manifestations of size, the railways left legacies, some temporary, some per-
manent. Here we deal briefly withfinances.
The railways accounted for more than 40 per cent of the interest on the
public debt in 1931 (ABS 1932). New South Wales (NSW) Premier Jack Lang
used to say,‘As goes the rail revenues, there goes the state budget’(quoted in
O’Connor 2005, p. 34: see Table 9.1).
When a private enterprise makes persistent losses, its capital is written down
through sale or bankruptcy. When a large state-owned enterprise makes per-
sistent losses, then the deficits damage the public accounts, unless the gov-
ernment reneges on its obligations—as Argentina did repeatedly, but not
Australia, despite Jack Lang’s effort in 1932. In the 1890s, the colonies’railway
interest bills were met, but caused severefiscal stringency that may have
worsened the depression (Boot 1998). Wage rates were cut in the Great
Depression (but not as much as the general price level fell) and capital works
virtually ceased. Concern about the foreign exchange demands for public debt
Table 9.1Losses of State Railways, 1919/20–1938/9, As million £A and as per cent of
states’revenues
Commonwealth
Year Book, £Annual Reports, £ Commonwealth
Year Book, %Annual Reports, %1919/20 1.83 2.12 5.8 6.7
1920/21 3.66 4.03 9.8 10.8
1921/22 2.10 2.45 5.6 6.6
1922/23 1.23 1.63 3.2 4.2
1923/24 1.20 1.73 2.9 4.2
1924/25 0.48 0.85 1.1 1.9
1925/26 2.70 3.13 5.9 6.8
1926/27 3.52 4.61 6.9 9.0
1927/28 4.74 4.94 8.7 9.1
1928/29 4.01 4.51 7.0 7.8
1929/30 7.58 7.96 13.0 13.7
1930/31 8.68 9.89 14.6 16.6
1931/32 4.70 6.93 8.4 12.4
1932/33 2.99 5.12 4.9 8.4
1933/34 2.65 4.52 4.5 7.6
1934/35 1.14 2.42 1.8 3.9
1935/36 1.11 2.23 1.7 3.3
1936/37 0.30 1.51 0.4 2.1
1937/38 –0.14 1.42 –0.2 1.9
1938/39 2.11 3.77 2.8 5.0
1919/20–1938/39 56.60 75.80 108.0 142.0
Notes: TheCommonwealth Year Bookmeasures differ from those of theAnnual Reportslargely on account of their
disregarding the increased cost of servicing debt to British bond holders subsequent to the depreciation of the Australian
pound in 1931. The measures of both theCommonwealth Year Bookand theAnnual Reportsdisregard the removal from
railways’accounts of about £32 m of debt by the Qld Railways Capital Reduction Act of 1931 and the Tasmanian
Railways Capital Reduction Act of 1936. Similarly, both disregard the £800,000 granted to NSW Railways by NSW
Treasury each year throughout the 1930s. The combined effect of these is to underestimate losses by about £2m pa.
Sources:Commonwealth Year BookandAnnual Reportsof six railways (New South Wales 1929; Queensland 1929; South
Australia 1929; Tasmania 1929; Victoria 1929; Western Australia 1929). State revenue is defined as the sum of state
taxation, land revenue, Commonwealth grants, and‘other revenue’(Barnard 1982).
Socialism in Six Colonies: The Aftermath