Edwin A. Pratt

“ It will be seen that the taxation of a railway line—as distinct from that of railway buildings—is, to all intents and purposes, the enforcement of a toll, on all traffic carried, for the privilege of passing through the parish concerned; while there is no suggestion, as there was in the case of turnpike roads, that those who collect the toll confer an advantage on those by whom the toll is paid. ”

“ While the control through the board of directors and the general manager is complete yet, at the same time, it would be impossible to keep pace with the rapidity with which business is done at the present day unless the district officers were able to act on their own responsibility in those cases where time did not permit of matters going through the usual routine, and for that reason the district officers of a company like the London and North-Western are capable men who are able, and are encouraged, to take full responsibility when it is necessary for them to do so. ”

“ The considerations here presented in regard to the general question of railway taxation are strengthened by the fact that, although a railway company is a commercial enterprise, it has not the facilities possessed by commercial enterprises in general in meeting any increase in cost of production or working expenses by an increase in its charges to the consumer, or the person equivalent thereto. In this respect an ordinary industrial concern, producing goods for sale, is a free agent to the extent that it is restrained in its charges only by market and economic conditions ”

“ Naturally, when a Government owns the railways, it is much more interested in checking excessive taxation of the lines by the local authorities than when the railways are owned by commercial companies; and one of the questions to which proposals in regard to the nationalisation of the British railways gives rise is whether, when the Government owned the railways, they would be willing to continue the payment from the railway revenues of all the taxation which local authorities are now able to exact from the railway companies. ”

“ The directors are appointed by the shareholders, all of whom have the right to express their views thereon at the half-yearly meetings of the company; and when it is stated that the number of shareholders—debenture, preferred and ordinary—in the North-Western is 100,000, representing 90,000 holdings, and that in 45,000 cases the holding is £500 or under, it will be seen that an English railway company is a far more democratic institution than one of those great railroad systems in the United States which may be completely dominated by a single individual. ”

“ Being thus enabled to depend for the greater part of their revenue on railway companies, who are given the privilege of paying but are denied the privilege of representation or of having any voice in the way the money they contribute shall be spent, there are local communities which show the greater readiness to carry out comparatively costly lighting, drainage, education, road improvement or other such schemes because it is a railway company that will pay most of the cost, the proportion thereof falling on the great bulk of the individual ratepayers in the parish being thus inconsiderable. ”

“ There are those who regard railway shareholders as "capitalists," and consider that the keeping of railway dividends at a low level, together with any depreciation in the value of railway stock that may result therefrom, are matters only likely to affect a comparatively few wealthy men, and not, therefore, of material concern to the country so long as the railways give the best possible service at the lowest possible rates. ”

“ The system of assessing railways for the purpose of local rating is one of extreme complexity. It grew out of the earlier system of the taxation of canals, and, had the railway companies fulfilled the original expectation of being simply owners of their lines and not themselves carriers, the principles on which the system was based might have applied equally well to rail as to canal transport. ”

“ In practice it is not unusual for a retiring general manager to be invited to take a seat on the board either of his own or of another company; but, generally speaking, the main qualification for a railway director, apart from the extent of his holding, is found in his possession, or assumed possession, of good business qualities, coupled with an interest in some particular part of the district the railway serves. ”

“ The alternative for a railway company lies in the possibility of reducing expenses; but there are limitations in this direction if perfect efficiency in all branches of the service is to be maintained, and no one would be likely to suggest that these exactions of local authorities should be made good by reductions in, for example, that especially large item of working expenses represented by the wages of railway servants. ”

“ The railway company, on the other hand, provide and maintain their own road, without putting the parish to the slightest expense, yet the parish is authorised to levy upon them what is, not only a toll, but a supplementary Income Tax for local purposes, based on the principle of the profits the company are supposed to make in the parish, often only because, for geographical reasons, it is necessary their lines should pass through it in going from one part of the country to another. ”

“ But a practice held in the sixteenth century to be unjust in itself as well as prejudicial to the interests of trade, and penalised by the Legislature accordingly, is considered quite right and proper, and receives express legislative sanction, in the twentieth century, though the local authorities upon whom the toll-privilege is conferred to-day may do no more to help the railways than Worcester and Gloucester and the other Severn towns did to help the river traffic—and that was nothing at all. ”

“ Meanwhile, and pending the long-delayed action by the Legislature, the railway companies have themselves done what they could to protect the interests of those they represent, or of those for whose wants they cater, by appealing against excessive and unjust assessments, and in many of these appeals they have been successful. Such appeals have been warranted, not alone by unfair increases of assessments but by the fact that taxation based on earning powers ought to be reduced as those earning powers decline ”

“ At the majority of the company's stations there is an agent, popularly known as the station master, who is in charge of both the passenger and the goods traffic; and at the larger stations the work is divided between a station master—who attends to passenger traffic, and is accountable to the district superintendent—and a goods agent, who is responsible for the goods work, and is under the control of the district goods manager. ”

“ No fewer than 82,000 persons are included in the industrial army which to-day constitutes the staff of the London and North-Western Railway. Of this total 11,000 are salaried officers and clerks and 71,000 are employed at weekly wages. A company which employs such a multitude as this, and, indirectly, ensures sustenance to a much greater number of persons, incurs obligations that are not met entirely by a stated salary or wage. ”

“ In the United Kingdom, however, the ownership of the railways is distributed among a far greater number of persons than is the case in the United States, where the control and the dividends of a great railway system may alike be in the hands mainly of a few financiers. ”

“ To-day, however, these contributions, which occur every year, are booked either to the general expenses account or the wages account—for they are, in fact, a part of wages—and they are naturally calculated as part of the cost of production, and eventually appear in the price of the goods, though perhaps not to the full extent in times of bad trade. ”

“ Clear, at least, it is that if both the Government and the local authorities continue to pile up these burdens of taxation on transport companies, themselves subject to the restrictions mentioned, the traders of the country cannot expect much relief in the railway rates of which many of them complain. It may be that the primary effect of the financial conditions thus brought about falls on the railway shareholders. It is, also, the case that the traders are well assured against any increase in rates. ”

“ The system of control over the expenditure of the Company's money is a very complete one. The general theory is that no expenditure is incurred without the direct sanction of the directors, expressed by a minute of some committee approved by the board. The district officers are, indeed, allowed to make small necessary payments, but for these vouchers are submitted monthly and, after being carefully examined, are passed by the Finance Committee. ”

“ Railway directors who, going beyond their legitimate functions as aforesaid, sought to interfere with or dictate to skilled railwaymen on matters of ordinary detail or office routine would, in fact, cause friction without necessarily promoting efficiency in operation. ”

“ It will be seen from the figures relating to track mileage in the United Kingdom that there is at least one mile of railway in the United Kingdom which really consists of nineteen pairs of rails alongside one another, though counting, in length of line, as only a single mile. In the United States there seems to be no suggestion of any railroad having more than four tracks. ”

“ One result of the power thus given to local authorities to bleed the railway companies as an easy and convenient method of providing themselves with funds is that in a large number of parishes throughout the country a railway company pays the bulk of the rates, even though it may not even have a railway station in the place. ”

“ Since comparisons are frequently made between English and German railway rates, with a view to showing that the former are higher than the latter, it may be of interest to compare, also, the amount paid for taxation by the railways of the United Kingdom with the corresponding payments of the Prussian State railways. The length of line of the two systems is approximately the same; yet while the taxation of the British system comes to £5,000,000 a year, that of the Prussian State railways is only £750,000 a year. ”

“ I am convinced that when the social legislation was introduced, and for the first time the large contributions for sickness insurance and later for old age and infirmity insurance had to be paid, many of us groaned. ”

“ What is happening to a large extent is that rural centres are providing themselves with urban luxuries at the cost of the railway companies—that is to say, at the cost either of the railway shareholders or of the railway users or both together. ”

“ In Dublin there is an Irish traffic manager who takes charge of all the interests of the company in Ireland, and there are agents in Paris and New York who look after the Continental and American business. ”

“ But the traders suffer a disadvantage as well as the shareholders because, though the railway companies may be prevented from raising their rates, they may, also, find it practically impossible to reduce rates which they would otherwise be willing to put on a lower scale. On the one hand the traders are protected from being charged more. On the other hand they are prevented from being charged less. They may not lose, but they may not gain ”

“ The average fare per passenger carried, and the rates per ton for goods and minerals handled, have fallen enormously; while, at the same time, working expenses have been continually going up, mainly owing to the demands for higher wages and shorter hours of employment, and the more stringent regulations of the Board of Trade as to block-telegraph working, brake-power, etc. Further, the increased gross or net revenues could not have been earned without a large capital expenditure for additional and more costly plant. ”

“ Whatever the difficulties which have attended the development of British railways, the lines themselves have been spread throughout the three kingdoms to such an extent that there are now very few districts not within easy reach of a railway ”

“ The cost of construction of the railway does not enter into consideration at all. The calculations are on what is called the "parochial earnings principle"—that is to say, the amount earned in the parish, and not the amount received from traffic arising in the parish. The railway company may have no station in the place, and the amount of traffic derived from the parish may be practically nil ”

“ The following table shows how the sum total of the payments both for rates and taxes and for Government duty in the years from 1900 to 1910 work out (a) per train mile and (b) per mile of open railway:—
This question of the taxation of railways is a matter of material concern as regards (1) the direct results thereof on (a) rates and charges and (b) dividends paid—or not paid; and (2) the general policy of the State towards the whole problem of internal communication. ”

“ On page 114 I have told how, in the early part of the sixteenth century, the local authorities of Worcester, Gloucester and other towns on the Severn sought to raise funds for their local exchequers by taxing the traders who used the river for the transport of their commodities; and I have further told how, in 1532, it was enacted that any person attempting to enforce such toll or tax should be fined forty shillings. ”

“ On the other hand, there is the fact that many of the single investments are those of friendly societies, trade unions, or other organisations representing the interests and dealing with the savings of a large number of members of the artisan class. ”