Railway nationalization

Railway nationalization

Railway nationalization refers to the act of nationalizing rail transport assets, taking them into public ownership. Several countries have nationalized part or all of their railway system at different times.

More recently, the international trend has been towards privatization. In some countries, notably Great Britain, resultant problems have led back to a more mixed solution.

National characteristics influenced the structures under which their respective rail networks originally developed. Some national railways were always under direct State management, some were State-planned but privately operated (as in France), others were wholly private enterprises lightly regulated (as in Great Britain, Ireland and Spain). Nationalisation was therefore a bolder step to take in some countries than in others. While ideology has played a role, so too has the need for systematic reconstruction of vital infrastructure devastated by war, often following a period of State control over private companies initiated during the conflict.


The Argentine railways were largely developed with British and French capital and were nationalised in 1948 during President Peron's first term of office.


In Canada, the government took control of several railways that fell into bankruptcy following World War I, including the Canadian Northern Railway, the Grand Trunk Pacific Railway, and the Grand Trunk Railway. On December 20, 1918, the federal government created the Canadian National Railways (CNR), and placed the companies that it took control of under the CNR. Canadian National Railway was privatized in 1995.


In 1878, the French government took over ten small failing railway companies and established the Chemin de Fer de l'État. The company absorbed the Chemins de Fer de l'Ouest in 1908.In 1938, the French state took 51% ownership of the newly formed SNCF merging of France's five main railways (100% in 1982).


The earliest railways in the German states were often run by private entrepreneurs. Starting in the late 1800s, the railways were recognised as important to the military, and operation often was taken over by the state, especially in Prussia and Bavaria. After World War I, the German Reich took over control of the state railways of Prussia, Bavaria, Saxony, Württemberg, Baden, Mecklenburg-Schwerin, Hesse and Oldenburg. The individual railways were merged into the Deutsche Reichsbahn-Gesellschaft in February 1924. ["Verordnung über die Schaffung eines Unternehmens "Deutsche Reichsbahn" vom 12.Februar 1924", RGBl. I Nr. 10, February 14 1924, p. 57] Due to impending war reparations, the DRG was a private company, but shares were bought by the Reich in 1937, effectively nationalising the corporation. In World War II the DR assimilated a great number of railway companies in the German-occupied territories as well as several smaller, previously privately owned lines in Germany. Post-World War II, after being under Allied administration between 1945 and 1949, the DR was split up into the Deutsche Bundesbahn and Deutsche Reichsbahn of the GDR, both state-owned. Private railways continued to exist in the West German realm of the DB, but DB and DR accounted for most of the rail traffic in post-war Germany. After German reunification, DB and DR became Deutsche Bahn AG in 1994. Whilst DB AG is a public limited company, all its shares are presently owned by the government of the Federal Republic of Germany. DB AG is now facing stiff competition in the freight and short-distance passenger sector, although they still hold a quasi-monopoly in the long-distance passenger sector. The IPO, originally planned for 2008, has been postponed.

Great Britain

In 1914, the railways were taken into Government control due to World War I, but were returned back to the original owners in 1921, three years after the war had ended. Starting in 1923, there were four major British railway companies: The Great Western Railway, the Southern Railway, the London and North Eastern Railway, and the London, Midland and Scottish Railway. In the United Kingdom during World War II, the railways were taken into State control. They were heavily damaged by enemy attacks and were run down aiding the war effort. After the war, the Transport Act 1947 provided for nationalising the four major railways. On January 1, 1948, the railways were nationalized and British Railways was created, under the overall management of the British Transport Commission, later the British Railways Board. By the 1980s, it was one of the few profitable state railway companies in the world.

The privatisation of British Rail occurred between 1994 and 1997, wherein a complicated privatisation took place to a series of private sector operators under contracts. Overall, over 100 companies took over from British Rail. In 2001 the track operator Railtrack went bankrupt; the replacement, Network Rail, is a quasi-state-owned entity. The Government still invests heavily in the railways, such as paying for extra rolling stock. Government spending on the railways has increased substantially compared to when the railways were in state control.


Railways in Northern Ireland were nationalised in the 1940s under the Ulster Transport Authority (UTA). The former LMS lines managed by the Northern Counties Committee, nationalised by the Westminster government, were sold by the British Transport Commission to the UTA in 1949. In the Republic of Ireland, Coras Iompair Éireann was formed from the merger of the Great Southern Railway with the Dublin United Transport Company on 1 January 1945. Initially a private company limited by shares, CIÉ was nationalised in 1950. The final privately owned mainline railway company on the island, the Great Northern Railway, was nationalised under joint control of the Republic of Ireland and Northern Ireland governments in 1953. It was wound up in 1958 and its assets split between CIÉ and the UTA.

Railways in both parts of Ireland remain nationalised under CIÉ, and the UTA's successor, the Northern Ireland Transport Holding Company. Operations have now been delegated to railway operating subsidiaries of both bodies - Iarnród Éireann - Irish Rail in the Republic, and Northern Ireland Railways Company Limited in Northern Ireland. Together, they run the Dublin - Belfast railway line as Enterprise.


Following unification, the Italian Government entrusted the railways to five regional concessionaires. The arrangement did not work well and, long before it was due to expire, the railways were nationalised in 1905. The nationalised operator is known as Ferrovie dello Stato.

See also History of railways in Italy


In Japan, the Railway Nationalization Act of 1906 brought most of the country's private railway lines under public control. Between 1906 and 1907, convert|2812|mi|km of track were purchased from seventeen private railway companies. The national railway network grew to about convert|4400|mi|km of track, and private railways were relegated to providing local and regional services.


After years of declining profitability, the national rail network was devastated by the Spanish Civil War. In 1941, the broad gauge railways were nationalised, as RENFE. The narrow gauge railways were also later nationalised; some of these have since been transferred to the autonomous regional governments where contained within a single region.

United States

After the United States entered World War I in 1917, the country's railways proved inadequate to the task of supplying the nation's war effort. On December 26, 1917, U.S. President Woodrow Wilson nationalized most American railways under the Federal Possession and Control Act, creating the United States Railroad Administration (USRA), which took control of the railways on December 28, 1917. The USRA introduced several reforms to increase efficiency and reduce costs, including standardizing rolling stock and steam locomotive designs. The war ended in 1918, and on March 1, 1920, the railways were handed back to their original owners.


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