Part 9

“It would seem natural also to expect that where the company were carriers, inasmuch as they performed the identical services which they perform under the second head, and others besides, they should be allowed to charge the same sums as they might charge when falling under the second category, _plus_ those which are appropriate to the extra services and liabilities which fall upon them when they undertake the duties and business of a carrier.

“The contention of the applicants appears to us singularly unreasonable. It was proved before the Railway Commissioners, and is not disputed, that the actual cost to the company of the accommodation and services, which, for many years after the railway system was very largely developed, and all the principal lines in the kingdom were at work, were on some of the most important railways in England provided by independent carriers, and did not fall upon the railway company, amounted to 1s. 5d. per ton; and it is admitted that, even with the help of the six-mile clause, the company, if the contention of the applicants is correct, would, in the case of traffic carried not more than six miles, have to carry goods coming under class 5, at a dead loss, which may be approximately stated as 8d. per ton for station services alone, besides getting nothing for the use of railway and trucks and for providing power.

“The charges of and incidental to ‘conveyance,’ as we have explained that phrase, are properly measured by the mile of distance travelled over. The terminal services of station accommodation, loading, watching, checking, and the like, have no common measure with the distance run, and are the same, whether that distance be two or two hundred miles....

“Our answer, therefore, is that the providing of station accommodation, and work of the general nature indicated to us by the Railway Commissioners, appear to us to be capable of falling under the definition of ‘services incidental to the duty or business of a carrier,’ and _prima facie_ to do so. Whether in any particular case they do so, or to what extent they do so, must be a question of fact for the Commissioners, the line we should draw being, that whatever is necessary for ‘conveyance’ in the sense in which we have defined it--being all capable of being measured by reference to the distance travelled--is covered by the mileage rate. Whatever is properly incidental, not to conveyance, but to the performance of the duty and business of a carrier ... that is to say, is actually performed and is done at a terminal station, may be made the subject of a separate reasonable charge.

“How could the Legislature ever provide for every single station on this line, for every terminal station, what was a proper charge? It could only be done by limiting it, as it has done, by ‘a reasonable sum,’ and it is for the Railway Commissioners to say what is a reasonable sum, under the circumstances at each terminal station. ‘No station is to be considered as a terminal station in regard to any goods conveyed on the railways of the company unless such goods have been received thereat direct from the consignor of such traffic, or are directed to be delivered thereat.’ Therefore terminal stations are recognised, and terminal charges are recognised distinctly.”

Sir Bernhard Samuelson observes that terminal charges are a necessary corollary of the Foreign mileage rates,[44] the scientific basis of which he so much approves; the equity of, and right to make terminal charges is equally a corollary to the system upon which the rates in this country have been fixed. The maximum charges for the user of the road, the user of the truck, and the provision of the engine are capable of being fairly measured by reference to the distance travelled. They are, therefore, properly the subject of a mileage rate. But the providing of station accommodation, and work which the Railway Companies perform as carriers--as distinguished from mere conveyance--have no relation to mileage. They must reasonably be--as it has been held in the case of “_Hall_ v. _The London Brighton and South Coast Railway Company_,” they legally are--the subject of an additional charge.

We may here correct a common error. The opponents of terminal charges are in the habit of speaking and writing of them as if the companies claimed that they might at their own discretion demand such payments as they thought fit.[45] The railway companies have never contended that they were entitled to make arbitrary terminal charges. Indeed, such a contention would be a legal absurdity. On the contrary, they have always submitted that, while their right to make those charges was undoubted, the amount must not only be reasonable, but also be subject to review by the Railway Commissioners under the 15th Section of the Regulation of Railways Act, 1873. Sir Bernhard Samuelson is inaccurate in stating that the railway companies proposed by their Bills of last Session to make those charges subject only to their own discretion. While strongly relying both upon their legal right and the justice of their claim, the railway companies were willing to submit proposals to the consideration of Parliament for a re-settlement of their powers in this respect. But they expressly provided that the Railway Commissioners should have power to hear and determine any question or dispute which might arise with respect to the amount or reasonableness of any terminal charge made by the company, and that any decision of the Commissioners as to terminal charges should be binding and conclusive on all Courts and in all proceedings whatsoever;” words borrowed from s. 15 of the Regulation of Railways Act, 1873.

[44] Report to Associated Chambers of Commerce.

[45] “The claim of railways to charge terminals would have to be considered if mileage rates are adopted in principle. That charge could in no wise be left to the discretion of the railways themselves, as was proposed in the Bills of last Session.”--Sir B. SAMUELSON.

A few details as to the law and practice on this subject in Continental countries may be useful. And, first, as to Germany. When the question of the introduction of a new tariff for the German railways was under consideration, it was agreed that in previously fixing the railway rates, sufficient consideration had not been given to the expense incurred at the sending and receiving stations, irrespective of the distance the traffic was carried. The result of the calculations which were made was that those expenses should be estimated at 12 marks per truck load of ten tons. This was accordingly adopted as the standard figure for all goods carried in wagon loads, while for small consignments the charge was fixed at 20 marks. The addition of those normal allowances to the rates on traffic to be carried short distances would have considerably increased the charges previously made. It was accordingly agreed, as a compromise, to graduate the terminal charges for short distances; the graduation being simply the means of avoiding what might have been considered a large increase in the railway rates, in consequence of the adoption of the “reform tariff system.” These terminals represent the working expenses at the forwarding and receiving stations, the labour of receiving the goods from sender, marshalling or shunting the trucks to the sidings set apart for the delivery of the goods, and also the expense incurred by railway companies for stationery and clerkage; but they do not include the expense of loading and unloading, except in the case of _Grande Vitesse_ and “_Piece Goods_,” They vary from 10d. per ton in full truck loads of 10 tons, to 2s. per ton of general goods, and in the special tariff classes, which include minerals, from 7¼d. in full trucks of 10 tons to 1s. 2½d. per ton.

In Belgium there is a fixed charge of 1 fr. per ton of 1,000 kilogrammes for the use of station and for clerkage; but it does not include loading and unloading, or booking, counting, or advice of arrival of goods, for all of which services extra charges are authorised and, in fact, made. This is practically a terminal charge.

In Holland the terminal charges vary from 1s. 2d. to 1s. 6d. per ton in the truck load classes, and 2s. 6d. per ton in respect of ordinary or “_piece_” goods in quantities of less than 5 tons. In the latter case the cost of loading and unloading is included in the terminal charge, but not in the truck load classes. In neither case are weighing, counting, stamping freight note, labelling or advice of arrival included. For all of these services extra charges are made.

In France only small charges varying from 20 cents. per ton for goods in full truck loads, to 35 cents. per ton for goods in less quantities, are made for the use of stations, though there are various charges for loading and unloading, booking, advice of arrival, and other services. Either, therefore, the traffic for short distances is carried at a loss, or no adequate return to cover the use of station and conveyance is obtained--a course, which, assuming the outlay upon a railway is entitled to a fair return, is opposed to sound commercial principles.[46]

[46] NOTE.--The terminals authorised and charged in these countries will be found fully set out in a tabular form in the Appendix III.

SECTION XII.

THE CONSTRUCTION OF RAILWAYS IN ENGLAND AND ON THE CONTINENT.

Sometimes it is asserted, although it is more often taken for granted, that all railway rates on the Continent are more favourable to traders than English rates. Upon this assumption is based the contention that the reduction of the latter may fairly be demanded. Whenever such statements have been carefully examined--_e.g._ in the inquiry before the Joint Committee of 1872--they have been proved to be erroneous. Nevertheless, they are still constantly repeated. More than once it has been publicly stated that in Germany, Holland, Belgium, &c., “rates are fixed on a scientific basis, and an intelligible principle,” while in this country they are “haphazard and estimates.” Seldom is there any attempt to make good such assertions and criticisms. The report made by Sir Bernhard Samuelson to the President of the Association of the Chambers of Commerce of the United Kingdom on the “Railway Goods Tariffs of Germany, Belgium, and Holland, compared with those of this country” is an exception, and on that account is specially important. That report endeavours to prove by figures that rates in this country are excessive. It has been cited--though, probably, such was not the intention of the author--as if it were an indictment of English railways; and the purport of it is to show that English rates ought to be reduced, and that, unlike the rates on the Continent they are fixed on no proper basis. Now, even if the difference between English and Continental rates were as great as Sir B. Samuelson describes, no inference unfavourable to English railways could be fairly drawn. No comparison could be useful which did not take into account the fact that railways in Great Britain have been constructed with private capital subscribed and expended on the faith of definite powers conferred on the companies by Parliament. Sir Bernhard Samuelson, however, passes lightly over the dissimilarities which mar his comparison; the widely different circumstances under which foreign lines were constructed; their much smaller original cost per mile, and the fact that most of the lines to which he refers were either constructed or assisted by the State, have been purchased by it, or have received State guarantees. The English railway companies obtained simply authority from Parliament to purchase compulsorily the land required, and to construct the necessary works.[47] On the other hand, the railways in the countries to which his report relates were, to a great extent, either originally constructed by the State, or the companies have been assisted by contributions towards the cost of construction, or a minimum rate of interest upon the capital provided and expended by them has been guaranteed to them, or the lines have been afterwards acquired by the State.

[47] There are some cases in Ireland in which Baronial Guarantees in respect of portions of the capital of railways have been given.

It is remarkable that Sir Bernhard Samuelson’s report gives no information as to the railways of France, though the nearest of the Continental countries, and though many of her products compete with ours. To correct this deficiency, it may be desirable to mention a few facts. The French Government constructed the first railways opened in that country or made advances for that purpose without charging interest; and they have since made or purchased other lines. In aid of the original lines for which concessions for 99 years were granted, the State in France contributed a vast amount, as appears by the following statement:--

Amount contributed by the State as shewn at December 31st, 1882 £66,639,549 Divers contributions also given by towns to the extent of 1,753,992 The Companies have themselves provided 340,421,032 ------------ £408,814,573

Upon the State railways (that is, for lines now worked by the Government) they have expended to December, 1882 33,851,598 In addition to which divers subscriptions were given by towns to the extent of 1,305,334 ------------ £443,971,505

Out of which the State (as shown above) provided £100,491,147 ============ The total amount was thus found in the following proportions:-- A.--By the State on lines worked by the Companies 15 per cent. On lines worked by the State 7·6 per cent. ---- 22·6 Contributions made by towns, &c. 0·7 per cent. B.--Capital provided by the Companies 76·7 per cent.

The total capital expended on French railways up to the end of 1884 had increased to £532,960,000,[48] of which sum the State had provided £148,680,000, or 27·9 per cent.; in addition to which the subscriptions given by towns amounted to ·8 per cent. Thus, up to December 31st, 1884, the capital provided by the companies themselves was not more than 71·3 per cent. of the whole. The French Government have also guaranteed the dividend on four of the great lines at rates varying from 7 to 12 per cent. Two other great companies may pay 11 and 13·5 per cent. dividend respectively before they can be called upon to construct any new lines; while all the six companies may earn dividends varying from 10 to 22 per cent. before they are bound to divide any surplus with the Government.

[48] This capital relates to the principal lines only.

A portion of the capital of each company is paid off annually beyond the guarantee; and at the end of the period of concession the railways will become the property of the State. The advances made to the companies under the guarantees by the Government, with interest at the rate of 4 per cent., are to be repaid out of any surplus beyond the maximum dividends which may be paid. If at the end of 99 years, any of the companies still be in debt, the Government are to be entitled to take without payment as much of the rolling stock as may be required to repay the debt, as far as the value of the stock may do so. By the conventions of 1883, the Government arranged with the companies to which they had given guarantees, that when a request to that effect is made by the State, new lines are to be constructed up to the amount of their debts at the end of 1883. In some cases this duty is incumbent only when the dividends paid by the companies reach or exceed the maximum percentage already mentioned. In addition to the large sum expended by the French Government on, or towards the original construction of railways, the total amount advanced to the companies to make up the guaranteed

dividends[49] amounted to December, 1883, to £23,592,000 and for the year 1884 to 2,250,000 ----------- £25,842,000 The interest on these advances amounted to December, 1883, to 5,904,000 and for the year 1884 to 36,000 ----------- £31,782,000 ===========

[49] The Report of the French railway Commission of Inquiry appointed in 1880 states: “Our railway companies have been largely subventioned for the construction of their lines, almost all receive annual subsidies, without which they could not meet the charges of their working expenses; all enjoy a monopoly which shelters them from internal competition; we have the right to demand from them, to force upon them, reforms that public and parliamentary opinion deem indispensable.” And again--“ * * * * In certain countries, England for example, where the system of liberty and commercial competition is largely in vogue, it is right that the railway companies, who have received nothing and from whom nothing is demanded by the State, and who may be considered only as belonging to the category of private merchants and manufacturers, should have greater freedom in dealing with their traffic and tariffs than is enjoyed in this country (France).”

But it is added: “It is not the same with Continental European nations. The Governments of Belgium, Holland, Bavaria, the Grand Duchy of Baden, Austria, Italy, Hungary, Russia, Sweden, and Norway are wholly or in part proprietors of the railway system.”--_Appendix 31 to Report from the Select Committee on Railways (Rates and Fares) 1882, Vol. II., pages 453-4._

In France the State has not pursued in regard to railways a policy strictly commercial. It has made great sacrifices to provide railways, in the hope of securing to the country indirect ulterior gains. For the sake of their development it has incurred great expenses which excite in some minds grave anxiety.[50]

In Germany most of the railways are now the property of the State.[51] In 1884, the various Governments owned 19,610 miles, and they worked another 496 miles for the companies, leaving only 2,505 miles out of a total of 22,611 to be worked by the railway companies. Of the railways which are the property of the State, about two-fifths were constructed, and the remainder were purchased by it. Of the total capital outlay of £485,831,766 on German railways, £437,728,471 has been expended by the State in constructing or purchasing them, and £48,103,295 has been provided by the companies themselves. The return upon the capital outlay of the State railways has been--[52]

1880-1 4·87 per cent. 1881-2 5·01 ” 1882-3 5·22 ” 1883-4 4·86 ” 1884-5 5·06 ”

This shows an average for the five years of about 5 per cent. per annum.

[50] “La dépense tout à fait stérile des 500 millions pour racheter des lignes ferrées improductives, les exagerations du projet Freycinet lors de sa naissance et les extravagances de développements posterieurs qu’on lui a donnés, des sommes énormes dépensées en des canals de transport, qui, pour beaucoup du moins, font double emploi et jouissent d’aucun trafic, toute cette mauvaise direction a absorbé les resources de l’État en sacrifices inutiles et ne lui a pas laissé le loisir de supprimer l’impôt sur la grande vitesse, les timbres sur les récepissés des chemins de fer, et d’obtenir, par un juste retour, des réductions de tarifs qui n’auraient été accompagnées d’aucune augmentation d’impôt.”--M. LEROY-BEAULIEU in _L’Économiste Francais, February 27th, 1886_.

[51] It is generally assumed that the railways in Germany were purchased with the view of more effectually utilising them, and the rolling stock for military purposes. The Government in this country are under no necessity to undertake the liability of acquiring the railways and guaranteeing the dividends for such a reason; the number of lines of railway and routes are so ample, and the number of engines, carriages, and wagons so great, that any movement required for the defence of the country can be carried out within any reasonable time, while under the Regulation of the Forces Act, 1871, Her Majesty, by Order in Council, may empower any person or persons, named in such warrant, to take possession of any railroad and of the plant belonging thereto, and to use the same for Her Majesty’s Service at such times and in such manner as the Secretary of State may direct; and the directors, officers, and servants of any such railroad, shall obey the directions of the Secretary of State.

[52] See note, page 118.

In Belgium, out of a total mileage at the end of 1884 of 2,711 miles, the State owned 1,930, or more than 71 per cent. of the railways. The outlay upon this mileage was as under:--

(_a_). Cost of railways actually purchased £36,668,915 (_b_). Amounts payable by annuities 12,442,804 (_c_). Capital expended on lines worked by State 3,900,653 ----------- £53,012,372

The interest paid by the Belgian Government on the above capital outlay was--

(_a_). 4 per cent. (_b_). 4, 4½ and 5 per cent. (_c_). 4¾ per cent.

The gross receipts on the State railways for the year 1884 amounted to--Coaching £1,620,565 Goods 3,088,108 Sundries 98,971 ---------- 4,807,644 and the expenses to 2,871,268 ---------- leaving net receipts £1,936,376

Upon a capital outlay of £53,012,372, these figures give an average dividend of nearly 3¾ per cent. It would, therefore, appear that the working of the State railways results in a loss to the Government, which the public have to make up by increased taxation.[53]