The Railway Nationalization Act (鉄道国有法)

The Railway Nationalization Act (the 17th Law issued on March 31, 1906) is a Japanese law to nationalize private railways in order to unify the nation-wide networks of railways under the Tetsudoin (Railway Bureau) in the Cabinet.

The law was issued on March 31, 1906 and revised on August 5, 1920. It was abolished on April 1, 1987 by the provision no.110 of Enforcement Law of Japanese National Railways Reform Act (Law no.93 issued in 1986).

The railway networks of 17 railway companies mentioned below, which were as long as 2812 miles (about 4500km), were acquired over the period from 1906 to 1907 by the nationalization act. The networks of Japanese Imperial Government Railway, which had been only 1600 miles (about 2600 km) before the acquisition, tripled to 4400 miles (about 7100 km). The activities of private railway companies were limited to only local transportation.

The development of the theory to nationalize the railways
The basic railway policy in Japan was, from the beginning, to build and administer it by the government. The policy was largely due to the fact that Masaru INOUE, who was the leader and the driving force of railway administration in Japan, was an ardent advocate of railway nationalization. However, with the financial drought, the government was not able to build and administer all the railways, and the government ended up being obliged to leave a part of building main railways to private railway companies. Because of the fact, Inoue took every chance to insist on his claim to nationalize the railways and acquire the private railway companies. Although the bill to nationalize the railways was repeatedly submitted to the Diet, it did not go through the Diet until Inoue's retirement in 1893.

It was the vast war spending of Seinan War that aggravated the government's finance. With the war spending, the government ran out of the budget to build railways. It went so far that the idea came up that Keihin (Tokyo and Yokohama) and Keihanshin railways completed by then would be sold to the private sectors and with money obtained by selling the lines, the new lines would be built. The dilemma between the policy of building the networks of railways quickly and the financial drought made the government change its policy and leave a part of the building main railways to private sectors. This is how Nippon Railway, the first private railway company in Japan, was established in 1881.

Inoue submitted a written opinion entitled 'An opinion on building private railways' to Construction Minister in 1883. In the written opinion, Inoue claimed that in principle railways should not be left to the private sectors because the purpose of the railways use was the same with one of National Route. He pointed out the eight adverse effects including the unnecessary competition and the neglect of improvement efforts that may occur when it was left to the private sectors.

Meanwhile, even though Nippon Railway had received a careful protection from the government, the boom to build private railways started across Japan when Nippon Railway announced its positive financial statements. Starting with Nankai Electric Railway in 1884 and Iyo Railway in 1887, Ryomo Line, Sanyo Railway Company, Mito Line (the first), Kyushu Railway and Kansai Railway (the first) were approved. The principle of construction and administration of railways by the government collapsed, and main railways in Japan came to be built both by the government and by private sectors. However, some of the projects induced reckless plans and investments, which resulted in the economic crisis in 1980. Also, such projects caused stagnation in construction, the delay of paid-in capital and deteriorating management of existing private railways.

The situation improved soon, and under such circumstances, Inoue submitted 'The opinion on the policies of railways' to the government in 1891. In the written opinion, he stressed the importance of acquisition of existing private railways in addition to his theory of nationalization of railways and insisted, for the purpose, that it was necessary to enact the law to acquire private railways.

Taking this opportunity, the government repeatedly submitted the bill of railway public ponds and acquisition of private railways to the Diet, but every time the bill was not passed. In 1892, the Railway Construction Act, in which great amendment was added to the bill of acquisition, was enacted. However, according to the act, the acquisition of private railway was possible only when acquisition was necessary for the construction of planned lines, and the support from the Diet was necessary. Hinting the possibility of nationalization in the future, in fact, the act allowed the construction of planned lines by private sectors. The act was watered down completely because the Diet was composed of the peerages, capitalists, and land owners who were also the shareholders of private railways. Being outraged by this, Inoue retired the following year.

Against Inoue's theory of nationalization of railway, the powerful businessmen in Mitsui and Mitsubishi-zaibatsu (company syndicate) including Eichi SHIBUSAWA, Ukichi TAGUCHI, and Hikojiro NAKAMIGAWA advocated the theory of railway management by private sectors. They were well aware that railway management would bring a huge profit along with the development of capitalism and there is close relationship between the control of industries and the control of railways. In their thesis run in the 'The investigative report on railways' published by the Tokyo Economic Association in 1891, Kazuchika SABURI refuted every point of the theory of railway nationalization by indicating the proof of it, and concluded 'The railways in the future should be built and administered by private sectors'. After this, the powerful businessmen including Shibusawa planned the disposal by the government of Japanese Imperial Government Railway in 1894 and tried to realize the railway management by the private sectors in one stroke, but the plan came to a deadlock with the outbreak of Sino-Japanese War.

After that, it was in 1899 that the railway nationalization became a political agenda. The bill of proposal on railway nationalization' was submitted to the House of Representatives and passed, and the Committee on railway nationalization under the direct control of the Prime Minister was established. Based on the report by the committee, the following year, the bills of railway nationalization and acquisition of private railways were submitted to the Imperial Diet, but the bills did not go through the Diet.

However, the military that began to be aware of the war against Russia with the Triple Intervention after the Sino-Japanese War came to consider the issue of railway nationalization as the primary purpose. The disadvantaged point of railway management by private sector was that in the case of the private railways, being the joint-stock companies, they must report their managing status in detail to the shareholders. But, among the shareholders there were some foreign investors. Therefore, when the companies told the foreign investors their managing status, the companies needed to tell them so far as to the information on running the extra trains for military transportation, and at the same time there was a fear that military secrets would leak to foreign countries. In addition, there was even a fear that when the stocks were bought up by foreign investors, military transportation might be refused if the investors were the ones from enemy country. Besides military reasons, Zaibatsu that were monopolizing the key industries after Russo-Japanese War came to think highly of the significance of railways. And Zaibatsu came to recognize that the fact of main railways being divided and held separately by private railways was so disadvantageous in terms of the competition with foreign countries.

And in 1906, after twists and turns, the bill of Railway Nationalization Act was submitted to the 22nd Imperial Diet by the First Saionji Cabinet. With not only Eichi SHIBUSAWA but also Kaoru INOUE, Takaaki KATO, and Korekiyo TAKAHASHI opposing the bill and trying to persuade the Diet, the government had trouble dissuading them, but on March 16 in the same year, the bill was approved with 243 in favor and 109 opposed. In the House of Peers, Sukenori SOGA (the president of Nippon Railway) and Mitsugi SENGOKU (the president of Kyushu Railway) opposed to the bill. But by the maneuvering of Yataro MISHIMA, the leader of a study group (in the House of Peers), the bill was approved with amendments on March 25. Originally, a joint committee of both Houses was going to be held. However, since Rikken Seiyukai Party (a political party organized by Hirobumi ITO) whose president was Saionji passed the amended bill with completely same contents because it was the end of the Diet session, the same bill was recognized to be passed. By the passage of the bill, railway nationalization which had been a long-cherished wish of Inoue was realized at last and 17 private railways were going to be nationalized.

The original draft of the bill submitted at this time was to acquire 32 private railways including 15 private railways, besides the original 17 private railways
The draft was to include the acquisition of 15 private railways besides 17 private railways that had been to be acquired in the first draft. The bill was passed in the House of Representatives but was amended and changed in the House of Peers to the original plan to acquire 17 private railways. The additional 15 private railways were as follows.

Kawagoe Railway, Narita Line (the first), Tobu Railway Co., Ltd., Chichibu-Railway, Sunzu Line of Izu Hakone Railway, Suigun Line (the second), Chuetsu Railway, Toyokawa Railway, Meitetsu Bisai Line, Omi Railway Corporation, Nankai Main Line, Nankai Takano Route, Osaka Railway (the second), Chugoku Railway, Hakata Bay Railway Kisen

Later movements

In May 1906, the Temporary Preparation Bureau for Railway Nationalization was established under the control of the Communication Minister. The bureau existed for a while after completion of the acquisition, and was abolished at the end of July in 1909 after the inauguration of Tetsudoin.

With the acquisition of private railways, the scale of the Imperial Government Railway, the fieldwork agency of government railways, swelled enormously in a short period. The succeeded length of the private railways was 4550 km, unopened line 292 km with 1118 locomotives, 3101 passenger carriages, and 20850 freight cars. Those figures far exceeded the ones Japanese Imperial Government Railway had possessed with 2525 km in length of the railway, 769 locomotives, 1832 passenger carriages, and 10821 freight cars. In order to accommodate them, on Aril 1, 1907 the Imperial Government Railway was reorganized to the Imperial Railway Agency.

As the Imperial Government Railway employed the vast number of employees that it had succeeded from the private railways, it ended up holding redundant workers because of position overlapping etc. On the other hand, in the Railway Agency of Ministry of Communication that was in charge of approval and license on private railways, the business reduced greatly. Because of this, in order to streamline both agencies by integration and reorganization, Tetsudoin was established on December 5, 1908. From this moment, the bureau was put out of control of Communication Minister and put under the direct control of the Cabinet with new position of president set up.

The various kinds of train cars that were succeeded from the private railways were used in the same model number as they had been used in private railways. It was in 1909 well after three years since the acquisition had started that, including the model number of train cars that had been used in the former Imperial Government Railway of Japan, the new model numbers were set up. Looking at only steam locomotives, there were as many as 187 forms, combined with 103 forms of tank locomotive and 84 forms of tender locomotive. It can be assumed that the number of the forms was enormous including the number of passenger and freight cars. The form of steam locomotive set up at this time existed together even after the new form was set up in 1928 and the form has been used until now.

In 1910, right after the inauguration of the Tetsudoin, not a single locomotive was produced. It is imagined that this is because the bureau was so tied up with dealing with the existing locomotives in various forms that swelled in a short period that it was not able to create new locomotive. After that, standard train cars in each form of car were set up, and assorted small number of train cars began to be culled out.

And after the Railway Nationalization Act was issued, few new applications for new private railway were turned in. This is partly because the conditions of the Private Railway Law that supervised the private railways were strict, however, there were some problems in terms of local development. In order to solve this problem, the provisions concerning railway establishment were simplified, and Light Railway Law was issued in 1910. After that, as no applications based on Private Railway Act were turned in, the Light Railway Act and Private Railway Act were abolished in 1919. And the Local Railways Act was established, the supervision of private railways were conducted based on this law.

In addition to this movement, some business persons aimed at establishing suburban railway system based on the Tramways Act which was applied for streetcar system. This system followed the example of the inter-urban which was popular in the United States at that time. The railway system began to spread throughout Japan since the inauguration of Hanshin Electric Railway Co., Ltd. in 1905. Some of such systems, like Mino-Arima Electric Tramline (later Hankyu Railway) established by the executives of Hankaku Railway, were invested by the capitalists that gave up their business by the Railway Nationalization Act.

After all, after about 80 years the management of the nationalized railway ended up returning to private sectors by the division and privatization of Japanese National Railways in 1987.