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  • Alan Stevens - AWAH - Libertarianism, Freedom.

Transport in Britain without the State

Updated: Oct 28, 2020

Transport infrastructure developed rapidly in Classical Liberal Britain. In the 20th century interventionist policies made rational economic calculation in transport investment impossible. We would benefit from a return to Libertarian principles in road and rail provision.


Transport infrastructure developed rapidly in Classical Liberal Britain. In the 20th century interventionist policies made rational economic calculation in transport investment impossible. We would benefit from a return to Libertarian principles in road and rail provision.

In the 18th century, Britain developed the skills to promote private investment in transport, in particular canals and roads. In incremental stages, building steadily on previous successes, engineers and promoters went from improving existing waterways to bringing wholly artificial waterways, canals, into being.

At the same time Britain’s existing long-distance roads were remade to ever higher standards under Turnpike Trusts. These were granted Parliamentary authority to improve and operate highways over fixed concession periods. Journey times on the new roads roughly halved. France achieved a similar improvement in its main long-distance road network. But, characteristically, the French state used forced ‘corvée’ peasant labour. Resentment of this form of state bullying became an important factor in the fall of the Ancien Regime.

In Britain there was practically no direct taxation, so investors had unfettered access to a growing, unimpaired pool of saved capital. There was no government involvement in transport investment. The currency was generally gold backed and therefore stable. Project promoters could rely on a steady, ready-made structure of transport rates and construction costs to guide them in identifying and managing value-adding projects.

In this basically libertarian environment, in just a century the country equipped itself with wholly privately owned and managed national canal and road networks. The canals greatly reduced freight costs and journey times between the isolated centres of the early Industrial Revolution, regional markets and cities, and the ports with their new commercial docks.

Under a Classical Liberal regime nobody needed government permission to use their property as they saw fit. They were quite free to build a canal, road or railway on it. If a promoter could acquire adjoining land for the whole proposed project route, he could just get on with constructing and operating it.

But there was a legal framework for entrepreneurs (‘promoters’) to propose transport investments. Promoters sought Parliamentary powers under a Private Bill in Parliament. Once enacted, Private Acts of Parliament gave promoting companies the right – as a last resort, not an opportunity to cheat property owners - to make compulsory purchase orders for specified parcels of land.

The backstop of recourse to compulsory purchase powers enabled promoters to deal with property owners who might otherwise have tried to ‘ransom strip’ projects. It also, perhaps more controversially, gave protections against nuisance actions, for example for noise or smoke affecting others’ enjoyment of their land. Of course, neither compulsory purchase powers, nor protections against nuisance actions, could exist in a properly non-state, free society.

In the absence of a transport policy, Parliamentary Bills were less politicised and were typically processed within weeks, or occasionally in a few months. Property owners’ objections were often taken into account and projects altered in line with the Bill committee’s recommendations. On occasion Bills would fail or have to be withdrawn by promoters. This happened, for example, to the first proposal by the Great Western Railway for a line between London and Bristol.

From the early 19th century, Britain built a comprehensive railway system which captured a preponderant share of freight and passenger transport. The roads and most canals slowly declined to relative insignificance. In the latter part of the nineteenth century the commercially obsolete road concession periods ended. Parliament reluctantly agreed to maintain them at public expense.

In the absence of any central planning, the railway companies nevertheless established an integrated network, just as the canal and road builders had before them. Nearly all major cities and quite a few of the larger towns had two or more companies offering passenger and/or freight services between them while serving different combinations of intermediate locations.

There were ten or so major railway companies, some regional and some practically national, especially on the freight side. As late as 1914 there were nearly a hundred lesser operators. Many but not all were ‘joint railways’ owned and/or operated by two or more of the larger companies.

All this had been done at next to no cost to the taxpayer. Prices and costs had fallen while investment was channelled effectively into relieving congestion (i.e. providing more capacity for areas of growing business). Moreover, it had been done very economically and, on the whole, profitably, out of voluntarily subscribed personal savings.

Everything had been competently managed in such a way as to build up an enormous amount of wealth. It was part of the virtuous Victorian cycle of continual investment in productive physical capital. The investment was accompanied by an equally impressive accumulation of human capital in the form of capable, responsible and industrious populations in Britain and in daughter societies in North America and Australasia.

The dogma of the Marxist inspired religion of the state is that businessmen and commercial undertakings are hopelessly short-termist and wastefully competitive.


Supposedly the political class is there to provide far sighted competent management and planning. The truth is the opposite.


The political class is incurably short-termist. Its members must subordinate everything to getting elected and re-elected. When they are in power, politicians are like short term renters. Their incentives are to strip out short term profit for themselves and for their voter supporters. This tends to be at the expense of long-term good management and prosperity.


But politicians cannot afford to care about that. The illegitimate power of the state must be turned to extracting loot to reward voters, whatever the long-term consequences. One is reminded of the proverb ‘Give a man a desert and he will make it a garden. Rent a garden to a man and he will turn it into a desert’.


One superb exhibit for the verity that independent property owners are the best and most effective drivers of long-term investment comes in the unlikely form of the ‘Pre-Grouping Railway Atlas’. This contains maps of every part of the country and more detailed maps of major British cities and ports, showing which companies operated which lines in 1914.

In the atlas, companies’ lines can be seen to interconnect with other lines, stations and depots belonging to other operators who must have been both competing as well co-operating. There was even a Railways Clearing House which processed payments between the companies under a host of joint access, revenue sharing or maintenance agreements. The patterns of the lines show a rich history of continued, highly rational and carefully planned investment.


A particular example is the map of South Wales. The Marquess of Bute had promoted and funded the vast coal docks at Cardiff to export South Wales Steam Coal around the world. As the area developed into an early equivalent of the Persian Gulf, several railway lines were built to take coal from the coal fields down to Cardiff.

In due course Cardiff became overloaded, or at least was deemed to be becoming too expensive. Barry, to the west, decided to compete for coal traffic to their new docks. Barry Docks expanded and promoted the connecting Barry Railway towards Cardiff and towards existing lines running to the valleys. It didn’t have to expensively duplicate every railway to every coal pit. It simply made revenue sharing deals to link up with other lines, including the Taff Vale Railway at Penarth west of the Cardiff Docks.


In league with coal producers in the Neath area, the Barry Railway created a separate subsidiary line running west to existing railways at Bridgend. The legacy now is a little used passenger line and a splendid viaduct by the sea near my brother’s house. But it worked. By 1914 Barry rivalled Cardiff as a coal port. The investment was paying off when the folly of the First World War intervened. The railways’ fortunes, and the scope for private transport initiative, were both to go into steep decline.


A last word on the Pre-Grouping Railway Atlas. The detailed maps in the latest edition are copies of those used by the Railway Clearing House for reference when working out payments between the member railway companies. They are quite lovely, technical art. They are also unintentional testaments to a lost age of confidence and enterprise.


The colourful patterns of their inter-weaved systems are characteristic of any free system of cooperative investment. In the absence of deadening political intervention, competently managed investment in roads, canals, electrical transmission lines, oil and gas pipelines, and water supply and drainage systems would all generate similar, complex, networks of cooperation.


The railways, like the coal industry which provided such a crucial part of their business, peaked in 1913. With hindsight, it is easier to see that at the end of the 19th century technological developments such as asphalt road surfaces, the internal combustion engine, rubber tyres and the possibility of energy distribution by an electric grid would undermine the railways in time. What was not so predictable is that the state would intervene to make managing road and rail investment more difficult.


With the 20th century came the abrupt end of the Classical Liberal regime and start of the continuing experiment in generalised government intervention. Interventionism meant that the market mechanisms of a free society could not be used to guide either the railways’ response to these unfavourable trends, or the development of a trunk road network.

The first move was the 1920 compulsory grouping of the vibrant pre-war industry into the four monopolistic companies of the interwar period, a move born out of interventionism and a crony-capitalist desire to reduce competitive pressures on railway rates and profits.

After WWII, the politicians nationalised the still cash-generative railways. They also embarked on the construction of an expansive trunk road network. The spirit of the age took it for granted, perhaps, that modern roads should be provided free at the point of use, just like health and education. So their construction went ahead in the complete absence of any economic calculation.

Meanwhile the state-owned railways were certainly not free at the point of use. Everybody just took it for granted the railways could compete on this uneven playing field against free roads, and in the face of continuously falling coal production since 1913. Meanwhile investment poured into trunk roads. This is not to say that the trunk road system would not have been built in a Classical Liberal society, given the development of the internal combustion engine. The best one can say is that, under a Classical Liberal regime, trunk roads would have been based on road pricing. The railways would not have been unreasonably undercut, but nor could they make any claim for public subsidy.

Trunk roads would have been built to the degree that they added economic value. They would not have cost taxpayers anything, and they would have been provided in a cost-effective manner. There would be no congestion. Competing undertakings would have promptly made pricing changes and added capacity on routes which have instead remained congested because of free access.

It is likely that motorways would have been built more cheaply. Possibly companies would make savings by not carrying HGVs. A passenger car and van motorway would have much smaller, lighter and cheaper structures and road surfaces. Road freight traffic also accounts for most motorway maintenance expense.

If there had been private sector trunk road developers, they would have been obliged to charge HGVs for their full road investment and maintenance costs.


Maybe the railways would not then have been stripped of their freight business. The railways might also have got an effective Channel Tunnel built with rebuilt lines which would have generated a great deal of profitable long-distance freight business.


The interventionist approach in transport has not been plane sailing. Free roads and lack of commercial management eventually drove the railways into loss and therefore subsidy as Democratic Socialism embarked on its muddled, if politically inevitable, policy of making productive people shoulder the burden of the unproductive.

On the way to building the motorways, the state created the dreadful Public Enquiry process which became famous for blight, delay and controversy. Government became more reluctant to promote projects. But vested interests such as those surrounding the HS2 project, with their snouts in the public trough, have little idea about letting anyone else do it instead. Meanwhile subsidy and regulation have allowed costs to mushroom – railway infrastructure costs reportedly went up by around two and a half times in real terms in just a few years after privatisation.

So what would a revived Classical Liberal solution look like now? The railways may well be unmanageable so long as the roads are free. Both need to be cut off from subsidy and therefore made to compete on economic merit. Both systems should be divided into competitive, unsubsidised and as far as possible unregulated companies – integrated track and train companies on the railways. Ideas of central planning and approval should all be replaced by an open project-enabling process, ideally based on a modified Private Bill mechanism.

What would happen? Taking the trunk roads first, and assuming that road companies were allowed to charge reasonably freely, one would expect significant reductions in congestion on the motorways. There would then be a rash of privately funded road proposals on corridors where congestion persisted. Government would save on current road costs. It would save the cost of future investment schemes or large-scale remedial maintenance proposals. And not least, the new road companies could be floated. This would net at least the £100bn or so current formal valuation of the trunk road system – and probably much more.

On the rail side one need not expect a collapse of the resulting independent railway companies. The Office of the Rail Regulator report for 2016-2017 reports passenger related revenue of £10.5bn. Leaving out considerable payments to and from government, train operating companies’ direct costs were £9.4bn. These included around £1.5bn of track access payments to Network Rail. Network Rail spent £2.8bn on maintenance and operating expense. (It also had £4.8bn of largely irrelevant other costs, overwhelmingly depreciation - a non cash item – and financing charges – a sunk cost).

On a cash and debt-free basis, an integrated passenger railway industry could last year have had collective revenues of £10.5bn and costs of around £10.8bn. This is not so far from break-even. A third of fares are regulated – i.e. held artificially low. Introducing road pricing would push up rail passenger traffic and revenues. It could also finally permit adequate development of redundant railway capacity to develop modern freight traffic to the Continent. Would it be fanciful to see total rail revenues grow well north of £12bn?


On the cost side, integrated companies with long term planning horizons would go a very long way towards improving operating performance and rolling back the growth in real rail costs since privatisation. CrossRail would neither have cost as much as £20 billion, nor would it have adopted an untried and unworkable signalling solution. One more cost that an independent railway industry would certainly not shoulder would be the vanity Concorde type project that is the HS2.


So the immediate savings of ending state intervention in road and rail could be over £100 billion from selling off the roads, over £100 billion from not attempting to build HS2, and much of the £25 billion or so spent annually by the Department of Transport. Yet again, the potential benefits of getting rid of the state and allowing human initiative free rein would be real and valuable.

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