Road versus Rail
The Economics of Transport. By M. II. Bonavia. (Nisbet. -5s.)
THE Cambridge Economic Handbooks provide a most useful series, written by economists for the layman with full recog- nition of the essential difficulties inherent in the subject. This volume is a notable addition to the series. Within the space of 197 pages Mr. Bonavia covers the organisation of transport by sea, river, canal, road and rail with sufficient economic analysis and historical background to explain the present problems.
The outstanding problem in transport at present is the growing competition of the roads with the railways ; and the regulation of this competition well illustrates the economic problems of monopoly and State control, to which transport almost invariably gives rise. The railways, which are necessarily monopolistic in organisation, charge higher rates for those classes of traffic which can bear a higher charge. Competitive road transport has naturally attracted that type of transport for which the railway charges are highest, although this is not necessarily the transport which the roads can carry more cheaply. There are, broadly speaking, two ways suggested for preventing this uneoopornie use of the community's transport resources. A single public mono- poly, controlling both road and rail transport, would theo- retically eliminate the waste. For, in Mr. Bonavia's words, " it will obviously be to the monopolist's advantage to despatch each unit of traffic by the most economical route:'
But what would be the position of private passenger cars, or of lorries operated for their own transport by individual producers ? And can we find suitable organisation and personnel efficiently to operate such a gigantic concern ?
If these difficulties are too great, is it not possible to regulate the conditions of competition between mad and rail, so that each system bears its full social costs, and to leave it to flee competition between them to attract each unit of traffic to that system which incurs the smaller cost ? Here Mr. Bonavia's analysis misses an essential point. A unit of traffic should be carried by rail rather than by road, if the extra cost incurred by the railway is less than the extra Bost that would be incurred by the road system ; and the railway will attract such transport from the roads, only if it charges a rate as low as the extra cost involved in taking this additional writ of transport. But fair conditions of competition between the rail and road will not necessarily enable the railways to charge so low a rate. For this would include only the cost of any additional labour, raw materials or wear and tear of capital involved, and would make no contribution to its fixed charges for stations, signals, permanent way, &c. ; and in consequence, the railways might be operated at a considerable loss. This greatly strengthens the ease for a public monopoly of transport, which could charge rates for transport high enough to avoid making a loss, and could then allocate each unit of traffic to that particular system on which the extra cost involved was lowest. But if the practical difficulties in the way of a public transport-monopoly are too great, we must be content with attempts to find a fair basis of competition between the different systems, recognising at the same time that some waste may be involved.
J. E. MEADE.