James Grierson

“ Here it is not right to stand merely on the defensive; we are well warranted in saying that if, fortunately, trade is not more depressed than it is, we owe this in no small degree to the efficiency of the railway system which has aided the manufacturer and producer in their difficulties. Economists are agreed that wages and salaries must bear some relation to cost of living, and must eventually rise if that becomes permanently dearer. Everywhere, but in great towns especially, railways have prevented the rise in the cost of provisions. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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 is a curious circumstance that in the discussion of the problem of railway rates on the Continent, wholly different language is employed with reference to English railways. Here, it is common to hold up foreign railways as models of cheapness and efficiency; there, in the discussions which have taken place in France and Italy on the same subject, the opposite course has been pursued. English railways have been extolled as worthy of imitation; they have often been praised for the very qualities in which it has been alleged in recent discussions that they are wanting. ”

“ 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? ”

“ 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 [Pg 15] 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. ”

“ 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? ”

“ They observe that “if goods of the same kind are carried to the same destination over the same railway for distances that are not the same, and the gross charge from the intermediate distance is as great as from the more distant one, there is a preference of one traffic over the other within the meaning of the Traffic Act of 1854; and that it is not sufficient to rebut this presumption to show that the charge for the longer distance has been reduced to meet a competition from another route.” ”

“ The house and steam coal raised at some of the English collieries named in the foregoing tables is probably the best in the world. The iron and steel are equal, if not superior, to any produced; and the districts in which the collieries and works are situated can (if only there were the demand, which, unfortunately, there is not) produce much more than they do. In these circumstances, with rates so favourable as those which are quoted, there appears to be absolutely no ground for the crude allegation that railway rates are the cause of the diminished exportation of either coal, iron, or steel. ”

“ It is alleged that the railway system is not properly managed, and that in some way—how it is rarely explained—the railways might be more profitably worked; that even if considerably reduced rates were charged, as good, or a better, dividend might be earned; or that as a consequence of reducing rates such additional traffic would be carried that the loss would be more than covered by the increased trade. Now, no doubt undue competition between companies exists. The largest possible amount of net revenue is not always obtained. ”

“ From long experience the existing companies know that nearly all the schemes which are at first brought out as independent competing lines will sooner or later be pressing to be worked or leased, or be in the market, and that the promoters of any of them not taken over, will be continually making applications to Parliament or to the Railway Commissioners, posing, not as an aggressive, but as an ill-used company, and harassing its neighbours with a view to be purchased or to levy blackmail. ”

“ 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 ”

“ Among the multifarious complaints against railway companies is one to the effect that companies, instead of competing with and underbidding each other, combine to charge equal rates. This is an illustration of the curious inconsistencies of some of those who criticise the working of railways. Such a practice would be, as will be seen in the next chapter, opposed to the ideas of others who urge that rates should be based on scientific and uniform principles. ”

“ 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. ”

“ If railways in this country do not carry all species of merchandise traffic at as low rates per ton per mile as some of those charged on railways in countries where, not only has the cost of construction been less than here, but where the lines are owned or subsidised by the State, such a fact is not conclusive. To determine how far rates charged in this country really affect the ability of manufacturers to compete with foreign rivals, the charges per ton per mile must not alone be considered. The gross rate per ton from the place of production to the port of export is important. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ 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 ”

“ 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.” ”

“ The same difficulty lies in the way of attempting to protect the people by the adoption of maximum rates. What would be a reasonable maximum upon one road would not be reasonable upon others. A maximum high enough to protect the railroads against harm would be too high to benefit the people on most of the roads, and a maximum low enough to protect the people on some roads would be ruinous to the interests of many other roads, so that it is not believed best to attempt to protect the interests of the public by the legislative rates or by the maximum rates. ”

“ 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 [Pg 7] 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. ”

“ Such statutes as the Railway and Canal Traffic Act of 1854, and the Regulation of Railways Act, 1873, exhibit an inclination on the part of Parliament to jealously limit the powers granted to the companies. The tendency of the Courts of Law has been to construe the Acts strictly against companies and give the public the benefit of all doubtful points. ”

“ 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. ”

“ 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 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 ”