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The New Zealand Railways Magazine, Volume 3, Issue 5 (September 1, 1928)

State Enterprise

State Enterprise

So much has been spoken and written in regard to socialism that there may be a tendency to forget that a State enterprise, such as a national railway system, may be carried on on quite non-socialistic lines and strictly in accordance with business principles.

The case in favour of a State running certain services in preference to allowing them to be carried on by private enterprise is freely conceded by economists to be unanswerable in the case of certain classes of work. For instance no one now ever suggests that postal business would be better left in the hands of private companies.

In regard to railways, the case is not so clear, as the greatest railway systems in the world have been built privately. But even these have, in many instances, depended upon public grants and concessions of various sorts for their establishment, and all have required some form of Government authority for their construction. The difference between these, however, and the railways built in most of the British overseas possessions is that, while the private railways have, in practically every case, been constructed to supply the needs of existing traffic, the State railway systems have had their origin in a desire to develop the country, for which purpose nothing has yet proved so effective as a railway. Moreover, in hardly any instance would such construction appeal to private individuals as a good investment from a purely operating standpoint. These conditions apply very definitely to New Zealand. But having brought the railways through their developmental period, when, naturally, they had to be worked on much the same lines as any other Department of State, the decision made some three years ago to place them upon a commercial basis has produced a new situation and a new outlook. The result so far has been to show that the same principles that governed the management of a private railway or private business of any other kind can be applied successfully to a State transport concern. There are, moreover, certain definite benefits that a State-owned business of this kind could confer upon a community which could not be obtained under private enterprise. The recent washouts along the Wellington-Hutt Valley Railway line supply an apt illustration of this. When, for a totally different reason, there were no trains operating on this section of the line for a few days, private enterprise seized the opportunity to provide road transport between Petone and Wellington for the usual rail borne passengers–charging 2/- for this service. On the page 5 present occasion, when the line was blocked, the railways themselves carried the crowds by road services, but charged only the ordinary fare, i.e., ⅙ return, as against the private operators' 2/- single on the previous occasion. That is to say, the State-owned enterprise did not exploit the misadventure in any way.

Then there is the feature of service such as the needs of the country may demand, e.g., in the matter of freight regulation and train connections to isolated places which it would not pay private enterprise to supply, but which the State is quite justified in supplying for the public's welfare. Anyone acquainted with the personnel of the Railway Department in this country is aware that the keenness of the average employee to do the best for his Department is at least equal to that obtaining in the best large scale private businesses and, that being so, the last remaining objection to a State enterprise of this kind is definitely removed.