280 History of Inland Transport 



the company, while the revised rates and the guarantee were 

 to continue for another twenty-one years. Needless to say, 

 railway companies in general do not pay ten per cent divi- 

 dends, though in 1844 ten per cent was regarded as quite 

 a reasonable dividend for a railway, in view of what the canal 

 companies had been paying ; while no such guarantee as 

 that suggested is ever likely to be made by the Treasury. 

 Provisions authorising the Board of Trade to make deduc- 

 tions from the guaranteed income as penalties for what they 

 might regard as mismanagement, and prohibiting a company 

 from increasing its capital pending a revision of rates, with- 

 out the sanction of the Board of Trade, were so vigorously 

 opposed that they were abandoned. 



The clauses of the Act relating to State purchase were to 

 apply only to new lines of railway, the 2320 miles of railway 

 sanctioned prior to the Session of 1844 and including many 

 of the chief links in the great trunk lines of to-day being 

 expressly excluded. As regarded railways sanctioned in the 

 Session of 1844, or subsequently thereto, it was enacted that 

 after the lapse of fifteen years the Treasury might acquire 

 them for twenty-five years' purchase of the average annual 

 profits for the preceding three years ; but if those profits 

 were less than ten per cent, the amount was to be settled by 

 arbitration. It was further enacted that no railway less 

 than five miles in length should be bought ; that no branch 

 should be acquired without purchase of the entire railway ; 

 that the policy of revision or purchase was not to be pre- 

 judiced by the Act ; that " public resources " were not to 

 be employed to sustain undue competition with independent 

 companies ; and, finally, that no revision of rates or State 

 purchase of lines should take place at all without an Act 

 of Parliament authorising the guarantee or the purchase, 

 and determining how either was to be done. 



To argue, as many advocates of the nationalisation of 

 railways habitually do, that the basis for State purchase has 

 already been established by the Act of 1844 is to set up a 

 theory which is obviously inconsistent with the real facts of 

 the situation. 



Commenting on this Act of 1844 the Joint Committee on 

 the Amalgamation of Railway Companies (1872) say in their 

 report : 



