110CPENDMJAZ Francs By the state and Sundry 1 412 000,000 By the companies 7,991,000,000 To facilitate the economical construction of lines, a law dated 12 July 1865, had authorized the departments and communes to create sec ondary lines for themselves in their neighbor hood. These railways, which were called alines of local interest° attained, in 1875, to an extension of 1,500 kilometers, representing an expenditure of 41,000,000 francs ($8,200,000).
1875-83.— During the preceding period, alongside of the great companies, a number of minor companies had sprung up, such as that of the Charentes, that of the Vendee, of Dombes, of the North and East, etc.; but their position had become very much embarrassed. Several of these lines — of
as well as of '
Since 1876 government had been preparing a scheme for completing the railway system. Several commissions were at work on it, and in 1879 M. de Freycinet, Minister of Public Works, procured their consent to a scheme which provided for the construction of 8,700 kilometers (5,391 miles) of new lines, and 8,300 kilometers (5,157 miles) of lines granted but not yet operated, or a total of 17,000 kilometers (10548 miles), within a period of 10 years.
The cost per kilometer was estimated at 200,000 francs ($40,000), making a total sum of 3,400,000,000 francs ($680,000,000), or an an nual outlay of 340,000,000 francs ($68,000,000) 'a very reasonable figure compared with the out lay for the companies during the period 1855 65 when it averaged 430,000,000 francs ($86, 00b,000) a year. The Freycinet scheme, as it has since been called, refers to the whole of these new lines, together with considerable works to be carried out in the ports.
The agreements of 1879 began to be carried' out at once, but the operation of the first lines showed a deficit, which, added to the cost of constructing the new lines, considerably in creased the burden on the state. It became necessary, therefore, either to proceed more slowly with the work, or else to have recourse to a financial operation to ensure the comple tion of the proposed lines.
Owing to a financial crisis it did not seem feasible to make a loan. The state accordingly fell back on the credit of the companies, and the government, in spite of lively opposition, succeeded in 1883 in carrying through Parlia ment a fresh set of agreements which regulate the French railway situation to-day.
The main features of these agreements may be summarized thus: (1) The companies ac cept the grant of about 1,200 kilometers of new lines. They undertake to supply, in addition to the working stock and plant for these lines, a sum of 25,000 francs per kilometer, the rest of the cost falling on the state. The companies agree to carry out the works according to plans approved by government and to advance the necessary funds which shall he repaid by annui ties. (2) In regard to guarantee the previous
distinction between the old and the new systems is done away with. There is only one account for working expenses. The net proceeds from this account are assigned by each company to the service of its debt and to the payment of a guaranteed minimum dividend. If there is a deficiency, the state gives its guarantee. If there is a surplus, it is used for the repayment of the advances made by the state as guarantee, and after the extinction of that debt it goes to the shareholders until the dividend touches a figure known as the °reserved° dividend, after which the profits are divided in the proportion of two-thirds for the state and one-third for the company. (3) With a view to reducing the amount of the annuities guaranteeing the interest, the companies are authorized to carry over till a fixed time the deficits on new lines to a special account, called °Account of Partial Operation,° where the deficit is covered each year by an issue of bonds. (4) A settlement was carried out in respect of the °Initial Out lay° account of the old systems, and also of the value of the stocks, on 31 Oct. 1882. However, the companies may still, by obtaining a simple ministerial authorization, execute supplement ary works and charge them to Initial Outlay. (5) The companies which had used the guar antee of interest under the agreements of 1850 liquidated their debt by constructing works up to an amount agreed upon. (6) The state re serves the right of repurchase at any time. Lines which have not completed 15 years' exist ence are to be valued according to the actual expenditure on them, and the same rule holds good for supplementary works. In regard to the other lines, an annuity is to be paid, de termined, as tinder the agreements of 1859, by the net profits of the last seven years, the guar antee of interest being included. (7) Finally,. the companies agreed to a considerable reduc tion of the passenger rates, and further promised to revise and unify the slow freight tariffs.
The brilliant situation of the companies in 1883 had raised the hope that the burden of the guarantee would not weigh too heavily on the budget. But a period of depression followed the prosperous years, and it was necessary, in order to reduce the expenditure, to proceed more slowly with the works. Accordingly the completion of the proposed lines seems de ferred to 1908 or 1910. Subsequently the re ceipts gradually rose, and in the last few years the calls on the state guarantee have been de creasing; some companies have even begun re payment. However, it is to be feared that the fresh outlays imposed on the companies may defer to a still distant date their entire libera tion from indebtedness to the state.
State Purchase of the ttOuesto Af ter lengthy parliamentary debates the pur chase by the state of the of the Compagnie de l'Ouest was decided and au thorized by law on 13 July 1908. It was sub sequently decided that the system should be operated in the same manner as the existing state railway, but with a special budget. The °Ouest° Railway was officially taken over on 1 Jan. 1909, and the purchase conditions were arranged by a friendly agreement in conformity with the law voted 21 Dec. 1909. Under this agreement, the state pays the old Compagnie de l'Ouest an annual sum equivalent to the dividend guaranteed to the shareholders, plus the amount necessary to meet the coupons of the bonds. The company retains its private property and cedes to the state all its assets in real estate and working plant. Later, the organization of the administration of the two state railways was established under the law of 13 July 1911, with a joint management, but two distinct budgets.