Saturday, 10 May 2014

Canal Cuttings (15)

This is just one of a series of around fifty old newspaper articles that I have been reading. I have been researching from old newspapers and magazines the last 200 years or so of the inland waterways. With particular interest in the issues of the day that were effecting the canals. The most active periods for evaluation and change, has always been just prior, during and shortly after the two world wars. It should be remembered that between the wars the ownership of some of the canals changed hands as the railway companies bought up the waterways to get reduce competition. What is not clear is the effect this early form of asset stripping had on the viability of the inland waterways. Its good to take a look back at what people were saying and doing in the past. Most surprising of all are some of the problems that beset the canals back then - are still prevalent today. Reading old newspapers can throw up some rather interesting stories. Here is what we would call today a public interest story.

Caveat: Some of the articles are difficult to read and even using modern electronic  scanning and text conversion methods. The odd punctuation, word or character may have been transcribed in error. 

The Fate of Transport

The Spectator: 6th December 1946

Talk about nationalisation in general is becoming wearisome, whether it be favourable or unfavourable. What is wanted now is a demonstration of how the thing works. Yet as one nationalisation Bill succeeds another, the practical test never seems to come any nearer. The Transport Bill which appeared last week represents, by its mere bulk and the detail of its provisions, some advance on the vague and irresponsible aspirations which, in the case of iron and steel, provided the extreme example of how not to do it. But it is still impossible to detect, through the dense mass of clauses, any clear outline of the British transport system of the future. Failure to produce such an outline is no disgrace in itself. The task has been made difficult by the fact that the British transport system has grown up in distinct and competitive sections. The clash of interests, which is the substance of its history from the earliest struggles between railways and landowners to the bid for a so-called Square Deal, has extended even into the field of academic study, so that nobody but a major genius, assisted by a brilliant research organisation, could give a clear and objective description of the present situation, much less of the future. 
The Minister of Transport is not a major genius. And the Ministry of Transport never has been, and is not now, one of the more successful Government Departments. Failure in such circumstances is certainly no disgrace. What really is disgraceful is the assumption by the Government that they know enough about transport to revolutionise it and make the revolution succeed. It is when the plan (if there really is a plan) is looked at as a practical proposition, that the worst misgivings arise. With this, as with every other nationalisation scheme, it is possible to make the charitable assumption that the Government have a rough idea of what they want to do. But it is even clearer in the case of transport than in that of iron and steel that they don't know what they are doing.

If any exception to these hard words can be made, it may be made in the case of the Bill's compensation clauses. At that point a principle may be detected and a crude, cynical and short-sighted principle it is. It emerges from the very variety of recent compensation arrangements. There have been at least eight such arrangements in the past year (three of them occurring in the present Bill) and all different from each other. Once again there is no disgrace in the failure to find one perfect answer to a very difficult question. The most accomplished economists and lawyers have made little impression on the general problem of compensation, particularly in the case of the unwilling seller, whose price may vary from a little above the market price for his securities to infinity. The accountants, after their fashion, have invented a considerable range of rules of thumb, all more or less unsatisfactory. The present Government, in its turn, has flitted from one device to another, and in the case of the railways has alighted on the most immoral of all, the expedient of hitting hardest those who are the least likely to give trouble.

Now it is possible to talk a great deal of nonsense about the morals of railway shareholding. The fact that the holding is widely dispersed in small units and that much of it belongs to widows and pensioners or is held in trust for charities does not settle the matter. The characteristics of railway capital must themselves be examined, and it will be found that a vast amount of it represents nothing more tangible than the legal fees paid out in the squabbles of the middle of the last century and the huge bonus issues of the end of that century. The exact balance of right is very difficult to determine. But this much is certain. The great majority of railway shares were acquired for the income they produced and it is on the relative income-producing qualities of the compensation stock that the fairness of the transaction must mainly be judged. The short answer is a matter of simple arithmetic. In 1938 (it was not a prosperous year) net revenues for the four main line companies and London Transport amounted to about £33 millions. Since then the cost-of-living index (which notoriously understates the actual rise in the cost of living) has risen by about 30 per cent. So that the income required to produce the same amount of goods as in 1938 (which is what most railway shareholders are interested in) would be at least £50 millions. Compensation on that scale might be regarded as adequate but not generous. But what the Government will pay, if, as is overwhelmingly likely, the rate of interest on the com- pensation stock is 21 per cent., is a little more than £25 millions a year. There is no principle that can justify this.

It is impossible to give an advance opinion on the effectiveness or otherwise of the transport organisation which will come into existence after this Bill becomes law. In the first place, it would be rash to assume that anyone in the Government has ever fully considered the implications of the " co-ordination " of transport which is ostensibly being aimed at. In the second place, the Ministry of Transport which, let it be repeated, is not a very efficient Department, is unlikely to provide any clear guidance. The present operators, the railway companies, haulage contractors, bus companies, municipalities, canal companies and so on, have never produced an objective study of the question and are unlikely to start doing it now. The views of the consumers are even further atomised and no coherent body of practice can be expected from them. In fact there is a consensus of informed opinion that what is wanted first of all is a grand inquest inevitably in the form of a Royal Commission on the whole question of the organisation and methods of British transport. It is the only possible basis for genuine progress and the Government are alone in considering it unnecessary.

Some meaning must be attached to the word "co-ordination," and the one which comes most readily to hand is the compulsory direction of traffic. This would probably mean in effect that every person wishing to consign goods would have to send them via a central collecting point, where it would be decided by which means they should be carried; and persons wishing to travel would go by road or rail, not as they chose, but as the transport authority chose for them. It might be possible to accept this restriction on individual liberty for reasons of economic expediency, were it not for the fact that it removes one of the guarantees of progress in transport methods competition. That progress has been hard and painful, particularly in its road-rail phase, for there is a very strong resistance to anything involving the scrapping of large fixed capital installations. But from time to time equipment has been scrapped or drastically modified to make room for better things. And there is a danger that, under co-ordination, scrapping will be delayed even longer than it is now. The consequences for the consumer of transport are grim indeed.

Since the original mistake of precipitate action on an inadequate factual basis has already been made, it is most unlikely that further and more reassuring features will come to light under a more prolonged scrutiny of the Bill. The compensation clauses have already been pretty thoroughly examined, but still each day brings more bad news as the researches go deeper, and the only hope now is that the Bill may be modified in its passage through Parliament. The proposal to set up five separate Executives for Railways, Docks and Inland Waterways, Road Transport, London Transport and, later, Hotels, merely substitutes internal and official competition, which has no spur to enterprise, for external and business competition, which has such a spur.

The arrangement whereby the holders of road transport C licences (i.e., businesses, other than hauliers, operating their own vehicles for their own work) will have to get official permission to move outside a 40-mile limit, is so fantastically restrictive, even with the existing legal qualifications, that it is doubtful whether it will ever work. No doubt more horrors will come to light when the pretentious fa├žade of the Bill is pierced in more places. It is impossible to be hopeful about transport nationalisation. By some miracle it may work, just as, by some miracle, Liverpool Street Station works, but the chances of its working well are small. And even if that did happen it would be impossible for the Government to take credit for successful planning, for the essence of the present scheme is that it is a shot in the dark. That is what any nationalisation scheme must be which does not look first to practical questions of operating efficiency. The present Government has shown that it is wedded neither to doctrinaire Marxism nor to the other dangerous doctrine that the business man always knows best. Why then can it not ask, in each context, what planning can and cannot do, and what the operation of the free market can and cannot do, and make its decision after it has examined those questions, not before?

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