bezirkseisenbahnräthe) are to be formed by the representatives of the interests of agriculture, manufacturing industry and commerce, and by railway experts (Spezialsachverständige.) These councils are to meet at least once every three months and are to be heard on all important railway matters. Their powers are only advisory. According to I (4) it would take two hundred years to pay off the railway debt, supposing that the one-half per cent. per annum was always on hand, which is by no means certain. Other provision is made, however, for a yearly amortization of the public debt, which, according to the guarantee is solely railway debt, to the amount of over 12,000,000 marks per annum, about one per cent. of the debt, as fixed by the budget for April, 1830. This debt does not include the money to be paid for the eight railways, which the government was empowered to purchase during the last session of the landtag that must be added to the railway debt. These railways, it is to be noticed, do not become at once state property in the strict sense of that word. The government is obliged to allow the shareholders at least a year to exchange their shares for state consols; they receive in the mean time an annual payment from the government equal to the income from the consols they are ultimately to obtain. For the shares and obligations of the first group of four private railways, the Berlin and Stettin, the Magdeburg and Halberstadt, the Hanover and Altenbeeken, and Cologne and Minden, the state is to give consols to the amount of 1,092,781,400 marks, bearing a yearly interest of 45,998,778.5 marks. These four purchases will, therefore, nearly double the state debt. The state property increases, however, in proportion. The Rhenish and Berlin-Potsdam and Magdeburg railways cost the state 717,342,900 marks, on which the yearly interest is 30,211,612 marks. The railroad operations of the winter will cost Prussia over 1,800,000,000; and, when completed, she will have a state debt of considerably over 3,000,000,000 of marks. Two years ago, April 1, 1878, the debt amounted to less than 1,100,000,000. One item in the contracts, as peculiarly characteristic of German ways, is worthy of notice. Provision is made for the directors and other officials who lose their places on account of the transfer of private railways to the state; so the employés of the Berlin and Stettin, the Magdeburg and Halberstadt, the Hanover and Altenbeeken, and the Cologne and Minden are to receive the handsome sum of 3,908,000 marks. This goes chiefly to the directors-the "deposed princes," as they have been called. The price paid for the railways seems to have been a fair one, but not too high. The shareholders exchange their shares for enough 4 per cent. consols to yield them the same income, or nearly the same, which they would in the immediate future have probably received from their shares. According to the law of 1838, the state was to give twenty-five times the average dividend of the last five years, when, after the expiration of thirty years from the date of concession, it forced a railway to sell. The state has made a better bargain by a voluntary agreement with the railways. The sum prescribed by the law in case of forced sales would be too much, as the tendency of railway profits in Prussia is downward. The shareholders of the Rhenish Railway have received since 1860 an average annual dividend of 7 per cent.; the dividends reached their maximum at 10 per cent. in 1871; since then they have gradually decreased to 7 per cent. in 1877 and 1878. The shareholders receive from the state a rente of 64 per cent. until the society is dissolved, and then a corresponding amount of consols. The dividends of the Berlin, Potsdam and Magdeburg Railway on the other haud have averaged only a trifle over 34 per cent. during the last five years, and the state gives 4 per cent. The shareholders of the Berlin and Stettin received in 1878 a dividend of 3.65 per cent., but the average of the five years, 1874-1878, is a little over 7.70 per cent.; they receive from the state 4 per cent. The shares of the railways purchased by the state have risen much in price, however, owing to the superior security of state papers. A few months before the Prussian Parliament opened, in the fall of 1879, the shares of the Cologne and Minden were quoted at about par; in November they stood at 141. In the same manner those of the Rhenish Railway rose from 70 odd to over 90. state has not, however, made a bad bargain. The The new state railways become feeders of the old. Much money will be saved that was formerly wasted in competition. Fewer buildings, railway stations, &c., are needed. Cars and locomotives can be used wherever they are most required, whereas much waste was occasioned formerly by running empty cars, which was rendered necessary by the different ownership. The whole administration is greatly simplified. The minister of public works reckons the yearly saving in the administration of the Berlin, Potsdam and Magdeburg Railway at 150,000 marks, which represents a capital of 3,750,000 marks; he reckons the yearly saving in administering and working the Berlin and Stettin, the Magdeburg and Halberstadt, the Hanover and Altenbeken, and the Cologne and Minden at 7,000,000 or 8,000,000 marks, representing a capital of 175,000,000 or 200,000,000 marks. The credit of the state has so far not suffered by the railway operations of the government. The four per cent. Prussian consols are higher now than they were before those operations began. A short time since, they were above par. I will endeavor to present in a few words the principal motives and considerations which have been influential in leading Prussia to her present railway policy. ECONOMIC CONSIDERATIONS. Railway building has called into existence a large industrial class, but the irregularity of railway undertakings is continually plunging those who are dependent upon them into distress. This is an important factor in modern "hard times." Capital and labor are drawn from other employments to be afterwards condemned to long idleness. The injury caused to general prosperity is undoubtedly great. Agriculture especially has suffered in many places by the loss of laborers who were drawn away by a deceitful but enticing prospect of bettering their condition. The state alone can draw up a plan of railway building to extend through many years and to be executed gradually. The government does not need to restrict its undertakings in such a time as the present; on the contrary, a time of crisis is often the most favorable one for state enterprise. The government is able to secure money on favorable terms, and labor and materials are cheap. The interests of the country, it is said, demand that railways which have taken the place, to a great extent, of ordinary highways, should be managed solely as public streets, in furthering commerce, agriculture, and industry. Railways must be managed as a unity; when one does not pay, the deficit can be made up out of a surplus from another railway. This is, at present, the case with the postal service in all civilized countries, and with the telegraph lines in the majority. The development and opening up of a country often render railways necessary, which will nevertheless not be "paying institutions," in the ordinary sense of that term, or will not pay for a long series of years to come; such railways the state alone can construct. Every time an unnecessary railroad is built, national capital is wasted. Hundreds of millions have been sunk in useless railway speculations in the United States which might have been employed otherwise to the benefit of the commonwealth in developing the resources of the country. The waste of capital and labor is not finished when the railway is constructed, and thousands of acres of land have forever been drawn away from the purposes of agriculture. Every time an unnecessary train is run, capital is wasted. But we might endure the loss occasioned by railway competition if it resulted in cheapening tariffs, if it were competition in the ordinary sense of that term, but experience has shown that railway competition usually injures the different railway companies, but does not benefit the public. In Germany the traffic is usually divided among the different companies, and in such a manner that the bulk of it passes over one route one month and another the second.. In his celebrated work Englische Eisenbahn-politik (Leipzig 1874-76) Professor Cohn has shown that in England a new railway between places already provided with one results almost invariably in an understanding between the companies and a rise in the tariff.* The end of railway competition is railway monopoly, and this is urged as a ground for state railways. In the first place, there will always be a great part of the country provided with only one railway, in which case there is a monopoly. It is absurd for the owners of a railway to say to farmers and country merchants, "If you don't like our railway, build one for yourselves." As matters are, people in and near towns through which only one railway passes are obliged to use that railway, and, unless protected by the government, are quite at its mercy. The railway under one management seldom exceeded 150 or 200 kilometers in the early history of railway development; but, as railways were extended, the necessity of establishing through trains, of coming to an agreement about the tariff for passengers and goods on such trains, of making arrangements about common institutions and common interests, caused the difficulties connected with the harmonious action of a large number of working factors to become apparent. Experience has demonstrated that long routes and railway complexes can be worked so much more cheaply and efficiently, that short lines running parallel, managed by different companies, are unable to compete. The railway history of England and France is especially instructive. The six large private railway companies in France—(1) Nord, (2) Est, (3) Ouest, (4) Paris à Orléans, (5) Paris-Lyon Méditerranée, (6) Midi—have absorbed 48 different companies; the eleven chief railway companies in England—(1) London and Northwestern, (2) Great Western, (3) Northeastern, (4) Midland, (5) Great Eastern, (6) London and Southwestern, (7) Great Northern, (8) Lancashire and Yorkshire, (9) Manchester, Sheffield and Lincolnshire, (10) London, Brighton and South-coast, (11) Southeastern-262 companies. Railway monopoly is not only a necessary but also a healthy growth, when railways are owned and managed in public interest, inasmuch as the public is far better and far more cheaply served than is otherwise possible. The benefit to be derived from a steady and simplified railway tariff is a further economic motive. In the "union of German railways" there are 63 local tariffs, numerous exceptions, and tariffs for special articles and goods (Einzeltarifsätze), 184 general tariffs, with 351 special tariffs for separate articles, and 199 general tariff's for traffic with foreign countries, and 314 special tariffs. This is, indeed, a confusion for the public and the railway companies themselves. The government and the best railway authorities advocate a unified railway tariff for the whole country, so simple that even a small business man shall be able to calculate the freight on goods from one place to another as easily as he now calculates on letters and other postal sendings. This rate must also be steady, so as to remove all uncertainty about the results of any given business transaction, so far as it is affected by freight charges. Changes should be made rarely and with previous warning. The present uncertainty and liability to change brings into legitimate business a gambling element similar to that caused by an irredeemable paper currency. The empire has introduced a so-called "natural tariff system" on its railways in Alsace-Lorraine with the best results. All goods are divided into two or three classes, according as they are sent as freight, express, in open or covered freight cars, and are then charged uniform rates, which depend upon weight and volume, at so much a kilometer, with a small fee additional for loading and unloading. The chambers of commerce in different cities of Alsace-Lorraine have expressed in warm terms their satisfaction with this system. We should not pass over, in this connection, the agitation of Herr F. Perrot, who imagines himself a second Rowland Hill. He advocates the application of the penny postal system to railway passenger and goods traffic. He would retain in Prussia three classes of passenger coaches, with a fare of 6 marks for the first class, 1 mark for the second, for the third, regardless of distance. His ideas are to be found in "die Anwendung des Penny-Porto-Systems auf den Eisenbahntarif und das Packet-Porto” (Rostock, 1872). The writer wishes it to be remembered that he is simply recording without criticism the arguments of others. |