capital they had sunk in the undertakings, but some reasonable compensation for its prospective value. We believe that if the principle of State purchase were decided upon, it would ultimately have to be carried out somewhat in the following manner:—
As regards the lines that are now earning a profit, Government should guarantee a rate of dividend, which might be taken at the average of, say, three years preceding the purchase, and this would certainly not be putting too high an estimate on their prospective value, which would have a tendency to increase in view of the Government guarantee.
As regards capital invested in railways constructed, but paying no dividend, the question is more complicated. Each case would have to be considered on its merits, but for our present purpose we may assume that the justice of the case would be roughly met by taking this capital at half its nominal value, the Government paying say, 2½ per cent, per annum upon the reduced amount in consideration of their obtaining the possession and control of these lines. Lines under construction and paying no dividend at the time of purchase might be taken at their nominal value, the Government paying 2½ per cent, per annum upon that amount.
A perpetual Government railway consolidated stock might be created, and the stocks of the different companies be converted into this Government stock on the principle of equivalents; that is to say, that, for example, supposing the Government consols to bear interest at 2½ per cent, per annum, a company whose invested capital was five millions, and who, during the preceding three years had been paying a dividend at
