Belgium.—The policy of government owner ship is perhaps best typified by the Belgian system. Of all countries in the world Belgium probably offered the best field for a state rail road. The country is small, compact and rich, the population crowded, active and intelligent, and the industries varied, all which insured a large volume of local traffic. Moreover, Bel gium is on the highway between England and Germany, so that, in addition to a dense local traffic, the Belgian lines were certain to secure considerable through traffic on commodities moving between England and Germany. There was in consequence of all this little room for mistake in locating the main lines, and they were, as in France, for the most part laid down intelligently and built economically. Railway construction began as early as 1833. Private companies were allowed to build lines where ever the state did not choose to build, but competition between the lines owned by private companies and the state lines was not at any time part of the original scheme. Like the French, the Belgians saw from the start that competition would be uneconomic and wasteful. The private railways increased rapidly from 200 miles in 1850 to 700 miles in 1860, and 1,400 miles in 1870. This rapid growth of the private lines was accompanied by their inevitable consolida tion into systems, and in spite of the fact that competition had not been contemplated, there began in Belgium about 1856 a period of rail way war between the state and the private lines and among the private lines themselves. Theo retically, the state had and exercised the power to forbid the private companies from entering into any competition with the state lines, but, in spite of that, competition in Belgium after about 1856-57 was keen. The state had the better routes and in some sort the inside track, but some other advantages possessed by the pri vate companies practically offset this advantage. This competition working the usual mischief finally drove the government to the expedient of buying out the private companies. This began about 1870. By 1874, the government owned more than half the mileage of the country. By 1880, it owned two-thirds, and in 1902, there were 2,516 miles of railway in the country, all or practically all of which is controlled by the state, either through ownership or lease, and competition is in consequence wholly eliminated. The total mileage in 1912 was 2,913, of which but 217 miles were private lines. The state now owns more than 90 per cent of the total mileage and operates almost all of the remain ing by lease. This is in brief the history of the development of railways in Belgium. It ap pears that competition was not part of the original scheme; that it nevertheless arose and ran its course; that when the state realized the disadvantage of it, steps were taken to elim inate it entirely, and that this was done by the purchase of the competitive lines. There was at first the inevitable consolidation of the pri vate lines, eliminating competition between those lines themselves, but intensifying it as between them and the government lines. Then came the consolidation of these lines with the state-owned lines by government purchase, and competition was at an end. It is another case of the universal tendency to combine, and of the powerlessness of government to prevent it.
Italy.— In 1878, a Parliamentary commis sion in Italy undertook an investigation of the railway situation in that country. Testimony was taken throughout the kingdom and an enor mous mass of material collected. In 1::1 this commission made its report to the government, which was subsequently published in seven quarto volumes. It was the most thorough railway investigation ever undertaken in the world and the report is probably the most valu able in existence. The material parts of it have been translated into French and are thus avail able. From the work of this commission it ap pears that, prior to the wars which resulted in the union of the Italian states in 1870, the prin cipal railway lines of Italy not only were dis connected and independent of each other, but also constituted isolated or strictly local sys tems for each of the chief independent states. Thus the lines in Tuscany, in Lombardy and in Piedmont were wholly distinct both from one another and also from those centring in Venice, Rome and Naples. Some of the early charters had come from the emperor of Aus tria and one from the Pope; the lines were in adequate to the demands of the business of the country, the service was very poor and the companies substantially bankrupt and irrespon sible, but there was plenty of competition. The problem after 1870 was to unite and consolidate these scattered and local lines into systems fit for united Italy, to construct new lines, to re construct old ones, to re-equip and to reconsti tute; and then to operate the reconstructed lines as a whole. The range of mountains from
north to south which constitutes the back-bone of the Italian Peninsula dictated a natural di vision of territory for the amalgamated lines. There was as of course much local jealousy to overcome. Although Italy was too poor to spend much money in experiments, there was thought to be danger to the autonomy of the new state in permitting foreign capital to come into the railways, and it was prevented by the government, so that, in consequence of all these matters and hindrances, things at first moved slowly. Connecting links were first built, which served to unite the isolated local systems, the plan being to consolidate the local parallel and competing lines rather than the connecting lines. Finally the roads fell into four systems — that of Upper Italy, that of Rome, that of the east coast and that of Sicily and the south. Here, as elsewhere in Europe, competition between parallel lines did not enter into the scheme of construction and reconstruction, and conse quently consolidation was not only inevitable, but easy, and it was facilitated wherever there was duplication. Upon the division of terri tory between the four systems and with the consolidation of lines within those four terri tories respectively and the building of the con necting links, the problem of construction was in a way to be solved; or, in other words, the lines were laid down and ready for operation. Next came the problem of ultimate ownership and present maintenance and operation. Soon after 1870 the state had begun to buy up the lines, especially in the north, where there was danger from Austrian influence, and by about 1875 a considerable part of the mileage of the kingdom was owned and operated by the state. So that by that time Italy seemed committed to what may be called the Belgian system of state ownership and operation. But Belgium was rich and Italy was poor, and it was soon found that the state was neither managing the lines well nor making any money out of it; there was, therefore, general dissatisfaction through out the country with the railway system; neither the poorly served public nor the depleted treas ury of King Victor Emmanuel was satisfied. It was in that state of affairs that the investiga tion of 1878 was undertaken, the result of which was that the Italian statesmen who had the matter in hand came to the conclusion that it was not the proper function of the Italian state to run its railways: that state manage ment in Italy had proved more costly and less satisfactory than private management, and that the carrying on of so vast an undertaking by the new state involved political risks and dan gers of a serious nature. The outcome was the chartering in 1885 of three private com panies, one, the Adriatic, for the territory on the east of the Apennines, a second, the Medi terranean, for the territory on the west, and a third, the Sicilian, for Sicily, the two systems in the peninsula being about equal consequence, while the one in Sicily was, of course, smaller. A fourth company has since been chartered to operate the lines in Sardinia. These companies were to take over the rolling stock of the lines within their respective territories at a valuation, and thus become the owners of it, and to main tain and operate the lines, dividing the gross receipts with the state on an agreed basis. So that the ultimate solution was that the state was to own the lines, where private companies were to operate them. Practically the railway busi ness of Italy proper is in the hands of two com panies, one on either side of the Apennines, the lines meeting at Naples, Rome, Florence, Milan and elsewhere. Between 1881 and 1897 the length of the Italian railway system almost doubled itself, and in 1898 there were 9,813 miles of line open for traffic. Since which time there has been practically no increase in the mileage. In 1912 there were reported 8,387 miles of state railways. The service is satis factory and the railway system is making rapid progress throughout the kingdom. Thus we see that in Italy competition preceded combina tion; that it was found to work mischief and that attempts at combination were the inevitable result ; that when the matter was taken seri ously and intelligently in hand by the state competition was eliminated by law and the territory divided; and that then„and then only, were satisfactory results secured in railway operation. It appears, therefore, that whether we choose state operation as in Belgium or re ject it as in Italy, it is the same as far as com petition and combination are concerned; that the same economic laws govern in each case, and that in the long run competition is elim inated.