Against Home Rule (1912) Part 22

What are most urgently needed to-day are the necessary funds to continue the good work which is being done, and to introduce the reforms that have been sketched above. Parsimony in educational matters is the most wasteful of all misplaced thrift. Let the reformers be dealt with wisely and generously, and the harvest will exceed even the expectations of those who are working most hopefully upon the problem. Withhold the funds on some n.i.g.g.ardly and mistaken principle of petty economy, and the present progress will be discouraged and the educational tree become stunted in its growth. From an administrative point of view, nothing, finance apart, would contribute more to the efficiency of Irish Education than the amalgamation of the National and Intermediate systems, as well as of the Technical work at present administered by the Department of Agriculture and Technical Education, under one Board. The method of examination by the Department is far sounder than that which is forced upon the Intermediate Board by the Acts of Parliament under which it works. In the case of science, the two are to be seen working to-day side by side in the Secondary Schools, to the undoubted benefit of the scientific course, which enjoys a double subsidy from the State, and is subject to the superior method of examination by the Department, being treated as a detached subject and the candidates being pa.s.sed _en bloc_. On the other hand, the obsolete method of examination by the Board tends to the serious disadvantage of the cla.s.sical curriculum, the grants being made on the unprofitable results of a general examination of individual candidates, the cla.s.s not being regarded as a whole, as is the case with the Department. By the repeal of the Intermediate Acts, and by the amalgamation of the various Boards into one, these anomalies would rapidly disappear, and for the first time a genuine system of co-ordination could be introduced into Irish Education, which would knit together the strength of all the parts and overcome many of the prevailing weaknesses, making the whole system what it ought to be, a living, growing, pulsating organism, developing and shaping itself with the life of the nation.

Is it conceivable that all this can he accomplished if the Union between the countries is rent asunder? What chance will there be of effecting this great settlement, which requires money and, above all, requires peace, when Ireland is plunged once again into the old internecine struggles of the eighteenth century? The warning is writ very large upon the wall, so that he who runs may read. The best hope for education in Ireland are the resources of Great Britain and a uniform policy undisturbed by party feuds. Neither of these can be looked for under a separate Parliament. Under the Union Ireland can have both, for the welfare of her children and the building of a n.o.ble history.

FOOTNOTES:

[Footnote 89: In writing the above I should like to acknowledge my indebtedness to the address published by Dr. Starkie in 1911 for many useful facts and figures.]

[Footnote 90: See the 76th and 77th Reports of the Commissioners of National Education in Ireland--Cd. 5340, 1910, and Cd. 5903, 1911.]

[Footnote 91: The residential buildings of the Commissioners' Training College in Marlborough Street, Dublin, still require to be completed by the addition of a new residence for women students, at a cost of about 50,000 spread over three or four years.]

XX

THE PROBLEM OF TRANSIT AND TRANSPORT IN IRELAND

BY AN IRISH RAILWAY DIRECTOR

Any scheme giving self-government to Ireland must seriously affect the problem of local transit and transport, by rail and water, which all parties in Ireland agree to be pressing and important. Nor is it merely a local question. As recent returns show, the trade between Ireland and Great Britain has of late years enormously increased, to the great advantage of both; for if Irish farmers profit by the export of beef, mutton, milk, eggs, b.u.t.ter, bacon and other articles, Great Britain has the benefit of a near food supply within the United Kingdom. Nor does any one doubt that this trade is capable of enormous increase. The improvement of Irish agricultural methods, the growth in England of a town population, the increased price of the necessaries of life, are some of the factors pointing in this direction.

If this trade is to expand, Irish traffic routes and facilities with Great Britain must be improved and increased, especially as the articles carried are largely of a perishable kind. Moreover, the internal traffic of Ireland, by rail, waterways, and ca.n.a.ls is capable of and needs great development, as witness the recent Reports of the Viceregal Commission on Irish Railways, and of the Royal Commission on Ca.n.a.ls and Waterways.[92] The problem of inland navigation is again intimately bound up with that of arterial drainage, as the Commissioners have reported. It is then strange to find, that on these pressing questions of first importance, there is an almost absolute silence on the part of those who advocate Home Rule in and out of Parliament.

SOLUTION OF TRANSIT PROBLEM IMPOSSIBLE UNDER HOME RULE.

It is true that the nationalisation of the Irish railways has in past years found the keenest advocates amongst individual members of the Home Rule Party; that the Majority Report of the late Viceregal Commission favouring State purchase of the Irish railways was formally approved of by the Parliamentary Party, and that Mr. Redmond has named "transit" as one of the special matters that should be left to be dealt with by an Irish Legislature. But there the matter ends. We are not given the slightest inkling what is proposed to be done on this matter, or how it will be done, or the slightest proof that under any system of Home Rule, the financial difficulties of the problem can be solved at all.

The Reports of both the Commissions referred to are based, first on the continuance of the present system of laws and government, and secondly, on the use of Imperial credit to the tune of many millions. Yet amongst the shoals of literature on Home Rule problems and finance, I can find no enlightenment as to how the transit problem is to be solved under the new conditions; _i.e._ how any Home Rule Government, whether it has control of Customs and Excise or not, and however it economises, is to find the money necessary to buy out the Irish railways and ca.n.a.ls. A Government that is faced with the problems of poverty and congestion, of housing, of increased educational grants, of afforestation, and of arterial land drainage, will have an almost impossible task in raising money for these purposes alone. And, let those who can, inform us how an Irish Parliament and Executive (with all else they will have in hand), will be able to raise even the 5,000,000 necessary to improve the Irish Light Railway System; not to speak of the sum at least tenfold greater which will be required for a complete purchase scheme.

So far we are without that information. The Irish Parliamentary leaders have not touched upon the point. The pamphleteers are almost equally silent. Professor Kettle, in his "Home Rule Finance," mentions the "Nationalisation of Railways" in one line of print, merely stating that "the project will have to be financed by loans and not out of annual revenue" (p. 41); and he further remarks, generally (p. 72), "that for the development of any future policy, approved by her own people, Ireland relies absolutely on her own fiscal resources." What fiscal resources, and under what conditions are they obtainable?

In the volume ent.i.tled "Home Rule Problems" issued by the Liberal Home Rule Committee, with a preface by Viscount Haldane, not one word is said on the subject, though there are chapters on Irish finance, and on Irish commercial and industrial conditions. Neither has Mr. Stephen Gwynn a single word on the subject in his "Case for Home Rule," though he makes the large a.s.sertion that "there is no country in the world where resources are more undeveloped than those of Ireland."

Mr. Erskine Childers[93] merely refers to the Irish railway problem as one that is "obvious and urgent," "which no Parliament but an Irish Parliament can deal with, and which calls aloud for settlement."

DETAILS OF RAILWAY TRANSIT PROBLEM.

Let us now look at the problem in more detail; and first is the question of the railways. The property to be dealt with consists of 3411 miles of railway, representing a total capital of 45,163,000, of which, at the date of the Report of the Commission, 2,873,000 paid no dividend; the gross annual receipts of the whole system being 4,255,000 and the net receipts 1,690,000, representing a return on the whole capital of 3.77 per cent.[94]

Of these lines, the railways constructed under the Tramways and Light Railways Acts cover 603 miles, of which 322 are narrow gauge, involving a liability on various baronies which have guaranteed interest on capital to the amount of 36,000 per annum. To bring these light railways up to a proper standard and equipment; to widen the gauge in many cases; to provide new sheds, stations, and rolling stock, and redeem the guarantees, a sum of about 5,000,000 would probably be necessary. In addition, projects for no less than eighty-three new railways were brought before the Commission;[95] and it is admitted on all hands, and the Commission find, that practically none of these railway extensions would be undertaken by private enterprise, and that these developments need the credit, help, and direction of the State.

Even the necessary improvement of the existing light railways cannot now be undertaken, for under the system of legislation under which they were constructed, there is no means of raising new capital.[96]

Now, what is advocated by the Majority Report is the--

"compulsory purchase by the State of these railway systems great and small, to be then worked and managed by an Irish elected authority as one concern, mainly with a view of developing Irish industries by reduction of rates and otherwise, and not strictly on commercial principles."[97]

This was the scheme supported by the Parliamentary Party, written up unceasingly by the _Freeman's Journal_, and held out under the term "Nationalisation of Railways," as one of the special boons which Home Rule will bring to Irish traders and farmers.

But mark how the operation is to be carried out. The Commission reported that the sum required should be raised by a railway stock charged primarily on the Consolidated Fund of the United Kingdom, with recourse to Irish rates to make up possible deficiencies, and further, that there should be an annual grant from the Exchequer of not less than 250,000 to the Irish railway authority. Seeing that the Commissioners refer to "the financial terms prescribed by the Act of 1844" (Regulation of Railways Act, 7 & 8 Vict. c. 85, ss. 2-4), and that a _cash_ payment to shareholders was provided for by that Act, it is to be presumed that the Commissioners intended Irish shareholders to be paid in cash. The Act of 1844 provided for payment to the companies of a sum in cash equal to twenty-five years' purchase of the previous three years' annual profits; but this was the minimum only, for it was provided that the companies could, under arbitration, claim additional payment in respect of future "prospects."

Now twenty-five years' purchase of the divisible profits, which at the date of the Commission, were 1,690,000, would amount to over 42,000,000, and if in addition sums had to be raised for "prospects,"

purchase of lines paying no dividend, special provision for prior stocks standing at a premium, redemption of guarantees, and the large sums required for the extensions and improvements we have mentioned, a sum not less than 50,000,000, and probably nearer 55,000,000, would be required.[98]

From the beginning to the end of the inquiry there was no suggestion that this immense operation could be carried out except by the use of Imperial credit, involving the two conditions: (1) that the Consolidated Fund of the United Kingdom be charged, and (2) that the British public be asked, and should be willing to find the money. Although the Majority Report contemplated an Irish elected authority to work the railways so purchased and amalgamated, it was never suggested that any such Irish authority could raise the necessary purchase capital, or, indeed, any portion of it. The whole scheme from beginning to end pre-supposed the continuance of the Union, with its advantages of credit and capital. Upset that Union, establish an Irish Parliament working out its own salvation, financially and otherwise, and the basis of the whole scheme of railway nationalisation vanishes.

That the British Government should allow its credit to be used to the tune of fifty millions, after full legislative, executive and taxing powers were handed over to an Irish Parliament, is too fantastic to be considered seriously. Whether an Irish or English authority controlled the working of the railways would under such circ.u.mstances make little difference, with the Courts of Law, the Executive, and Police in other hands than that of the Government guaranteeing the interest. The security for the advance would be imperilled; and, indeed, it is doubtful whether a tenth of the money required would be advanced, even in London, on those terms. For a similar reason any formal pledge of Irish rates and taxes, to make up deficiencies in working, would be illusory. At any rate, if Irish Land Purchase is to be continued under British credit (and it certainly will be a prior claim and charge), it is idle to expect Parliament to undertake the vast additional obligations involved in Irish railway nationalisation. Parliament would pay the piper but could not call the tune.

IRISH CREDIT NOT SUFFICIENT.

There remains the alternative of the new Irish Parliament financing the operation. This it must do by means of payment in cash to the selling shareholders, for reasons which will be hereafter stated, unless it wishes to start its career by a scheme of spoliation, which would not merely rob the shareholders (who are mostly Irish), but would destroy the credit of the Irish Government. Mr. Redmond has recently acknowledged that a large number of Irish railway shareholders are good Nationalists; and it is certain that a great portion of the ordinary stock is held by Irish farmers and traders; and much of the preference and debenture stocks are also held by Irish charities, convents, diocesan trustees, and monastic inst.i.tutions. These persons will expect, and justly expect, cash on a compulsory purchase, on basis of market value, or capitalisation of dividend, so as to secure the same return of interest.

Could the Irish Government borrow 50,000,000, and at what rate? To borrow at a higher rate than the present return on Irish railway capital, namely, 3.77 per cent., would be to incur a loss on working the railways, from the outset, which Irish ratepayers or taxpayers would have to make up. The net receipts, at the time of the Commission's Report, were, in round figures, 1,600,000, and thus to borrow 50,000,000, even at 4 per cent., would mean an annual loss of 300,000 a year, even if there were no sinking fund. A 10_s._ per cent sinking fund would increase the total annual loss to 550,000.

But, could an Irish Government Guaranteed Railway Stock be issued at 4 per cent.? Would Ireland's credit stand better than that of Hungary, whose 4 per cent. gold _rentes_ stand at 92, or of the Argentine, which has to borrow at nearly 5 per cent.? There are grave doubts whether the large sum required would be subscribed at all, at even 4 1/4 per cent, or 4 1/2 per cent. basis. It is not likely that English investors would take up such a loan, seeing that they have consistently fought shy of Irish investments, and they are not likely to change their views upon the break up of the Union.

It may be said that the sum required could be raised in Ireland--that patriotic feeling would stimulate the operation, and the large sum of money (over 50,000,000), lying on deposit at the Irish banks may be referred to as available. Patriotism that has not financed the Irish Parliamentary Party will not be likely to finance a gigantic railway loan. Nor is the large sum appearing as banking deposits really free money available for investment. With increase of deposits, the items of loans and advances in banking accounts have also correspondingly increased, and they largely balance each other. Not only is the money deposited by one customer lent to another, and therefore already utilized, but, to a large extent well known to bankers, the deposits, _i.e._ the credits to particular accounts, represent money lent to the persons having these accounts, and are not, in fact, their own free balances. So also credits in the accounts of one bank, figure as debits on the balance sheet of another bank. There probably has been in recent years considerable saving in Ireland, but it is also certain that those savings have largely gone, and will continue rightly to go in improvements of farms, which the Land Acts and Land Purchase Acts have made worth improving for their possessors. Those who have not saved enough borrow, and the bank advances represent largely the capital required by farmers and traders. The deposits, therefore, are being well used, and are not dead money. Divert them to any large extent to another purpose, and there will probably be a contraction of banking credit, which Irish farming and industry will be the first to feel.

PURCHASE BY STATE PAPER.

It may be said that the nationalisation of railways could be carried out, not by a cash payment, but by a paper exchange of existing Railway Stocks into newly created Irish Government Stock, the amount of the existing net receipts being guaranteed. But, unless the Irish Government could actually borrow in cash the sum required, at a rate equal to that nominally put on the new stock, the shareholders would be robbed of a capital sum equal to the amount of the discount on the stock, _i.e._ the amount of the market quotation below par, or issue price. There will be sellers of the new stock from the beginning, and what the public will give for it, and not the nominal figure put upon it by the Irish Government, will be its real value. The Irish Government may issue the Railway Stock at 3-1/2 per cent., but if they could borrow the sum required only at 4-1/2 per cent., the new stock will at once find its level at about 77 instead of 100, and the capital value of Irish railways will be reduced from, say, 45,000,000 to 35,000,000, and the difference, 10,000,000, would come out of the pockets of Irish shareholders. The Irish Government would be, however, in this unpleasant dilemma, that if they issued the stock at a rate per cent, nominally higher than the present return in railway capital, namely, 3.77 per cent., the annual charge for interest would be greater than the net receipts, and so from the beginning there would be an annual loss; and the fact of this annual loss would be another factor tending to depreciate the new Railway Stock. The alternatives before an Irish Prime Minister, pressed to carry out a "Nationalisation" policy, are not enviable. He will either have to provide by taxation for the annual loss involved in taking over the railways on a fair basis, or to deprive the most thrifty and industrious cla.s.ses of his fellow-countrymen of a large slice of their savings and investments. In either event, the new Government will have received a serious blow to its credit at the outset of its career.

EFFECT OF REDUCTION OF RAILWAY RATES.

There is, moreover, a special reason why such a stock, from its inception, would tend to depreciate in value; namely, that from the moment the Irish Government or their nominees became the owners, there would be almost irresistible pressure put upon them to reduce the railway rates, and generally (as indeed the Majority Report recommends) to work the railways on other than commercial lines.[99] A reduction of rates has been held out as the great resulting boon of nationalisation ever since the Irish Parliamentary Party specifically raised the question in Parliament in 1899. A 25 per cent. reduction in rates and fares (suggested by Nationalist witnesses) would involve an annual diminution of net receipts to the Government of over 1,000,000 per annum, and if the reduction were in goods rates alone, the loss would be 568,000 per annum. It would be years, if ever, before such a loss could be recouped, however the traffic was increased. Experience has shown that in recent years running expenses tend to increase nearly parallel with the gross receipts, and a large increase in gross traffic would involve enormous capital outlay for rolling stock, engines, sidings, etc. It is unnecessary to comment upon the suggestion that the railways should not be run on "commercial principles." The Irish ratepayers and taxpayers, who would have to bear the loss, would loudly call out for business management when it was too late.

It is hardly necessary to add that another result of such an operation would be to prevent the Irish Government raising the very large sum necessary for improving and standardising the light railways and for extensions, except at an unremunerative rate of interest. Even if shareholders be put off with State paper, contractors will have to be paid with cash. Moreover the creation of such a large amount of debt at the beginning of the new regime would render it difficult, if not impossible, for the Irish Government to raise sums necessary for other public works and services of a pressing character, arterial drainage, ca.n.a.ls, education, and other objects, not to speak of migration, congestion, and land purchase. The conclusion, in fact, is inevitable, that without the security of the United Kingdom, and the market of British investors willing to lend, it is idle to think that either State purchase of railways, or any other of the boons mentioned, are reasonably possible. Mr. Erskine Childers, though a Home Ruler, does not fail to perceive, to use his own words, "that financial independence will now mean a financial sacrifice to Ireland."[100]

EFFECT OF NATIONALISATION ON TRADE RELATIONS.

There are other important considerations which confirm the view that, if the control of Irish railways were taken away from the Imperial Parliament, and placed under a Parliament sitting in Dublin, and if the general code of railway legislation now binding on both countries could be altered by a Home Rule legislature, results disastrous to the trade between the two countries would probably follow, whether "Nationalisation" were carried out or not.

The Majority Report recommends, as one of the chief objects of "Nationalisation" under an Irish authority, the reduction of _export_ rates, both local and through rates, on the Irish railways, as "essential to the development of Irish industry," and this seems the pet project of a large number of witnesses, and of Irish local authorities.

Import and export railway rates are now the same for the same cla.s.ses of produce, and no Irish railway company could now differentiate between them, without being pulled up by the Railway Commission at the suit of British traders, or British railway companies. The policy suggested is practically to use railway rates as a system of local protection, similar to the existing practice and policy on the continental, and notably the Prussian State Railways. It is easy to see that without any Customs barrier between the two countries, such a policy would inaugurate practically a tariff war between Ireland and Great Britain, which would be disastrous to both. That such a policy should be subscribed to by Free-traders, and that a Free-trade Government should advocate a change in the relations between the two countries, under which such a system could be possible, is indeed surprising. To use Imperial credit for such a purpose would be midsummer madness. Even without any scheme of nationalisation, the establishment of a separate Executive and Legislature in Ireland might have sinister effects on traffic arrangements between Great Britain and Ireland and on the harmonious administration of the railways.

THE RIGHT SOLUTION.

The truth of the matter, and the inference to be drawn from the above considerations and the whole trend of modern trade, is that to break up the railway systems of Great Britain and Ireland into two rival and hostile systems of transit, working for different objects and by different methods, would be to stop a natural and healthy process of uniform working and harmony, which has enormously advanced in the last decade, to the great advantage of Ireland.

Almost every scheme of amalgamation in Ireland has been connected with the opening or development of a new cross-Channel route, as the history of the Fishguard and Rosslare and the new Heysham routes fully shows. As part of this process, English companies, like the Midland and the Great Western, are either acquiring Irish lines or making special traffic arrangements with them. Enormous sums have been spent on harbours and steamers by English companies for the purpose of developing traffic with Ireland, and the increased interchange of goods has been of great advantage to both countries. The ideal put forward by advocates of railway nationalisation and Irish independence, that in respect of trade and traffic Ireland should be a sort of watertight compartment, self-supporting and self-contained, is, I submit, a mischievous delusion which, if put into practice, would undo much of the good progress Ireland has recently made. Such an ideal would also be the exact contrary of the line of national development as based on transit and transport followed in almost every other civilized country. In Germany, Canada, the United States, and Australia, we see the policy consistently pursued of amalgamation, consolidation, and facilities for long-distance traffic, so that between all parts of each State and Empire there shall be the freest and most perfect interchange of traffic. Canada and the United States have been so far inspired by this principle as to spend countless millions first on East and West (and now on North and South) lines, even before there was traffic to carry, and in order to create traffic; and the principle has been justified in its results.