THE RAILWAYS AND THE TRADERS.*
WE must congratulate Mr. Acworth upon having written a very interesting book on what is prima facie a very dull sub- ject. Railway-rates do not sound a particularly exciting theme, but the writer of the work before us has contrived to endow them with life and interest. His book is another proof of the literary axiom that technicalities are not dull in themselves. It is the way in which they are handled, not the facts, which are tedious. A badly composed Life of Queen Elizabeth may be a hundred times duller than a well-written treatise on the disposal of sewage in large towns.
The problem of railway-rates, of which Mr. Acworth treats, may be gathered in brief from the following statement. The ex- penses incurred in running a train are derived from two different sources. First, there is the share of the permanent charges of the line, to which each train must contribute its quota. These are charges incurred in paying interest on the capital expended in making and keeping up the line and the stations, and in paying station-masters, signalmen, and other officials, —in fact, in contributing towards an establishment without which no train could run at all. Next, there are the special expenses incidental to a particular train, which would not be incurred unless it ran. They include the "rent" of the engine and trucks, the cost of fuel, and the pay of engine-driver, stoker, and guard. Now, it is clear that if a train is to be started, and is to run regularly, both these kinds of expense must be remembered in the price asked for the transportation of goods. If not, there will be a loss. But now, suppose a train once established, and carrying goods at a certain charge per ton, which charge is more than the Company's out-of-pocket expenses over the particular train. It is obvious that additional goods can be carried at a much lower rate. If the Companies charge only a little over the cost of the extra fuel and labour which the haulage of the addi- tional goods will require, they will make a clear profit. Hence it happens that when once a train-service is established which pays its way, the Company begins to look about for this addi- tional traffic, which is sure to bring in a clear profit. In order to attract it to their line, they can and do, therefore, offer very much lower rates than are paid by the traders who contribute to what we may term the ground-expenses of the train. The
Company argue We have got our train running. It may as well run full as empty. It is therefore worth our while to offer rates only a little above our extra out-of-pocket expenses in order to fill it." In this way it happens that railway-rates are almost of necessity so arranged that certain goods pay their full share of every expense incurred on the line, while others only pay a trifle over the out-of-pocket expenses of haulage. But this being the case,
• The Railways and the Traders: a Sketch of the Railway-Rates Question in Theory and Practice. By W. M. Acworth. London John Murray. 1891. the railways have, or appear to have it in their power to choose who shall pay the high and who the low rates. Naturally, then, each class of traders is extremely anxious that it shall gain the advantage of being held to be supplying the " additional traffic." Those who get the cheap rates are, of course, satisfied. Those who do not, however, consider that they have been unfairly discriminated against, and clamour for legislation to prevent the Railway Companies giving cheaper rates to one class of goods than another. This is the most important aspect of the railway problem in brief. The answer of the Companies is as follows. They say :—` We admit that the necessities of the case make us seem to treat certain traders better than others, but there is nothing really unfair in what we do. If we discriminate, our discrimination is based on a perfectly fair and reasonable principle. We impose our rates heavily or lightly according as the traffic will bear it. We only give the cheap rates, which bear but a very small propor- tion of the permanent charges of service, when we know that if we did not, we should not get the traffic at all. For example, suppose we have got a train-service running at certain rates which are too high to allow, say, potatoes to be carried by them, though a great many potatoes would be sent on our line if we reduced the rates. Now, we can do under these circumstances one of three things. We can reduce the rates for everything down to the level where we shall catch the potatoes ; we can leave matters as they are ; or, again, we can make a special low rate for potatoes which will get us a small profit over out-of-pocket haulage ex-
penses. On examination of the details, it turns out, however, that we cannot cut down all the rates to the level at which we shall make it worth the farmers' while to send potatoes, for to do so would force us to work our train- service at a dead loss. We can, therefore, either keep up the high rate for everything, and so give no one an advantage, or make the special potato rate. If we make a special potato rate, the other traders will, of course, declare they are being made to pay part of the cost of hauling potatoes, and this is no doubt theoretically true. These aggrieved traders must remember, however, that they are really acting the part of the dog in the manger. They cannot possibly have the low rates for themselves, therefore they are not injured by another trader having it.' On these grounds the Railway Com- panies declare that they have a perfect right to dis- criminate. They only discriminate, they declare, in order to get traffic which otherwise would not exist at all. In fact, they reply to the traders who pay the higher rates, in the spirit of the parable of the workers in the vineyard. They do no injury to one set of traders by benefiting another. Further, the Railway Companies urge that the possession of the right of discrimination gives them great opportunities for helping the public, and for securing to them benefits of competition which they would not otherwise obtain. To this the traders answer that the power wielded by the Companies is too great. The result of the present system is to put it in the hands of rail- way managers to make or unmake cities and industries at will. Geographical advantages, they complain, are often annihilated by a Railway Company's decision as to rates, and a manufacturer is not unfrequently forced to help his rival to undersell him. He pays high to keep up a cheap train-service for his competitor. Looked at from the point of view of the trader, these complaints are doubtless valid enough ; but if we consider the question from that of the public, it is a different matter. The exercise by the Companies of the power of discrimination greatly tends to do away with the monopolies created by geographical position, and so to cheapen manufactures and produce of all kinds to the producer.
We have no intention on the present occasion of attempting to decide absolutely between the rival claims. We are, however, inclined to believe that the ideal plan would be to leave it to the Companies and the traders to fight the matter out among themselves. If, however, this is to be the rule, the State must do far more to encourage com- petition in transport than it does at present. If there were free competition in railways, there would be no more a railway-rates question than a shipping-freights question. No doubt it will be said that competition never acts in railways, because it always ends in combination, and we shall be reminded of George Stephenson's axiom " Where combination is possible, competition is impossible." We think, however, that it can be shown, as Mr. Acworth seems to assert, that a great deal of the so-called com- bination is really competition, though competition con- centrated by agreement in particular things. Railways,
when they combine to charge similar rates, are really com- peting very eagerly in "facilities,"—that is, in speed, com- fort, &c. We believe, therefore, that the true remedy will be to leave the railways to fix their own rates, but to make the digging of canals and the construction of short lines of steam-tramways far easier than at present. These are the competitors which will make railway-rates reasonable. There are many parts of England where good steam-tram lines following the course of the highways—there would often be room enough at the edge of the existing roads—would reduce railway-rates far more effectively than any Commission. The houses, the farms, the mills, the factories, and the villages and towns are all built on the roads ; therefore steam-trams running by or through them would prove an enormous convenience. Again, the digging of ship-canals will tend very greatly to re- duce rates, for ship-canals bring the sea inland, and the sea, as Mr. Acworth shows, is the competitor the railways are most affected by. As long, however, as our system of making public improvements by private Act of Parliament is adhered to, we shall find these competitors come slowly into the field. The fact that we are so far behind the Continent in the matter of steam-tramways laid beside the roads is due almost en- tirely to our system of private-Bill legislation. What we want is a system under which the powers of compulsory pur- chase, now wielded by Parliament, shall be given to any two Judges of the High Court, who shall hear evidence and decide, under the forms of a suit at law, whether the proposed com- pulsory purchase is for the public benefit. If they decide it is, the Company should be empowered to buy under the Lands Clauses Act. If, however, Parliament cannot be induced to adopt a system under which competition in transportation shall be encouraged instead of prevented, we admit that it is probably necessary to do something to regulate rates. Whether the regulations proposed by Lord Balfour's Commission are wise, or even practicable, we cannot pretend to say. Mr. Acworth believes them not to be so. Here is his opinion. It is true he is the advocate of the railways, but we confess that his remarks seem to rest upon reason and common-sense :—
" Whether the existing competition in facilities will continue in full force as at present, remains to be seen. It is more probable that facilities, too, will be gradually but steadily diminished, and a policy of cheese-paring and stagnation take the place of one of expansion and encouragement to trade. If this be so, the traders and the public will have lost tenfold more than they can ever dream of gaining by petty and nagging reductions of existing rates. No one who knows what a hindrance to real business this long protracted duel between the companies and the traders has been—for it has lasted now almost without intermission for a decade—can doubt that it is in the public interest that the ques- tion should be settled. But the present writer is so firmly per- suaded that the present settlement can settle nothing, that the traders who have gained trifling reductions will still be dissatis- fied, and that the other traders, on to whose shoulders the com- panies will attempt to transfer some portion of their loss, will be tenfold more so, that for his own part, if Parliament cannot satis- factorily amend the Provisional Orders, he would be thankful to see them rejected altogether, and the question left open for settle- ment hereafter, and possibly under more favourable auspices."
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