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on the subject vas being prepared by Mr. Meyer, the main purpose of which was to see whether there were any principles which could be add down.
Lord Hailey said that the Union of South Africa had tried some very startling expedients in dealing with road-rail competition. In the Colonies many different expedients had been tried, and each Colony had tried to settle the question in its own way. A statement of the methods that had been tried in the different Colonies would be very valuable; one of the most useful things that could be done was to spread this knowledge so that each Colony knew what had been tried in the others.
The Chairman said that Lord Halley had raised a question of vital importance. In spending the big sum of money which was being raised for colonial development it would be necessary to decide whether transportation should be regarded as a commercial profit-making proposition, or at least paying its way, or whether, as he thought, it should be regarded as a public necessity for the development of the country.
General Hone said that any study of the question would be very valuable, from the military point of view, in the reconstruction of Malaya. As a result of the war, it was realised more and more that the strategic value of railways was such that a change of policy, even in this country, was desirable.
Mr. Caine said that, assuming that a railway had a public value, strategic or developmental, which could not be covered by running it the ordinary commercial competitive basis, a further question arose as to whether the public should pay for that value in its capacity as taxpayer or in its capacity as user of the railway: if the railway had to be subsidised, should that be done by restricting the competition of other forms of transport and maintaining the railway rates at a higher level than they would reach under competition, or should it be done by a definite subvention from taxation?
The Chairman observed that the London Underground Railways did not wait, as the Maine Line Railways did, until traffic existed, out built railways where no traffic existed, knowing that the provisica of traffic facilities would bring the traffic in the years to
come.
Lord Hailey agreed that this was important. He had guaranteed to bear the loss on no less than eight railways in India when the railway authorities did not believe that there would be any traffic; but in fact he had had to pay only £1,000, because the traffic was forthcoming at once. There was another question, namely whether a railway should provide for the amortisation of its debt. Colonial practice was to raise money for railways on the principle that the debt had to be repaid and that therefore one had to allow for amortisation charges. That was not necessarily the practice where private equities were concerned. Perhaps Mr. Meyer might be asked to consider this question in his memorandum.
Mr. Caine said that that question had been discussed in the Finance Sub-Committee with regard to Colonial Loans. The Railways in this country assumed that their capital was never going to be repaid, whereas the average Colonial railway was financed under loans which had to be repaid in 20 to 40 years,
Lord Hailey said that in the interval the railway looked more
like
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