TRANSPORT AND COMMUNICATIONS BILL, 1923. - SECOND STAGE.

In asking the Dáil to give a Second Reading to this Bill I shall have to relate somewhat of the intentions and go into some detail with regard to its general purposes and its needs, but I want to say right at the outset that this Bill is not presented in the expectation that when it is passed it will make any great revolutionary change, or add any great extent to the well-being of the masses of the people. Further, I want to say that it is not put forward in deference to any preconception regarding nationalisation, or State ownership, or collectivism, or anything of that kind. It is put forward in its present form in the belief that necessity compels action of this kind if the most is to be made of the nation's transport conveniences. It has been asked why there should be any attempt to press forward such a Bill as this is at this moment; why should we not leave things as they are? The answer to that is, of course, that the public, traders, agriculturists, travellers, are pressing for some action to be taken regarding the future of the railways so that they, particularly the traders, will know where they stand. They are pressing for changes, because they believe that changes would result in a reduction in rates. The railway companies, too, are uncertain of their future, and are holding up necessary development because of that uncertainty. The need for urgency was present in the minds of the Government eighteen months ago. At that time they appointed a Commission and instructed it to sit day by day, if possible, with a view to making recommendations with regard to the future of the railways. Recommendations were made, but, as announced in the Dáil, the Government were not prepared to accept them. They recognised still in January of this year the urgency of the problem, and they said that they would give the railway companies a certain period within which to bring forward their own proposals regarding consolidation, or amalgamation, or grouping, and if within that time no agreed proposals could be brought forward by the railway companies then the Government would be prepared to bring forward their own proposals. That time expired six months ago, and the necessity for action, from the public point of view, seems to be as urgent to-day as it was then, so that I think no excuse is required to be made for presenting this Bill as an attempt to meet the case put forward by many sections of the community, regarding the railway problem particularly.

I want to lay stress at this stage upon this point, that this is not a matter of railway policy alone. It is because the railway position is so closely associated with the general economic condition of the country, and its future economic policy is so much bound up with the railway policy, that I ask the Dáil to look on this whole problem, not from the point of view of railway policy, but from the point of view of national economic policy. I think the Dáil will realise the necessity, if they are looking forward at all, for having at least a faint idea of what they propose this country should be; have some idea at least of the lines of policy on which it is intended that we should develop. We have a country to make the most of, and the question really is, what are we going to do with it? The railway policy might well be directed towards satisfying the requirements, the desires, of the railway shareholders, and the country and the Dáil may say that we have faith in the natural genius of the people, and as a State, as a Legislature, all we have to do is to stand aside and keep order and let who will, do what he wishes, in the belief and faith that by allowing everybody to do as he wishes within the law that good must certainly come. That is quite an understandable policy, and it is a view held by many Deputies, and those who hold that view will object no doubt strenuously to any proposals such as are in this Bill, but the appeal I am making is to the Dáil to set before itself at least a conception of the future, and to recognise that the transport problem is clearly bound up with any conception of the future of the country. Really we have to decide whether transport is to be subordinated to general public policy, or are we to allow those in charge and control of transport so to order and govern their affairs as detrimentally to affect national policy, provided it satisfies the desires of those in control of transport?

I think it will be admitted that railway policy may conflict with national economic betterment, and the basic question I am putting to the Dáil is whether national economic betterment should be the primary purpose of transport policy, or whether transport policy should be so directed as to satisfy the desires of those interested in the transport business, irrespective of its effect on the national well-being. To come down to a concrete illustration, it would be good railway policy, for instance, to encourage the transport of bacon through Dublin to Leicester—it is a long journey—and to bring back boots from Leicester to Limerick. It would be good national policy to limit transport, and if other things were satisfactory to direct the bacon from Limerick to Carlow, and transport boots from Carlow to Limerick. National policy would be served by the second, while railway policy would be better served by the first. I ask the Dáil to agree with this proposition, that if railway policy conflicts with national interest, railway policy must be subordinate; but speaking purely in general terms one would require to consider how best to ensure that railway policy will be subordinated to national policy. That is really the problem to be answered in the discussion on this Bill. It may be said that there are a variety of proposals before the country for consideration. It is urged by some, perhaps not very many, that the present arrangements should be continued, that there is no need to make any change the companies will look after themselves, and incidentally the country will benefit. I think it will be generally agreed, here, at any rate, that that proposition is out of the question.

If we take merely the question of baronially guaranteed lines we are faced with a problem which must be solved, and which can only be solved, by some change. Representatives of those counties which have baronially guaranteed railways will not be satisfied to allow matters to remain as they are. The second proposition is that we should allow the absorption of selected lines by English companies. No legal change is required for that. Certainly no legal change is necessary. It can be done by Stock Exchange operations. I do not know how many members of the Dáil there are who will agree that that will be a desirable development. Then we have the views of the Farmers' Unions as indicated by their witness before the Railway Commission—that there should be a continuation of the present ownership, that there should be no restriction upon any body of persons coming together who would like to build a new railway in competition with existing railways, and that the present railways should not be allowed to continue their monopoly but that there should be an authority set up to control rates. That, I think, is a short and fair summary of the attitude of the Farmers' Union through their spokesman, Mr. Young, of Stradbally. I do not know whether that view of railway economics is likely to be acceptable. The proposition that any group of men should be free to build a new railway anywhere and that the Legislature should not exercise any control in such a matter, whether it is largely supported in this Dáil or not, certainly would not commend itself to men of average experience in economic matters. Then we have a proposal that we should leave the railway companies to enter into voluntary amalgamation, allowing them, if they desire, to leave aside, out of the amalgamation, the non-paying companies. I do not think that that either would commend itself to the Dáil. Non-paying companies have been set up by Acts of Parliament, and, rightly or wrongly, they are part of the transport system of the country and must be considered, and I do not think that the Oireachtas would agree to voluntary amalgamations which allowed the non-paying companies to be left entirely outside. Then there is the proposition which, it is suggested, was once, at least, the policy of the Government, that there should be compulsory amalgamation. Such schemes would have to be submitted to the Oireachtas for consideration and approval, and then there is the scheme of State ownership and ultimate control. The proposal which I have put before the Dáil is, of course, the last, and it is not by any means a new proposal. It is neither revolutionary, radical, bolshevik, or anything of an abnormal nature.

It has been recommended by the most staid conservative Commissions, and no one will allege at this stage that State ownership of railways has anything of a radical or revolutionary character about it. There have been Commissions on this question of Irish railways running from 1836, 1865, 1881, 1906 and 1922, and, without exception, these Commissions have recommended State intervention of one kind or another. They have recommended changes in the administration of the railways, recommending Government action of one kind or another, and in reporting the history of railways in this country one reads the refrain, "No Government action was taken." Commission after Commission, and Inquiry after Inquiry, and still the continuous refrain, "No Government action was taken." I have a sort of notion that if Government action is not taken the railways will get into such a position in this country as detrimentally to affect the course of development. I have said that this proposal is not revolutionary, nor is it new. Even Adam Smith wrote so many years ago, "The tolls for the maintenance of a high road cannot with any safety be made the property of private persons." John Stuart Mill said: "The charge made for services which cannot be dispensed with is, in substance, quite as much compulsory taxation as if imposed by law. This applies to the case of a road, canal or railway. These are always in a great degree practical monopolies, and the Government which sets such monopolies in the hands of private companies is in much the same position as if it allowed individuals or associations to levy any taxes they chose for their benefit on all malt produced in the country, or on all cotton imported into it." The opposition to the proposal in this Bill is, in the main, an opposition to the principle of State ownership. It is, I would point out, not an opposition to the principle of State subsidies. Most of the opponents of the proposal, whether within railway circles or within mercantile circles, do not oppose, but rather suggest, the necessity for State subsidies in one form or another.

They vary in their suggestions regarding the amount of control which such a substitute would carry with it, but none is consistent in taking this line that the State should neither have anything to do with railways financially nor in management. I am very doubtful whether an efficient railway system can, in this country, be provided without some form of public assistance. While I believe that is true, it is not intended in this Bill to provide for such public assistance. We are suggesting that every effort should be made within State control to provide a railway service on commercial lines without any subsidy, leaving the users of the railways to pay all the charges that are incurred in the running of the railways. Whether that will succeed or not, either under State ownership or under private ownership, is a matter for the future. I will say this though, that the State has, as a matter of fact, in Ireland, come to the assistance of privately owned railways to the extent practically of seven million pounds. Most of it, no doubt, has been refunded, but the fact remains that State assistance, to the extent of £6,873,653, a sum equal to over fourteen per cent. of the total capital of the railways, has been provided by the State. These figures are taken from the Scotter Commission Report, which Commission concluded its labours, I think, in 1910. Of course we must bear in mind in speaking of the question of the ability of railways to maintain themselves without external aid, that there was pre-war for many, many years that kind of assistance, which arose from the underpayment of the railway servants. Every witness practically, on the railway side, admits that before the war railway servants were underpaid. True, they say, they were only in line with the rest of the community. Nevertheless, the conclusion is that shareholders obtain their dividends by virtue of the fact that railways servants were underpaid.

Now let us assume that the proposal for State ownership is not accepted, and that we are bound to the principle of unification. Without public ownership it is the only practical alternative to the proposals of this Bill. I have referred to the baronially guaranteed lines. The railway companies' view of that is expressed by the General Manager of the Midland Great Western, speaking on behalf of the companies as a whole, and not merely of his own company, that if the railway companies were to be expected to take over the baronially guaranteed lines then there must be a subsidy from the State. They also have the view that that subsidy shall not carry with it any representation on the board or any control over the management. Even the minority of the Scotter Commission advocated a State subsidy. Now, I am stressing this case, because I want you to have in mind, when you are thinking of the merits of this Bill or the principle involved, that the alternative is some form of railway organisation which involves a State subsidy. It is suggested that there might be some kind of control over the rates by means of a Rates Commission, some kind of control from outside. That is the view of the representatives of Chambers of Commerce, Farmers' Unions and the trading public generally, from all one can hear. It is urged on every hand that there must be a tribunal to determine what the rates on merchandise shall be, that a body may be set up to make representations. Rather in the language of the Scotter Commission minority they might make representations to the companies regarding the adjustment of rates. On that I would like to stress the evidence of a very high authority, Mr. Acworth, who is a member of the minority of the Scotter Commission reporting against nationalisation. He wrote in a book called "The Railways and the Traders" these words:—

"For every shilling cut by an expeditious tribunal off a rate, it is easy for the railway companies, if they are agreed to act in harmony with each other, to withdraw two shillings' worth of facilities; and the traders may make up their minds that this is what must inevitably happen if the railway companies are confronted with lower rates, simultaneously with the rapid rise of working expenses."

"Assume that your tribunal can fix a reasonable rate, what is the use of it unless it can schedule to its judgment a minute specification of the quality of service to be given in return for the rate? The railways can bring down troops of expert witnesses. How can the tribunal refuse to hear them when every student of railway economics knows that the reasonableness of each particular rate depends not merely on its own individual circumstances, but on a comparison with all the other rates and a consideration of the company's business? But for a farmer or shopkeeper, with the assistance possibly of the local attorney, to undertake to fight trained railway experts with a lifetime's experience and with every fact and figure at their finger's ends, is only to court defeat."

The Railway Rates Tribunal, which is merely an attempt to adjust rates on merchandise, is a broken reed, entirely unfitted to secure the needs which the trading community desire. The late Chairman of the Brighton Railway Company goes so far as to declare that even successful action is futile before a Rates Commission. He says:—

"The Companies could easily retaliate, under a sense of injury, by measures which no control could prevent unless it was prepared to take on itself the entire responsibility of the detailed management of the line."

There is the classic case of the Chatterly Colliery Company:—

"Thinking they were illegally overcharged by the North Staffordshire Railway Company, they took them before the Railway Commission, proved their case and secured an order confining the railway within the legal maximum. Thereupon the railway company flatly declined to carry the traffic of the Chatterly Company. They were again taken before the Commission and at once ordered to resume the traffic, subject to a penalty of £50 a day for refusing. They complied with the letter of the order, but `under as awkward and inconvenient circumstances for the Chatterly Company as the railway company could possibly arrange.' And Sir Alfred Hickman declares that though, technically, the Chatterly Company won everything, they could not compel the railway company to afford them ordinary facilities such as were necessary to carry on their business, and they were obliged to compromise the matter upon worse terms than the Commissioners had allowed."

That is the experience, I think, of many traders, even in this country. I am quoting this case to show that the reliance upon the Railway Rates Commission to ensure that the traders' interests shall be safeguarded against the railway companies' attempts to make fish of one and flesh of another, in their efforts to make traffic pay, is quite unsatisfactory so far as influence on privately-owned companies is concerned. I ask the Dáil to conclude from that that the interests of the mercantile community, the manufacturing community that may come, the agricultural community, and the general travelling public cannot be secured by outside control. The logical end of that argument is that a public service, such as the railway service, should be publicly owned and controlled in the interests of the public.

I hope that every Deputy has carefully examined the provisions of the Bill and satisfied himself or herself as to where the defects, if any, lie. Some, no doubt, will say the defects lie in the principle of public ownership. Others will say that they agree with the principle of public ownership, but that the methods of control and management are not satisfactory.

Others will say that, granted the desirability of public ownership, the method of acquiring is not satisfactory to their views, or that the price to be paid is too generous or the method of fixing the price unfair. I hope that Deputies will give vent to their opinions on these various points before the Bill leaves the Dáil. In the main, I would like to say that we have taken the lead of the Minister for Agriculture in regard to the financial proposals of the Bill. We desire to be at least as fair as the Government. We acknowledge that they set us a very good example as to the method of acquisition and the terms of purchase and rate of interest.

What about the arrears?

Deputy Gorey reminds me that there are arrears even in connection with railway service. I may give the Deputy an assurance—if that is what he is seeking—that the arrears of payment from the County Councils to the railway companies will be completely wiped out by this Bill. Our desire in regard to finance and management of the railways under this scheme is that the railways should be run in such a way as to make the receipts cover all expenses, and to avoid the necessity for any State subvention. I hope that will be possible. I hope, no matter what be the future of the railways, it may be found unnecessary to provide a State subvention. But, as I said earlier, I am personally doubtful of the possibility of making the fullest use of railway transport without some form of State subvention. But that may be a matter of future State policy. I hope that if ever it is decided that State assistance is required, that it will be for a definite, specific purpose, and not to make up deficits. I would hope, for instance, that railway policy might be directed towards encouraging transport between points within the country, as distinct from the encouragement of transport from within the country to outside the country. That encouragement may involve eventually some form of State subsidy in the earlier stages. But that may be entailed, whether railways are nationalised or whether they remain under private ownership. I have said that we have taken the Land Act as a precedent for our financial proposals and, differing from the report of the last Railway Commission, we are not proposing to deal with individual stockholders, but rather with the companies as corporate bodies. We propose that there shall be a Railways Tribunal to fix the price, and that Railways Tribunal may be paralleled by the Land Commission. The Tribunal will value the undertaking, taking all the circumstances into account, and that Tribunal will also decide how the purchase price of any company might be distributed amongst the various grades of stockholders. The intention is that the undertaking shall be valued on a net revenue-earning basis. In doing that, it will be necessary to have regard to the amount of such earnings in the past, and to take into account the possibilities of maintaining these net earnings, having regard to all the circumstances, including the demands of the trading community for lower charges and the demand of the employees of the railway companies for a reasonable livelihood. We also lay down that the maximum shall be based upon the average of the five best years in railway history—the five years preceding December 31st, 1913. I have a suspicion—almost a conviction—that no matter what Tribunal would be set up, it would be found in practice that the maximum of fifteen years' purchase of the average of those five years would be the normal, one might almost say the minimum. We propose that railway stock should be issued in exchange for the stock of the company, such railway stock to be guaranteed by the Central Fund, in addition to the earnings of the companies. The stock would carry in one case 4¾ per cent. for 67 years, and 4½ per cent. for the first five years. Terminable annuity certificates will be issued, carrying, as I say, 4¾ per cent. for 67 years. At the end of that time the debt will be paid. At the option of the stockholders, redeemable stock certificates, carrying 4½ per cent. for 72 years, with a quarter per cent. sinking fund for 67 years, would be issued. The financial effect of these two methods would be identical, so far as the State is concerned, and as I have said already, it is proposed that the debt due to the companies for the arrears of baronial guarantees would be wiped out.

In regard to these financial proposals I would just like to draw attention to two or three figures. The total capital of the railways is round about £47,000,000 or so, according to the last figures I have been able to see, and for the five years preceding 1914 it may be said that the total yield of the dividend paying stock of the Irish railways was round about £1,700,000. I have made an estimate, and I mention this to reassure certain timid Deputies who own railway stock or who have aunts or mothers-in-law who own railway stock and are afraid of the widows and the orphans, that assuming the revenue to be on the basis of, say, the year 1920, and assuming the expenditure to be on the basis of the most recent returns we have been able to find, there is ample margin not only for paying out of railway revenue all the requirements of this stock, but enough to leave at least a little for reductions in rates. The reassurance I want to convey is, that from the calculations I have been able to make, the plan we have embodied in the Bill would allow debenture holders to receive, on State guarantee, 85 per cent. of the 1913 income from debentures, and that, bear in mind, was the best year in railway history. Preference stock holders would receive, or could receive if so allocated, 75 per cent. of their 1913 income, and ordinary shareholders about 60 per cent. of the 1913 income, bearing in mind that that would be a State guaranteed income for 72 years. Now that is even better than was guaranteed to the landlords by the Bill introduced by the Minister for Agriculture and passed through the Dáil and into law, and which was generally acclaimed by the country as most satisfactory. We cannot, then, be charged with being niggardly or unfair to railway stock holders when we have done as well for them in this Bill as the Government is prepared to do for the landlords.

This Bill does more than deal with the transfer of railways from the present companies to the State. It proposes a scheme of management which, I submit, meets the requirements of the mercantile community as expressed through their witnesses before the recent Commission, and meets the requirements of the railway companies through their spokesmen in so far as they demanded something like a single control, without interference from busybodies or political activities of one kind and another. Our proposal is that the railway system should be fitted into a general transport system, a system which has to do with all the means of communication in the country. We have suggested, but have left the details to be worked out, that a road transport system, a canal transport system, and a postal communication system should be brought under one effective ultimate Government control. We do not think, for instance, that the Post Office is the kind of service which requires a political head by itself. We conceive that the transport and communications of the country should be fitted into the general social economy, and should be finally controlled by a single Minister, but that the actual working of those various departments should be under expert guidance. That is the conception that is attempted to be applied in the Bill.

We are looking ahead, and we are asking the Dáil to think not merely for the next two or three years or five or ten years, but to lay plans for the building up of the nation, and one of the most important factors in that building up will be the means of communication and transport, and we are trying to persuade the Dáil to agree to a system which would enable all those various means to be co-ordinated under one Minister. There is just one other point of minor importance that I wish to refer to. That is the effect of this scheme upon the railways which are outside the present jurisdiction of the Saorstát. We have conceived of the railway system of Ireland as a single system, and we look forward to the time, not far ahead, when that system will be, in effect and in fact, a single system under a single head nationally controlled. We recognise the facts of the present day and we suggest that the appointed day, again following the Minister of Agriculture, for the transfer of the railways which run into the six Northern Counties should be a day to be appointed when convenient.

It is quite within the purview of the Bill that if the necessity should arise such portions of the railways as are in the area of jurisdiction of the Saorstát should be transferred. We prefer that a cutting of that kind should not take place unless it is found to be absolutely necessary, and hence we have suggested the delay of the transfer of the Northern Railways to a more convenient season. There are, of course, innumerable points that will be raised in discussion, or shall I say, that could be raised in discussion, and no doubt most of them will be; but I think that to the broad principle underlying the Bill—State purchase, control of the railways in the interest of the nation as contrasted with control of the railways in the interests of railway shareholders—the Dáil should assent and further, perhaps I would have no difficulty in persuading the Dáil that if the principle of State ownership is accepted then the principle of purchase will be accepted also. I, therefore, ask the Dáil to agree to give this Bill a Second Reading.

I beg to second the motion.

We have listened to Deputy Johnson in proposing the Second Reading of this Bill, as we always listen to him, with pleasure. As a novice in political matters, it strikes me as strange that a Bill of this public importance should be introduced as a Private Bill. I think it has been recognised generally that the particular activities of an opposition is to take advantage of the slips that come from the Government benches, and when we find Deputy Johnson and the Labour Party bringing forward a Bill of this importance it seems to me very much like as if they did not anticipate, in the near future, at all events, occupying the Government benches, and that the opinion they must have come to is that in risking their reputation in the production of this Bill they are not doing their Party very much harm. I think another consideration in this matter is this:—Whereas the Bill is brought forward by the leader of the opposition the attitude of the Government seems to be open to question. They have given us very little guidance in the matter, and it seems to me that the Government are in the happy tion of looking on while the opposition exploits the proposition to find out how far it will go down with the country. That, I think, is the rather happy position the Government find themselves in. In other words they are letting Deputy Johnson and his party pull a few chestnuts out of the fire for them, and I congratulate him upon that.

In connection with the railways we have had some experience of Government control. During the war it was considered necessary that the Government should take control of the railways, and speaking as a commercial man, I do not think the result of that experience has convinced very many traders that they are going to benefit by the change. I am not prepared at present to take up the cudgels on behalf of railway administration. It would not be politic to do so because to-morrow or the next day I may have various complaints against the railway companies. But I do say that from a trading point of view, with all their defects—and they are many no doubt —I prefer the devil I know to the devil I do not know. Any experience we have to rely upon in connection with the Government management of trading concerns is not, I think, a happy augury for the proposals of this Bill. What are railways? It seems to me that not only in this country but in other countries railways have been made a stalking horse for all sorts of unsound propositions. What is the difference between the railways and other ordinary trading concerns? Railways have been built on a capital supplied by the shareholders to do a certain work. In an ordinary business way these people put their money into the railways with the hope and prospect of getting a return for their money. The Government are necessarily interested in the railways because of the powers which they hand over to the railway companies and consequently it is necessary for them to keep a certain amount of control as they would have a right to keep control of any form of industrial undertaking which required administration. But why glorify the railways? Why propose to nationalise the railways? Have they a monopoly? I think not. They are a means of transport; so are steamships; so are your roads; so are motors on the roads; so is the air, or, at least, it will be in the course of time. Trading concerns and trade are, no doubt, to some extent, dependent on railway traffic, but, from my point of view, I would rather see the trading community taking a stand themselves in the matter of organisation so as to be at any moment independent of the railways, if the railways were unreasonable. There is nothing to prevent it. If the rate from here to Cork is unreasonable what is to prevent the trading community having a boat to run down by sea or putting on motors to run down by road? Personally I would rather see the trading community in the position of being able to tell the railway companies as far as the rates are concerned, that the rates were unreasonable and that they would take the matter into their own hands. What is Government control going to do for us? Is it going to reduce the rates? I think not. Is it going to better the service? I think not. What we want is not unification. We want the railways kept in a position to give us alternate routes for our traffic and —I am not saying they will do it— I hope they will take care of their own affairs.

The shareholders are the proprietors in this case. They ventured their money in the undertaking. Where railways have been a failure I think you will find that mostly they have been a failure because they have been promoted and subsidised by the Government. In connection with these baronial railways which we hear about as being non-paying, if the country and the Government wish to put up an uneconomic proposition for the good of the country, I do not think they have a right afterwards to saddle the failure on anyone else. In the same way, if a body of shareholders come forward and put money into a concern, and it is a failure, I do not think you will find many people coming in to sympathise with them to the extent of recouping them for money they put into the business. That is the main thing I want to emphasise, and that is why I object to the glorification of the railways any more than any other business or trading concern in the country. In taking up this attitude Labour points to the fact that they were particularly interested in railways. Through the operation of political forces which they were able to manipulate, they have secured a preferential and a peculiar position for railway servants that would never have applied to this country under ordinary conditions, and that would never apply to trading concerns as a whole on purely economic grounds. That is the difficulty our railways are in at the present time—the inflation of the charges which were forced upon the railways against the recommendation of the railway managements and in spite of any representation that could be made so far as they were concerned. That is the difficulty as far as the railway companies are concerned to-day, and it is not, I think, due to anything else but the operations of a law that cannot and will not apply ultimately to this country.

Following the principles of this Bill, I think I may describe it as nationalisation of the railways mainly. If I may speak on behalf of the traders, and, I think, of the public generally, either the Labour Party or the Government will have to put forward very much more cogent reasons for the change they propose to make than they have done in this Bill, in order to get the support of the people who will have to pay the piper if the Bill came into operation.

Mr. O'HIGGINS

If Deputy Hewat will move the adjournment of the debate now he will have the right to speak again.

I move the adjournment of the debate.

Debate adjourned until Friday, at 2 p.m.

Mr. O'HIGGINS

I move the adjournment of the Dáil until 3 o'clock to-morrow.

The Dáil adjourned at 8.25 p.m.