Public and private management of Italian railways: 1905-1985

TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 Public and private management of Italian railways: 1905-1985 Gestión pública y privada de los ferrocarriles italianos: 1905-1985 STEFANO MAGGI Università degli Studi di Siena Via Banchi di Sotto 55, 53100 Siena ITALIA [email protected] ORCID: 0000-0001-9813-0839 Recibido / Recebido: 7.6.2024. Aceptado / Aceite: 4.12.2024 Cómo citar/How to cite: Maggi, Stefano (2024), “Public and private management of Italian railways: 1905-1985”, TST. Transportes, Servicios y Telecomunicaciones, 54, pp. 90- 107. DOI: 10.24197/tst.54.2024.90-107 Este artículo está sujeto a una licencia / Este artigo está sujeito a uma licença Creative Commons Atribución 4.0 Internacional (CC-BY 4.0) Abstract: This article traces the history of private and public management of Italian railways, starting from the private management systems created after the unification of Italy, with particular attention to the period from 1905 to 1985, when a large part of the national network was managed by the State Railways (Ferrovie dello Stato – FS). The research identifies the problems related to Italian railways in that period, from the first years after the foundation of FS, until the beginning of the new process of privatisation. The first years after 1905 focused on improving the railway system, left in poor condition by the private companies prior to nationalisation. The Great War required a huge effort for the recently established FS. Then came the twenty years of fascism (1922-1943), with an increase in the efficiency of the railway system but also with the first manifestation of competition with cars and trucks. Finally, the period of the second half of the 20th century recorded a serious crisis of the system, with the closure of many secondary railways and with the perception of the train as a means of transport for the poor. Despite the commencement of the construction of the high-speed railway between Florence and Rome, trains continued to lose ground in the transportation market. Private management returned between 1985 and 1992. Keywords: Railway History, Italian State Railways, Railway Management, Railways on the 20th century Resumen: Este artículo traza la historia de la gestión privada y pública de los ferrocarriles italianos, a partir de los sistemas de gestión privada creados después de la unificación de Italia, con especial atención al período de 1905 a 1985, cuando una gran parte de la red nacional fue administrada por los Ferrocarriles del Estado (Ferrovie dello Stato – FS). La investigación identifica los problemas relacionados con los ferrocarriles italianos en ese período, desde los primeros años después de la fundación de FS, hasta el comienzo del nuevo proceso de privatización. Los primeros años después de 1905 se centraron en la mejora del sistema ferroviario, abandonado en mal estado por las empresas privadas antes de la nacionalización. La Gran Guerra exigió un enorme esfuerzo para la recién creada FS. Luego vinieron los veinte años de fascismo (1922-1943), con un aumento de la Public and private management of Italian railways: 1905-1985 91 TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 eficiencia del sistema ferroviario, pero también con la primera manifestación de la competencia con automóviles y camiones. Finalmente, el periodo de la segunda mitad del siglo XX registró una grave crisis del sistema, con el cierre de muchas líneas ferroviarias secundarias y con la percepción del tren como un medio de transporte para los pobres. A pesar del inicio de la construcción de la línea de alta velocidad entre Florencia y Roma, el tren siguió perdiendo terreno en el mercado del transporte. La gestión privada volvió entre 1985 y 1992. Palabras clave: Historia del ferrocarril, Ferrocarriles estatales italianos, Gestión ferroviaria, Ferrocarriles en el siglo XX INTRODUCTION The purpose of this paper is to review the private and public management of railways in Italy. The initial section focuses on the era of private management prior to the birth of the State Railways (Ferrovie dello Stato – FS). The paper then continues with an analysis of the public railway company, created in 1905 with the nationalisation of the railways. The history of the FS is analysed by exploring its organizational structure, its impact on national life, technological progress and contributions to social modernization. FS remained a publicly owned entity until 1985, enduring the challenges of two world wars. It served as the primary national employer for an extensive period, with railway workers being highly unionised and politically active. The public management of Italian railways can be divided into at least four distinct periods: the initial phase from 1905 to 1920, marked by the establishment of the company and the challenges during WWI; the Fascist era, characterised by technological advancements and increased efficiency; the post-war reconstruction period, highlighting the social significance of north-south migration trains; and finally, the introduction of highspeed trains and reformation initiatives, culminating in the transition to private ownership between 1985 and 1992. This study draws upon both historiographical and legislative sources, with a particular emphasis on statistical and economic data published by FS. 1. BEFORE FS. THE PRIVATE MANAGEMENT In post-unification Italy, railway construction benefitted from state subsidies, while relying on private capital, including of foreign origin, to prevent further strain on the already substantial national budgetary deficit. 92 Stefano Maggi TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 Private entities participated through the legal mechanism of concession. Under this arrangement, railway companies were granted rights for construction and management of a service that, despite being public, was subject to restrictions. Moreover, companies were demanded to provide equal treatment to all users. During the second half of the 19th century, Italian railways faced a tumultuous administrative journey. Railway concessions sparked a lengthy debate on state supervision methods. The private companies administered a sector of considerable political and military significance, with significant impact on local communities that relied on trains to be supplied with essential commodities. Consequently, leaving railways solely in the hands of a majority of shareholding bankers was deemed unacceptable. Hence, concessions were established with numerous clauses safeguarding collective interests, which were subjected to frequent revisions. Inheriting a complex railway landscape from pre-unification governments, the Kingdom of Italy grappled with a perplexing scenario. It encompassed state railways in Piedmont and Naples alongside lines entirely under private ownership. Additionally, there was an intermediate model where infrastructure was publicly owned while operation was delegated to concessionary companies. The discussion regarding the legislation for railway management unfolded in the Chamber of Deputies between March 23rd and April 12th, 1865. After being approved in the Chamber of Deputies, the law was also approved in the two sessions of the Senate. Subsequently, it was promulgated on May 14th, 1865. It became known as “the law of large groups” (Law 14 May 1865, n. 2279). The construction and operation of most railways were delegated to three main companies: Strade Ferrate Alta Italia, Strade Ferrate Romane, and Strade Ferrate Meridionali, each overseeing a network spanning between 1,500 to 2,000 kilometres. These companies typically received subsidies for each line or kilometre operated, with the subsidy decreasing as the productivity per kilometre increased. At times, this subsidy was replaced by a guaranteed annual interest on shares, alongside other forms of subsidies, with varying mechanisms applied across different lines within a company. Additionally, pre-existing agreements from 1863 with Compagnia Vittorio Emanuele (managing railways in Calabria and Sicily) and Compagnia Reale Sarda (managing railways in Sardinia) remained in effect. Private companies were subject to supervision by officers of the Ministry of Public Works. Public and private management of Italian railways: 1905-1985 93 TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 The large group system proved ineffective. Consequently, a comprehensive reorganisation became imperative within a few years to address the enduring financial crises plaguing railway companies (Maggi, 2012, p. 98). In March 1878, a decision was made to establish a commission of inquiry regarding railways. Its mandate was to evaluate whether the previously established agreements aligned with state’s interests and to determine the most optimal methods for granting operational concessions to private initiative (Article 1 of Law 8 July 1878, n. 4438). The commission of inquiry published its report in March 1881, shedding light on the challenges faced during the governmental operation of the Upper Italy network. The commissioners recommended a new concession to private operators. However, four years of deliberations and unfinished projects ensued until Francesco Genala, the former chair of the commission of inquiry and the new minister of Public Works, expedited the finalisation of the previous agreement in April 1885 through the so-called “convention law” (Law 27 April 1885, n. 3048): “Few projects on railway conventions have been the subject of long, patient studies like this one – thus began the introductory report of over 300 pages – perhaps because no other project bested it in importance” (Barazzuoli, Curioni e Corvetto, 1884). Indeed, the railway issue remained central to national economic policy. The peninsula was longitudinally divided to facilitate north-south traffic development. The Società per le Strade Ferrate del Mediterraneo managed the western part with 4,046 km in operation, while Strade Ferrate Meridionali oversaw the eastern part with 4,515 km. The government aimed to balance national and international traffic between both companies, distributing ports and mountain passes accordingly: Genoa was assigned to the Mediterranean network and Venice to the Adriatic, while Livorno, Naples, and Taranto were interconnected by both networks. The Milan-Chiasso line was also shared due to the significant importance of the Italy-Germany Gotthard route via Switzerland. Additionally, the Strade Ferrate della Sicilia was granted concession of the 599 km of lines traversing the island, while the old organisation of the Sardinian railways (Compagnia Reale Sarda) remained intact, with a total length of 414 km. Furthermore, there were additional local companies, which by December 31st, 1887, operated 1,326 km of network. These included: the Palermo- Marsala-Trapani line, spanning 189 km in Sicily; the Veneto company, managing 134 km comprising the Vicenza-Schio, Vicenza-Treviso, and Pa- 94 Stefano Maggi TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 dova-Bassano lines; the Ferrovie Nord Milano, 63 km in length, which would undergo significant expansion in the 20th century; and the Arezzo- Fossato di Vico Central Appennine Railway, stretching across 134 km. In the early 20th century, more lines were added to the system, particularly connections with mountainous areas in the Alps and the Apennines. By 1905, the total extension had increased by 2,296 km (table 1), consisting of 1,098 km of standard-gauge and 1,198 km of narrow-gauge railways. Year FS (until 1905 under management of large private companies) Railways in concession to local companies Total 1839 8 – 8 1851 702 – 702 1861 2.743 30 2.773 1871 6.637 73 6.710 1881 9.326 180 9.506 1891 12.452 1.512 13.964 1901 14.418 2.033 16.451 1905 14.782 2.296 17.078 1911 15.413 2.981 18.394 1921 16.295 4.261 20.556 1931 16.928 5.643 22.571 1941 17.105 5.957 23.062 1951 16.354 5.357 21.711 1961 16.395 4.763 21.158 1971 16.100 4.139 20.239 1981 16.162 3.671 19.833 1991 16.066 3.516 19.582 1995 16.005 3.527 19.532 2000 16.107 3.461 19.568 Table 1. Railway network in Italy 1839-2000 (in kilometres) Source: Istat, 1958, p. 73; Ministero dei Transporti, Conto nazionale dei trasporti, several years. Regarding the 1885 reform, a key development was the separation between ownership and operation. The state retained ownership of the railway infrastructure, as it had become too extensive for any private entity to purchase. Operational control was delegated to three companies for a maximum period of sixty years, including the option renewing the contract every twenty years. An exception was made for the 1,720 km managed by the Strade Ferrate Meridionali, which remained under private ownership through previous concessions. Some shares were held by German financial Public and private management of Italian railways: 1905-1985 95 TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 groups, reflecting the increasing presence of German capital in the peninsula, but primarily by Italian groups. “The political significance of these agreements laid in the government’s connection with the most influential economic interests in the country”. Consequently, there was a widespread perception of significant influence wielded by high finance over ministers and deputies (Carocci, 1956, pp. 355- 356). The conventions adopted a hybrid public-private model inspired by the Netherlands. Under this arrangement, the companies were responsible for the technical and financial management of a state-owned network. Gross revenue was divided, with the operator receiving 62.5% and the state 27.5%. To support the Sicilian network, where traffic was limited, the percentages were adjusted to 82% for the operator and 18% for the state. However, the state’s share increased if total revenue surpassed certain thresholds: 112 million lire annually for the Mediterranean network, 100 million for the Adriatic network, and 8.5 million for the Sicilian network. Profits from equity would also be shared, but only if they exceeded 7.5% annually; otherwise, they would remain entirely with the companies. Nonetheless, the State guaranteed a minimum dividend of 3% for shares. The rolling stock, along with operational commodities, was sold to the companies for a total price of 265 million lire, excluding what was already owned by the Meridionali. Additionally, three special funds were established: one for natural disasters, another for the renewal of infrastructure and rolling stock, and the third for capital increases (funded by issuing bonds). It was anticipated that the capital should grow by 3.5% annually, but this goal was not met due to limited traffic growth during the economic depression that followed. The numbers of passenger transportation increased from 41 million in 1885 to 52 million a decade later, while goods transportation rose from 14 million tons to 18.5 million in the same period. However, this growth was lower than expected, invalidating initial forecasts, and prompting companies to seek renegotiation of agreements and implement cost-saving measures, including staff and maintenance, leading to widespread discontent. 3. THE ACTIVITY OF FS IN THE FIRST YEARS The disentanglement witnessed in the final phase of private management called for a complete overhaul of the system, often met with enthusiastic dedication from railway officials who believed they were undertaking a crucial task for both the state and the nation. 96 Stefano Maggi TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 Between July 1st, 1906, and June 30th, 1907, there was a 20% increase in train services, leading to improved productivity of both rolling stock and personnel. To create an immediate impression of enhancement, bathrooms were installed on two express trains on the Florence-Rome route in the latter half of 1906, equipped with dedicated baggage cars. Additionally, short-term measures were taken to address carriage heating, particularly in colder regions, which had long been a source of frustration. Consequently, a directive was issued to outfit as many trains as possible with steam pipes for heating, and special heating wagons were constructed to attach to the rear of the longest trains, ensuring heating in the last cars. Another significant improvement was the expansion of electric lighting. In 1905, only 1,300 carriages were fitted with electric lighting, while 1,400 cars had gas lighting and over 4,200 were still using obsolete oil lighting. Four years later, electric lighting had been extended to 3,400 carriages. Equally important was the implementation of the Westinghouse continuous brake on passenger trains, enhancing safety and preventing significant time loss during train deceleration. Over the first four years of state management, the number of trains equipped with this system doubled. In the meantime, corridors were introduced to facilitate communication between carriages. Between 1906 and 1909, the number of daily trains/km equipped with corridors increased from 4,600 to 30,100, thereby facilitating the expansion of dining services on the most significant routes. Renewed research efforts led to the development of new types of steam engines. Among them was the 680, which conducted a speed experiment on February 7th, 1907, with a special train transporting participants of the 13th meeting of the Italian Society for the Progress of Sciences from Parma to Piacenza. The engine achieved a speed of 120 km/h, setting an Italian record for a passenger service train. On the commercial perspective, a new fare known as the differential fare was introduced, applicable to all trains. This fare structure resulted in substantial price reductions for long-distance journeys, making travel between the north and south of Italy more accessible. Additionally, a special fare was implemented for the third class of omnibus trains, aimed at reducing costs for short journeys to encourage the growth of local traffic. In 1906, with the opening of the Simplon tunnel, the Simplon Express, a luxury train, was inaugurated from Paris to Milan and Venice. Following the Great War, the Simplon Orient Express initiated the Paris-Istanbul route via Lausanne, Milan, Trieste, Zagreb, and Belgrade. Public and private management of Italian railways: 1905-1985 97 TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 In 1905, only 178 km of railway were electrified. It was Riccardo Bianchi, an Italian engineer and the first Director-General of the FS, who revitalised the electrification of railways programme, focusing efforts on electrifying mountain pass lines. Electricity promised significant improvements over steam locomotives, as it not only provided greater power but also eliminated the smoke, which was particularly harmful in tunnels for both passengers and staff. Between 1910 and 1915, several lines were electrified using a three-phase power system on overhead wires, which became known internationally as the Italian system. These included the Passo dei Giovi railways between Genoa and Ronco Scrivia; the original 1853 route via Busalla; and the socalled branch of the Giovi via Mignanego, opened in April 1889. These lines handled the substantial flow of goods to the Ligurian port, 80% expedited to the north, crossing the Apennines. By 1915, other electrified lines included the Savona-San Giuseppe-Ceva railway and the Bussoleno-Modane line, which traversed the Moncenisio tunnel, totaling 349 km in length. Additionally, two large hydroelectric power stations were activated at Morbegno in Valtellina and Rochemolles in the Upper Susa Valley (Celli, 1956, pp. 80-81). The innovations implemented in the railway sector during this period were also the outcome of significant research efforts initiated in the early years following nationalisation. In 1905, the Experimental Institute of the Ferrovie dello Stato was established to foster collaboration among researchers in various railway sectors. The institute primarily focused on material analysis and technoscientific experimentation on railways. Riccardo Bianchi’s reorganisation and development efforts within the railway system indeed yielded positive outcomes in operations. However, the impact of these changes took several years to manifest and did not shield him from severe criticism. Ultimately, this criticism led to his resignation in January 1915, following allegations of sluggishness by the railways in the rescue efforts following an earthquake in Marsica. With the resignation of prime-minister Giovanni Giolitti from the political arena, Bianchi no longer enjoyed unconditional support from the government. Additionally, he faced hostility from railway workers, whose organisational reinforcement led to significant cost increases due to salary raises and workforce expansion, resulting in decreased productivity. 98 Stefano Maggi TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 4. THE FASCIST PERIOD: 1922-1943 Prime Minister Ivanoe Bonomi assumed office in July 1921 amidst the turmoil of fascist violence. He wrestled with the phenomenon of bureaucratic inflation, which entailed a significant increase in the number of employees across the Italian public administration. His administration shed light on the alarming deficit within the railway sector, which reached a record figure of 235,460 lire in 1921, partly due to the implementation of the eight-hour workday and the retention of additional personnel hired during World War I emergency measures. The railway workforce included 102,000 labourers in 1900. Despite the pressing need for decisive action, Bonomi’s government was unable to enact significant measures. It was Mussolini’s government that eventually addressed the challenging situation. In his early years, Mussolini prioritised public services to gain popular support, recognising their efficiency and functionality as symbols of restored order. Upon assuming power, Fascism implemented drastic measures against railway workers, unlike any other public sector reform. In December 1922, the Board of FS was dissolved, and its responsibilities were temporarily entrusted to special commissioner Edoardo Torre. Within approximately two years, Torre completed the company’s reorganisation. The railway workforce, consisting of 226,907 employees as of June 30, 1922, was significantly reduced to 174,140 labourers two years later, with over 50,000 individuals being exonerated through government decrees. These decrees often targeted activists and sympathisers of the socialist and communist parties under the pretext of poor performance. A new compensation structure was introduced, reducing seniority status and salaries for lower grades while increasing wages for officials (Valentinuzzi, 2000, pp. 29-32). For example, the minimum annual salary of a senior executive, such as the head of service, was raised from 21,000 to 27,500 lire. Conversely, the minimum wage of a train driver decreased from 9,900 lire to 7,400, that of a conductor from 6,600 to 5,000, and that of a common worker from 7,650 to 5,000. A significant portion of the reduction was allocated to increasing accessory skills, linked to individual productivity. Upon the railway workers’ return to work, characterised as “ordered, disciplined, and quiet”, FS reported “uninterrupted and profitable work of all categories of personnel” during the 1923-1924 fiscal year (Amministrazione delle Ferrovie dello Stato, 1925, pp. 12-16). Public and private management of Italian railways: 1905-1985 105 TST. Transportes, Servicios y Telecomunicaciones: 54 (2024): 90-107 ISSN 2951-7176 Law 22 April 1905, n. 137, “Che approva i provvedimenti per l’esercizio di Stato delle ferrovie non concesse ad imprese private”. Law 15 June 1905, n. 259, “Relativo all’esercizio di Stato per le ferrovie non concesse ad imprese private”. Law 15 July 1906, n. 324, “Riscatto delle strade ferrate meridionali e liquidazione della gestione della Rete Adriatica”. Law 15 July 1906, n. 325, “Accordi per la liquidazione della gestione della Rete Mediterranea”. Law 7 July 1907, n. 429, “Riguardante l’ordinamento dell’esercizio di Stato delle ferrovie non concesse ad imprese private”. Law 31 December 1907, n. 813, “Per l’approvazione della convenzione 1° giugno 1907 per la liquidazione della gestione della Rete Sicula al 30 giugno 1905”. Law 25 June 1909, n. 372, “Modificazione ed aggiunte alla legge riguardante l’ordinamento dell’esercizio di Stato delle ferrovie non concesse ad imprese private”. Law 7 August 1919, n. 1443, “Che approva la diffida per il riscatto di tutte le linee e tronchi ferroviari tenuti dalla Compagnia Reale delle ferrovie sarde, autorizzandone l’esercizio da parte delle ferrovie dello Stato”. Law 2 February 1920, n. 130, “Concernente la ricostituzione del Consiglio di amministrazione delle ferrovie dello Stato”. Law 17 May 1985, n. 210, “Istitutiva dell’ente Ferrovie dello Stato”. 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