Part 17

This canal was authorised by an Act of 1794. The canal is between Newbury and Bath, a distance of 57 miles. But the water communication is extended beyond Newbury on the one side to Reading by means of the River Kennet, and from Bath to near Bristol on the other side by means of the River Avon. The total navigable distance between the points named is 86½ miles. This canal is joined by the Wilts and Berks canal (which is connected with the Thames by the Thames and Severn canal) and the Somersetshire Coal canal. Thus the Kennet and Avon canal forms part of an extensive system of waterways, by communicating direct with the Thames on the one hand and the Severn on the other. The total cost of the Kennet and Avon canal was £1,011,589. It was opened in 1810, from which date, up to 1813, no separate accounts of capital and revenue were kept. But the returns from 1813 show that the receipts of the canal gradually increased from £22,075 gross and £11,843 net in 1813 to £58,820 gross and £39,113 net in 1840. The opening of the Great Western Company’s line between Reading and Bath in 1840-41 seriously affected the canal revenue. The canal company applied to Parliament for powers to construct a railway alongside their canal. Failing in that project, they in 1848 availed themselves of the powers of the General Canal Act, and entered upon the carrying business, from which, however, they derived little profit. In fact the first year was the only year when the revenue derived from the carrying business exceeded the expenses. The opening of the line of railway between Chippenham and Trowbridge in 1848-50 still further injured the canal traffic. The canal company offered to transfer their undertaking to the Great Western Company; and the terms for such transfer were agreed and approved by Parliament in 1852. In sanctioning the arrangement, Parliament, however, imposed upon the Great Western Company the condition that, if at any time the canal tolls were complained of as, in comparison with those of the railway, prejudicially affecting traders on the canal, the Board of Trade should make such regulations and fix such tolls as they might think fit. In 1867-1868 the traders using the canal memorialized the Board of Trade to reduce the tolls. An Arbitrator, who was appointed, reported in favour of a reduction, which was accordingly carried out. The tolls thus fixed were charged up to 1877, when the traders again memorialized the Board of Trade. The matter was referred to the Railway Commissioners, before whom it was given in evidence that if further reductions were made on certain articles constituting the chief trade of the canal, the traffic would materially increase. The Railway Commissioners thereupon reduced the tolls upon those articles from 1d. per ton per mile with a maximum of 6s., to ½d. per ton per mile with a maximum, for the whole distance of 86½ miles, of 2s. But the statements of the traders that an increase of the traffic would follow upon a reduction of the tolls have been found to be entirely baseless. Notwithstanding this great reduction, the traffic had fallen from 159,190 tons in 1876, to 125,807 in 1885.

The gross receipts in the year 1840 were, as already stated, £58,820; in 1848 they had fallen to £33,205; in 1852, when the canal was taken over by the Great Western Company, to £24,291, and in 1885 to £4,237. The canal has been maintained in an efficient state of repair by the Great Western Company, in accordance with the obligation imposed upon them by their Act of 1852, and the navigation has been always kept open. Notwithstanding the large reductions in the tolls, the traffic has year by year diminished, until in 1885 the expenses considerably exceeded the receipts, without taking into account the interest (between £7,000 and £8,000 a year) which the company have to pay upon the capital expended in acquiring the canal undertaking. These are weighty facts. Although the Great Western Company purchased the Kennet and Avon canal, pay interest on the purchase money, and maintain it, and although they are deprived of the power to fix the tolls upon the canal, and have had to submit to two reductions--the maximum under the latter arrangement being for the whole length of the canal little more than one farthing per ton per mile in respect of any description of goods--the traffic has continued to fall off. The tolls do not yield sufficient to pay the salaries and wages of the working staff, or even the actual cost of the labour and materials necessary for maintenance and repairs.

The foregoing illustration, may help to correct the statements which have been made as to the conduct of railway companies in the capacity of owners or workers of canals. Not only the Kennet and Avon canal, but, it is probable, all the other canals which have been taken over by the Great Western Company, must have been closed years ago if they had remained in the possession of the canal companies. The public have, in fact, had the opportunity of availing themselves of the water carriage when it was to their interest to do so, just because the railway company took over the canals and kept them in working order.

Though every railway company owning or managing a canal may be compelled under the Section cited on page 193 to keep it in repair, only one application for that purpose has been made to the Railway Commissioners. This is scarcely consistent with the loose, unverified accusations as to the shortcomings of railway companies. Besides, it is not true that the whole canal system has passed under the influence of railways. Of the 3,029 miles of canals in Great Britain, 1,592½ miles are owned or managed by other than railway companies.[108] An examination of the map prepared by Mr. Abernethy, C.E., for the Select Committee of 1883, shows, that south of a line passing through Worcester, Birmingham, Nottingham and Hull, there is scarcely a canal of any importance, with the exception of the Kennet and Avon canal, between Bath and Reading, permanently, temporarily, or partially in the hands of a railway company.

[108] Appendix to Report of Select Committee on Canals, page 214, “These lengths are exclusive of the River Thames, Severn, Wye, Humber, Wear, and Tyne in England; the Rivers Clyde, Forth, Tay, and the Caledonian Ship Canal in Scotland; the Shannon and other navigations in Ireland.” According to Mr. Taunton’s Report, the canals and navigable rivers in England, Wales, and Scotland under control of railways are 1,447 miles as against 2,335, which are independent of railway companies (Appendix 228.)

The fact appears to be that canals flourish only where certain conditions exist. Where a large traffic can be conveyed in full boatloads; where the country is flat, and there are consequently few locks; where large vessels propelled by steam can be used; where works are so situated that the cost of collection or delivery can be saved; in such circumstances, canals are suitable for coal, chalk, cotton, stone, bricks, pig-iron, round timber, grain, &c., and such like goods carried in large quantities, or for short distances. They can, no doubt, when such conditions exist, be beneficially used at a low cost for carriage; but for traffic not large, or composed of a great variety of articles, which have to be collected in small quantities from different places, or to be distributed all over the country, canals cannot successfully compete with railways. Want of water in dry summers, interruptions from ice in winter, and diversity of gauges in locks and tunnels--all matters which add to cost--are great inconveniences, and grave objections to water carriage. Often carriage by canal necessitates the erection of warehouses for storing goods, which is saved by the transit of traffic by rail. The speed and despatch demanded by the modern necessities of trade have tended to throw upon the railway more and more of the traffic which formerly went by canals, as well as the increase in the traffic of the country. In Staffordshire, canal boats meet from all the principal towns such as Manchester, Liverpool, and parts of Yorkshire in the North, and London and Bristol in the South; _but no through traffic is exchanged_. All the traffic of Staffordshire in iron, hardware, chains, anchors, nails, &c., outwards, and grain, timber, spelter, bone, manures, &c. inwards, requiring speed, is carried by railways. Where the canal charges are equal to, or lower than, the railway rates, the railways and canals divide the traffic. Newly-opened collieries and works are now, as a rule, laid out for loading into railway wagons, not into boats, because railway stations and railway trucks give greater facilities for distribution of coal to all parts of the country. No doubt certain large canals--for example, the Aire and Calder, Bridgwater, and the Leeds and Liverpool--can be profitably worked in their exceptional circumstances, as they possess a plentiful supply of water, and traverse a long stretch of comparatively level country. Where such conditions exist for distances of fifty to sixty miles, canals may compete successfully for heavy traffic with railways.

Nor have the proprietors of canals done the utmost to overcome inherent disadvantages. The existing inland system, with only 7-feet locks, is inadequate. The canals are too shallow; they are wasteful in the consumption of water; and they cannot be worked economically. The cost of working larger boats of 300 tons on suitable canals, hauled by steam, and loaded and unloaded by the best appliances of steam cranes would, of course, be much less expensive than that of working the boats of, say 30 to 60 tons, now used.

The cost of haulage on the narrow canals is much in excess of the cost of conveyance by rail, and the difference remains,[109] notwithstanding all efforts to improve the canals; efforts which, to be really useful, it was estimated would cost about £12,000 a mile. Mr. F. Morton, a canal carrier, stated that his firm lost from £100 to £150 per boat, per year, on certain of their “Fly” or quick boats, which were worked as an auxiliary to their general business with a view to compete with the railways, and help to retain that portion of the “Slow” traffic which they still have.

[109] See evidence before the Select Committee on Canals, in 1883.

In countries possessing a large network of canals and other waterways--in France, Holland, and Germany (the Rhine provinces) for example--and where railway accommodation is not so complete as in this country, canals are necessarily important channels of communication. In France the waterways consist of--

Miles Navigable rivers 4,627 Canals 2,967 ----- 7,594

Except 534 miles the whole of the mileage is the property of the State, and canals have been artificially fostered by it. According to a report prepared by M. Krantz, in 1872, and submitted to the Select Committee on Canals in 1883, the expenditure upon the waterways in France was on that date £32,738,715 on canals, and £13,557,867 on rivers, a total of £46,296,582, while the cost of maintenance for the year was upwards of £336,000[110].

[110] M. de Foville says (1880) “_Sur les canaux de l’Etat, la suppression totale des droits de navigation sera peut être bientôt un fait accompli_” p 134.

In Belgium the aggregate length of the canals and navigable rivers is 1,254 miles, seven-eighths of which belong to the State. On a great portion no toll is charged; and on the remainder, sums varying from 3¼d. to 1s. 1d. per ton per 100 miles.

In Holland there are nearly 3,000 miles of canals and waterways, the former of which practically belong to the State.

If the explanation which has been given be not correct--if the great obstacle to the success of canals in this country be not their inferiority, as compared with railways, in the carriage of goods to answer the needs of trade--why have no new canals been made for some fourteen or fifteen years? They cost much less per mile than railways, and their maintenance expenses are not so heavy. That they are falling into decay in this country when left in private hands, is due, in the main, to the fact that this country is well supplied with railway accommodation, and that for most kinds of merchandise they are not such an efficient mode of transport as railways.[111]

[111] There is a large mileage of canals belonging to canal companies, and considering the views expressed by some as to the use which could be made of the canals which belong to the railway companies, it would have been instructive if the proprietors of all the independent canals had shown by the manner in which they had maintained and worked them, that the railway companies’ canals could be more profitably and usefully worked than they now are.

CONCLUSION.

The chief complaints which have been discussed fall under two heads; first, the statements expressed in many forms that rates on the Continent are lower than rates here, that this difference injures our trade, and that English railway rates ought therefore, to be reduced; secondly, that rates are based on no principle, that a scientific system ought to be adopted, and that import, transit, and certain other special rates, as the greatest anomalies, ought to be prohibited. A few words remain to be said to summarise my arguments as to each of these statements.

The facts and figures mentioned at pages 144-8, and elsewhere have shown, it is hoped, that for instance, the exportation of iron or coal--the articles more often mentioned in the controversy--is not prejudiced by the railway rates charged in England as compared with those charged abroad. There has been, undoubtedly, some loss of trade in particular markets. For instance, coal was formerly sent from this country to Antwerp, Rotterdam, and Amsterdam. It is now replaced by Belgian and German coal. Is this very surprising? Is it reasonable to expect that colliery proprietors on the Continent would not supply coal, or the Governments, the proprietors of the railways, not convey it at anything above cost price rather than allow foreign coal to be imported, their collieries to stand idle, and their people to be unemployed? Coal of superior quality can be shipped at Newport and Cardiff at from 6½d. to 1s. per ton. What abatement could reasonably be expected from rates based on such a very low scale? What effect, if a reduction were made, could it have upon the alleged foreign competition, and upon the depression in trade?

The prices of coal are low because of over production, and undue competition between colliery owners. The extravagant prices obtained by colliery proprietors in 1873-4 led to the opening of many new collieries in the South Wales, Northern and Midland districts of England, as well as in Germany and elsewhere. The result was to create a capacity of output far beyond the demand--160,000,000 tons per annum now as compared with 127,000,000 tons in 1873. The desire which exists in every district for reductions in railway rates is not so much to meet foreign, as home competition; the strength of that desire is ascribable to the activity and intensity of the latter competition.

In regard to export trade, the inland producers of manufactured goods must be at a disadvantage as compared with their rivals on the sea coast. But no complaint that the railway companies had diverted traffic from England abroad by exorbitant rates was made out before the Railway Rates Committee. The Royal Commission on the Depression of Trade have heard much evidence to that effect, but they have not thought it necessary to call upon the railway companies for any reply. To very different causes--some of them far reaching and deep--is due the depression which interested persons would attribute on superficial grounds to the operation of rates.

Upon the policies pursued by foreign Governments in regard to the construction and working of railways, it is unnecessary to pass any opinion. No trustworthy judgment is possible without fully considering all the circumstances--especially the difficulties to be encountered and the objects which the Governments had in view. It is enough to point out how radically different are the railway systems here and abroad--how much at variance are the policies pursued by our Government and by those of Continental States. Here the sole principle running through railway legislation has been to depend upon private enterprise, and to encourage competition between the companies.[112] Parliament has afforded no assistance to them, except indeed conferring the power to purchase, often on payment of exorbitant prices, the necessary land. Even when property of the State has been required by a railway company, the Government have, as a rule, been as exacting in their terms as any of the now maligned landowners, wholly different has been the policy of Governments abroad. Not only have railways been saved the payment of extravagant compensation or legal expenses in obtaining powers to construct the railways or acquire property, but inasmuch as the public in France did not, as in England, come forward to provide the necessary capital, the State supplied large portions of the capital of some railways, and contracted heavy obligations to promote the construction of others. In Germany, the State is responsible for the interest on the capital, the Government alone bearing any loss arising from charging low rates or otherwise. That also is the position of the Government in Belgium, which is responsible to the extent of 71 per cent. of the railway system in that country. The principles which have guided the Belgian Government in fixing railway rates appear from the extract from the report of the Debate to be found on page 115. At an interview which M. Vandenpeereboom, the Belgian Minister of Railways, Post and Telegraphs, was good enough to grant the writer, this was confirmed. Asked “what had been the object which the Government had in fixing the tariff; whether they had in view the obtaining of a fair interest on the outlay as a commercial undertaking, or whether the object was to develop the resources of the country, looking to a return on the outlay as a secondary consideration,” M. Vandenpeereboom replied “_that the object had been to develop the resources of the country_, and therefore a return on the capital was not of primary importance.” These fundamental differences cannot be disregarded; the fruits of systems so radically dissimilar cannot be expected to be the same.

[112] “Monopoly” is at present the favourite word of the adversaries of railways; everything is permissible because railway companies have a “monopoly.” This word has at least three senses. Monopoly in the strict legal sense in which the Bank of England is guaranteed by statute, the exclusive right of issuing notes within a certain area; monopoly in the sense of being able to exclude other competitors, because in a commercial point of view there is no room for competition, or because the work could not be done more cheaply or better by others. Messrs. W. H. Smith may be said to possess a monopoly in this sense; monopoly is equivalent to property. No railway company possesses a monopoly in the first sense. No company is guaranteed against competition within any area, as many of them know to their cost. Most attacks against railways are justified by using the word, true in the second or third sense, as if true in the first; and persons in eminent positions occasionally condescend to sanction the use of this fallacy.

If the State here, as in France, had provided without charging interest towards the capital expended upon the railways in this country, the same proportion as was so provided by the State in France (say upwards of £200,000,000), and guaranteed from 7 to 11 per cent. dividend on the remainder of the share capital; if it had, as in Holland, found three-fifths (£480,880,000) of the total sum expended on British railways, and accepted less than one per cent. interest upon the advance, the railway companies in this country could have afforded to carry at rates considerably lower than they now carry. It would not have been unreasonable in that case on the part of traders to have called on them to do so.

But the benefits, such as they are, of the Continental system cannot be fairly claimed without bearing the cost. Other countries, having in view advantages from railways, have paid for them with public money, and are prepared to pay still further for them at the expense of the taxpayer; it would be an unreasonable and scarcely honest policy to try to get indirectly the same rights and advantages without payment.

Our Government have been called upon to reduce the rates of the railway companies upon the complaint of traders that they have to compete with French, German, and Belgian traders, who are served by what, speaking generally, may be termed “subsidised lines.” To such an application the answer of the Government of this country, who have hitherto declined to aid the sugar manufacturers in their competition with those in France, supported though the latter are by State bounties, cannot be doubtful. Nor would purchase by the State remove all the differences which have been mentioned. Some of them cannot now be overcome. If the Government did purchase the railways, and by reducing the accommodation to something like that given on the Continent, were enabled to diminish the working expenses; if they placed the railways on the same footing as regards duties and taxes as the Government lines in Germany, the fact would remain that the railways in this country have cost from 45 to 120 per cent. more than those on the Continent, and that in wages alone there is a disparity which they would not be able materially to alter.

The volume of trade in England, it may be said, is greater in proportion to that of other countries; this should be considered, it may be argued, as an equivalent for the greater cost of construction and working of the railways. The fact that the average dividend is only 4·02 per cent.--that is, two-fifths of the dividend which in 1844 it was considered the railways should pay--is one of several answers to this contention.

A few remarks may be made with respect to the second class of complaints--those which relate to the mode of fixing rates.

The chief question is, What rates will at once yield a fair return on the capital of railways and best accommodate and develop the trade of the country? The early Acts provided that they should be fixed according to mileage. This, as we have seen, was altered by s. 90 of the Railway Clauses Act 1845. Are railway companies no longer to carry out the provision of that Act, and continue to charge rates “so as to accommodate them to the circumstances of the traffic?” That principle has guided them for forty years, and certainly ought not to be altered without good cause and full consideration. Instead of merely inveighing against the present mode of fixing rates as unscientific, those who are dissatisfied should explicitly state what mode they would substitute, and make clear by full explanation that it would be at once fair to the companies, and not injurious to the trade of the country. To charge according to actual cost of conveyance, or on a strictly mileage basis, has been shown to be impracticable and impolitic. What other modes can be suggested?