There are special and peculiar problems connected with the
construction of railways in the economically backward areas of the
world. In well populated regions, such as western Europe, railways
have been built to accommodate existing traffic; in sparsely populated
regions, such as eastern Russia and western United States, they have
been constructed chiefly to create new traffic. In the economically
advanced countries of the world the railway has been the result of
civilization; in the backward countries it has been the outpost of
civilization. A new railway in an undeveloped region is obliged at the
outset to concern itself mainly with the upbuilding of the territory
through which it runs, in order to assure abundant traffic for the
future; during this period its receipts are rarely, if ever, adequate
to meet the costs of operation. Private capital cannot be expected
to assume alone the risk and burden thus involved, but the public
service which the railway renders during this critical time justifies
the government in subsidizing the enterprise until it can become
self-supporting. The granting of state subventions has been a common
practice of the nineteenth and twentieth centuries. China time and time
again has pledged national revenues in support of railway construction;
the Latin-American countries have been conspicuous exemplars of
the same practice; more than half of the railways of Russia were
constructed with government funds.[44]
There was every reason to believe that the Bagdad Railway would be
built with some system of state guarantees. Almost every railway in
Asiatic Turkey at one time or another had been the recipient of a
government subvention, and the proposed trans-Mesopotamian railway
faced many more obstacles than had faced any then in operation.
The provinces through which the Bagdad Railway was to pass were
sparsely settled and were too backward, economically, to warrant
the construction of a railway for the accommodation of existing
traffic;[45] the German technical commission of 1899 had pointed
out that the estimated gross operating revenue for some years would
be entirely inadequate to pay the expenses of running trains even
if there should be an unlooked for volume of passenger and mail
service to India. In time, it was believed, improved transportation
and greater political security would induce immigration and produce
widespread economic prosperity in the provinces of Anatolia, Syria, and
Mesopotamia, thus assuring financial independence to the railway.[46]
During the interim, however, a state guarantee appeared to be necessary.
Public-domain text, read in full here on John Shaqi.
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