It may be said that the nationalisation of railways could be carried out, not by a cash payment, but by a paper exchange of existing Railway Stocks into newly created Irish Government Stock, the amount of the existing net receipts being guaranteed.  But, unless the Irish Government could actually borrow in cash the sum required, at a rate equal to that nominally put on the new stock, the shareholders would be robbed of a capital sum equal to the amount of the discount on the stock, i.e. the amount of the market quotation below par, or issue price.  There will be sellers of the new stock from the beginning, and what the public will give for it, and not the nominal figure put upon it by the Irish Government, will be its real value.  The Irish Government may issue the Railway Stock at 3-1/2 per cent., but if they could borrow the sum required only at 4-1/2 per cent., the new stock will at once find its level at about 77 instead of 100, and the capital value of Irish railways will be reduced from, say, L45,000,000 to L35,000,000, and the difference, L10,000,000, would come out of the pockets of Irish shareholders.  The Irish Government would be, however, in this unpleasant dilemma, that if they issued the stock at a rate per cent, nominally higher than the present return in railway capital, namely, 3.77 per cent., the annual charge for interest would be greater than the net receipts, and so from the beginning there would be an annual loss; and the fact of this annual loss would be another factor tending to depreciate the new Railway Stock.  The alternatives before an Irish Prime Minister, pressed to carry out a “Nationalisation” policy, are not enviable.  He will either have to provide by taxation for the annual loss involved in taking over the railways on a fair basis, or to deprive the most thrifty and industrious classes of his fellow-countrymen of a large slice of their savings and investments.  In either event, the new Government will have received a serious blow to its credit at the outset of its career.

EFFECT OF REDUCTION OF RAILWAY RATES.

There is, moreover, a special reason why such a stock, from its inception, would tend to depreciate in value; namely, that from the moment the Irish Government or their nominees became the owners, there would be almost irresistible pressure put upon them to reduce the railway rates, and generally (as indeed the Majority Report recommends) to work the railways on other than commercial lines.[99] A reduction of rates has been held out as the great resulting boon of nationalisation ever since the Irish Parliamentary Party specifically raised the question in Parliament in 1899.  A 25 per cent. reduction in rates and fares (suggested by Nationalist witnesses) would involve an annual diminution of net receipts to the Government of over L1,000,000 per annum, and if the reduction were in goods rates alone, the loss would be L568,000 per