Railway Rates: English and Foreign
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Title: Railway Rates: English and Foreign
Author: James Grierson
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*** START OF THE PROJECT GUTENBERG EBOOK RAILWAY RATES: ENGLISH AND FOREIGN ***
RAILWAY RATES:
ENGLISH AND FOREIGN.
BY
J. GRIERSON,
GENERAL MANAGER OF THE GREAT WESTERN RAILWAY.
SECOND THOUSAND.
LONDON:
EDWARD STANFORD, 55, CHARING CROSS.
1886.
PRINTED BY
WATERLOW AND SONS LIMITED, LONDON WALL, LONDON.
Transcriber's Notes:
Underscores "_" before and after a word or phrase indicate
_italics_ in the original text.
Small capitals have been converted to SOLID capitals.
Obvious spelling mistakes have been corrected.
Old or antiquated spellings have been preserved.
In the sample contracts, the blank spaces to be filled in have
been replaced with underscores.
The caret character "^" indicates a superscript for the next
character or bracketed group of characters.
PREFACE.
A part of the information upon which these observations are founded
was obtained for my own guidance, in considering the complaints as
to Railway rates and the comparisons between railways in the United
Kingdom and abroad. At the suggestion of the representatives of some
of the Companies the subject was followed up. These observations
have expanded beyond my original intentions; but they have been
prepared for a limited object; they do not purport to exhaust the
subject. I have endeavoured to treat it fairly, and to pay due
regard alike to the interests of the traders, the public, and
the railway companies; interests which may, to a hasty observer,
occasionally appear conflicting, but which, looked at reasonably,
and in the light of full information, are seen to be identical.
Though solely responsible for the comments and conclusions, I am
indebted for the information upon which they are based to many
persons; among others, to several of the Presidents, General
Managers, and others connected with the control of the railways in
France, Belgium and Holland; to Sir Bernhard Samuelson, M.P. (who
placed at my disposal the voluminous and useful information which
he obtained as to the railways in Germany, Belgium and Holland); to
some of the General Managers and other Officers of the companies
in England, the United States, and Canada; and to many friends who
have been kind enough to supply much information and give valuable
assistance.
If the information thus collected helps to clear up some
misconceptions, to prevent the adoption of theories as to the fixing
of rates which would be most injurious to the trade of the country,
and to bring about an equitable and satisfactory settlement of
questions now so much discussed, my object will have been attained.
J. GRIERSON.
PADDINGTON,
_December 1st, 1886_.
CONTENTS.
SECTIONS PAGE
I. Introduction 1
II. The principle upon which Rates should be based 6
III. Cost of Service 8
IV. Equal Mileage Rates 13
V. Differential Rates 21
VI. Grouping, here and on the Continent 39
VII. Differential Rates on the Continent 45
VIII. The Interest of Consumers in Rates 62
IX. The Real Basis of Rates 68
X. New Classification 78
XI. Terminal Charges 93
XII. The Construction of Railways in England
and on the Continent 107
XIII. Working of English and Continental Railways--Comparative
facilities afforded by them 119
XIV. High Rates and their effect on trade 142
XV. Proposals for fixing rates by Railway
Commission.--Conciliation Courts 161
XVI. Railway Amalgamation 179
XVII. Railways and Canals 190
Conclusion 201
Appendix I. Comparison between English and Foreign Rates i
Appendix II. Comparison of Railway receipts from merchandise
and mineral traffic ix
Appendix III. Tariffs and Conditions for the conveyance of
merchandise Traffic in Holland xii
” ” Belgium xxvii
” ” Germany xliv
” ” France lv
Toll and maximum rate clauses in Railway Acts lxv
SECTION I.
INTRODUCTION.
For many reasons the failure to pass the Railway and Canal Traffic
Bill ought not to be regretted even by those who are dissatisfied
with railway companies, but who sincerely desire to benefit the
trade of the country. In the discussion of that Bill, and in the
debates on the subject of railway rates in recent sessions of
Parliament, the existence of many misconceptions were disclosed. As
to principles, there was little agreement; there was, if possible,
still less as to details. Charges which had often been explained or
refuted were repeated as if they were new, and as if they had never
been answered. One of the greatest defects of the discussion was
its fragmentary, one-sided character; it was carried on with far
too little regard to the interests of many classes, districts, and
ports which would have been seriously injured by some of the changes
hastily proposed. Many of those who professed to represent traders
ignored the interests of large sections of them; and what would
benefit consumers was, to a remarkable degree, lost sight of. The
delay may be useful; and it may be hoped that any future legislation
will be shaped according to the interests of all traders, and not of
a part of them only, and of the general public, to whom extended
and not restricted trade, cheapness, and a wide area of supply are
desirable.
The following observations do not attempt to correct or remove all
the misconceptions in circulation, or to answer all the charges
against English railway companies. Many of such charges are so
vague as to elude refutation; they appear formidable, but only
formidable because they are indefinite. Nor is this an attempt to
show that, with regard to railway working and rates, all is done
for the best by the companies. Considering the fact that the rates
are numbered by millions, and the variety of interests which they
affect--considering, too, the fact that this is an island with
numerous ports, companies and trading interests, all competing with
each other--it would be amazing if there were no anomalies and
defects. The present purpose is only to show that of the charges
brought against railway companies some are erroneous; that some
are exaggerated; that many are of a contradictory character; that
some are complaints of evils which railway companies did not create
and cannot alter; and that other supposed grievances could not be
removed without injury to the community. It has recently been stated
in Parliament that “this is the first time that traders have had
an opportunity of going before a tribunal and putting their views
fairly before it.”[1] This betrays forgetfulness of the fact that,
as lately as 1881 and 1882, during two sessions, a Select Committee
heard the complaints of all persons who believed that they had
grievances to relate. The statement, too, inadvertently ignores
the fact that, when the companies submitted in the session of
1885 Bills to Parliament, and thus offered a further opportunity
of inquiry, Chambers of Commerce and other persons professing to
represent trades refused to avail themselves of the opportunity,
and prevented the investigation taking place. English railway
companies need not dread a thorough examination of their working,
or a comparison with any foreign system. They need be apprehensive
only of a vague uninstructed notion that “something must be done;”
of legislation adopted, if not in a panic, in a time of greatly
depressed trade; of crude one-sided proposals made on behalf of a
part of the interests concerned by persons who have not sufficiently
examined and considered all the consequences of their schemes; and
of the application of a standard of perfection supposed to exist
somewhere, but in truth nowhere realized.
[1] Mr. Forwood. Debate on second reading of Railway and Canal
Traffic Bill, 6th May, 1886. Hansard, vol. cccv. 446.
The continued depression of trade, the necessary efforts to
reduce the cost of production, jealousy of foreign competition,
misapprehensions fostered by agitation, as to the commercial effects
of “special,” “import,” and “transit” rates, have given birth to
vague, ill-considered proposals, some of which would be certain to
injure the cause which their authors have most at heart.
One point is at the outset very clear--the inconsistent nature of
many of the charges made against railway companies. Within the
last twenty years such complaints have been the subject of three
elaborate inquiries before Royal Commissions or Parliamentary
Committees[2]. Before all of them were submitted proposals
completely at variance with each other. With equal emphasis
railways are now asked to satisfy contradictory demands; and to a
large extent the multifarious charges made against them answer or
cancel each other. Many traders demand the very opposite of what
is a necessity to others, and of what consumers, naturally anxious
to enlarge the field of supply, earnestly desire. Some of the
former complain, for example, in language which seems borrowed from
mediæval times, that their “geographical” or “natural advantages”
are diminished. Other traders blame railway companies for not
sufficiently effacing natural disadvantages, and not offering
inducements for the development of trade in new districts. Exporters
want favourable terms; importers do the same; and another class
protests against concessions either in favour of exports or imports.
It is a remarkable fact that many of the proposals which were most
in fashion a few years ago have now been abandoned, and that in
Parliament and the Press we now hear chiefly of schemes totally
different from those which were formerly supported. Equal mileage
rates were once strongly advocated; and, probably owing to the great
success of the Penny Post and to the experiences of the advantages
of one uniform rate for all distances, there was a belief in some
minds that, with certain modifications, the same principle might
be applied to rates for goods. Ingenious schemes were devised for
equalizing within certain zones or areas, rates irrespective of
distance and other circumstances. There is a fashion in so-called
Railway Reform. Such schemes are now little heard of; they have
given place to proposals essentially different, which may in their
turn make way for others.
[2] See Report of Royal Commission, 1867; Report of Joint Select
Committee of House of Lords and Commons, 1872; Report of Select
Committee, 1881-2.
In all the recent discussions of rates much was heard of those who
were discontented, but very little of those who, being satisfied,
were silent. Most errors in Political Economy, it has been said,
come from not taking into account what is not seen. Especially true
is this of the question of railway rates, not the least important
problem of Political Economy. Of the trades and interests which are
dissatisfied with existing arrangements, people hear and see much.
Unfortunately they appear to take little heed of other interests,
equally important, which are contented, or comparatively so, which
do not send deputations to the Board of Trade, and which changes
such as have been from time to time proposed would injure or even go
far to ruin.
SECTION II.
THE PRINCIPLE UPON WHICH RATES SHOULD BE BASED.
The first condition of any useful discussion of railway rates is
that _all_ interests shall be considered--the interests of all
traders, and of all consumers, as well as of railway companies. To
every proposal this test--the golden rule--should be applied. How
would any projected change affect all concerned? Every one cannot
get such rates as he would desire; the utmost which is practicable
is to fix them in the manner, on the whole, most suitable to the
requirements of the community as a whole; and this will be found
in the long run to coincide with the interests of the companies.
In consequence of not applying this test, and owing to the fact
that persons may freely put forward proposals without explaining
what would be the consequences of a general application of their
principle, little progress is made in the discussion. A second
condition of any profitable consideration of the subject is obvious.
To argue about the propriety of this or that rate, the question
whether this town or that port is badly treated, or this or that
industry is made to pay too much, is of little use without agreement
as to the principle upon which rates ought to be framed. There is a
third condition no less reasonable. When English railway companies
are accused of imposing charges at haphazard, and in an arbitrary
fashion, what scientific principle, it may be asked, ought to be
followed? There is no escaping this question--not even if the task
of framing or controlling rates were committed, as has sometimes
been proposed, to the Board of Trade or the Railway Commissioners.
To this question rarely, however, is any answer given. When
one is attempted, very seldom is it made with reference to all
interests meriting attention.[3] How often do witnesses before
Royal Commissions or in Parliamentary inquiries merely deprecate in
general language what they object to as personally injurious, or
merely claim what would be advantageous for themselves! How often is
their proposal of reform merely a thinly veiled plan for securing
_protection_ against competition for some industry or some town or
port! How many proposals as to rates, propounded with facility and
confidence in Chambers of Commerce, would prove to be valueless or
even objectionable if their authors were always obliged to answer in
detail two questions. What would be the effect of the proposals on
consumers? How would they affect producers and traders generally?
[3] Gustav Cohn, the well known German writer on English railways,
while advocating many changes, complains of the limited, one-sided
knowledge of the subject shown by the chief English critics of
railways.--_Die Englische Eisenbahnpolitik_ (1883), p.88 and
elsewhere.
SECTION III.
COST OF SERVICE.
One favourite proposal, often refuted but constantly renewed, is
to base rates on the actual cost of conveyance _plus_ a reasonable
return on the capital invested. Whether this would benefit the trade
of the country we shall by and by consider.
But it is no light presumption against this principle that, though
so often proposed, especially by theorists, nowhere has it been
carried out. Obviously cost of conveyance bears no relation to
value of goods--the mere transit of some descriptions of very
valuable goods costs as little as that of low priced articles. It
will be generally found that when pressed, the advocates of this
theory are not prepared to maintain that for a cwt. of coals and
a cwt. of copper the charge should be the same. They shrink from
the application of their own principle, recognising, as is the
fact, that it is absolutely inconsistent with any classification of
goods, such as traders and the Board of Trade have been urging the
companies to adopt.
Inconsistent as such a principle is with any kind of classification
of goods, and leading to the consequence that a rate might be the
same for a bale of cotton as for high priced silks, its effect might
be to revolutionize trade. But there is a preliminary difficulty;
how is the cost of conveyance to be ascertained with anything like
accuracy? How is the cost of conveying a particular consignment or
even the average cost of every kind of traffic to be found? What
the transit of full loads of coal in this country, or of grain
in America, from point A to point B costs may be approximately
found. Allowances may be made for the maintenance of the permanent
way, for cost of engine power, and the wages of drivers, guards,
&c.; and calculations, more or less accurate, can be made as to
the cost of conveyance even over lines of varying gradients. The
solution even of this simple form of problem would be difficult.
When in cases before the Railway Commissioners it has been attempted
to discover the _actual_ cost of conveying a particular kind of
traffic, the operation has been laborious. The companies interested
have been compelled to incur great expense in procuring returns and
information, and the result has in general been only approximately
accurate. Very complex and difficult is the real problem. A large
portion of the traffic of the country is carried in trains which
pick up and set down wagons at intermediate stations. In the same
truck may be goods of all classes and different quality or bulk
for different destinations. One article of great bulk and light
weight may be carried in a truck by itself or along with articles
of great weight and small bulk.[4] There is a further difficulty
in the fact that, while certain fixed expenses remain much the
same, no matter what may be the volume of traffic, the movement or
operating expenses increase with the traffic. It may be confidently
stated that no trustworthy data as to the cost of conveying each
consignment or each class of goods in the actual intricacy of
business could be obtained. At best only estimates could be roughly
arrived at by arbitrarily making allowances and assumptions. Will
those who talk about cost of service reveal the formula by which
they can accurately calculate the cost of carriage of a particular
article carried in the same truck with a dozen others, all coming
from different places and destined for different stations over three
or four different lines, the cost of no two of which has been the
same, and the working expenses of which are totally dissimilar? If
they have discovered this formula, it remains to be stated how it
may be applied.
[4] NOTE.--See illustration of cubical contents in proportion to
weight, page 83.
So serious are the difficulties in the way of ascertaining the facts
as to cost of transport, so varied are the circumstances in this
country, that it is not surprising that in every instance in which
the principle has been brought before a Parliamentary Committee or
Royal Commission it has met with the condemnation expressed by the
Select Committee of 1872--“it is impracticable.”[5]
[5] For attempts to calculate cost of service, see A. Fink on “_Cost
of Railway Transportation_,” New York (1882); Hadley on “_Railway
Transportation_,” p. 261; _Sax’s Die Eisenbahnen_ 1.60 and 2.361;
_Lardner’s Railway Economy_; and the Italian Parliamentary Inquiry
(_Atti della Commissione d’Inchiesta sull’ Esercizio delle Ferrovie
Italiane_) part II., vol. II., 962.
If the use of each wagon were charged for, according to its
capacity, the cost of conveyance per truck could, no doubt, be
approximately known. Whether such a system is the best for railway
companies need not be here considered; certain it is that it is
extremely undesirable in the interest of the trader. According to
it, he must pay for a five or a ten ton wagon, whether he filled
it or not, and whether the merchandise which he sent was silk,
bales of cotton, or fruit. The system of charging so much a wagon
instead of so much a ton--_wagenraum tarif_, as it is called--is,
to a considerable extent, in force in Germany and Holland. In both
these countries, however, it has been found incompatible with the
necessities of commerce to abide strictly by this principle. One
curious result would be brought about by charging per wagon--there
would be a return to practices some forty years ago given up in
England as needlessly costly and unsuitable to business. Every
customer of a railway does not want a whole truck. He wishes to send
ten cwt. of bales or a cask weighing one hundredweight; he could not
send his goods if he had to pay for a full truck. To provide for the
wants of the great mass of traders and the ordinary requirements of
business, intermediaries between the railway companies have sprung
up in Germany and Holland. Indeed, the great bulk of the traffic in
the latter country is carried by carriers or forwarding agents in
full wagon loads. The company is practically only a toll taker. The
forwarding agents charge the consignor or consignee of the goods
sums over and above the tolls or rates paid to the companies. So
far as a large part of the public is concerned, the rates of the
companies are, in those countries, mere paper rates. Not being able
to take a full wagon, small traders must pay what the forwarding
agents demand, or make special terms with them. This is very much
the state of things which existed in England before 1844, when the
companies were, as a rule, merely owners of the road, locomotives,
&c., and when they left to private persons the business of carriers.
Those who can recall that time, or who reflect what the results of
such a system would be, will scarcely wish for its return; it would
be indeed a lamentable retrogression, injurious alike to the public
and the railway companies.[6]
[6] See the unqualified condemnation of the system in the Italian
Parliamentary Report already quoted: “The natural system was a
system eminently theoretical. To-day all doubt on the subject is
removed; this system was tried for five years, and it proved very
unsatisfactory.” Parte II., Vol. III., p. 954. It is pointed out
with truth that the so-called “natural system” is injurious to small
industries and small towns.
See also page 18.
SECTION IV.
EQUAL MILEAGE RATES.
Another proposal which, though always condemned by competent judges,
is still, in some form, very often brought forward, is to charge
equal mileage rates.[7] Admitting the impossibility or impropriety
of making rates vary according to the cost of conveyance of goods
without reference to their value or quality--recognising the
expediency of classification in some form--many persons think that
it would be well to charge for the same kind of goods the same sum
per mile universally. This plan is simple; it has an appearance
of being equitable; and, as such, it is attractive. But, on the
slightest consideration, it becomes apparent that exceptions which
mar this simplicity must be admitted. In fact, no one proposes that
this principle should be inflexibly carried out. Far from being
really equitable, equal mileage rates would often act most unfairly.
Mileage run is only one element out of many in cost of service; and
to compel companies to charge the same sum between points equally
distant, irrespective of the original cost of constructing the way,
the nature of the gradients, the amount and regularity of the
traffic to and fro, and the extent of back haulage of “empties,”
would be doing great injustice. Obviously an allowance must be
made to cover the cost of specially expensive undertakings, such
as the Runcorn, Tay and Forth Bridges, the Sol way Viaduct, or the
Severn Tunnel. So, too, allowance must be made for steep gradients;
manifestly the same paying load cannot be carried over gradients of
one in forty as over one in eight hundred. In Germany and Holland
an effort has been made to adopt the mileage system; and (subject
to exceptions for import, export and transit rates, referred to
afterwards) it is assumed to be carried out. But patent facts
could not be ignored; in these countries an extra mileage up to 12
kilometres (about 7½ miles) is taken into the calculation of
rates for expensive bridges and steep gradients. Speed, too, must
be taken into account; as it increases, a more than proportionate
increase in engine power is necessary.[8]
[7] The late Member for West Wolverhampton, in comparing the rates
for Coke between Staveley and Northamptonshire and Staveley and
Wolverhampton, practically advocated mileage rates, although,
probably, not intending to do so. (See debate on the second reading
of the Railway and Canal Traffic Bill, May 6th, 1886.)
[8] If an engine and tender weighing together 56 tons is capable of
drawing a maximum load of say forty loaded wagons weighing 560 tons
at 25 miles per hour on the level, it will only take the following
loads over the gradients named below, and, in addition to the
reduction in the load, the speed would also be considerably reduced.
Level. 40 wagons weighing 560 tons. Incline 1 in 100 20 ” ” 280 ” ”
1 ” 50 10 ” ” 140 ” ” 1 ” 30 6 ” ” 84 ”
See also Spon’s Dictionary of Engineering; Encyclopedia Britannica
“Railways,” and the elaborate work _Des Pentes Economiques en
Chemins, par M. Charles de Freycinet_.
Equality is here not equity. To all railway companies the result
of establishing a system of equal mileage rates would not be the
same. Much would depend on the question whether the rates were the
same over all parts of the same railway, or whether equal mileage
rates were in force throughout the country: a distinction not always
borne in mind by those who propose such rates. Undoubtedly to many
railways the loss of traffic as the result, of equal mileage rates
would be serious. Unless a very low scale of rates, entailing heavy
and unnecessary loss, were adopted, much of the long distance
traffic would cease to be carried. On other railways, however, the
present net revenue might be maintained by levelling up rates;
although the amount of traffic would be less, the working expenses
might be reduced. On the whole, the more the theory of equal mileage
rates is studied, the clearer it becomes that its adoption would
probably be much less injurious to some railway companies than to
colliery proprietors, manufacturers, traders, ports, and to the
country at large.[9]
[9] Before Mr. Cardwell’s Committee (23rd February, 1853) the late
Mr. Robert Stephenson, the eminent engineer, gave the following
illustration, which is not yet antiquated:--
“I referred to that in order to shew the Committee the great
impropriety of attempting anything like an equal mileage rate on
railways. I can elucidate that in a very remarkable manner, and shew
the injustice that the carrying out of the principle would inflict
upon some railway companies, especially where goods are concerned.
I will take the case of the Great North of England Railway, from
Newcastle coal-field towards York, and towards the rivers Tees and
Tyne. In one direction there were 5,450,000 tons of coals carried
over one mile, which was equal to 320,588 over one mile for each
engine; there having been employed by the York, Newcastle and
Berwick Company for the performance of that duty 17 engines. Towards
York, where the distance was greater, and the gradients were better,
and the loads heavier, and the work more uniform, 13 engines took
14,435,000 tons over one mile, which was equal to 1,110,000 tons
for each engine over a mile; in the other case, the duty that one
engine performed was carrying 320,588 tons over a mile; therefore in
this case one engine has done 3·466 more work than the other engine,
so that on the first line it cost the Company nearly four times as
much as it cost them for doing the same duty on the other line. On
the one line there are a number of collieries; the engines have to
stop and pick up the traffic, and the railway wagons do not average
perhaps more than seven or eight miles per day, whereas in the other
case they work for hours continuously, and with heavier loads and no
stoppages.”
To consumers, whose interest are so apt to be lost sight of in
the controversy, the change would be disastrous. Equal mileage
rates would seriously lessen or even destroy traffic now conveyed
long distances. By narrowing the area of supply, they would raise
the prices of provisions and commodities such as milk, fish, and
vegetables in and near great towns. The sustenance of a community
such as London, is, one might almost say, possible only because
it is not fed solely from the region immediately round it, but is
supplied from very distant points. If the London markets are able
to procure fish from remote parts of Scotland or Ireland, beef
from Aberdeenshire and adjacent counties, milk from farms within
100 miles, vegetables from Penzance, and the Channel Islands, eggs
and butter from Normandy, coals from the Midlands, Lancashire and
South Wales, the capital owes these advantages to the fact that
English railways have not been bound by equal mileage rates. Were
such a system strictly enforced, fuel, provisions, and most of the
necessaries of life would be raised in price. So far as consumers
are concerned, equal mileage freights by sea--the height of
absurdity in the eyes of all who know anything of commerce--would
be as reasonable as equal mileage rates by land.[10]
To manufacturers whose works and premises are not near densely
populated districts or ports--the great centres of consumption or
export--the change would be disastrous. They would be driven out
of the field by more favourably situated competitors, who would
acquire a monopoly. The pursuit of certain trades would become
impossible in districts in which they are now carried on with
success. Not a few manufactories would soon be closed, but for
the facilities which they now possess for procuring raw materials
from remote parts. To give a few illustrations out of many: South
Staffordshire is supplied with iron ore or pig-iron from Staveley in
Derbyshire, Westbury in Wiltshire, Fawler in Oxfordshire, Frodingham
in Lincolnshire, Ulverstone and Wigan in Lancashire, Middlesborough
in Yorkshire, and also from South Wales; and it receives limestone
from Froghall in North Staffordshire, Minera in Denbighshire,
Wirksworth in Derbyshire, Presteign in Radnorshire, and Porthywaen
in Shropshire.[11] Such are examples of the interdependence of
districts and industries, the co-operation of places far apart, with
which equal mileage rates would interfere. Even if originally they
would have been beneficial they would revolutionize the conditions
under which trade has been carried on in this country since the
introduction of railways.[12]
[10] See preface to Smiles’ Life of Stephenson, and, as to the
provisioning of Paris by means of railways, interesting details in
_La Transformation Des Moyens de Transport, par Alfred de Foville,
Chef de Bureau au Ministère des Finances_, p. 256.
[11] About thirty years ago, when the iron works at Westbury in
Wiltshire were constructed, it was anticipated that fuel would
be obtained from the Badstock district, about 14 miles distant.
But after sinking collieries it was found that the coke was not
suitable; so that it has now to be obtained from South Wales, a
distance of about 130 miles. The pig iron is sent to South Wales in
the return coke wagons, and also to South Staffordshire, a distance
of 140 miles. The coke and pig iron are carried at special low rates
below those in force for traffic to intermediate places. Without
such special rates, or if mileage rates were charged, the works
would have to be closed.
[12] An American writer points out that the following would be the
result of applying the principle of equal mileage rates, or of
basing rates on cost of service:--
1. “There would be little or no classification of freights.
Grain, lumber, coal, iron, shoes, dry goods, groceries, drugs and
chemicals, would all have to pay near about the same rate per 100
pounds per mile, and that rate would have to be something like an
average of the present rates charged upon the different classes of
freight. The higher classes of freight would be a good deal lowered,
and the lower classes would be materially raised. The result would
be that cheap and heavy products could be no longer transported over
the distances that are now carried.
2. “The rates on through freight would have to be proportioned very
nearly to the distance hauled. The rate from Chicago to Boston for
instance, would be materially higher, and the rate from Chicago to
Baltimore materially lower than the rates from Chicago to New York.
3. “Roads having the lowest grades, and most favourable alignment
would have lower rates than their competitors, and would monopolise
the business, to the entire exclusion of those lines which traverse
more difficult and expensive territory, and upon which the cost
of transportation was greater. And the tide once turned, the evil
would multiply itself; for the rates would decrease rapidly on the
favoured roads, with the increase of business, and would increase
on the unfortunately located roads, with the decrease in volume of
their freight, until the latter would be left with nothing but their
local business to support them, which would then have to be advanced
to the highest figures possible.”--_Railroad Transportation, by E.
P. Alexander, Vice-President of the Louisville and Nashville Railway
Company._
Some advocates of the theory of mileage rates may concede that
their adoption would entail loss on certain districts and to
some individuals, but deny that the community as a whole would
suffer.[13] Is this a reasonable view? Even if the home trade were
not injured, the result of equal mileage rates must be to increase
the cost of production of many articles manufactured at a distance
from ports of shipment. Would not this make competition with foreign
countries more difficult than it is? And must it not reduce the
demand for labour?
[13] Very recently the fishermen in the North of Scotland have been
asking that the same gross rates shall be charged from Wick to large
towns in the South as are charged from the fishing ports, such as
Grimsby, on the East Coast of England. What would they, or most
consumers of fish, say to equal mileage rates?
The principle of equal mileage rates, it may be added, has been
condemned by every Royal Commission and Parliamentary Committee
which has investigated the subject; and this condemnation has been
pronounced on grounds for the most part wholly independent of
the interests of railway companies. As pointed out by the Select
Committee of 1872, the principle would “prevent railway companies
from making perfectly fair arrangements for carrying at a lower
rate than usual goods brought in large and constant quantities,
or for carrying for long distances at a lower rate than for short
distances.”
“It would prevent railway companies from lowering their fares
and rates so as to compete with traffic by sea, by canal, or by
a shorter or otherwise cheaper railway, and would thus deprive
the public of the benefit of competition, and the company of a
legitimate source of profit.”
“It would compel a company to carry for the same rate over a
line which has been very expensive in construction or which from
gradients or otherwise is very expensive in working, at the same
rate at which it carries over less expensive lines.”
The Committee add--“It will be found that the supporters of equal
mileage, when pressed, often really mean, not that the rates they
themselves pay are too high, but that the rates which others pay are
too low.” In other words, they desire to apply the principle when it
works in their favour, and to reject it when it does not.[14]
[14] “We have nothing to do here with the study of the tariff
systems adopted on the Alsace-Lorraine lines, and extended with
some modifications to the generality of German lines. Seductive by
its simplicity, the principle of fixing the rate according to the
weight only, and without regard to the value of the object carried,
has not found numerous partisans in France. Such a radical reform
would overthrow our commercial habits, and would occasion results,
in a financial point of view, which would be impossible for us to
estimate.” Report of the French Commission of the Third System on
Railway Tariffs, by M. Richard Waddington. (Appendix 31 to Report
from the Select Committee on Railways (Rates and Fares), 1881-2,
Vol. 11. p. 449).
SECTION V.
DIFFERENTIAL RATES.
While shrinking from advocating equal mileage rates, many persons
take up an intermediate position. They object to rates being much
out of proportion to distance; they do so although the traffic may
not be carried over the same parts or sections of a railway. The
rates to which objection is taken are of several kinds:--Special
rates for export traffic; special rates for import traffic; transit
or through rates; special rates generally--special rates for long
distance as distinguished from short distance or intermediate
traffic.
Such differential rates exist--and the circumstance is not
unimportant--in all countries in which railways have been developed;
and it will be found that, here as elsewhere, they have been
adopted, not solely or even chiefly with a view to benefit railway
companies, but mainly to meet the not unreasonable demands of
traders and consumers.
The following are a few instances of special import and export rates
charged by the railway companies in this country, viz.:--
-----------+-------------+-----------------------+----------+----------
| | | Import |
| | | and | Local
From | To | Article. | Export | Rates
| | | Rates | per Ton.
| | |per Ton. |
-----------+-------------+-----------------------+----------+----------
Manchester | London | Cotton Goods in Bales | 25/- | 40/-
| | | C. & D. | C. & D.
” | Southampton | ” ” | 25/- | 45/-
| | | C. & D. | C. & D.
| | | |
Birmingham | London | Hardware | 25/- | 27/6
| | | C. & D. | C. & D.
” | ” | Bedsteads | 22/6 | 28/4
| | | C. & D. | C. & D.
| | | |
London | Plymouth | Newspapers and | 24/2 | 37/6
| | Periodicals | C. & D. | C. & D.
| | | |
Leeds | Hull | Woolen and Worsted | 12/6 | 16/8
| | Goods | C. & D. | C. & D.
| | | |
Manchester | ” | Bale goods | 17/6 | 31/8
| | | C. & D. | C. & D.
| | | |
Liverpool | ” | Salt Provisions | 12/6 | 20/-
| | |Carted in | Hull.
” | London | Fresh Meat | 25/- a | 50/- a
| | | C. & D. | C. & D.
| | | 30/- b | 55/- b
| | | C. & D. | C. & D.
Bristol | ” | American Provisions | 20/- | 27/6 X
| | | C. & D. | C. & D.
” | ” | Fresh Meat | 20/- a |
| | | C. & D. | } 40/-
| | | 25/- b | } C. & D.
| | | C. & D. | }
| | | |
Hull | ” | Meat and other | 25/- | 40/-
| | Imported Goods | C. & D. | C. & D.
-----------+-------------+-----------------------+----------+---------
a. Exclusive of hampers.
b. Inclusive of hampers.
X Bacon in 1 ton lots 22/6 per ton C. & D.
Butter and Lard in 4 ton lots 22/6 per ton C. & D.
C. & D. In other words, collected and delivered.
In the interest of shippers transit rates have been adopted; and
as an illustration, may be mentioned the rate for tea from China,
Japan, and India, brought by water to London, and despatched to
Liverpool by rail for shipment to America or elsewhere, viz.:--
--------+------------+------------------------+----------+----------
| | | Export | Local
From | To | Article. | Rates | Rates
| | | per Ton. | per Ton.
--------+------------+------------------------+----------+----------
London | Liverpool | Tea from China, India, | 25/- | 37/6
| | Japan, under Bond | C. & D. | C. & D.
| | | |
” | Birmingham | Tea | -- | 34/2
| | | | C. & D.
” | Manchester | ” | -- | 40/0
| | | | C. & D.
--------+------------+------------------------+----------+----------
In the abolition of these rates the home trader or consumer can have
no direct interest; although the transit rate is lower than that for
home traffic, it cannot in any way prejudice the English trader.
If the special rate were withdrawn he would be no better off; the
traffic would simply go to its destination by water.
To reduced export rates the objections are few. They are generally
admitted to be useful; and at a time when on all hands it is
urged to be necessary to extend our trade abroad, they could not
be abolished without causing serious loss and loud complaints.
It is important to enable a colliery owner to export coal, or a
manufacturer without a port in the vicinity of his works, to export
his wares on such terms that he will not be at a heavy disadvantage
or be driven out of the field. Special lower rates enable the
manufacturers of exported goods, such as manufactured cottons from
Manchester, and hardware from Birmingham, to send them to London,
and to avail themselves of lines of steamers sailing from several
ports. But for such facilities exporters would be confined to one,
and that the nearest, port, and they would lose the benefit of the
competition in facilities and sea freights. The railway company
which happened to own the route to the nearest port would possess a
monopoly of the traffic, and might charge their full rates instead
of the present reduced rates.
Nor is the practice recently introduced in the interest of railway
companies. In the Act authorising the very first railway on which
steam was used, the Stockton and Darlington, the principle is
recognised. The tolls upon the coal shipped on board any vessel
for export were fixed at one halfpenny per ton per mile, while
the toll on all other coal was 4d. per ton per mile. Each of the
special export rates has been made, it may be truly said, at the
instance of some manufacturer or shipper who would be injured by
their withdrawal. In granting such terms, railway companies have
endeavoured to satisfy the urgent demands of customers. And if the
rate to one intermediate place is fair and reasonable in itself,
is it any substantial grievance that it is higher than the rate on
goods for shipment?[15]
[15] The rate for the carriage of flour from Minneapolis for
consumption at Milwaukee or Chicago is one-third higher than the
rate for flour for shipment.
Special import rates have been much more attacked; but when the
principle is fairly carried out, they are no less defensible than
export rates. Most of the objections to them come, it will be found,
from persons who believe that they have a vested interest in certain
produce and trades; often they are assailed by the very persons who
are the defenders of reduced export rates. The majority of special
import rates naturally arise out of sea competition. The existence
of the import rates for fresh meat and provisions from Liverpool and
Bristol to London, which have been especially condemned, is due,
not, as is assumed, to the arbitrary action of companies, but to the
demands and necessities of traders. Those who are interested in the
trade of Liverpool, the great seat of the American trade, and in the
steamers sailing between America and Liverpool, desire to compete
with the direct sea communication with London, or with other ports
near to it. In like manner the shipping companies and others who
are interested in the trade of Southampton claim special rates and
facilities in favour of that port. Naturally they wish that a part
of the traffic should go _viâ_ Southampton; and a compliance with
their wish benefits the public.
Special import rates are not charged on foreign goods merely because
they are foreign; the chief, though not the only, explanation of
their existence, is the desire of steamboat companies and merchants
that a part of the goods consumed in other places may be carried
through the port in which they are interested, instead of the goods
being all sent through ports nearer to or direct to the ultimate
destination. The railways have, in fact, complied with urgent local
demands.
Some rates for import traffic are less than for the same description
of goods going in the opposite direction. Such cases are probably
rare, and the circumstances of all of them are not fully known. The
following, however, was the origin of one of them: The millers in
the Eastern counties found that their trade suffered by reason of
the competition of millers situated on the Thames, who were able to
obtain by water foreign grain at low rates. The former urged upon
the railway companies the necessity of granting them reduced rates
from London for foreign grain to mix with English wheat, and thus
enable them to produce better and stronger flour than that produced
by home grown wheat alone. The millers pointed out that by so doing
the local industries in which the companies and the districts
have an interest would be benefited, and that there would be an
increased trade in foreign grain down from London and in flour up to
it. Admitting the force of these arguments, the railway companies
put in force lower rates. Here, as elsewhere, we find a collision
of interests, and conflicting demands. These rates have recently
been altered with the view of partially removing the grounds of
complaint in this case; it remains, however, an apt illustration of
the difficulties encountered in framing rates. Reduced rates are
complained of by one portion of the public; and yet, if they were
cancelled, other sections would consider themselves aggrieved. Such
are the difficulties with which railway companies have to contend;
bound to serve and accommodate classes at variance with each
other; subject to criticism and complaint if they do not satisfy
contradictory demands.
There has been much hostile comment on the conveyance at reduced
rates of foreign produce and merchandise from the Continent, through
English ports to places of consumption. The French traffic from
Cherbourg or Havre carried _viâ_ Weymouth or Southampton, and from
Boulogne or Calais, _viâ_ Dover or Folkestone, and the Dutch and
Belgian traffic from Rotterdam or Antwerp, _viâ_ Harwich, have been
especially the subject of unfriendly remark. But the explanation
of such rates is simple; they are due to no designs against the
English factor. French traffic carried _viâ_ Cherbourg may be sent
direct by sea to London. In order that it may be conveyed over a
portion of their systems, the London and South Western Company run
steamers between that port and Southampton; and until recently the
Great Western Company had a line of steamers between Cherbourg and
Weymouth. In order to compete with the sea communication, the South
Western and Great Western Companies necessarily fixed their rates
with reference to the sea freights from Cherbourg and other ports.
The distance between Southampton and London is 76 miles, while the
distance between Weymouth and London is 159 miles. Of course the
Great Western Company charged the same rates by the longer as the
South Western Company charged by the shorter railway route. Hence
the complaint that French goods were being carried cheaper from
Cherbourg to London than from places in Dorsetshire, past which,
when carried by the Great Western Company, they were conveyed. The
obvious answer was, that if the Great Western Company did not carry
at all, the traffic would be sent _viâ_ Southampton, and that if
the London and South Western Company ceased to carry, it would be
sent to London direct by sea. In fact, the Great Western Company
have recently given up the steamboat service, and ceased to carry
_viâ_ Weymouth; the grounds of complaint made in the name of the
Dorsetshire farmers have thereby been removed. But the competition,
such as it is, of French with English produce, continues all the
same, only all the traffic is carried, not through Dorsetshire,
but by other routes. Indeed, immediately after the service _viâ_
Weymouth was withdrawn a new service was established between
Paimboeuf and Newhaven; and by this route a portion of the traffic
previously sent _viâ_ Weymouth is now carried.
Irish produce from Waterford is carried to London by various routes:
direct to the latter by sea; by sea to Bristol, and thence by
rail, 119 miles to London; by sea to Milford, and thence by rail,
282 miles; and by sea to Liverpool, and thence by rail 201 miles.
The rates _viâ_ Bristol are, and must be, fixed with reference to
those charged by sea, and those _viâ_ Milford and _viâ_ Liverpool,
must be the same, or nearly so, as those charged _viâ_ Bristol.
Yet, according to the views of some persons, this competition is
unfair to intermediate towns between Milford and London, and between
Liverpool and London, between which intermediate places and London
the rates are higher, or higher in proportion, than those charged
between London and Waterford. There are complaints as to this
disparity, although the competition, if any exists, would continue,
even if no Irish traffic were carried _viâ_ Milford at all.
Similar observations apply to traffic between Dublin and Liverpool.
Between these cities there is daily steam communication; so that
goods carried by sea to Holyhead, and thence by rail, may be
conveyed throughout at lower rates than those charged for traffic
for places intermediate between Liverpool and Holyhead. Indeed, sea
competition influences the rates for traffic between Dublin and
Manchester. Traffic is carried by sea, _viâ_ Liverpool, and thence
by rail (31 miles) to Manchester, while the distance by rail from
the latter place to Holyhead is 122 miles. Consequently the rates
between Manchester and Dublin, _viâ_ Holyhead, are less than to some
intermediate places.[16]
[16] In the evidence given before the Select Committee in 1881,
the rates for foreign hops from Boulogne to London were compared
with the rates charged for home grown hops from the Ashford and
Canterbury districts to London. The former were complained of as
being an undue preference in favour of foreign produce. No doubt
there was a considerable difference. The rate from Boulogne to
London was 17s. 6d., and that from Ashford to London, 38s. It was,
however, shewn that the rate of 17s. 6d. per ton for foreign hops
from Boulogne to London was a station to station rate, while the
rate of 38s. per ton from Ashford to London included delivery and
all station services, and that owing to the difference in the mode
of packing the hops, 73 per cent. more foreign hops than English
hops could be loaded in a truck. The railway companies concerned
urged that the home producer was not prejudiced by the transit rate
complained of. While it enabled the railway companies to obtain the
conveyance of a portion of the foreign hops, an increase of the rate
from Boulogne would not be of any benefit to the English grower. The
foreign hops would still find their way to London direct by sea. The
rate of 17s. 6d. per ton from Boulogne to London was cancelled in
deference to the complaints. What is the result? The foreign hops
are imported as before; but they are now carried by the General
Steam Navigation Company. The railway companies have to some extent
suffered; the English producer has gained nothing.
Tea imported into London may be carried by sea direct to Newcastle
or Liverpool. Iron manufactured at Middlesboro’ or in South
Wales can be conveyed by water at low freights to London. So,
too, tin-plates may be conveyed by water from Glamorganshire to
Liverpool. If the importer or the manufacturer, therefore, desires
to send, or the companies desire to carry, any of those goods by
railway, special rates yielding only a small profit to the companies
must be quoted; otherwise the whole, or nearly the whole of such
articles, would be sent by sea. Such reduced rates are complained of
because of their being less in gross or per mile than those for the
same or similar articles carried for the like or less distances. But
grocers or consumers of tea, iron merchants or blacksmiths in inland
towns, or manufacturers whose works are near the port of shipment
would derive no advantage from all these goods being carried by sea
at the same or even lower rates than those now charged by railway.
The influence of the sea, “the great free trader” as it has been
called, is vast and far reaching. England and Scotland being an
island, there is all round the coast direct competition with the
sea. It exists for instance between London and Yarmouth, Hull,
Newcastle-on-Tyne, Leith, Aberdeen on the eastern coast; and between
London, Southampton and Plymouth, and the west coast ports, that is,
Bristol, the South Wales ports, Liverpool and Glasgow.
If railways in England did not compete with transport by the
sea they would in many cases be of comparatively little use to
manufacturers and merchants. Only by such competition do they fully
minister to the requirements of the trade of the country. If all
the intermediate rates were to be brought down to the level of
those charged between port and port what would be the result? The
companies would have to raise their port to port rates. The public
would lose the benefit of rail carriage for goods sent between port
and port, and the companies the profit they might have derived from
such goods. Who would be the gainer?[17]
[17] Lines of steamers carrying Belgian, Dutch, German, and French
goods and produce, run between Antwerp, Rotterdam, Amsterdam,
Boulogne, Havre and London. In competition with them the Great
Eastern, South Eastern, and London Chatham and Dover Companies carry
_viâ_ Harwich, Folkestone and Dover respectively, at such rates as
they can obtain in competition with those charged by steamer direct.
It has been a subject of complaint that these goods are conveyed at
lower rates than similar merchandise from places in Essex or Kent,
past which they are carried by rail. No doubt the regular and quick
services provided by the railway companies are of great advantage
to the senders and consumers. But so far as London is concerned,
a great part, if not the whole of the goods, not requiring quick
transit could be sent by sea direct, if the Harwich, Dover, and
other services were discontinued.
There are import rates to towns in the interior to which there is no
direct sea competition. If such rates are not based on the rates to
places to which there is such competition, _plus_ the local rates,
they may be open to question to an extent not applicable to the
rates to and from ports.
Many apparent anomalies in railway rates arise from competition of
the railways with the sea: others are the results of comparisons of
the rates charged by railway companies, which must carry, if they
are to carry the traffic at all, at the same rates as a company
having a shorter route. Inasmuch as competition between railway
companies is carried on extensively, many such disparities exist.
The apparent anomaly in tin plates being carried from South Wales
to Liverpool _viâ_ Stockport, near Manchester, at lower rates than
to Manchester, was referred to by Mr. Johnson Ferguson in the
debate on the second reading of the Railway and Canal Traffic Bill.
This arises from the Midland Railway Company competing with two
shorter routes between these places, and from the rates by those
routes being so fixed as to meet the competition by sea; the former
company’s longer route is through Stockport (not Manchester), to
which latter place of course there is no export trade, and at which
there is no sea competition. This anomaly would be entirely removed
by the Midland Company ceasing to compete for the Liverpool traffic;
but the consumers of tin plates in Manchester would not in any
respect be benefited by the change. The distance by the shortest
railway route between London and Bristol is about 119 miles. There
are two other railway routes, the shorter of which is 161 miles;
there is also direct transport by sea; and by all of these routes
there is competition for the conveyance of merchandise traffic. To
suit the requirements of the trade between these ports, as well as
to contend with competition by water, special rates are charged.
Withdraw them, and either the interchange would not take place or
the goods would have to be sent by sea. Of course the other railway
companies carrying between the two places charge the same rates as
those in force by the shortest railway route, otherwise they would
obtain no share of the traffic; and these rates are necessarily less
for the throughout distance than those charged for like descriptions
of goods to some of the intermediate towns on the longer route.
To take one more illustration: steamboats ply between Liverpool
and Bristol. Goods carried by railway between these two places by
one or other of the three available routes must pass through some
one of the following places:--Birmingham, Worcester, Hereford,
Shrewsbury, Chester or Warrington. The local rates to all these
intermediate towns may appear disproportionate to those charged
between the extreme points. But is there any real injustice done?
Is it disadvantageous to the public that railway companies should
compete with sea carriage between different ports in the Kingdom?
Should not railway companies be allowed to accept in respect of
traffic so carried, which would otherwise be wholly lost to them,
a less percentage of profit without being compelled to reduce
all their rates to intermediate inland places to the same or
proportionately less amounts? What injustice is done to those whoso
goods are carried to and from intermediate inland places by the fact
that their rates are higher, or higher in proportion, than the
competitive rates, provided the rates to intermediate places are in
themselves fair and within the Company’s legal maximum?
A third source of complaint of disproportionate rates arises from
the competition between ports. Assume, for instance, port A to be
51 miles, port B 72 miles, and port C a greater distance from D,
one of the great seats of manufacture and commerce. The merchants
and shipowners at C and B desire to compete with A, and they induce
the railway company to carry from all three at the same rates. The
result is that the rates are lower for the throughout distance
than to and from some of the intermediate places. The grounds of
grievance would be removed by the railway company ceasing to carry
from C and B at the same rates as from A. But the importation
of foreign goods would continue; the only difference being that
they would be carried through one port instead of two or more.
And here a curious fact may be noted. If, in the case supposed,
the railways between A and D, B and D, and C and D belonged to
separate companies, in all probability no complaint would be
made of the rates from A, B, and C to D being the same. On the
contrary, competition being always desired by the public, it would
be considered in that case advantageous and in the interest of the
public. But because the lines between B and D and C and D belong
to the same company as that between A and D complaints are made on
account of the rates being equal. What is hailed in the one case as
a benefit is decried in the other as mischievous and unjust.[18]
[18] Many of the rates from Hull are affected by inland water
competition, or by those charged from Liverpool. On the other hand,
the rates from Hull govern those from Grimsby (as a competing port),
Harwich, West Hartlepool, Newcastle, Sunderland and Shields. In
fact, a large portion of the anomalies in railway rates arise from
the competition between ports. Although improvements in detail as
to such rates, no doubt, are possible, the interests of some ports
would be seriously affected by any change in the principle on which
railway rates are fixed.
The chief explanation of differential rates have been mentioned;
another cause less important is in operation. In carriage by
road, cost may be roughly measured by distance, though even as to
the expenses of cartage that is subject to exceptions. But this
test--admitted to be practically useless as regards freight by
sea--does not hold good of railway transport. Of the various kinds
of outlay on the part of a railway company, a large portion remains
fixed, whether the distance run by a train is ten miles or one
hundred. Such, for example, are the cost of terminal accommodation,
and the services of loading and unloading, and clerical work. Such,
too, speaking broadly, are the interest on cost of construction,
repairs of bridges and earthworks, the permanent staff of employés,
and of signalling. Another kind of expenditure increases directly
with the mileage run; for example, the provision of, and wear
and tear of locomotives, rolling stock and permanent way, and
liability for loss of or damage to goods in transit. Certain
kinds of expenditure increase with the distance run, but not in
the same ratio. Obviously wages, cost of locomotive power, and
cost of haulage generally are not four times as much in the case
of a train which has run a hundred miles as in one which has run
twenty-five. With the progress of railways, with improved economy in
the use of machinery, and in other ways, this tendency--recognised
to some extent by the Legislature in the rates for short distance
traffic--in expenditure not to increase in the same proportion as
mileage distance, becomes an important element. The result of all
this is to make mileage less a criterion of cost, and tends to place
large towns at a greater distance at an advantage as compared with
intermediate towns, and to give rise to differential rates.[19] It
is also obvious that from many intermediate towns the quantities
forwarded are not so large and regular as from terminal towns, and
that from the former there is not a constant traffic to and fro.
[19] See as to this Dr. Otto Michaelis’s _Differenzialtarife
der Eisenbahnen_, in which the natural and necessary rise of
differential rates in Germany is explained.
The urgent demands of traders and producers have created
differential rates; the interests of the public and consumers have
maintained them; interests, it may be added, which have been little
heard in any of the inquiries which have taken place, but which, if
any change were meditated, would probably be found to have more at
stake than the railway companies. They would ask,--Why should such
special rates be withdrawn? They would be losers by the change. The
railway companies also would be losers. So too would the public
interested, especially as regards perishable goods, in the more
rapid and regular conveyance of merchandise than is possible by
water. Who would be the gainer? Not, certainly, the home producer,
who would find foreign goods brought direct to London by sea; not
the consumer, who wishes cheap goods rapidly conveyed, and to whom
it is immaterial how they reach him. The fact is that differential
rates have arisen in no small degree out of the same causes as have
necessitated a classification of goods. Goods of small intrinsic
value will not be conveyed at all unless at low rates; only on
special terms can such goods produced at a great distance be brought
to market.
Sometimes it is urged as an objection to differential rates, that by
reason of them companies sustain, on long distance traffic, a loss
which is made up by charges on short distance traffic. Repeated, as
if it were an axiom, this statement is generally erroneous; though
producing, no doubt, a lower percentage of profits than the latter,
the former yields some profit, unless where undue competition
operates.
To carry traffic at a rate yielding a small profit, is better for
a railway company than to have its permanent way for many hours
unused, and its plant not fully employed. It may be expedient to
accept traffic producing only a small percentage of profit, if it
can be got on no better terms; such traffic will at least help to
defray the fixed charges, which must be incurred whether it is
carried or not. But is a company bound to do all its business on
such terms, or would it be desirable that it should do so? Can the
senders of other traffic paying only reasonable rates, yielding the
company what would otherwise be admitted to be only a fair profit,
justly object? and if a company be deprived of this long distance
traffic, will it not be forced to raise rates on other traffic in
order to maintain its revenue?[20]
[20] NOTE.--See Extract from Sir T. Farrer’s Evidence at page 66.
But, it is also objected, differential rates deprive the inhabitants
of certain towns of the natural advantages of their geographical
position. This argument would be more persuasive than it is if it
were not generally expressed in the very language of Protectionists,
if it were not so often a claim of an exclusive right to supply
certain markets, and a scarcely concealed dislike to the intrusion
of competition. Even supposing that low rates, which enable the
produce of remote parts of England and Scotland to be conveyed
throughout the length and breadth of the land may interfere with
the trade of manufacturers nearer London and other great towns; so
may the making of a railway. Places which have one, or districts
which are left without any, may be injured by railway communication
elsewhere being opened. The existence of any such right as is
claimed is questionable. Preserving the natural advantages of one
town means preventing the removal of the natural disadvantages of
others. In truth, the abolition of differential rates would deprive
many places of their natural advantages. That Liverpool is on the
sea, and that Birmingham is not, that there is sea communication
from the former to London, are circumstances which railways did
not create, and to which they must accommodate themselves. Railway
Companies are not answerable for the fact that certain kinds of
traffic come from a point having the advantage of a sea route; that
there is competition at one place and not at another; and that goods
may be conveyed from New York to London all the way by sea, or
partly by sea and partly by land.
If the rates for all traffic between intermediate places were
either made the same as or less than those to terminal points,
companies would be compelled to consider whether raising the export
and import rates, or reducing those on local traffic, would result
in the least loss. If the former course were adopted, as, in the
majority of cases it would be, the facilities which manufacturers
and merchants now enjoy would be withdrawn; it would be to their
interest to ship at the nearest port. The railways would suffer some
loss. The inhabitants of intermediate places and the port towns
would derive no advantage except the removal of what generally is
merely a sentimental grievance. What would a London draper gain
if the Manchester and London Shipping rate were withdrawn, and if
manufacturers shipped all their goods in Liverpool instead of a
portion of them being shipped from London? What would it avail an
Essex farmer if Dutch and Belgian produce were sent direct from
Rotterdam and Antwerp to London, instead of through Harwich? Would
farmers in the South of England be any better off if French eggs and
butter were sent by sea to London instead of through Southampton or
Newhaven?
SECTION VI.
GROUPING HERE AND ON THE CONTINENT.
“Grouping,” is the name of the familiar arrangement by which
collieries or works within a given area are charged equal rates,
and are thus enabled to compete on equal terms. In fixing the rates
for traffic carried long distances, grouping stations far apart is
carried out to some extent. For instance, the rates for tin plates
from South Wales and Monmouthshire to Liverpool are the same from
the works between Carmarthen on the west, and Monmouth on the east,
the distances varying from 160 to 206 miles. So, too, the rates
between Scotland and places in England, south of and inclusive of
Yorkshire, are divided into groups--22 in the former, and 39 in
the latter. Though the practice is not of the first importance to
railway companies, it is not without value to them. If “grouping”
were prohibited, and the nearest collieries or works could supply
all the coal or goods which were required, railway companies might,
in some cases, earn as much net profit on the traffic carried as if
grouping were adopted. No doubt, however, if the nearest collieries
or works charged the public enhanced prices, or if they could not
supply the commodities to the extent required by the public, the
railway companies would suffer. They would lose not only the traffic
which they might have carried, but they would also suffer from the
lessened prosperity of districts in which they had an indirect as
well as a direct interest.
The chief sufferers, however, from the giving up of “grouping”
would be the public; they distinctly gain by the practice, though
producers near great towns or sea-ports may lose the benefit of
“geographical position.” Collieries and works which are “grouped”
are enabled to contribute to the available supply. They enter
markets from which they would be otherwise shut out; the extent of
the trade is thereby increased; the price paid by the consumer may
be lessened. In fact, many traders admit, tacitly at least, the
value of the practice.
Its legality has lately been called in question. It has been
supposed to be prohibited by the decision of the Railway
Commissioners in the case of the _Denaby Main Colliery Company_ v.
_Manchester, Sheffield, and Lincolnshire Railway Company_, which
came before them in January, 1880. The complaint was that the rates
and tolls charged to the owners of the Denaby Main Colliery, for
the conveyance of coal, both by railway and canal were an undue
prejudice and disadvantage to themselves and undue preference to
the others within the meaning of Section 2 of the Railway and
Canal Traffic Act, 1854. The railway rates from the Denaby Main
Colliery to Keadby, which is 25 miles, and to Grimsby, which is 56
miles, were 2s. 1½d. and 3s. 1d. per ton respectively. Similar
rates were charged from the other collieries in the same group,
although the distances between Keadby and Grimsby and the Denaby
Main Colliery were 15 miles less than the most distant of the other
collieries in the group. For all coal passing to certain places to
the eastward, the Denaby Main Colliery was grouped with 48 other
collieries in the same district. But, except in certain cases, the
collieries were not grouped for coal going to the west; on traffic
sent to places in that direction Denaby had to pay according to
its geographical position. With regard to some portion of their
traffic to the west, the Denaby Main Colliery had special rates. The
decision of the Railway Commissioners, which has not been reversed,
was that this particular grouping system did subject the proprietors
of the Denaby Main Colliery to undue and unreasonable prejudice and
disadvantage. But their decision was probably upon the facts, not
upon the law; and their finding really was that the group was too
large, and that the Denaby Main Colliery ought to be taken out of
it. The same question was to some extent discussed in the House of
Lords in the _Denaby Main Colliery Company Limited_ v. _Manchester,
Sheffield and Lincolnshire Railway Company_ (L.R. 11, A.C. p. 97);
and the observations of the learned law lords do not confirm the
opinion that grouping is _per se_ illegal.[21] If the contrary were
the case--if all such arrangements were necessarily illegal--the
result would be somewhat serious to trade.
[21] “I think that even if it were distinctly found that the
differences in the charges actually made were so disproportioned
to the differences in the cost as to be undue and unreasonable, it
would not impose an obligation to charge equally.”--Lord Blackburn,
p. 122.
A few particulars as to grouping on the Continent may be mentioned.
It will be found that it has been adopted there for the same reasons
as led to it here.
In Germany and Holland grouping is recognised. There, as has been
previously mentioned, mileage rates is the principle on which the
tariffs are based, and the State practically controls the rates. But
some exceptional tariffs for coal and coke are not calculated upon
the distance from the place of origin to the station of destination.
Sending stations in certain cases, and sea-ports in others, are
formed into groups. In Germany, for instance, the sending stations
included in the exceptional tariff with Bremen, Hamburg, and other
ports in the North of Germany, are divided into seven groups. The
first three embrace all the stations in the Right Rhenish district
where coal mines exist. Group 1 contains about fifteen stations from
6 to 24 kilometres distant from each other, in a total distance
of 245 kilometres to Bremen and 359 kilometres to Hamburg. Group
2 contains about thirty-five stations from 1 to 19 kilometres
distant, and Group 3 seven stations at distances varying from 1 to
13 kilometres. The total distances to Bremen and Hamburg are 271
and 385 kilometres respectively. For all stations in the same group
there is one tariff, which is for one fixed consignment per week:--
Group 1 ... ... 49 marks per ton.
” 2 ... ... 50 ” ”
” 3 ... ... 51 ” ”
If there are two fixed consignments sent regularly every week for
one year, a reduction is made of one mark for every 10 tons, and for
3 Consignments weekly a reduction of 2 marks for every 10 tons.
4 ” ” ” 3 ” ”
5 ” ” ” 4 ” ”
6 ” ” ” 5 ” ”
The coal stations of the Rhine Province and Westphalia are also
grouped for Dutch, Belgian and French traffic. In the two last
cases, however, the differences of distance are very slight. For
Dutch traffic the differences of distance between the stations in
Group 1 vary from 1 to 16 kilometres in a total distance of 218
kilometres, in Group 2 from 3 to 20 in a total distance of 233
kilometres, and in Group 3 from 1 to 33 in 265 kilometres.
The grouping of the ports in the North of Germany, shows a much
greater difference in favour of certain ports. For instance, the
same rates are charged from the coal stations to Bremen as to
Hamburg, although the former is 114 kilometres (71 miles) further;
the distance from Dortmund to Bremen being 237 kilometres (147
miles), and to Hamburg 351 kilometres (218 miles.) The same rates
are also charged to the following ports as to Bremen, which is
distant from the various coal stations from 221 to 271 kilometres:--
Kilometres. Miles.
Bremerhafen 66 41 beyond Bremen.
Geestemünde 62 38½ ” ”
Harburg 103 64 ” ”
Hittfeld 94 58 ” ”
Nordenhamm 40 25 ” ”
Thus the “grouping” which is permitted, and indeed actually carried
out, by the German authorities, exceeds in degree anything of the
kind known on the railways in this country.
In France also, “grouping” of ports is sanctioned with a view to
promote competition. The special import and export rates from
Dunkirk, Calais, and Boulogne to Paris, which are equal in amount,
notwithstanding the differences in distance, may be taken as an
example:--
Dunkirk to Paris, 304 Kilometres.
Calais ” ” 296 ”
Boulogne ” ” 252 ”
SECTION VII.
DIFFERENTIAL RATES ON THE CONTINENT.
In France, Belgium, and Germany, there are fewer ports competing
with railways or with each other than in Great Britain. In each
of those countries the principle of mileage rates has been
nominally, and, to a large extent, in practice adopted. But in all
of them causes similar to those which have here created so-called
differential rates have been in operation. In each of them the fact
of competition by water is recognised as a reason for charging
reduced or special rates; such rates for export or import traffic
exist, although the special rates for the latter traffic are fewer
than for the former; and there are also special transit rates[22].
All these rates have been established after much consideration.
Writing of the discussion of the subject in the Corps Legislatif in
1863, M. Aucoc observes in his well-known work, “Since that solemn
discussion, the principle of differential tariffs has been placed
beyond question.” He adds: “It may be well to mention also that,
in the numerous judicial works on the working of railways, not
only the legality, but the necessity and equity of conditional and
differential rates have been almost unanimously recognised.”[23]
[22] See _décret_ of April 26, 1862, quoted by M. A. de Foville in
_La Transformation des moyens de Transport_ p. 68.
[23] The following are some of the opinions of French statesmen
and economists on the subject:--“_Dans ma conviction le tarif
différentiel est à la fois juste, conforme aux vèritables intérêts
économiques et nécessaires à la concurrence._” M. ROUHER.
“_Les industries de transport par eau, par terre ou par chemin de
fer ne vivent et ne prospèrent que par les tarifs différentiels.
C’est en différenciant sagement leurs tarifs qu’elle attirent les
marchandises et les voyageurs._” M. LEGRAND, _sous-secrétaire d’état
au Ministère des travaux publics_:
“_L’expérience a démontré aux compagnies la nécessité de superposer
au tarif réglementaire de nombreux tarifs à prix reduits.^{***} Il a
été reconnu que ceux là mêmes qui se plaignaient, le plus vivement
des tarifs différentiels en recueillaient indirectement le bénéfice.
Ce sont, en effet, ces tarifs qui fournissent au trafic des grandes
compagnies les masses de marchandises les plus considérables, et
ce sont ces masses qui rendent possible la réduction, au profit de
tous, des tarifs généraux._” M. DE FOVILLE. _La Transformation des
moyens de Transport_ pp. 66, 67.
In a report to the French Chamber of Deputies by a Railway
Commission in 1880, the Commissioners approved of special tariffs,
and added: “We are even inclined to suggest the development of
traffic of this nature, the importance of which is not at all in
proportion to the natural advantages which France derives from her
geographical position and her numerous ports.” _Appendix 31 to
Report from the Select Committee on Railways (Rates and Fares),
1882, Vol. II._
Take first the special rates in France. Wheat may be imported
either _viâ_ Marseilles, or _viâ_ Rouen and the Seine to Paris, the
distance from Marseilles being 863 kilometres, and from Rouen 134
kilometres. To compete with the sea and the Rouen route, the Paris,
Lyons, and Mediterranean Railway Company charges for imported goods,
special rates between Marseilles and Paris. These rates have been
complained of as encouraging foreign trade. The answer, however, is
that if not conveyed _viâ_ Marseilles such goods might be conveyed
_viâ_ Rouen and the Seine to Paris. The general tariff rates on
the French lines are based upon a uniform charge per kilometre,
irrespective of any special requirements of the locality. In order,
however, to remedy the disadvantages arising from such a system,
and to meet the various circumstances and requirements of particular
trades, numerous special tariffs are adopted with the sanction of
the Minister of Public Works. These special rates are not, as is
sometimes supposed, fixed upon any regular or uniform basis. Some
are adopted for the purpose of developing a new, or increasing an
existing trade which may be subjected to competition from other
districts; others are established to meet competition by sea, canal,
or otherwise. Under some circumstances reduced rates are arrived at
by adopting computed instead of actual distances; the former being
sometimes based on the distance by a shorter route either by rail,
road or sea. But in some cases an arbitrary distance is adopted.
The French railway companies have special import and export rates
for numerous articles in their classifications which are lower than
the ordinary class rates to the port town, and occasionally lower
than the class rates from intermediate stations; in which case the
special import and export rates may apply. The following table is a
comparison of a few import and export rates with the ordinary class
rates. The latter, it should be observed, are, in some instances,
based on computed, and not on actual, distances.
DUNKIRK AND PARIS.
---------------------------+------------------------------------------
| ACTUAL DISTANCE, 304 KILOMETRES.
| COMPUTED DISTANCE, 267 KILOMETRES.
+------+------+------+------+------+-------
CLASSES | 1 | 2 | 3 | 4 | 5 | 6
| | | | | |
| f. c.| f. c.| f. c.| f. c.| f. c.| f. c.
Ordinary Class Rates | 42·55| 36·55| 31·20| 25·85| 20·50| 12·35
| | | | | |
Import and Export Rates[24]| 30·00| 26·00| 23·00| 20·00|{18·00| 12·00
| | | | |{15·00|
---------------------------+------+------+------+------+------+-------
[24] Until recently, the classification of imported and exported
goods, in force on the Northern of France Railway, was composed
of six classes. A new tariff is now in force, the rates for such
traffic varying from frs. 8 to frs. 30 per 1000 kilogrammes.
For the purpose of comparison, the rates charged for imported and
exported goods are shewn under the respective classes in which the
same articles are generally included when charged at the ordinary
class rates.
CALAIS AND PARIS.
--------------------------+------------------------------------------
| ACTUAL DISTANCE, 296 KILOMETRES.
| COMPUTED DISTANCE, 267 KILOMETRES.
+------+------+------+------+------+-------
CLASSES | 1 | 2 | 3 | 4 | 5 | 6
| | | | | |
| f. c.| f. c.| f. c.| f. c.| f. c.| f. c.
Ordinary Class Rates | 42·55| 36·55| 31·20| 25·85| 20·50| 12·35
| | | | | |
Import and Export Rates | 30·00| 26·00| 23·00| 20·00|{18·00| 12·00
| | | | |{15·00|
--------------------------+------+------+------+------+------+-------
BOULOGNE AND PARIS.
--------------------------+------------------------------------------
| ACTUAL DISTANCE, 252 KILOMETRES.
| COMPUTED DISTANCE, 252 KILOMETRES.
+------+------+------+------+------+-------
CLASSES | 1 | 2 | 3 | 4 | 5 | 6
| | | | | |
| f. c.| f. c.| f. c.| f. c.| f. c.| f. c.
Ordinary Class Rates | 40·30| 34·75| 29·75| 24·65| 19·60| 11·80
| | | | | |
Import and Export Rates | 30·00| 26·00| 23·00| 20·00|{18·00| 12·00
| | | | |{15·00|
--------------------------+------+------+------+------+------+-------
DIEPPE AND PARIS.
--------------------------+------------------------------------------
| ACTUAL DISTANCE, 166 KILOMETRES.
| COMPUTED DISTANCE, 166 KILOMETRES.
+------+------+------+------+------+-------
CLASSES | 1 | 2 | 3 | 4 | 5 | 6
| | | | | |
| f. c.| f. c.| f. c.| f. c.| f. c.| f. c.
Ordinary Class Rates | 28·05| 24·75| 21·40| 18·10| 14·80| 9·80
| | | | | |
Import and Export Rates | 25·00| 19·00| 14·50|{10·75| 9·00| 7·00
| | | |{10·00| |
--------------------------+------+------+------+------+------+-------
In some instances the special rates apply both ways, _i.e._, for
import or export goods. But many of the export rates for certain
articles are lower than the import rates; for instance, the rate
for Cereals from Paris to Dieppe for export is frs. 7·50, while the
import rate from Dieppe to Paris is frs. 9.
In addition to special rates for export and import goods there
are also special tariffs for _transit_ goods subject to special
conditions which appear anomalous, and have given rise to
complaints. The following is an illustration:--Both Roubaix and
Rouen are spinning centres, and Epinal is a weaving centre. The rate
for a 5-ton load of Yarn from
Kilometres. fr. cts.
Roubaix to Epinal 462 is 47·60.
Rouen to ” 537 ” 57·40.
Antwerp to ” 467 ” 37·0.
The rate for Yarn from Dieppe to Bâle, a distance of 716 Kilometres,
is 47 frs. 30 cts. The explanation of these apparent anomalies is
that the rates from Roubaix and Rouen to Epinal are based on the
local ordinary tariffs; that the rate from Antwerp to Epinal is a
special import rate; whereas the rate from Dieppe to Bâle is a still
lower special tariff for transit goods. The following is an example
of transit or through rates from a town in Italy to a port in
France. The proportions of the receipts accruing to each Company and
the rates charged for goods carried locally between the respective
points are shown. It will be seen that the local rates from the
frontier to Paris are in excess of the charges from Milan to Paris.
------------------------------------------------------------------------
| | | A. | B. |
| | D |-------------+-------------+--------------
| | i |Through Rates|Through Rates|
| | s | for lots of |for lots of 5|
| | t |100 kilos and| tons and |Ordinary Local
| | a | above | above |Rates between
From. | To. | n |-------------+-------------|the respective
| | c | In the proportions due to | points.
| | e | each distance. |
| | |---------------------------+--------------
| |km.| 1st | 2nd | 1st | 2nd | 1st | 2nd
| | |class.|class.|class.|class.|class.|class.
----------------|--------+---+------+------+------+------+------+-------
| | |f. c. |f. c. |f. c. |f. c. |f. c. |f. c.
Milan |Modane |238| 22.14| 18.42| 22.14| 18.42| 40.89| 36.03
Modane |Frontier| 12| 1.15| 0.95| 1.15| 0.95| 2.90| 2.50
Frontier |Paris |672| 68.10| 57.25| 53.50| 46.55| 94.20| 81.00
| |---|------|------|------|------| |
| |922| 91.39| 76.62| 76.79| 65.92| |
| | | | | | | |
Ceinture Railway| -- | 15| 3.10| 3.10| 3.10| 3.10| 3.10| 3.10
Paris |Havre |226| 23.05| 19.60| 17.55| 15.35| 32.00| 28.00
Terminal charges| -- |...| ...| ...| ...| ...| 1.90| 1.90
-----------------------------+------+------+------+------+------+-------
Totals per 1,000|Kilos 1163|117.54| 99.32| 97.44| 84.37|174.99|152.53
-------------------------------------------------------------------------
A.--The proportions accruing to the French Companies for lots under
5 tons remain the same for traffic from all the Italian stations
named in the Tariff.
B.--The French Railway proportions for lots of 5 tons and above vary
according to the distance of the Italian town from the frontier, as
will be seen from the examples below:--
Goods from
Cormons to Havre. 1st class. 2nd class.
P.L.M. 38.60 35.25
Ouest 8.45 7.80
Oulx to Havre. 1st class. 2nd class.
P.L.M. 72.75 62.40
Ouest 15.05 13.05
In respect of traffic for intermediate places, the French railway
companies may make higher charges than the rates for _transit_
traffic carried over the same portion of railway beyond those
places. But they may be required to charge the same sums for traffic
to or from any intermediate place as they charge for import or for
export traffic carried beyond.
In Belgium, also, differential rates are charged between certain
places for export and for local consumption. The following are a few
illustrations:--
--------------------+----------+-------+------------+------------
| | | | FOR
| | | FOR EXPORT | LOCAL USE.
| From | To |------------+------------
| | |10 ton lots.|10 ton lots.
| | | per ton. | per ton.
--------------------+----------+-------+------------+------------
Coal |Mons |Antwerp|Frs. 2·91 | 4·62
|Jemappes | ” | 3·04 | 4·67
|Charleroi | ” | 2·81 | 4·58
|Fountaine | | |
| l’Evêque | ” | 2·81 | 4·58
| | | |
Bar Iron and Girders|Liége | ” | 4·70 | 6·65
|Charleroi | ” | 4·57 | 6·39
|Marchienne| ” | 4·54 | 6·33
| | | |
| | | per 1000 kilogrammes.
Window Glass |Charleroi | ” | 6·30 | 8·28
--------------------+----------+-------+------------+------------
Neither private companies nor the State railways are permitted to
make concessions of any kind, or to depart from the official tariff
in favour of any particular firm or carrier. All general or special
tariffs must be approved by the Minister, and published in the
official paper, the “Moniteur.”
On the Prussian railways the maximum rates shewn in the tariff are
actually charged. But exceptions are made where trade requirements,
competition, and other similar circumstances appear to necessitate
a departure from the official rates. It is not considered that
railway companies are, in general, bound to adjust anomalies in the
carriage charged for traffic arising in different districts, for
one and the same destination, by reducing the rates from the more
distant sending station. But for the sake of uniformity the rates
are so adjusted if, for any reason, exceptional rates from any
particular district have been adopted, and if they are lower than
from intermediate stations nearer by rail to the same destination.
In Germany under the “_Seehafen Ausnahme Tarif_,” there are a very
considerable number of special rates. For instance, the rate for
grain from Bremen to Cologne, a distance of 324 kilometres, is
12 marks, while from Hemelingen, which is short of Bremen by six
kilometres, to Cologne (318 kilometres) it is 15 marks 50 pfenning.
For the purpose of stimulating the traffic from the Rheinisch
Westfälischen District with the German North Sea Ports, viz.,
Emden, Leer, Papenburg, Bremen, Bremerhaven, the competition of the
rates to the Dutch ports, to which the Rhine affords a cheap water
conveyance, had to be taken into consideration. Accordingly from
Essen to Bremen, 254 kilometres, the Amsterdam rates, which are
lower than the tariff rates from Dortmund to Bremen, 237 kilometres,
were adopted, although the traffic from Essen to Bremen has to pass
_viâ_ Dortmund, which is 17 kilometres nearer to destination. In
another instance the German State railways give a rebate of 5 marks
per truckload for coal exported from Hamburg.--“For consignments of
coal for Hamburg and Harburg a _rebate_ of 5 marks per 10,000 kilos.
is made when proof is given that the coal is destined for export
to Trannaine, places outside of Germany or for the German Baltic
Ports.” In other words, a rate of 5 marks less is charged to Hamburg
for coal for export than to the same place for coal to be consumed
in the town.
Exceptional Tariff No. 2 consists of special rates for goods
traffic between stations of the Royal Elizabeth Railway, &c., and
Gustavsburg. They, however, are only in force during the period when
vessels can ply on the Rhine, for instance:--For “Stückgut” or piece
goods from Vienna to Gustavsburg the transit rate is 7m. 24pf. per
100 kilos. 1st class, and 6m. 60pf. 2nd class, and the local rates
are 8m. 11pf. 1st class, and 7m. 73pf. 2nd class.
The effect of these special rates is to secure the traffic to the
Bavarian State and Hessian railways, and prevent its passing over
the Prussian and Dutch railways. The Rheinisch Westfälischen private
railways grant contract (Abonnements Special Train) tariffs for the
conveyance of coal from the Ruhr district to Nederlandish stations
in fixed consignments of at least 200 tons, and not exceeding 300
tons. The adoption of these rates has principally been prompted by
the competition of the water service on the Rhine. They include
haulage to the sidings or depôts; and they are granted only to
traders who contract to send at least once a week for one year a
consignment of from 200 to 300 tons to Nederlandish stations.
Thus it will be seen that in Germany the carriage of traffic in
large quantities is charged at special or reduced rates. A similar
principle has been recognised in this country also. It was held
by the Court of Common Pleas, in the case of Nicholson _v._ Gt.
Western, that “Clause 31 of the Railway and Canal Traffic Act, 17
and 18 Vic., is not contravened by a railway company agreeing to
carry at a lower rate, in consideration of a guarantee of large
quantities and full loads at regular periods provided that the
real object of the railway company be to obtain thereby a greater
remunerative profit by the diminished cost of carriage, although
the effect may be to exclude from the lower rate those persons who
cannot give such a guarantee.” The effect of such a system, however,
has been complained of by smaller traders as favouring the larger
ones; and in this country, it is not in practice generally acted
upon.
The basis of through tariffs between Germany and other foreign
countries is the normal mileage rate to the German frontier; but
with the view of encouraging the export trades, reduced rates are
charged in favour of international traffic.
The Dutch are also desirous of developing their transit traffic;
and with that object so called “exceptional rates,” based upon
lower mileage rates than the ordinary tariffs, are charged from
places of production in Germany to the Dutch ports. Thus, there
are “exceptional rates” for, amongst other things, heavy iron and
steel goods from manufacturing towns in Westphalia to Amsterdam
and Rotterdam, and they are as much as 37 per cent. lower than the
ordinary rates. These German-Dutch rates are invariably lower than
the ordinary rates to inland towns lying between the forwarding
station and the port. The following are some of the exceptional
rates in force, compared with the ordinary rates to inland towns for
shorter distances:--
----------+-----------+--------------------+---------+--------+---------
| | | | |Rate per
From | To | Description | In lots |Distance| 1000
| | of Goods. | of |in kilo-| kilo-
| | | |metres. |grammes
| | | | | [25]
----------+-----------+--------------------+---------+--------+---------
| | | | | Marks.
Dortmund |Amsterdam |} Heavy iron and | | 231 | 6·30
” |Rotterdam |} steelgoods, bars, | 10 tons | 246 | 6·60
” |_Utrecht_ |} sheets, rails | | _194_ | _8·0_
| | | | |
Essen |Amsterdam |} | | 199 | 8·20
” |Rotterdam |} Hardware | 10 tons | 214 | 8·70
” |_Utrecht_ |} | | _162_ | _8·50_
” |_Gouda_ |} | | _194_ | _9·90_
| | | | |
Rotterdam |Dusseldorf |} Coffee, rice, | 10 tons | 234 | 9·20
_Utrecht_ | ” |} currants & sugar | | _182_ | _10·60_
| | | | |
Strasbourg|Rotterdam |} Machinery | 5 tons | 614 | 24·90
” |_Utrecht_ |} | | _571_ | _25·60_
| | | | |
Mannheim |Rotterdam |} | | 499 | 18·40
” |Amsterdam |} Grain | 10 tons | 504 | 18·40
” |_Boxtel_ |} | | _408_ | _19·40_
” |_Eindhoven_|} | | _388_ | _18·60_
| | | | |
Frankfort |Rotterdam |} | | 479 | 20·
” |_Arnheim_ |} Skins | 10 tons | _376_ | _23·80_
” |_Ede_ |} | | _392_ | _24·70_
| | | | |
Nuremberg |Flushing |} | | 715 | 31·84
” |_Arnheim_ |} Toys | 5 tons | _606_ | _42·60_
” |_Helmund_ |} | | _579_ | _40·80_
----------+-----------+--------------------+---------+--------+---------
[25] These rates are exclusive of cartage and of the extra charges
referred to in Appendix I. Page vii.
For traffic between Austrian and Hungarian towns and the Dutch
ports in certain articles there are also so-called “Seaport transit
rates.” For instance, for dried plums, apples and pears from Vienna
to Rotterdam, the export rate for lots of 10 tons is m. 41·50 per
ton of 1,000 kilogrammes, the local rate being m. 51·60 per ton;
for wool from Buda Pesth to Amsterdam the rate per ton of 1,000
kilogrammes in lots of 5 tons, is export m. 67·0, local m. 81·30.
These rates are only available for goods destined for export or
import; and, as will be seen, they are considerably lower than the
rates for the same description of goods for consumers in the port
of shipment. There are also exceptional rates for goods traversing
Germany to and from the German sea-ports and Austria and Hungary.
The following is a comparison between the rates from Bremen to a
station on the Danube, and the rates from the latter station to a
station situated between that station and the sea-port:--
------------------------+---------+---------+----------+------------
| | |Raw Cotton| Tobacco
|Distance |Distance |per 100 ks|per 100 ks.
|in Kilom.|in Miles.| (2 cwt.) | (2 cwt.)
+---------+---------+----------+------------
| | | Marks. | Marks.
Bremen--Regensburg | 683 | 427 | 2·46 | 2·49
Nienburg--Regensburg | 616 | 385 | 2·88 | 3·83
+---------+---------+----------+------------
Difference in favour of | | | |
the longer distance | (67) | (42) | 0·42 | 1·34
------------------------+---------+---------+----------+------------
In Holland no scale of rates is universally chargeable. Each railway
company is authorised by the Concession under which the railway was
constructed, to charge certain specified rates. But, as in England,
the existing rates actually charged are generally lower than the
maximum; and the fixing of them maybe controlled by the State. By
Article 31 of the Dutch Law the railway companies are required to
carry all goods (not excluded from transport) and passengers at the
rates set forth in the published tariffs, and under the conditions
determined by the regulations, without unduly favouring special
persons, Societies, Companies, or other bodies. By the existing law
the railway companies are forbidden to make special arrangements for
carriage at lower rates than those published in the tariffs, except
in the following cases:--
(_a_). For the carriage of large quantities;
(_b_). For the carriage of one or more truckloads
of goods at stated intervals;
(_c_). For the carriage of goods intended for
charitable purposes or for exhibition.
Notice of such exceptions has to be given to the Home Minister.
Those reductions must be available for all goods of the same class,
to be conveyed on the same line, and under the same conditions; they
must be immediately advertised; and they remain in force during the
existence of the contract.
By the strict letter of the law it is provided that the same rates
must, over the whole of the system of the railway, be charged by
the company for the like article for the same distance. But, in
consequence of the competition by inland navigation for traffic
to and from places in Holland, and also by the Rhine, and through
Belgium for German traffic, this requirement proved impossible
to carry out in practice. The Government have found it necessary
to allow the companies to enter into special contracts for the
conveyance of goods on such conditions as they might consider it
desirable to agree upon. Notice of any special contract must, as
before stated, be given to the Minister of Commerce after it is
entered into, and the official assent is subject to the company
agreeing to enter into a like agreement with any other person. While
such is the letter of the law, virtually enjoining equal mileage
rates, the practice is altogether different. For any description
of traffic, special agreements as to quantity to be forwarded and
time of delivery are made. The great object is to obtain traffic.
The published notices of such contracts contain, it may be added, no
information which can be utilized.
The following is an illustration of the special contracts entered
into and of the manner in which their existence is notified:--
[COPY OF SPECIAL CONTRACT.]
SPECIAL AGREEMENT for the carriage of slow train goods
from _________________________________
to _________________________________
between ______________________________
on the one hand, and the General Goods Manager of the
Railway Company, at ______________________________
contracting in the name of the Direction of the above-named
Company (or Companies), on the other hand.
ART. I.
The first-named contracting party binds himself to have all the goods
to be despatched or received by him during the current year,
estimated at ______________________________
truck loads (______________________________ kilogrammes),
from ______________________________
to ______________________________
carried over the lines of the ______________________________ Railways,
in accordance with the conditions in Article IV. of the
Law of Railway Companies (General Rules and Regulations), of 9th
January 1876 (Gazette No. 7), and with the Special Bye-Laws in force
for local traffic, as set forth in the tariff, for the conveyance of
fast and slow goods over the lines of the ___________________________
Railway Company, approved by order of the Minister of the
Interior, dated 1st March, 1877, and which tariff came into force on
the 1st April, 1877. On the other hand the last named contracting
parties bind themselves to carry the goods of the first-named
contracting parties during the year 1885 at the reduced rates shown
in the circular of the _____________________________
Railway Company, dated ______________________________ 1885.
No use may be made of these rates for the re-despatch of goods at
intermediate stations, so as to obtain a cheaper rate than the
direct rate.
Agreed to and signed in dupl. at
______________________________th ______________________________188_
Contracting party No. 1.
______________________________th ______________________________188_
Contracting party No. 2.
[COPY OF CIRCULAR.]
RAILWAY.
The Direction of the ______________________________ Railway begs to
inform those interested that the General Goods Manager
______________________________ of ______________________________
has been authorised to make special agreements for the carriage during
the current year of large quantities of Goods, or for regular
consignments of one truckload or more between Stations of the
______________________________ Railway, and between those Stations
and Stations of the ______________________________
on the following basis:--
(_a_) For large quantities: Per 100 kilos. and 10 km.
In consignment of 10 tons in 1 cent.
” ” 5 to 10 tons 1½ cent.
” ” 3 to 5 tons 2 ”
” ” 100 kilos. to 3 tons 2⅓ ”
with 8 cents per 100 kilos. terminal charges.
(_b_) For regular consignments in truckloads:
The charges as above for consignments of 10 and 5 tons.
Any fractional distances will be counted as for 10 kilometres, and
the weight per 100 kilogrammes, without distinction for different
classes of goods. Parts of 10 kilometres and 100 kilogrammes will
thus be taken as 10 kilometres or 100 kilogrammes.
With these exceptions the General and Special Rules and Regulations
of the ______________________________ Local Rate Book of 1st April,
1877, with the alterations and additions made therein later, apply
to these contract goods.
Consignments of 5,000 kilogrammes will be treated in the same manner
as goods of Class A, and consignments of 10,000 kilogrammes in the
same manner as goods belonging to the Classes B, C, D, and the
Special Tariff.
Further information can be obtained at all the Stations; or on
application to the Agent of the ______________________________ Railway.
______________________________
[COPIES OF NOTICES OF SPECIAL CONTRACTS.]
From the “_Dutch Guide_,” of 28th January, 1886.
HOLLAND RAILWAY COMPANY.
A contract has been entered into for the carriage of a large
quantity of goods over the Company’s lines.
Further information can be obtained at the Goods Office, at
the Central Administration Buildings, Droogbak, Amsterdam.
The ADMINISTRATOR.
AMSTERDAM, _25th Jan., 1886._
______________________________
From the “_Dutch Guide_,” of 25th February, 1886.
COMPANY FOR WORKING THE DUTCH STATE RAILWAYS.
Various contracts have been entered into for the carriage of large
quantities of goods on the Southern net of the State Railways.
Further information can be obtained at the Goods Manager’s Office,
Moreelselaan, No. 1, Utrecht.
The GENERAL MANAGER.
UTRECHT, _17th-24th Feb., 1886._
______________________________
CENTRAL RAILWAY.
A Contract for the carriage of cattle has been entered into.
Further information can be obtained at the Goods Manager’s Office,
Catharijne Kade 759, Utrecht.
The result is that a considerable portion of the traffic is carried
under special agreements, under conditions such as the following,
viz.:--
The sender agrees to forward between A and B special quantities, for
instance:--
80 tons Soap,
10 ” Sugar,
5 ” Pepper,
5 ” Tobacco,
or to forward the whole of his traffic between C and D estimated at
a specific quantity for a certain period, for instance:--
400 tons General goods,
10,000 ” Coal,
1,000 ” Coke.
In Italy, differential rates have been the subject of public
inquiry, and the representatives of some local interests have
asked for their abolition. But they exist; and the verdict upon
them of the Parliamentary Committee of Inquiry in 1881 was: “It is
indisputable that the system of differential rates has helped to
strengthen and improve the national industries.”[26]
[26] Parte II., Vol. II., Sec. 32.
The fact of railways in other countries charging special rates for
import, export and transit traffic, is, of course, not a proof of
their being right in principle. But the foregoing information may
correct loose assertions or suggestions that differential rates are
unknown or rare elsewhere. It shows that the railway authorities and
the Governments who control the rates in those countries, even while
professing to charge mileage rates, have considered it necessary,
with the view of promoting and protecting the interests of their
trade, to charge differential rates.
In the United States, where there is much competition for the
conveyance of long distance interstate traffic, and where remarkably
low rates--“war rates,” as they are called--are charged, charges
for intermediate traffic are not lowered proportionately. In that
country differential rates have been much attacked; they have no
doubt occasionally been imposed without measure or reason. But they
still subsist, and are found useful. As an illustration it may be
stated that, at the present time, the rates for the conveyance of
flour from Minneapolis to Milwaukee, 335 miles, and to Chicago, 420
miles, are the same; while the rate to Duluth, 164 miles, is only 25
per cent. less.[27]
[27] NOTE--The _Montreal Gazette_, 1st April, 1886, writes thus on
the subject of the Railway Commission Bill:--“These rates are fixed
and determined by the Great American Trunk Lines, in competition
with which the Tariff of the Canadian roads is necessarily
regulated; to interfere with these rates would be to take away
from the Canadian Companies a large amount of the gross earnings
derived from a source which increases the volume of business in
Canada.... The discrimination which is complained of in particular
localities arises wholly out of an established competition between
lines reaching a favoured point. Destroy the natural consequences
and natural advantages of competition--lower rates--and you remove
all inducement to the provision of rival routes; put an end to
competition, and at once an increase in rates all round will
be established. The Railway Act prohibits interference by the
Government in the regulation of rates until a Company is proved to
earn 15 per cent. upon its invested capital. What Railway Company in
the Dominion to-day is earning that profit?... If competition is to
be made a positive disadvantage, if every inducement to particular
localities to promote rival enterprises is to be swept away, the
rates of existing lines will be run up in all directions to the
injury not only of every locality now favoured by competition, but
of those localities which consider themselves aggrieved by reason of
the absence of the low rates which competition enforces.”
It may be mentioned that one of the fiercest enemies of differential
rates, in a work recently published, declares that the only remedy
is to “restore the character of public highways to the railways by
securing to all persons the right to run trains over their tracks
under proper regulation!” “The Railways and the Republic” (1886), p.
372, by James T. Hudson.
SECTION VIII.
THE INTEREST OF CONSUMERS IN RATES.
Of the causes which have prevented progress in the public discussion
of rates, chief has been the fact that the subject has been regarded
too exclusively from the point of view of a limited number of
traders or producers. The general interests of the country have
been overlooked, or it has been assumed that they are identical
with those of particular traders. Once the question is looked at
from several sides--as it appears to those who buy as well as to
those who sell, and to producers in different places--many of the
complaints made against the companies as to the existing system of
fixing rates are seen to be unfounded.
Those who buy commodities are interested in getting them to the
various markets cheaply and in abundance. They wish the charge for
transport to be small--they wish it to be small even if the distance
from which the goods are conveyed be great, because their sources of
supply are thereby increased. To the consumer the ideally perfect
state of things would be a tariff for the conveyance of merchandise
based on the same principle as the Penny Post; commodities would be
conveyed at a low price, and producers over an immense area would be
able to send them to market. To the consumer it would be in every
way desirable that all disadvantages of distance or “geographical
advantages” should disappear. Accordingly, as has been before
stated, plans have been brought forward for making uniform rates
for the same class of goods within a large area, or within certain
regions or zones. The attainment of this is impracticable--the
distance between various parts of the same country cannot be
ignored, as in the case of carrying letters or transmitting
telegrams. Consumers may fairly desire that the cost of transporting
articles from a great distance may be lowered so as to permit of the
influx of goods from remote parts. But unfortunately they cannot
altogether efface distance. The next best thing is that the cost
of transport shall not increase _pro rata_ with the distance. This
reasonable desire railway companies have sought to satisfy, and with
what results is well known.
London, for instance, formerly drew its chief supplies of food
from its immediate neighbourhoods. The extensive market gardens
which existed, especially in the eastern and western suburbs, sent
their produce to town by heavy road wagons, and to this day they
continue to do so. But as population increased, and the demand for
food became greater, the facilities, both in regard to conveyance
and charges, afforded by the railway companies, enabled farmers,
graziers, and market gardeners in distant parts of the kingdom to
compete with those in the immediate neighbourhood of London, to
the obvious advantage of the consumer. In this way fat cattle from
Norfolk, meat from Scotland and Devonshire, fish from Scotland,
Ireland, and the East and West Coast of England, broccoli and new
potatoes from the Scilly Islands, Penzance and the Channel Islands,
store potatoes from Lincolnshire and Scotland, and other articles
of food are conveyed by the railway companies at rates which,
although not proportionate to those charged for shorter distances,
are beneficial to traders and their customers. Meat is carried
from Yorkshire, about 189 miles, at 55s. per ton; from Aberdeen,
516 miles, at 67s. 6d.; and from Stromness, in Orkney, 776 miles,
at 90s. per ton. Potatoes from Yorkshire are carried at 15s.; from
Sunderland, 269 miles, 18s. 4d.; and from Aberdeen, 30s. per ton.
The effect is to open fresh markets to producers throughout the
country, and to supply the wants of an ever increasing population at
such reasonable prices as would not otherwise be possible.
“To move is practically to produce,” at least it often is so. The
consumer desires that commodities and materials should be conveyed
from places where they are produced cheaply or are abundant, to
places where they are more in demand; that coal, for instance,
should go to districts where there is ore without fuel available
for smelting; that timber, or excellent building stone, should be
conveyed to great cities; and that the small value of many raw
materials, rendering it impossible for them to bear more than the
lowest rate of carriage, should not prevent their being conveyed.
This demand, also, the railway companies have satisfied by charging
rates not always exactly varying with the distance. Writing of
the marvellous effects of railways, the late Mr. Newmarch, in
his edition of “Tooke’s History of Prices,” says: “Among their
greatest achievements are the opening up of new fields of supply,
and the deepening of old channels of consumption. They have brought
into profitable use mines, forests, quarries, arable and grazing
districts, fisheries, harbours, and rivers, previously inaccessible.
The produce arising from these various and numerous sources is so
much additional wealth placed at the command of the community.”[28]
Had equal mileage rates been universally enforced many of those new
sources of supply would still be useless; the articles would not
bear the cost of transport.
[28] Vol. 5, p. 376.
At any given time in a particular market there is a certain price
which an article such as milk, wheat, or iron will fetch. Assuming
that price to be 30s., the cost of production 20s., the rate of
conveyance 3d. a mile, A, B, C, D, to be four places, each 10 miles
distant from each other on the same railway, and each capable of
producing an “output” of 500 tons. The article can be economically
conveyed no further than (10 x 12) / 3 = 40 miles, that is from D.
In such circumstances consumers will have an available supply of
2,000 tons. Producers at A, 10 miles distant, will pay for transport
2s. 6d.; those at B, 5s., and so on. Those at A, B, and C, 10,
20, 30 miles distant, will possess a considerable advantage over
producers at D, the place 40 miles distant. This superiority would
be retained by those who have long leases; but in course of time,
by the action of competition, rents would rise, and the advantage
would tend to pass to the owners of the land at A, B and C. What
would be the result, if a railway company, desirous of enlarging
its traffic, established lower rates (say 2d. a mile) to E and F,
places on the same line, also 10 miles apart, and equally capable of
producing an “output” of 500 tons? The particular article might now
be conveyed from F, 60 miles distant. The consumer would benefit;
his available supply would now be 3,000 tons. In practice this
might be an understatement of the gain to him, for the result
might be to give access to districts in which the conditions of
production were altogether easier and cheaper. Producers at A, B
and C, might temporarily--the landowners at these points might
permanently--suffer; but the public and other landowners would
gain. They would gain indirectly and directly--directly in the
increased volume of supply, indirectly by the increase of traffic
enabling the company to keep down its general scale of charges;
and manufacturers and landowners at points E and F would benefit.
Such an illustration may serve to show how the interests of some
landowners and certain traders may sometimes be on one side, and
those of consumers, other landowners, the bulk of traders, and the
railway companies on the other.[29]
[29] NOTE.--The evidence of Sir Thomas Farrer, given in 1881,
is very deserving of consideration. In answer to the question,
“Now turning to the question of inequality of charges, of which
the Committee have had many complaints--in fact, the bulk of the
complaints have been with regard to the inequality of charges from
one place to another--in your opinion, is this inequality productive
of injury to the trade of the country?” He replies, “As far as I
can judge, it is not.” He is asked:--“I suppose you would say that
while on the one hand one portion of the country may be a loser,
another portion of the country is a gainer, and that the one may be
set against the other?”--He answers:--“I am not quite certain that
I should say that one portion of the country is a loser, but I am
quite certain that another portion is a gainer.”
Again, in reply to question: “Then looking at the question also from
the point of view of the public, the inland towns which are charged
higher than towns on the sea-coast are merely paying the natural
penalty of being inland towns, and not having an equally good
geographical position?”--He states, “Quite so; on the whole I should
think the inland towns were proportionately better off than before
the railways existed, because, before the railways existed, sea-side
towns had the water traffic to themselves, but now the railways
afford a kind of competition with that traffic, and bring a great
many places into communication with one another which could not have
been brought into communication before.”
In reply to the question, “On the whole, do you think the country
gains by these rival routes to the outports?” He says, “I do
distinctly.” And again, in answer to the question, “According to
your view, then, as far as the public is concerned, it is of no
consequence that a railway company should so destroy the natural
advantages of one place?” He replies:--“I think it is one purpose
of the railway companies to annihilate distance as far as they
can; I would certainly encourage the railway companies in bringing
Shetland fish to the London market, even although the effect of it
were to lower the price of the Grimsby fish.” Further, in reply to
the question, “As far as that is concerned, you would allow the
Railway Companies to make any differential charges they may please
for or against other localities?” He replies:--“I would certainly
not compel them to charge upon fish from Thurso and fish from
Grimsby in proportion to the distances of those two places. I have
been accustomed, as a free trader, to consider the interest of
the consumer very largely; but it seems to me that this claim for
regular mileage has proceeded upon the interest of one special class
of producers; but it is very much to the interest of the consumer
as well as to one class of producers, that the people at a distance
should be able to send to the consuming market.”
SECTION IX.
THE REAL BASIS OF RATES.
The Managers of English railways have not assumed that they could
fix rates on a “Scientific” or “Natural” basis. But they have
endeavoured, after consulting merchants, manufacturers and traders,
to fix such rates as were required to develop the largest amount
of trade; and it is submitted that they have been carrying out
principles which will, on the whole, bear the closest examination.
They probably have made mistakes, and in some cases entered into
undue competition with each other, or fostered it too much between
producers or ports. But the principles upon which they have
acted are sound; and the instances in which they have erred are
exceptional. It has been the aim of railway companies to make rates
conform to the requirements of trade, or, according to a popular
expression, to charge what the traffic will bear.[30] It is easy
to misrepresent this principle. The commonest misrepresentation
is to assume that it means charging what the traffic will _not_
bear. Rightly understood, this, it is contended, is the only fair
working principle; the only scientific rule, if that phrase has
any clear meaning. It is only another way of saying that rates
should be so fixed as to enable a manufacturer or a trader and
the railway company to obtain a reasonable profit, and that rates
should ultimately be determined by the law of supply and demand. The
value of conveyance, like the value of any other service, is not
necessarily what it costs, but what it is worth to him who wishes
his goods carried. On supply and demand, the available means of
transport and the demand for it depends what it is worth while to
give for carrying an article from A to B. Obviously the demand will
be affected by the nature of the merchandise. If it be of a costly
nature, such as manufactured articles, producers of it or dealers
in it can afford to pay a higher rate than if it were of low value;
a rate of 3d. a ton per mile, which might be prohibitive of the
carriage of sand or lime, would add to the value of silk or velvet
only an insignificant percentage.[31]
[30] In the Report made by M. Richard Waddington in the name of
the Commission of the Third System of Railway Tariffs, special
or differential rates are thus referred to. “These Tariffs are
established in compliance with a trade demand which varies, as
one can easily understand, according to the locality and district
concerned. Like intelligent merchants the administrators of the
railway companies have based their rate of charges on the law of
_Supply and Demand_....” The celebrated expression of M. Solacroup,
director of the _Orleans Company_, sums up the considerations which
led to the compilation of special tariffs. “_In the matter of
Transport Tariffs there is only one rational rule, viz., to ask of
merchandise all it can pay; any other principle is no principle._”
[31] It may be objected that under such a system companies might
extort exorbitant sums from traders who must send their goods. But
(1) the figures and returns referred to later on show that in fact
the companies have not made such charges, but have benefited every
industry as well as themselves; (2) the statutory maxima cannot
be exceeded; (3) at many points there is effective sea and canal
competition; (4) the result of increasing the rates to a height
which prevents the producer from earning a fair profit must, in
the long run, be to diminish the traffic of the railway; (5) there
is always a liability when, high rates exist that Parliament will
sanction a new line, even if the chances of its financial success be
not great.
The capital of English railways amounts to upwards of £800,000,000.
One of the problems to be considered is how to raise a revenue
sufficient to pay on this sum even a moderate rate of interest?
The Companies might perhaps obtain it by charging for conveyance
according to equal mileage rates or according to cost of service.
Following such a course they might probably levy charges which a
great portion of the traffic would not bear; they might charge, for
example, as much for a consignment of pig iron as for a consignment
of copper of equal weight carried equal distances--which is
generally what cost of service implies. If their sole object were
to obtain the necessary revenue, they might cease to regard the
effect of rates upon the interests of traders, districts, or ports,
and, while conforming to the statutory maximum, they might levy
rates detrimental to particular kinds of traffic. Their practice
has been altogether different: they have sought to give full effect
to the intention which Parliament had in view in framing the rude
statutory classifications. They have endeavoured to suit the charges
to the capacity of the traders, and in the words of Section 90 of
the Railways Clauses Consolidation Act of 1845, “To accommodate
them (the rates) to the circumstances of the traffic.” Such is the
only sound principle working to the interest alike of railways and
their customers. If rates were too high, and the traffic could not
bear them, traders would suffer; the companies themselves would
also suffer; their traffic would diminish, or would not expand as
it might do. Such was the principle, speaking generally, on which
the classification in railway Acts was framed. Such, too, is the
principle of existing rates, only instead of being an hypothesis
as to what will suit particular kinds of traffic, the existing
classification and rates are based on facts carefully ascertained,
verified by long experience, and corrected from time to time.
It is not unimportant to bear in mind that much the same principle
as that which we have discussed is applied in regard to indirect
taxation, or the taxation of commodities.[32] What an article will
bear--in other words what the owner can with convenience pay--is
a rule alike applicable to taxation and railway rates. In more
civilised countries articles of prime necessity are not taxed, or
very little; articles of luxury and of great value are taxed more. A
distinction is made between wheat and tobacco, sugar and wine; and
whenever it is practicable, without opening the door to fraud, to
put indirect taxes on _ad valorem_ basis, it is done. A similar rule
is observed, so far as possible, with respect to direct taxation.
Income tax, for example, is payable only by those whose incomes
exceed £150. An endeavour is made to obtain the revenue of the
country from the persons who can best afford to pay, and to levy it
upon articles, the taxation of which will, to the least practicable
extent, be a burden on the trade of the country. To fix railway
rates on any other principle than that described above would be much
like raising the national revenue from all persons alike, rich or
poor, to impose the Customs and Excise upon all commodities, whether
articles of luxury or necessity, and irrespective of their value.
[32] See Ricardo (Principles of Political Economy and Taxation, 3rd
Section, page 144): “Of all commodities none are perhaps so proper
for taxation as those which, either by the aid of nature or art,
are produced with peculiar facility. Taxes on luxuries have some
advantage over taxes on necessaries, they are generally paid from
income, and therefore do not diminish the productive capital of the
country.”
See also Leroy Beaulieu, _Science des Finances_, vol. i.
When railways were first authorised, it was everywhere anticipated,
strange though it may now appear, that the companies would be
merely toll takers, and that the public, or carriers, would use them
in the same manner as turnpike roads. Every railway was to be a
highway; every one of the King or Queen’s subjects was to be free to
use it. Many statutes bear traces of this, now apparently, curious
assumption. The private Acts, as a rule, contained no provision for
the companies themselves acting as carriers. The classification of
the articles to be carried and the tolls to be taken were borrowed
from the canal Acts. No very clear principle of classification ran
through the special Acts. The classification in the main, however,
probably accorded with the considerations pointed out by Adam
Smith, who drew attention to the inconvenience of levying tolls on
turnpike roads solely according to weight.[33] Speaking broadly,
the tolls were in accordance with the ideas as to indirect taxation
prevalent at the time when canals began to be largely constructed.
In the original classification one may trace a desire to encourage
agriculture, and the manufacture of iron, and such articles as
were, generally speaking, carried in large quantities. Articles of
general use in manufactures and raw materials were to be carried
cheaply. The omissions from the lists of articles are remarkable.
Such commodities as coal, iron ore, bricks, clay, manure, slates,
stone, bar and pig iron, heavy iron castings, anvils, chains,
timber, grain, flour, sugar, hides, dye-woods, earthenware, drugs,
cotton and wool, were enumerated. On the other hand, machinery,
hardware, hollow-ware, cutlery, glass, ale, wines and spirits,
grease, oils, soap, drysalteries, paints, colours, paper, leather,
floor-cloth, and textile fabrics, were not named; they came under
the general description of “manufactured goods, articles, matters or
things,” and might be charged the highest maximum rates. The special
Acts contained, as a rule, an enumeration of only 40 to 50 articles
in three to five classes.
[33] “A tax upon carriages in proportion to their weight, though a
very equal tax when applied to the sole purpose of repairing the
roads is a very unequal one when applied to any other purpose, or
to supply the common exigencies of the State. When it is applied to
the sole purpose above mentioned, each carriage is supposed to pay
exactly for the wear and tear which that carriage occasions of the
roads. But when it is applied to any other purpose, each carriage is
supposed to pay for more than that wear and tear and contributes to
the supply of some other exigency of the State. But as the turnpike
toll raises the price of goods in proportion to their weight, and
not to their value, it is chiefly paid by the consumers of coarse
and bulky, not by those of precious and light, commodities. Whatever
exigency of the State, therefore, this tax might be intended to
supply, that exigency would be chiefly supplied at the expense of
the poor, not of the rich; at the expense of those who are least
able to supply it, not of those who are most able.”--(_Wealth of
Nations._ Book 5 part 3.)
In a few years, experience proved that the theories on which
Parliament had proceeded were impracticable. In the first place,
the notion that railways could be used by all comers in much the
same way as canals or roads was found to be erroneous. Railway
companies accordingly applied, in their special Acts, for powers
not only to find locomotive power and wagons, but also to convey
traffic as common carriers. In 1845, the Railways Clauses Act (s.
86) authorised every company to convey on their railway all such
passengers and goods as might be offered to them for that purpose,
and to make such reasonable charges in respect thereof as might be
from time to time determined upon, not exceeding the tolls by the
special Act authorised to be taken. The special Acts contained,
as has been stated, imperfect classifications of merchandise, the
maximum rates chargeable for conveyance, and powers to charge for
loading, unloading, and other services incidental to the business of
a carrier. About 1845 a second great change in the mode of charging
for conveyance came to pass; and it is a circumstance worth noting
that about that date a similar change took place, without concert,
in France, Belgium and wherever railways existed. Up to that time
railways had, as a rule, acted on the principle of equal mileage
rates. This proved disadvantageous; it did not meet the requirements
of trade; it was particularly unsatisfactory to distant traders; it
prevented the opening up of new districts; and it needlessly limited
the amount of traffic.
About the time which we have mentioned, the imperfection of the
statutory classifications became manifest. Such rates as were
intended to be _ad valorem_ were not in fact on that basis; so
far as it was intended to favour raw produce this object was not
sufficiently accomplished. The advantages of differential rates, the
necessity of adapting charges to the traffic, the power of railways
to open up new districts, and develop new industries, began to
be understood. Accordingly the Legislature enacted the following
provision, the words of which merit attention:[34]
S. 90, “And whereas it is expedient that the company should
be enabled to vary the tolls upon the railway so as to
_accommodate them to the circumstances of the traffic_,
but that such power of varying should not be used for the
purpose of prejudicing or favouring particular parties,
or for the purpose of collusively and unfairly creating
a monopoly either in the hands of the company or of
particular parties, it shall be lawful, therefore, for
the company, subject to the provisions and limitations
hereinafter and in the special Acts contained, _from
time to time to alter or vary the tolls by the special
Act authorised to be taken, either upon the whole or
upon any particular portion of the railway as they shall
think fit_; provided that all such tolls be at all times
charged equally to all persons, and after the same rate,
whether per ton, per mile or otherwise, in respect of all
passengers, and of all goods or carriages of the same
description, and conveyed or propelled by a like carriage
or engine passing over the same portion of the line of
railway under the same circumstances, and no reduction or
advance in any such toll shall be made either directly or
indirectly in favour of any particular company or person
travelling upon or using the line.”
[34] In the same year a Statute (8 & 9 Vict. c. 28) was passed
giving canal companies powers to vary tolls in the same manner as
railway companies might. By 8 & 9 Vict. c. 42, which was passed the
same session, canal companies were authorised to become carriers on
their canals and “to make such reasonable charges for conveying,
warehousing, collection and delivery as they might respectively from
time to time determine upon, in addition to the several tolls or
dues which any such company or undertakers were then authorised to
take for the use of the said canals, navigations or railways.” Two
years later canal companies were authorised to borrow money for the
purpose of becoming carriers on their own waterways. (10 & 11 Vict.
c. 94.)
Personal preferences were forbidden. But the companies were to
accommodate their rates to the circumstances of the traffic, the
Legislature’s mode of expressing the rule that the traffic should
pay what it could bear; and within the statutory maxima, the
companies were to be free to alter their tolls as they thought fit.
How far this was altered by s. 2 of the “Railway and Canal Traffic
Act, 1854,” need not here be considered. It is enough to say here
that, so far as s. 90 was concerned, differential rates were not
only not prohibited, but distinctly sanctioned. S.90 required
equality only in regard to traffic “passing between the same points
of departure and arrival, and passing over no other part of the
line.”[35]
[35] Earl of Selborne in _Denaby Main Colliery Company_ v.
_Manchester Sheffield and Lincolnshire Railway Company_.--L.R. 11
A.C. p. 113.
Consumers may profitably bear in mind the report of the Select
Committee on Railways (Rates and Fares), of 1881-2. Whilst stating
“Your Committee cannot recommend any new legislative interference
for the purpose of enforcing upon Railway Companies equality of
charge.” They add: “Some of the inequalities of charges complained
of are to the advantage rather than to the disadvantage of the
public, where there is an _undue preference_ the law now gives a
remedy.” They also give the following illustration:--
“That Greenock sugar refiners should be in the same markets as the
sugar refiners of London, while it may be a grievance to London
refiners, must be an advantage to Greenock refiners, and cannot be a
disadvantage to buyers of sugar.”
It is added that the effect of interference with the freedom to fix
rates according to special circumstances would in this instance be
“to give a practical monopoly to the London sugar refiners who would
be the real gainers by the transaction. It does not appear to your
Committee that such a result would be either just or reasonable.”
For more than forty years railway companies have been conforming
to these principles. They have been developing long as well as
short distance traffic, and aiding the opening of new industries.
They have done so to their own advantage, for though the return
on the capital expended on railways has been small, it has been
obtained on a large volume of traffic. They have been able to
benefit the commerce of the country to a degree which would have
been impracticable if, instead of rates being elastic and freely
accommodated to traffic, the traffic had been forced to adapt
itself to the rates. Producers pay what they find it worth while
to pay; they pay no more. In framing the statutory classification,
the Legislature assumed that producers would probably find it worth
while to pay the authorised charges. The companies find out what
such producers can in fact pay, and what rates will best promote
traffic. What preferable rule could be substituted?
SECTION X.
NEW CLASSIFICATION.
One inconvenience incidental to the course taken by the railway
companies has been experienced. The actual classification in
use does not follow the meagre, and in many respects arbitrary,
statutory classifications; the latter may not be a guide to the
former. This was one of the grievances laid before the Railway
Rates Committee in 1881 and 1882. Traders, it was said, could only
with difficulty ascertain the companies’ powers to charge for goods
not enumerated in their Acts. The representatives of the railways
agreed with some of the witnesses who gave evidence on behalf of
the traders as to the original classifications in the Acts of the
companies having become obsolete. They explained that from time to
time they had been rectifying, in the manner already described,
the defects of the statutory classification, and that, acting on
information communicated by manufacturers and merchants, and guided
by their own experience, they had framed and generally adopted
the Railway Clearing House Classification, which embraces some
2,700 articles, and which is, on the whole, fairly adapted to the
requirements of trade. They added that the companies were prepared
to agree to a revised maximum classification in lieu of the original
classification.
Accordingly, the Committee recommended--
“That there should be adopted over the whole Railway system
one uniform classification of goods.”
“That terminal charges should be recognised, but be subject
to publication, and, in case of challenge, to sanction by
the Railway Commissioners.”
The Board of Trade thereupon intimated to the railway companies
their intention of introducing into Parliament a Bill with the view
of carrying out some of the recommendations of the Committee, and
requested them to prepare a standard maximum classification for
general adoption.
This was done. The companies were also prepared to assent to a
codification of their maximum rate clauses, having due regard
to their existing powers, so as to assimilate them to the new
classification. But they stipulated that certain, rights which at
that time were considered by some to be doubtful--in particular, the
right of the companies to charge for terminal services--should, as;
recommended by the Committee, be recognised. The Bill introduced in
the Session of 1883 by the Board of Trade was not proceeded with.
Acting therefore on a suggestion which was made to them, several of
the companies introduced Bills in the Session 1884-5, with a view
to consolidate the maximum rate clauses, and secure the adoption of
a general classification, and the recognition of terminals. But the
companies received from Government no such assistance as they had
reason to expect. The mere consideration of their Bills was strongly
opposed, the Board of Trade eventually joining in the opposition;
and the measures had to be withdrawn. Last Session the Board of
Trade introduced a Bill, not only to compel the companies to do what
they, by their Bills introduced in the Session of 1885 sought to do,
but also to make it obligatory on them to accept such altered rates
and tolls as the Board of Trade, with the subsequent sanction of
Parliament, might lay down, and to submit to periodical revisions
thereof--requirements so contrary to the conditions on which the
companies provided the capital for the construction of the railways,
that it is difficult to believe that the effects of the provisions
of the Bill could have been clearly understood. The companies
unanimously objected to a measure which amounted to confiscation.
It is probable that a satisfactory arrangement would have been
come to; but owing to the dissolution of Parliament the Bill was
not proceeded with. In view of the desire of the public for a new
classification, the recommendation of the Railway Rates Committee,
end the general assent of the companies, it may be assumed that in
the course of the next Session the subject will again be brought
forward; and it is therefore desirable to consider the principle on
which a classification should be framed.
In the earliest Canal and Railway Acts the basis of the
classification was the nature, bulk and value of the articles
carried. The lowest tolls were applicable to articles carried in
large quantities, such as lime, dung, coals, and rough stone; the
medium tolls to grain, timber, &c., and the higher to manufactured
goods, and the more valuable articles of merchandise, such as
wool, tea, wines and spirits, &c. On canals, this classification
was in force, notwithstanding the fact that they were at first
only toll takers, and did not incur any cost in conveyance or any
risk--services and liabilities for which the carriers charged the
public beyond the tolls. The numbers of articles enumerated in the
original Acts were, as previously stated, from 50 to 60, divided
generally into from three to five classes. The present Railway
Clearing House classification, which has been revised from time
to time, contains seven classes. The following is a comparative
statement of the number of different articles enumerated in it
during the last 34 years:--
1852 748
1860 816
1870 1,621
1880 2,373
1886 2,753
Judging from remarks which have been made[36] as to the
“inconsistency and want of classification,” it appears to be the
view of some persons that this classification has been framed by
the companies in an arbitrary manner and without regard to the
necessities of trade. Nothing could be more erroneous than this
assumption. Of necessity it is from the traders themselves that the
railway managers have primarily obtained the information by which
they have been guided in framing the classification. The questions
to be determined in fixing rates are not simple; the elements to be
taken into account are many. Whether the traffic is considerable,
whether the cubical contents are large or small in proportion to
the weight whether it is carried in large or small quantities,
whether the merchandise consists of raw materials or manufactured
goods, articles of necessity or luxury, must be considered. The
requirements of traders with conflicting interests, the different
views taken by the companies, and the desire to encourage special
industries must be studied. In practice what takes place is this.
When a new article of commerce or of manufacture is introduced, the
merchant or manufacturer calls on the railway company immediately
interested to have it classified and to fix the rates. Of course,
there is an endeavour to get it placed in the lowest possible class.
Such applications are carefully considered; and they are from time
to time discussed by the managers at their conferences. Thus the
classification is continually under consideration and revision;
there is a constant process of re-adjustment to the changing
circumstances of trade. So-called anomalies there no doubt are,
and departures from the basis on which a classification should be
framed. But the Railway Clearing House Classification, which is the
result of this continual effort to adapt charges to new conditions,
answers reasonably, if not perfectly, the requirements of trade.[37]
[36] “What is complained of by the traders is not so much the
high scale of the rates as their inconsistency and want of
classification, as well as the want of facilities given by the
railway companies for the development of the trade in a particular
locality. That before the Royal Commission on Depression of Trade,
not a single witness, except in the shipping interest, was examined
in reference to railway rates who did not complain of some act of
injustice on the part of the railway companies, not so much in
regard to the rates, although they were onerous and prohibitory in
some cases, as to the inconsistency of such rates.”--_Mr. L. Cohen,
House of Commons Debate, 6th May, 1886. Hansard, vol._ cccv., _pages
428-9_.
[37] NOTE.--The New Zealand correspondent of the “_Economist_”
(Oct. 23, 1886), writes from Wellington as follows: “The fact of
the railways being in the hands of Government is by no means an
unmixed good. A uniform system of rates is demanded everywhere. If a
concession is made to one district, the rest of the colony naturally
demand to be placed on the same footing, so that the Railway
Department rarely meet the wishes of the public. _A private Company,
if it found that the freight could be got by lowering the tariff on
some particular item, would do so at once, and if it paid, continue
it._ The cost probably would be merely a few tons of coals, and a
small amount for wear and tear. _Many trades, notably the timber
trade, are very much hampered by the Government tariff which does
not admit of differential rates._”
This is a sample of the inconveniences attending uniformity.
It must be borne in mind, in framing a new standard classification,
that it will be the maximum beyond which the companies must not go.
If adopted generally over all railways, the scales of maximum rates
must allow scope for the local necessities and peculiarities of
different districts of the country. Inverness-shire and Cornwall,
as well as Staffordshire, Lancashire, and Yorkshire, agricultural,
manufacturing, and mining districts, must all be considered. There
must be sufficient elasticity in the scale of maximum rates to
allow of the charges being remunerative on short distance traffic.
Goods coming under the same generic name often vary considerably
in cubical contents in proportion to weight, value, and risk of
damage, as well as in the extent to which they are carried; all
considerations not to be forgotten in constructing a uniform
classification. The following few examples, taken casually from
consignments actually carried, illustrate the remarkable variations
in the weights and bulk of some of the traffic:--
Cubic feet to the ton.
Agricultural Implements vary from 70 to 1316
Boots and Shoes 75 ” 108
Coal 34 ” 48
Copper 10 ” 165
Carpets 68 ” 159
Drain Pipes 99 ” 205
Furniture 142 ” 3501
Hay 364 ” 630
Holloware 106 ” 214
Hats 529 ” 1719
Iron (Bar) 7 ” 39
” (Scrap) 24 ” 165
Luggage 95 ” 971
Millinery 315 ” 986
Sewing Machines 104 ” 350
Straw 788 ” 1256
Tobacco 53 ” 165
Wool 266 ” 747
Ditto (Australian pressed) 93 ” 282
The value of goods coming under the same description, and the risk
in conveying them, frequently vary as much as the cubical contents.
No matter what pains are taken to frame a fair classification,
it is to be feared that any classification based on a careful
consideration of the nature and value of the articles carried, and
all the varying circumstances of trade--and an omission to consider
any such element would work injustice--must appear to some traders
to be more or less anomalous. Some will still consider they have a
grievance to lay before Chambers of Commerce.
It may be well to state how the problem has been dealt with on the
Continent. The particulars given may be instructive to those who
hastily recommend an adoption of the systems in force abroad.
In France the classification of goods and rates is in a transition
state; and a large portion of the trading and manufacturing classes
are discontented with the charges at present made by the railway
companies. With a view of simplifying the tariff, in 1879 the
Minister of Public Works took steps to frame for adoption on all
the French Railways a classification divided into six classes.
Subsequently an attempt was made to prepare a uniform scale of
railway rates diminishing according to distance. But after a long
enquiry, and full consideration, the proposal was abandoned. In
1883, the Paris, Lyons, and Mediterranean Railway Company proposed
the adoption of a revised tariff, which professes to afford, on
the whole, a reduction in the rates as compared with the former
tariff. It was sanctioned by the Minister of Public Works in
August, 1885. It consisted of six classes for general goods in any
quantities, and six for goods of the special classes, which are
generally carried in lots of one and five tons. The latter six
classes were in substitution for the many special tariffs formerly
existing. The Eastern of France Railway Company also revised their
tariff, re-adjusting the classification, and reducing the number
of their special tariffs to 28. An article formerly carried at a
special tariff between certain specified stations is now charged at
the fourth class rate. But when carried generally, and not between
particular stations, such an article remains, as before, in the
second class. The Northern of France Railway Company have also
revised their tariffs on a somewhat similar basis.
Long debates on the subject of the charges under the new tariffs,
and on the railways generally, took place in the Chamber of
Deputies, in February and March last. There were complaints that
the “reformed tariff,” and particularly that of the Paris, Lyons,
and Mediterranean Company, had not brought about the anticipated
reductions, and that, while in some cases lower rates for certain
goods carried in large quantities had been conceded, higher rates
had been fixed for similar goods sent in small quantities. The rate
for 5 ton lots, for instance, is lower; but that for lots under 5
tons is generally higher. The larger traders had derived a benefit
from the change; but the small traders and consumers compared with
what they were, are placed at a disadvantage. So far the other
companies have not made any alteration in their tariffs.
Thus it will be seen that in France there is no uniform
classification. The tariffs of the companies, with the exception
of the Ouest, Nord and Est, are composed of a different number
of classes, and the number of articles enumerated in the
classification also varies. Articles, too, are not included in the
same classes on all lines. For instance, the Ouest enumerates 1686,
the Nord 1519, and the Paris, Lyons, and Méditerranée, 1425. The
tariffs are divided--
by the Compagnie de l’Ouest into 6 classes.
” ” ” l’Est ” 6 ”
” ” ” du Nord ” 6 ”
” ” ” Paris, Lyons, } 6 general tariff classes.
” ” ” Méditerranée } 6 special ” ”
” ” ” d’Orleans ” 4 classes.
” ” ” du Midi ” 5 ”
” ” ” de l’Etat ” 9 ”
The following examples show how the classifications vary:--
----------------------------------------------------------------------
| | | |Paris- | | |
| | | |Lyons- | | |
ARTICLE. |Ouest.| Est.| Nord.|Medite-|Orleans.| Midi.|Etat.
| | | | ranee.| | |
------------------+------+------+------+-------+--------+------+------
|Class.|Class.|Class.| Class.| Class. |Class.|Class.
Ironmongery | 4 | 2 | 2 | 2 | 2 | 3 | 2
Colours (common) | | | | | | |
in Casks | 4 | 1 | 1 | 1 | 3 | 3 | 4
Manure | 6 | 6 | 6 | 6 | 4 |Spec’l| 6
Flour | 4 | 4 | 4 | 4 | 3 | 3 | 4
Wool (raw) | 4 | 2 | 2 | 3 | 3 | 2 | 2
Machinery (packed)| 4 | 3 | 3 | 3 | 1 | 3 | 3
China in Casks and| | | | | | |
Crates | 3 | 1 | 1 | 1 | 2 | 2 | 1
Raw Sugar | 5 | 4 | 4 | 4 | 3 | 3 | 4
Potatoes in Bags | 5 | 4 | 4 | 4 | 3 | 3 | 4
Window Glass | 4 | 3 | 3 | 3 | 2 | 3 | 3
----------------------------------------------------------------------
In Germany, Holland and Belgium there is no such classification
as is in force in this country. Generally speaking, goods of all
descriptions, except wagon loads of 5 and 10 tons, are charged
according to weight, irrespective of their nature or value. In
Germany the railway tariff consists of 8 classes, viz.:--
1. _Grande Vitesse_ which includes articles of all
descriptions carried by
passenger train.[38]
2. “_Stückgut_,” or Which includes articles of all
“Piece” Goods. descriptions of less than
5 tons carried by goods
train.
3^{A1}. Wagon Loads Articles of all descriptions in
truck loads of 5 tons not
mentioned in the special
classes.
4^B. ” ” Articles of all descriptions in
truck loads of 10 tons.
5^{A2}. ” ” Certain articles specified in
the classification, in truck
loads of 5 tons.
6. Special Tariff, I. }
7. ” ” II. } Ditto in 10 ton lots.
8. ” ” III. }
[38] _Grande Vitesse_ goods are not always carried by passenger
train. They can be carried by any train the railway company may
determine, provided the time allowed by law, which is half the time
for ordinary goods, is not exceeded.
The system actually existing in Germany is a compromise. Previous
to 1878 different systems existed in North and South Germany. The
classification in use in the former was governed by the value of the
goods; while that in force in the latter was framed with particular
reference to their weight and measurement. In that year, however, an
attempt was made to reconcile the two systems; the “Reform Tariff,”
as it is called, was established on all the German railways. There
was a concession to the Southern system; rates for goods in covered
trucks in five or ten ton lots were adopted. The North system, on
the other hand, was recognised by establishing the Special tariff
classes, in which the relative value of the goods has been taken
into consideration. The actual classification is therefore dual; it
is a compromise between two totally different systems. Obviously it
does not accord with the requirements which have been put forward
by, or on behalf of, traders in this country.
In Belgium, also, there is practically no classification except for
traffic in full truck loads. The tariff consists of--
Tariff No. 1 Articles of all descriptions
up to 5 kilogrammes (11 lbs.)
carried by passenger trains.
Tariff No. 2 Articles of all descriptions
carried by ordinary passenger
trains, but chiefly articles
of all descriptions up to 200
kilogrammes (4 cwt.) carried by
goods trains.
Tariff No. 3--Class I.--Goods of all descriptions from
8 cwt. and upwards, conveyed
by goods trains.
{Certain goods specified in
” II.--{ the classification, in truck
” III.--{ loads of 5 tons.
” IV.--Certain goods specified in
the classification in truck
loads of 10 tons.
For Tariffs 1, 2, and Class I. of tariff No. 3, there is practically
no classification. All goods up to the specified weights are
included, without reference to their value or nature. Only in
respect of the wagon-load classes of tariff No. 3 does any
classification exist. In this classification, which applies to all
the Belgian railways, about 639 articles are enumerated. It is
assumed to be framed with reference to the value of the goods, the
mode of transit, the amount of the company’s responsibility, and the
circumstance of the goods being carried in open or covered trucks.
In Holland, the classification is very similar to that which exists
in Germany. Goods are divided into two classes, i.e., “_Stückgut_”
or “Piece” goods, to which belong all consignments less than 5
tons carried by goods train; and “_Truck Load_” goods, which
includes goods in truck loads of 5 or 10 tons, or which pay as
for those weights. The “_Stückgut_” class is subdivided into two
classes, and the “_Truck Load_” class into four classes. The total
number of articles enumerated in the classification is about 242.
Although the bases of the tariffs charged for conveyance differ,
the classification is practically the same on all the railways in
Holland. The following is an example of the classification of goods
on the Dutch Rhenish Railway. It will be seen that such articles as
coffee, cheese, butter, in consignments of less than 5 tons, are
included in the same class as coal, coke, gravel and raw iron; a
feature not likely to be imitated by admirers of the “scientific
classification” supposed to exist abroad.
----------------------------------------------------------------------
| In Lots of
|-----------------------
DESCRIPTION OF GOODS. | Less | 5 Tons|10 Tons
| than | and | and
|5 Tons.| above.| above.
----------------------------------------------+-------+-------+-------
Bark, asphalt pipes, petroleum, vinegar, clay | | |
drain pipes, oils, paper, trees, butter, | | |
fresh meat, coffee, spirits, cheese, hair, | | |
dyeing earths, pencils, sugar, sumac | II. | A |
| | |
Raw tobacco, pitch, lithographers’ stone, | | |
cabbage and vegetables in bulk, herrings, | | |
window glass, dye-woods, cotton yarn, | | |
Glauber-salts, soda, cotton twist, wool, jute| II. | B |
| | |
Raw asphalt, ashes, potato meal, beetroot, | | |
seeds, sheet iron, iron pipes, iron wire, | | |
lime, linseed, cake, lead, parts of machines,| | |
pasteboard, corn and grain, raw sugar, iron | II. | C |
| | |
Guano, grindstones in the rough, stone | | |
troughs, coal tar, worked stones, sleepers, | | |
spath millstone, fuel, marble in blocks | II. | D |
| | |
Raw iron, cast iron, gravel, wood, coal, | | |
limestone, pebbles, raw chalk, clay, manure, | | |
coal, coke, turf, ore, tiles | II. | D | S R
----------------------------------------------------------------------
This diversity of system and practice will give some idea of the
difficulty experienced in framing a classification suitable to
each country, or, indeed, to various portions of the same country.
The difficulty will be still better understood by observing the
different manner in which goods placed in the 2nd Class, under the
Railway Clearing House Classification, are classified in other
countries.
CLASSES.
----------------------------------------------------------------------
| | FRANCE. | | | |
| |-----------| | | |
DESCRIPTION OF |ENG- |Nord. |BEL- | HOL- | GER- | CANADA.
GOODS. |LAND.| |Ouest. |GIUM.|LAND. | MANY.|----------------
| | | |PLM| | | | Any | Car
| | | | | | | |Quantity| Loads.
---------------+-----+---+---+---+-----+------+------+--------+-------
Aerated Waters | 2 | 4 | 5 | 4 | 1 | Gen. | Gen. | 3 | 4
| | | | | |Tariff|Tariff| |
Agricultural | | | | | | | | |
Machines| ” | 2 | 2 | 2 | 1 | ” | ” |1, 1½ | ..
| | | | | | | | &D1 |
” Seeds | ” | 4 | 4 | 4 | 3 | B |S.T. 1| 2 | 5
Bacon and Hams | ” | 2 | 4 | 2 | 1 | Gen. | Gen. | 2 | 4
| | | | | |Tariff|Tariff| |
Bedsteads | ” | 2 | 3 | 2 | 2 | ” |S.T. 1| 1 | ..
Biscuits | ” | 1 | 1 | 1 | 1 | ” | Gen. | 2 | 4
| | | | | | |Tariff| |
Cattle Food | ” | 3 | 3 | 3 | 3 | B |S.T. 2| 3 | 5
Cheese (Packed)| ” | 2 | 4 | 2 | 1 | Gen. | Gen. | 3 | 4
| | | | | |Tariff|Tariff| |
Cider in Cases | ” | 2 | 4 | 2 | 1 | ” | ” | 3 | 4
Colours and | | | | | | | | |
Paints, Common| ” | 1 | 4 | 1 | 1 | ” | ” | 3 | 5
Confectionary | | | | | | | | |
in Casks | ” | 1 | 1 | 1 | 1 | ” | ” | 1 | 4
Flax, Raw | ” | 3 | 4 | 3 | 2 | ” |S.T. 2| 3 | 5
Hemp, Raw | ” | 3 | 4 | 3 | 2 | ” | ” | 3 | 5
Leather, | | | | | | | | |
Undressed | ” | 3 | 4 | 3 | 1 | ” | Gen. | 3 | 5
| | | | | | |Tariff| |
Osiers | ” | 2 | 4 | 2 | 2 | B |S.T. 2| 2 | 6
Preserves, | | | | | | Gen. | Gen. | |
Casks | ” | 3 | 4 | 3 | 1 |Tariff|Tariff| 2 | 4
Cotton Yarn for| | | | | | | | |
Weaving | ” | 2 | 2 | 2 | 1 | ” | ” | 3 | 5
----------------------------------------------------------------------
The following is a comparison of the number of articles included
in each classification, so far as such exists, in France, Germany,
Holland, and Belgium:--
CLASSES.
Chargeable
ENGLAND. Mineral Special First Second Third Fourth Fifth at Mileage
Scale, &c.
Railway Clearing
House 80 446 453 500 672 319 180 103
FRANCE. Sixth. Fifth. Fourth. Third. Second. First.[39]
Ouest 36 329 533 250 212 326
P.L.&M. 35 104 231 265 279 511
Nord 36 106 253 279 288 557
[39] The first class in France corresponds with the highest or fifth
class in England.
CLASSES.
BELGIUM.
Fourth. Third. Second. First.
168 177 294 Goods of all descriptions
in part loads.
HOLLAND.
B. C.
158 84
GERMANY.
Special Tariff 1. Special Tariff 2. Special Tariff 3.
314 119 176
The number of articles which the companies proposed to provide for
in the standard classification by their Bills deposited in the
Session of 1885, was 2,656, classified as under:--
CLASSES.
Mineral. Special. First. Second. Third. Fourth. Fifth.
86 389 469 483 682 334 213
Assuming that any maximum classification to be framed should comply
with the conditions which have been already stated, and that it
should accommodate trade in all districts of the country, the
classification suggested by the railway companies in their Bills
will bear the test of any fair inquiry. When the change which we
have indicated is carried out--when the maximum rate clauses of the
companies are consolidated and revised on an equitable basis having
regard to the present powers and to the new classification--traders
will be able easily to ascertain whether the charges made by the
companies are within their Parliamentary powers.
SECTION XI.
TERMINAL CHARGES.
We come to another common complaint against railway companies,--the
one which, next to that relating to differential and import rates,
has lately been most heard of. From time to time during the last
30 years, and especially of late, the right of railway companies
to make charges for what are known as terminal services beyond the
remuneration for actual conveyance has been challenged. On the part
of the railway companies there has been no change of practice.
No new kind of charges has been imposed; those in dispute have
been made from the very beginning of railways in this country.
Introduced by the common carriers upon the railways, they were
continued by the railway companies. On the strength of the right to
receive these charges, companies took upon themselves the carrying
business, constructed large goods stations, with vast siding and
other accommodation, and in providing land, premises and appliances,
expended an enormous amount of capital, not necessary for earning
the statutory mileage rates. The legality of such charges has been,
after full argument on appeal, upheld by the Court of Queen’s Bench
(_Hall v. London Brighton and South Coast Railway Company_, L. R.
15 Q. B. D. 505): their equitable character is not less clear,
and the contention to the contrary is, in the words of the joint
judgment of Mr. Justice Wills and Mr. Justice Mathew, “singularly
unreasonable.”[40]
“We have already mentioned the anticipation, in the early days,
that the railway companies would merely furnish the railway and
charge tolls for the use of it by carriers and others, who would
employ private locomotives, carriages and wagons. The notion was
borrowed from the experience as to canals and highways; and it has
been well said that ”no proper understanding of a good deal of our
railway legislation, and pre-eminently of clauses relating to tolls
or charges, can be arrived at, unless it (the theory) is firmly
grasped and steadily kept in view.”[41] On railways, as on canals,
there were three states of circumstances which it was considered
must be provided for: First a railway company, like a canal company,
might simply provide a highway, looking to the tolls alone for the
use of that highway for a revenue upon their capital; secondly,
without themselves being carriers, the railway company might provide
trucks and locomotive power, as the canal companies provided boats
and haulage power on the canal; or, thirdly, both the canal company
and the railway company might be carriers upon the highway which
they themselves had provided, and find the wharves, stations, other
necessary premises, accommodation and appliances, and the capital
for that purpose.
[40] Mr. Justice Manisty delivered a separate Judgment. See note at
foot of page 99.
[41] Wills, J., in Hall v. London Brighton and South Coast Railway
Company, p. 536. See also Field J. in Brown v. Great Western Railway
Company, L. R. 9 Q. B. D., p. 751.
The owners of lands along the banks of canals were entitled to
construct, in connection with them, wharves, basins and warehouses;
and we find in the earlier railway Acts, and in the Railways
Clauses Consolidation Act 1845 (subject to which all railways since
that date have been, constructed), similar powers with respect to
railways conferred upon adjoining owners. They were authorised
to construct sidings and junctions for the purpose of making
communications between their own lands and the railway. It was
intended that a trader should load his wagons on his own premises,
carry them over the railway and take them off the railway again at
another siding or communication, paying the railway company a mere
toll for the use of the length of line over which the traffic was in
fact worked. Nor was this a mere theory. For many years upon some
of the railways in this country the work of carrying merchandise
was, to a considerable extent, actually performed by large firms
of carriers, such as Pickfords, and others, who provided their
own siding accommodation with the railways, and built or rented
their own stations and warehouses. During this period the railway
companies, so far as this part of their traffic was concerned,
merely provided the highways, the wagons and the engine power, and
hauled the traffic from its place of origin to its destination; and
they undertook no responsibility as common carriers in respect of
the goods. The carriers provided the station accommodation, loaded
and unloaded the goods, checked and weighed them, and handed over
the loaded or unloaded trucks to the railway company in a convenient
position for the engine to be attached to them. Of course, the
carriers, who undertook all liability as such, charged the public
not only the tolls which they paid to the railway company, but also
a considerable additional sum to cover the risk of their Common
Law liabilities, the cost of providing station and warehouse
accommodation, clerkage and invoicing of goods, and other services
beyond the haulage of the trucks.[42] Upon some lines the state
of things which we have described existed for many years. But
gradually the railway companies began to undertake the duties and
responsibilities of carriers. They purchased or built, often at
enormous expense, the necessary terminal accommodation which, under
the previous system, had been provided by private carriers; and
they made to the public charges similar to those which the carriers
themselves had before made for corresponding accommodation and
services. The companies raised the large sums required to furnish
this accommodation and for their working capital as carriers, upon
the faith that they were entitled to stand in all respects, in the
place of the carriers or forwarding agents, and to make reasonable
charges for accommodation and services not covered by, and obviously
having no relation to, the mileage rates for simple haulage from
point to point.
[42] Mr. William Pierssene, Manager to Messrs. Pickford & Co.,
stated in his evidence before the Railway Commissioners in the case
of Kempson v. The G. W. R. (4 N & M 426), that in addition to the
amount of the railway companies’ tolls, a sum varying from twelve to
_eighteen shillings_ a ton was paid by the customer for the services
which now form the subject of terminal and cartage charges.
This view has been sanctioned by the Legislature in almost all
Railway Acts passed since 1845. The charges which a company are
authorised to make are of three kinds--first, tolls for the use of
the railway as a highway; secondly, charges, in addition to the
tolls, for the use of carriages, wagons, and for locomotive power
where such of them are provided by the company--in other words, for
conveyance along the railway. A third class of charges becomes due
when the company not merely convey the goods, as they would for the
carriers who had their own station accommodation and staff, but
are themselves the carriers; cases where, in addition to providing
the highway, vehicles, and locomotive power, they perform “such
services as are incidental to the duty or business of a carrier.”
These services include the providing of stations, warehouses and
sheds, where goods are received, sorted, loaded, covered, checked,
weighed, and labelled, and trucks marshalled for convenient removal
to their various places of destination, and the maintenance of a
large staff of clerks, book-keepers, porters, workmen, engines and
horses necessary for these operations. In this last case the company
are entitled to make, in addition to the charges proper to highway,
rolling stock, and locomotive power, a reasonable charge for the
services, often costly and onerous, rendered in their totally
different capacity of carriers.
It is undisputed that if the railway companies were not carriers
and acted as toll takers only, they would be entitled to claim
their full tolls. But what would be the result if they put in force
such a right? The carriers or forwarding agents who would replace
them, naturally would, as they formerly did, levy such payments as
would cover the cost of station accommodation, and all the services
performed in respect of the carriage of goods beyond the mere
conveyance along the railway. Can it have been in the contemplation
of the Legislature that railway companies were not to be entitled to
make the same charges?
Suppose a Bill were before Parliament for the construction of a
railway, and a clause requiring that the mileage rates should cover
the cost of terminal accommodation were inserted, and the promoters
accepted the Bill with such a restriction. The construction of a
station at the terminus of the railway in a large town is very
costly, and it would be to the interest of the company to make the
station outside the town where land and works would be cheap. They
would thus save capital upon which they would obtain no return,
and, at the same time, they would be entitled to charge the public
the full cost of cartage, whatever the amount might be. The Great
Western Company, for instance, might have constructed their terminus
at Wormwood Scrubs--from which place the cost of cartage to the City
would probably be 7s. 6d. per ton, which the public would have to
pay. With the view of affording better accommodation and of reducing
the expense of cartage, they have erected a station under Smithfield
Market, at a cost, in interest on outlay, maintenance, and other
terminal expenses of an average of 3s. 8d. per ton. According to the
opponents of terminal charges the Great Western Company are only
entitled to be paid a mileage rate proportional to the distance from
Wormwood Scrubs to Smithfield, that is, as for seven miles, to cover
the use of the railway and the station. To take other illustrations,
could it be supposed that the London and North Western Railway
Company would have spent several millions of capital in providing
expensive station accommodation in the immediate vicinity of the
Docks in Liverpool, instead of receiving and delivering the traffic
at Edge Hill, or that companies would have constructed vast stations
in London, Manchester, Leeds, and many other important places,
unless the cost was to be covered by payments in addition to the
mileage rates? So inequitable and opposed to the real interests of
traders is this contention that it is difficult to understand how it
could ever be put forward.
One of the allegations before the Railway Rates Committee in 1881-2,
was, that the companies carried some traffic at too low rates,
and, to compensate themselves, imposed higher rates than otherwise
would be necessary on other traffic. Now, if railway companies were
not allowed to charge for terminal accommodation and services, one
effect would be that in consequence of the cost of the construction
and the expenses of stations, short distance traffic would be
actually carried at a loss.
In recent years terminal charges have been recognised in every Act
for the construction of new railways, by the introduction of a
clause of which the following is a copy:--
“No station shall be considered a terminal station in regard
to any goods conveyed on the Railway, unless such goods have
been received thereat direct from the consignor, or are
directed to be delivered thereat to the consignee.”
If the railway companies were not entitled to charge terminals for
the use of the stations, the insertion of such a clause in Acts
of Parliament would be meaningless; the intention of the clause
evidently was that the companies may not charge terminals in respect
of any intermediate station or junction, and the fair inference is
that they may do so at the sending or receiving station.[43]
[43] Hall v. L. B. & S. C. Railway. Manisty, J., L. R., 15 Q. B. D.
p. 544.
The equitable mature of the claim of the railway companies to make
terminal charges has been admitted on several occasions by some, if
not by all, of the railway commissioners. Their refusal to consider
terminal charges as legally justifiable has arisen only from the
doubt which existed in their minds as to the strict construction of
the words of the clauses; and that question has now been decided by
the Queen’s Bench Division in “_Hall_ v. _The London Brighton and
South Coast Railway Company_.” Some portions of the judgment of the
Court in that case deal only with the construction of the sections
of the particular Private Acts of the defendant company; but the
remarks of the Judges upon the general principles which govern
the railway companies, claim to make terminal charges, explain so
clearly their natural equity as well as their legality, that they
may not improperly be quoted:--
“This notion of the railway being a highway for the common use of the
public, in the same sense that an ordinary highway is so, was the
starting point of English railway legislation. It is deeply engrained
in it. In the early days of railways it was acted upon at least
occasionally, and in respect of goods traffic, and although it enters
but slightly into modern railway practice, _no proper understanding
of a good deal of our railway legislation, and pre-eminently of
clauses relating to tolls or charges, can be arrived at, unless it
is firmly grasped and steadily kept in view_. Those states of things
were from this point of view to be expected and to be provided for
by legislation. The company might be merely the owners of a highway
and toll takers for the use of it by other people with their own
carriages and locomotives. That state of things would be worked out
by the railway company possessing the mere line of railway from
end to end, and by the persons making use of it, buying or renting
contiguous land whereon to keep their rolling stock, and have their
offices, availing themselves of the powers of Section 76 of the Act
of 1845, and getting on to the railway by means of sidings connected
with the railway.
“A second state of things, as we know from the evidence in this case
to which by the consent of the parties we are at liberty to refer,
prevailed extensively for many years after the railway system was in
full operation, and for some years at least after the passing of the
Act of 1845. The railway company provided the line and provided the
engines and trucks, but they were not carriers. The large warehouses
and sheds wherein goods were received, sorted, loaded, covered,
checked, weighed and labelled, and trucks or carriages marshalled
and prepared for convenient removal to their various places of
destination--a corresponding work was done in respect of goods
arriving from a distance--the staff of clerks, book-keepers, porters,
workmen, and horses necessary for these operations were all provided
and maintained at the expense of the carrier, and no portion of them
fell upon the company. The company, on the other hand, as owners
of the rolling stock, for the use of which, as well as of their
railways, they received payment, provided whatever accommodation they
needed in order to keep in convenient proximity to the places where
the carrier had his depôts the necessary supply of rolling stock.
“The third state of things which might exist simultaneously with the
second, or might be the one prevailing exclusively on a particular
line, existed when the company were themselves the carriers of the
goods, and when as carriers they provided the accommodation and
performed the services above described.
“The company might thus be: 1, toll-takers and neither conveyers
nor carriers; 2, conveyers but not carriers; 3, carriers. It would
naturally be expected that in the first case they would have powers
to take tolls, and tolls only, and that in the second, they would
have power to make charges, which should include tolls and charges
for the use of rolling stock, and it would seem reasonable enough
that (inasmuch as they would probably have much greater facilities
for keeping and using their rolling stock to advantage and with
economy than any other person could have) where they provided both
trucks and locomotives as well as took tolls, the maximum charge
should be lower than the aggregate of the three separate charges
which they might make for, 1, use of railways; 2, use of carriages;
3, locomotive power.
“It would seem natural also to expect that where the company were
carriers, inasmuch as they performed the identical services which
they perform under the second head, and others besides, they should
be allowed to charge the same sums as they might charge when falling
under the second category, _plus_ those which are appropriate to
the extra services and liabilities which fall upon them when they
undertake the duties and business of a carrier.
“The contention of the applicants appears to us singularly
unreasonable. It was proved before the Railway Commissioners,
and is not disputed, that the actual cost to the company of the
accommodation and services, which, for many years after the railway
system was very largely developed, and all the principal lines in the
kingdom were at work, were on some of the most important railways
in England provided by independent carriers, and did not fall upon
the railway company, amounted to 1s. 5d. per ton; and it is admitted
that, even with the help of the six-mile clause, the company, if
the contention of the applicants is correct, would, in the case of
traffic carried not more than six miles, have to carry goods coming
under class 5, at a dead loss, which may be approximately stated as
8d. per ton for station services alone, besides getting nothing for
the use of railway and trucks and for providing power.
“The charges of and incidental to ‘conveyance,’ as we have explained
that phrase, are properly measured by the mile of distance travelled
over. The terminal services of station accommodation, loading,
watching, checking, and the like, have no common measure with the
distance run, and are the same, whether that distance be two or two
hundred miles....
“Our answer, therefore, is that the providing of station
accommodation, and work of the general nature indicated to us by the
Railway Commissioners, appear to us to be capable of falling under
the definition of ‘services incidental to the duty or business of a
carrier,’ and _prima facie_ to do so. Whether in any particular case
they do so, or to what extent they do so, must be a question of fact
for the Commissioners, the line we should draw being, that whatever
is necessary for ‘conveyance’ in the sense in which we have defined
it--being all capable of being measured by reference to the distance
travelled--is covered by the mileage rate. Whatever is properly
incidental, not to conveyance, but to the performance of the duty and
business of a carrier ... that is to say, is actually performed and
is done at a terminal station, may be made the subject of a separate
reasonable charge.
“How could the Legislature ever provide for every single station on
this line, for every terminal station, what was a proper charge? It
could only be done by limiting it, as it has done, by ‘a reasonable
sum,’ and it is for the Railway Commissioners to say what is a
reasonable sum, under the circumstances at each terminal station. ‘No
station is to be considered as a terminal station in regard to any
goods conveyed on the railways of the company unless such goods have
been received thereat direct from the consignor of such traffic, or
are directed to be delivered thereat.’ Therefore terminal stations
are recognised, and terminal charges are recognised distinctly.”
Sir Bernhard Samuelson observes that terminal charges are a
necessary corollary of the Foreign mileage rates,[44] the scientific
basis of which he so much approves; the equity of, and right to make
terminal charges is equally a corollary to the system upon which
the rates in this country have been fixed. The maximum charges for
the user of the road, the user of the truck, and the provision of
the engine are capable of being fairly measured by reference to the
distance travelled. They are, therefore, properly the subject of a
mileage rate. But the providing of station accommodation, and work
which the Railway Companies perform as carriers--as distinguished
from mere conveyance--have no relation to mileage. They must
reasonably be--as it has been held in the case of “_Hall_ v. _The
London Brighton and South Coast Railway Company_,” they legally
are--the subject of an additional charge.
We may here correct a common error. The opponents of terminal
charges are in the habit of speaking and writing of them as if the
companies claimed that they might at their own discretion demand
such payments as they thought fit.[45] The railway companies have
never contended that they were entitled to make arbitrary terminal
charges. Indeed, such a contention would be a legal absurdity.
On the contrary, they have always submitted that, while their
right to make those charges was undoubted, the amount must not
only be reasonable, but also be subject to review by the Railway
Commissioners under the 15th Section of the Regulation of Railways
Act, 1873. Sir Bernhard Samuelson is inaccurate in stating that
the railway companies proposed by their Bills of last Session to
make those charges subject only to their own discretion. While
strongly relying both upon their legal right and the justice of
their claim, the railway companies were willing to submit proposals
to the consideration of Parliament for a re-settlement of their
powers in this respect. But they expressly provided that the
Railway Commissioners should have power to hear and determine any
question or dispute which might arise with respect to the amount
or reasonableness of any terminal charge made by the company, and
that any decision of the Commissioners as to terminal charges should
be binding and conclusive on all Courts and in all proceedings
whatsoever;” words borrowed from s. 15 of the Regulation of Railways
Act, 1873.
[44] Report to Associated Chambers of Commerce.
[45] “The claim of railways to charge terminals would have to
be considered if mileage rates are adopted in principle. That
charge could in no wise be left to the discretion of the railways
themselves, as was proposed in the Bills of last Session.”--Sir B.
SAMUELSON.
A few details as to the law and practice on this subject in
Continental countries may be useful. And, first, as to Germany. When
the question of the introduction of a new tariff for the German
railways was under consideration, it was agreed that in previously
fixing the railway rates, sufficient consideration had not been
given to the expense incurred at the sending and receiving stations,
irrespective of the distance the traffic was carried. The result
of the calculations which were made was that those expenses should
be estimated at 12 marks per truck load of ten tons. This was
accordingly adopted as the standard figure for all goods carried
in wagon loads, while for small consignments the charge was fixed
at 20 marks. The addition of those normal allowances to the rates
on traffic to be carried short distances would have considerably
increased the charges previously made. It was accordingly agreed,
as a compromise, to graduate the terminal charges for short
distances; the graduation being simply the means of avoiding what
might have been considered a large increase in the railway rates,
in consequence of the adoption of the “reform tariff system.” These
terminals represent the working expenses at the forwarding and
receiving stations, the labour of receiving the goods from sender,
marshalling or shunting the trucks to the sidings set apart for the
delivery of the goods, and also the expense incurred by railway
companies for stationery and clerkage; but they do not include the
expense of loading and unloading, except in the case of _Grande
Vitesse_ and “_Piece Goods_,” They vary from 10d. per ton in full
truck loads of 10 tons, to 2s. per ton of general goods, and in the
special tariff classes, which include minerals, from 7¼d. in full
trucks of 10 tons to 1s. 2½d. per ton.
In Belgium there is a fixed charge of 1 fr. per ton of 1,000
kilogrammes for the use of station and for clerkage; but it does
not include loading and unloading, or booking, counting, or advice
of arrival of goods, for all of which services extra charges are
authorised and, in fact, made. This is practically a terminal charge.
In Holland the terminal charges vary from 1s. 2d. to 1s. 6d. per
ton in the truck load classes, and 2s. 6d. per ton in respect of
ordinary or “_piece_” goods in quantities of less than 5 tons. In
the latter case the cost of loading and unloading is included in the
terminal charge, but not in the truck load classes. In neither case
are weighing, counting, stamping freight note, labelling or advice
of arrival included. For all of these services extra charges are
made.
In France only small charges varying from 20 cents. per ton for
goods in full truck loads, to 35 cents. per ton for goods in less
quantities, are made for the use of stations, though there are
various charges for loading and unloading, booking, advice of
arrival, and other services. Either, therefore, the traffic for
short distances is carried at a loss, or no adequate return to cover
the use of station and conveyance is obtained--a course, which,
assuming the outlay upon a railway is entitled to a fair return, is
opposed to sound commercial principles.[46]
[46] NOTE.--The terminals authorised and charged in these countries
will be found fully set out in a tabular form in the Appendix III.
SECTION XII.
THE CONSTRUCTION OF RAILWAYS IN ENGLAND AND ON THE CONTINENT.
Sometimes it is asserted, although it is more often taken for
granted, that all railway rates on the Continent are more favourable
to traders than English rates. Upon this assumption is based the
contention that the reduction of the latter may fairly be demanded.
Whenever such statements have been carefully examined--_e.g._ in
the inquiry before the Joint Committee of 1872--they have been
proved to be erroneous. Nevertheless, they are still constantly
repeated. More than once it has been publicly stated that in
Germany, Holland, Belgium, &c., “rates are fixed on a scientific
basis, and an intelligible principle,” while in this country they
are “haphazard and estimates.” Seldom is there any attempt to make
good such assertions and criticisms. The report made by Sir Bernhard
Samuelson to the President of the Association of the Chambers of
Commerce of the United Kingdom on the “Railway Goods Tariffs of
Germany, Belgium, and Holland, compared with those of this country”
is an exception, and on that account is specially important. That
report endeavours to prove by figures that rates in this country
are excessive. It has been cited--though, probabl
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