Part 2

Another proposal which, though always condemned by competent judges, is still, in some form, very often brought forward, is to charge equal mileage rates.[7] Admitting the impossibility or impropriety of making rates vary according to the cost of conveyance of goods without reference to their value or quality--recognising the expediency of classification in some form--many persons think that it would be well to charge for the same kind of goods the same sum per mile universally. This plan is simple; it has an appearance of being equitable; and, as such, it is attractive. But, on the slightest consideration, it becomes apparent that exceptions which mar this simplicity must be admitted. In fact, no one proposes that this principle should be inflexibly carried out. Far from being really equitable, equal mileage rates would often act most unfairly. Mileage run is only one element out of many in cost of service; and to compel companies to charge the same sum between points equally distant, irrespective of the original cost of constructing the way, the nature of the gradients, the amount and regularity of the traffic to and fro, and the extent of back haulage of “empties,” would be doing great injustice. Obviously an allowance must be made to cover the cost of specially expensive undertakings, such as the Runcorn, Tay and Forth Bridges, the Sol way Viaduct, or the Severn Tunnel. So, too, allowance must be made for steep gradients; manifestly the same paying load cannot be carried over gradients of one in forty as over one in eight hundred. In Germany and Holland an effort has been made to adopt the mileage system; and (subject to exceptions for import, export and transit rates, referred to afterwards) it is assumed to be carried out. But patent facts could not be ignored; in these countries an extra mileage up to 12 kilometres (about 7½ miles) is taken into the calculation of rates for expensive bridges and steep gradients. Speed, too, must be taken into account; as it increases, a more than proportionate increase in engine power is necessary.[8]

[7] The late Member for West Wolverhampton, in comparing the rates for Coke between Staveley and Northamptonshire and Staveley and Wolverhampton, practically advocated mileage rates, although, probably, not intending to do so. (See debate on the second reading of the Railway and Canal Traffic Bill, May 6th, 1886.)

[8] If an engine and tender weighing together 56 tons is capable of drawing a maximum load of say forty loaded wagons weighing 560 tons at 25 miles per hour on the level, it will only take the following loads over the gradients named below, and, in addition to the reduction in the load, the speed would also be considerably reduced.

Level. 40 wagons weighing 560 tons. Incline 1 in 100 20 ” ” 280 ” ” 1 ” 50 10 ” ” 140 ” ” 1 ” 30 6 ” ” 84 ”

See also Spon’s Dictionary of Engineering; Encyclopedia Britannica “Railways,” and the elaborate work _Des Pentes Economiques en Chemins, par M. Charles de Freycinet_.

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 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. Unless a very low scale of rates, entailing heavy and unnecessary loss, were adopted, much of the long distance traffic would cease to be carried. On other railways, however, the present net revenue might be maintained by levelling up rates; although the amount of traffic would be less, the working expenses might be reduced. On the whole, the more the theory of equal mileage rates is studied, the clearer it becomes that its adoption would probably be much less injurious to some railway companies than to colliery proprietors, manufacturers, traders, ports, and to the country at large.[9]

[9] Before Mr. Cardwell’s Committee (23rd February, 1853) the late Mr. Robert Stephenson, the eminent engineer, gave the following illustration, which is not yet antiquated:--

“I referred to that in order to shew the Committee the great impropriety of attempting anything like an equal mileage rate on railways. I can elucidate that in a very remarkable manner, and shew the injustice that the carrying out of the principle would inflict upon some railway companies, especially where goods are concerned. I will take the case of the Great North of England Railway, from Newcastle coal-field towards York, and towards the rivers Tees and Tyne. In one direction there were 5,450,000 tons of coals carried over one mile, which was equal to 320,588 over one mile for each engine; there having been employed by the York, Newcastle and Berwick Company for the performance of that duty 17 engines. Towards York, where the distance was greater, and the gradients were better, and the loads heavier, and the work more uniform, 13 engines took 14,435,000 tons over one mile, which was equal to 1,110,000 tons for each engine over a mile; in the other case, the duty that one engine performed was carrying 320,588 tons over a mile; therefore in this case one engine has done 3·466 more work than the other engine, so that on the first line it cost the Company nearly four times as much as it cost them for doing the same duty on the other line. On the one line there are a number of collieries; the engines have to stop and pick up the traffic, and the railway wagons do not average perhaps more than seven or eight miles per day, whereas in the other case they work for hours continuously, and with heavier loads and no stoppages.”

To consumers, whose interest are so apt to be lost sight of in the controversy, the change would be disastrous. Equal mileage rates would seriously lessen or even destroy traffic now conveyed long distances. By narrowing the area of supply, they would raise the prices of provisions and commodities such as milk, fish, and vegetables in and near great towns. The sustenance of a community such as London, is, one might almost say, possible only because it is not fed solely from the region immediately round it, but is supplied from very distant points. If the London markets are able to procure fish from remote parts of Scotland or Ireland, beef from Aberdeenshire and adjacent counties, milk from farms within 100 miles, vegetables from Penzance, and the Channel Islands, eggs and butter from Normandy, coals from the Midlands, Lancashire and South Wales, the capital owes these advantages to the fact that English railways have not been bound by equal mileage rates. Were such a system strictly enforced, fuel, provisions, and most of the necessaries of life would be raised in price. So far as consumers are concerned, equal mileage freights by sea--the height of absurdity in the eyes of all who know anything of commerce--would be as reasonable as equal mileage rates by land.[10]

To manufacturers whose works and premises are not near densely populated districts or ports--the great centres of consumption or export--the change would be disastrous. They would be driven out of the field by more favourably situated competitors, who would acquire a monopoly. The pursuit of certain trades would become impossible in districts in which they are now carried on with success. Not a few manufactories would soon be closed, but for the facilities which they now possess for procuring raw materials from remote parts. To give a few illustrations out of many: South Staffordshire is supplied with iron ore or pig-iron from Staveley in Derbyshire, Westbury in Wiltshire, Fawler in Oxfordshire, Frodingham in Lincolnshire, Ulverstone and Wigan in Lancashire, Middlesborough in Yorkshire, and also from South Wales; and it receives limestone from Froghall in North Staffordshire, Minera in Denbighshire, Wirksworth in Derbyshire, Presteign in Radnorshire, and Porthywaen in Shropshire.[11] Such are examples of the interdependence of districts and industries, the co-operation of places far apart, with which equal mileage rates would interfere. Even if originally they would have been beneficial they would revolutionize the conditions under which trade has been carried on in this country since the introduction of railways.[12]

[10] See preface to Smiles’ Life of Stephenson, and, as to the provisioning of Paris by means of railways, interesting details in _La Transformation Des Moyens de Transport, par Alfred de Foville, Chef de Bureau au Ministère des Finances_, p. 256.

[11] About thirty years ago, when the iron works at Westbury in Wiltshire were constructed, it was anticipated that fuel would be obtained from the Badstock district, about 14 miles distant. But after sinking collieries it was found that the coke was not suitable; so that it has now to be obtained from South Wales, a distance of about 130 miles. The pig iron is sent to South Wales in the return coke wagons, and also to South Staffordshire, a distance of 140 miles. The coke and pig iron are carried at special low rates below those in force for traffic to intermediate places. Without such special rates, or if mileage rates were charged, the works would have to be closed.

[12] An American writer points out that the following would be the result of applying the principle of equal mileage rates, or of basing rates on cost of service:--

1. “There would be little or no classification of freights. Grain, lumber, coal, iron, shoes, dry goods, groceries, drugs and chemicals, would all have to pay near about the same rate per 100 pounds per mile, and that rate would have to be something like an average of the present rates charged upon the different classes of freight. The higher classes of freight would be a good deal lowered, and the lower classes would be materially raised. The result would be that cheap and heavy products could be no longer transported over the distances that are now carried.

2. “The rates on through freight would have to be proportioned very nearly to the distance hauled. The rate from Chicago to Boston for instance, would be materially higher, and the rate from Chicago to Baltimore materially lower than the rates from Chicago to New York.

3. “Roads having the lowest grades, and most favourable alignment would have lower rates than their competitors, and would monopolise the business, to the entire exclusion of those lines which traverse more difficult and expensive territory, and upon which the cost of transportation was greater. And the tide once turned, the evil would multiply itself; for the rates would decrease rapidly on the favoured roads, with the increase of business, and would increase on the unfortunately located roads, with the decrease in volume of their freight, until the latter would be left with nothing but their local business to support them, which would then have to be advanced to the highest figures possible.”--_Railroad Transportation, by E. P. Alexander, Vice-President of the Louisville and Nashville Railway Company._

Some advocates of the theory of mileage rates may concede that their adoption would entail loss on certain districts and to some individuals, but deny that the community as a whole would suffer.[13] Is this a reasonable view? Even if the home trade were not injured, the result of equal mileage rates must be to increase the cost of production of many articles manufactured at a distance from ports of shipment. Would not this make competition with foreign countries more difficult than it is? And must it not reduce the demand for labour?

[13] Very recently the fishermen in the North of Scotland have been asking that the same gross rates shall be charged from Wick to large towns in the South as are charged from the fishing ports, such as Grimsby, on the East Coast of England. What would they, or most consumers of fish, say to equal mileage rates?

The principle of equal mileage rates, it may be added, has been condemned by every Royal Commission and Parliamentary Committee which has investigated the subject; and this condemnation has been pronounced on grounds for the most part wholly independent of the interests of railway companies. As pointed out by the Select Committee of 1872, the principle would “prevent railway companies from making perfectly fair arrangements for carrying at a lower rate than usual goods brought in large and constant quantities, or for carrying for long distances at a lower rate than for short distances.”

“It would prevent railway companies from lowering their fares and rates so as to compete with traffic by sea, by canal, or by a shorter or otherwise cheaper railway, and would thus deprive the public of the benefit of competition, and the company of a legitimate source of profit.”

“It would compel a company to carry for the same rate over a line which has been very expensive in construction or which from gradients or otherwise is very expensive in working, at the same rate at which it carries over less expensive lines.”

The Committee add--“It will be found that the supporters of equal mileage, when pressed, often really mean, not that the rates they themselves pay are too high, but that the rates which others pay are too low.” In other words, they desire to apply the principle when it works in their favour, and to reject it when it does not.[14]

[14] “We have nothing to do here with the study of the tariff systems adopted on the Alsace-Lorraine lines, and extended with some modifications to the generality of German lines. Seductive by its simplicity, the principle of fixing the rate according to the weight only, and without regard to the value of the object carried, has not found numerous partisans in France. Such a radical reform would overthrow our commercial habits, and would occasion results, in a financial point of view, which would be impossible for us to estimate.” Report of the French Commission of the Third System on Railway Tariffs, by M. Richard Waddington. (Appendix 31 to Report from the Select Committee on Railways (Rates and Fares), 1881-2, Vol. 11. p. 449).

SECTION V.

DIFFERENTIAL RATES.

While shrinking from advocating equal mileage rates, many persons take up an intermediate position. They object to rates being much out of proportion to distance; they do so although the traffic may not be carried over the same parts or sections of a railway. The rates to which objection is taken are of several kinds:--Special rates for export traffic; special rates for import traffic; transit or through rates; special rates generally--special rates for long distance as distinguished from short distance or intermediate traffic.

Such differential rates exist--and the circumstance is not unimportant--in all countries in which railways have been developed; and it will be found that, here as elsewhere, they have been adopted, not solely or even chiefly with a view to benefit railway companies, but mainly to meet the not unreasonable demands of traders and consumers.

The following are a few instances of special import and export rates charged by the railway companies in this country, viz.:--

+-------------+-----------------------+----------+---------- | | | Import | | | | and | Local From | To | Article. | Export | Rates | | | Rates | per Ton. | | |per Ton. | -----------+-------------+-----------------------+----------+---------- Manchester | London | Cotton Goods in Bales | 25/- | 40/- | | | C. & D. | C. & D. ” | Southampton | ” ” | 25/- | 45/- | | | C. & D. | C. & D. | | | | Birmingham | London | Hardware | 25/- | 27/6 | | | C. & D. | C. & D. ” | ” | Bedsteads | 22/6 | 28/4 | | | C. & D. | C. & D. | | | | London | Plymouth | Newspapers and | 24/2 | 37/6 | | Periodicals | C. & D. | C. & D. | | | | Leeds | Hull | Woolen and Worsted | 12/6 | 16/8 | | Goods | C. & D. | C. & D. | | | | Manchester | ” | Bale goods | 17/6 | 31/8 | | | C. & D. | C. & D. | | | | Liverpool | ” | Salt Provisions | 12/6 | 20/- | | |Carted in | Hull. ” | London | Fresh Meat | 25/- a | 50/- a | | | C. & D. | C. & D. | | | 30/- b | 55/- b | | | C. & D. | C. & D. Bristol | ” | American Provisions | 20/- | 27/6 X | | | C. & D. | C. & D. ” | ” | Fresh Meat | 20/- a | | | | C. & D. | } 40/- | | | 25/- b | } C. & D. | | | C. & D. | } | | | | Hull | ” | Meat and other | 25/- | 40/- | | Imported Goods | C. & D. | C. & D. -----------+-------------+-----------------------+----------+---------

a. Exclusive of hampers. b. Inclusive of hampers. X Bacon in 1 ton lots 22/6 per ton C. & D. Butter and Lard in 4 ton lots 22/6 per ton C. & D. C. & D. In other words, collected and delivered.

In the interest of shippers transit rates have been adopted; and as an illustration, may be mentioned the rate for tea from China, Japan, and India, brought by water to London, and despatched to Liverpool by rail for shipment to America or elsewhere, viz.:--

+------------+------------------------+----------+---------- | | | Export | Local From | To | Article. | Rates | Rates | | | per Ton. | per Ton. --------+------------+------------------------+----------+---------- London | Liverpool | Tea from China, India, | 25/- | 37/6 | | Japan, under Bond | C. & D. | C. & D. | | | | ” | Birmingham | Tea | -- | 34/2 | | | | C. & D. ” | Manchester | ” | -- | 40/0 | | | | C. & D. --------+------------+------------------------+----------+----------

In the abolition of these rates the home trader or consumer can have no direct interest; although the transit rate is lower than that for home traffic, it cannot in any way prejudice the English trader. If the special rate were withdrawn he would be no better off; the traffic would simply go to its destination by water.

To reduced export rates the objections are few. They are generally admitted to be useful; and at a time when on all hands it is urged to be necessary to extend our trade abroad, they could not be abolished without causing serious loss and loud complaints. It is important to enable a colliery owner to export coal, or a manufacturer without a port in the vicinity of his works, to export his wares on such terms that he will not be at a heavy disadvantage or be driven out of the field. Special lower rates enable the manufacturers of exported goods, such as manufactured cottons from Manchester, and hardware from Birmingham, to send them to London, and to avail themselves of lines of steamers sailing from several ports. But for such facilities exporters would be confined to one, and that the nearest, port, and they would lose the benefit of the competition in facilities and sea freights. The railway company which happened to own the route to the nearest port would possess a monopoly of the traffic, and might charge their full rates instead of the present reduced rates.

Nor is the practice recently introduced in the interest of railway companies. In the Act authorising the very first railway on which steam was used, the Stockton and Darlington, the principle is recognised. The tolls upon the coal shipped on board any vessel for export were fixed at one halfpenny per ton per mile, while the toll on all other coal was 4d. per ton per mile. Each of the special export rates has been made, it may be truly said, at the instance of some manufacturer or shipper who would be injured by their withdrawal. In granting such terms, railway companies have endeavoured to satisfy the urgent demands of customers. And if the rate to one intermediate place is fair and reasonable in itself, is it any substantial grievance that it is higher than the rate on goods for shipment?[15]

[15] The rate for the carriage of flour from Minneapolis for consumption at Milwaukee or Chicago is one-third higher than the rate for flour for shipment.

Special import rates have been much more attacked; but when the principle is fairly carried out, they are no less defensible than export rates. Most of the objections to them come, it will be found, from persons who believe that they have a vested interest in certain produce and trades; often they are assailed by the very persons who are the defenders of reduced export rates. 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 like manner the shipping companies and others who are interested in the trade of Southampton claim special rates and facilities in favour of that port. Naturally they wish that a part of the traffic should go _viâ_ Southampton; and a compliance with their wish benefits the public.

Special import rates are not charged on foreign goods merely because they are foreign; the chief, though not the only, explanation of their existence, is the desire of steamboat companies and merchants that a part of the goods consumed in other places may be carried through the port in which they are interested, instead of the goods being all sent through ports nearer to or direct to the ultimate destination. The railways have, in fact, complied with urgent local demands.