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N** I'ofi. . .509 USA ■as i7lt) 48:2 - 500 - Pi^or.e :^S (^16) 288 - 5989 - '"'::• ^•- " ^"'■'S'^S^H^C^' . s / THE ENGLISH RAILWAY com;^iission of AM) CANAL 1 8t i s. J. McLean AssociATF l'Ri)n;.M.K up Economics, i.Ei.ANi> StaNFOHU JlNlOl, U.MVIKSITY reprinted from The Quartehi.y Journal oi- Economics Vol. XX., November, 1905 nvms:^^^^ THE . . Q-^Af^TEJ,,y joru^^,;, or ECO^'O.mcS Pu' /i.s/ifif /or J/ir- 7.-,/ /• • Is fUiih!ish,;i tor H,r n:h rutes, rate-JM)ol{H, t.-rminalH, Icpility of rates, provisions relatinR to private branch si. lings, and referen.c.8 under tt,(> Hoard of Trade Arbitrations Act, 1874, ihe most important matters from the standpoint of the traders are (a) terminals, (6) reasoiiable faciiiti< , (r) through rates, (d) mulw preference, (e) control over actual rates. The history of the terminal (|uestion is a long and in- volved one. When the earlier railways w, : chartered, thr. "canal toll" idea i)revailed. For a time carriers, already in existence, quoted through rates over the rail- way lines, making such arrangements as they deemed prof)er in regard to payments for special services and for station terminals. It was not long, however, b<'fore the radways controlled the forwarding business, and com- plamt soon aio.se. The railways claimed the right, in addition to the powers given them under their maxnnum rates, to make charges for additional services and for termmals.' The traders contended that the maximutn rates covered all that the railways were legally empowered to collect. It was concerning the station terminals, however, that the keenest contention existed. The Select Committee of 1882 had recommended that termin.i charges should be recognized, but that they should b. -.ubject to publication by the companies, and that in case of challenge they should be sanctioned by the Railway Comnii.ssion.' A clause to this effect was contained in the regulative mea.sure intro. ch»„.., (a pro-tra,ler brochure, published in I^ndnn ■„ It^f ' a «u ' the raUway pomt of view will be found i„ the addre«, of T l>o.^ O ' "'' °' «nt,n« the London & North-western Railway before the Board TT't^V' ^''™" b.r29. 1889. reported in Railrva, Ner.,, November 2 ,889 pp 778 TsS'":' °T Gnerson, RaUway Rale,. £ngH.h and Foreign, pp 93-06 ^"^ "" ENGLISH RAILWAY AND CANAL COMMISSION 6 the portions remaining. Consequently there are still in effect sections of the Railway Clauses Consolidation Act, 1845, the Railway and Canal Traffic Act, 1854, the Regulation of Railways Act, 1868, and the Regulation of Railways Act, 1873. Since 1888 jurisdiction in regard to actual rates has been given by an Act of 1894; while, under a law of 1904, the powers of the Commission in regard to private sidings have been made more definite by an interpretation of the "reasonable facilities" clause of the Act of 1854.' II. Terminals, Re.vsonable Facilities, and Through Rates. Tlio Act of 1888 had recognized terminals. ITie Pro- v'sional Orders Acts gave them definite form. The mat- ter was finally passed on by the Commission in 1891 in a decision which upheld that of 1885.' Justice Wills, who gave the decision in the former terminal case, was at this time the judicial member of the Commission. On appeal the decision of the Commission was upheld. While the question of the legality of terminals has thus been set- tled, there still remains the question of the right of the trader to be exempt from the payment of terminals under special conditions. This (juestion is of especial inter- est in connection with the m ning and manufacturing dis- tricts, where the establishments furnishing and receiving freight are u.sually situated on private sidings or on pri- vate railways. The importance of these sidings is shown in the fact that, while at the Sheffield freight station the tonnage in 1900 was 580,(KK), at a near-by siding it was 1,100,000. In 1894 the Commission was given jurisdic- ' For ()etail cnncerninR the unrepealeii sertioni* f»w^ WfKMifall, 7'Ae A'cuj Aow and Practice of Railway and Canal Tralfic, etc.. Appendix A. ^Suiierhu tt Co. v. Great \orthern Hu. Co.. 7 Rv. and Canal Traffic Ca.HPs, 156. 8 QUARTERLY JOVRXAL OF ECONOMICS tlr'l at'sTdin" T"-'"" '™™ P^^"^-^ «^ terminal had not t ^^ ""^ '* ^'"' ""'^^'^^ that the services of 1888 m" ' "T '• '^^"'^'- *^^ P^---" «f the I of 1888, requiring the railway to distinguish conveyance from termmal charges, it had been held tiat the resTnsT bihty of the railway might be discharged by staUnT hat the whole payment wa3 for a conveyance mte' Z th ^:vi^::T\rr ^" '''' ''-' '-"■'—:' on tne railway, m such a case, to prove that it HiH n^. charge for terminals.^ The Commission h 'pc^'^ t allow a rebate from sidings charges without proof'tha any definite amount of terminal is included in the ate A mn^afacre case for such a rebate is made out, if t L howt he 's me'En '"f^ ^"^^ ^^'^-" -^'^tantiaUy same rom.. T^-' '""^ P"'''"^ '''''' -substantially the same routes a s.dmgs trader who does not require or use any termmal accommodation or services is c .arid the same amount as a trader who uses the 'ta ion ' Rnt the latter rate must not be simply a paper rt " l„ fa, tt;:^cti : :fTc^' '"- ^^'"^' '' '-> ^^^^^^^^^ cockWa e V t ^°'""^'^^«'«" *" f«"«^- the rule in Pid- cocks case, r.e., to assume that the service charges are n the same proportion to the rates actually charge, I' the maximum service charge would be to the sum of the maximum rates,-i.e., the maximum rate and the „ axi mum terminals.' ^'"" The through-rate clause of the Act of ISSS n. • i that through rates statins fK„ provides g" rates, stating the amount, route, and appor- Traffifc"«:u"9.'"- " ""'"' "^'"'""'^^' «- <"^ «'*-. 10 R.v. and Can,. Traffio^'ct::: f;".'* ^'"""•^'''- v. .V/^^.. n^. „^ o.*„., „ R,. ,„, c,„^, Ca.„nf " ^- •''"-*'•'- '^-'^'« * ^-— - «V..9 K..a„C Canal T™mo ENGLISH RAILWAY AND CANAL COMMISSION 7 tionment of the rate, may be proposed by a railway, a canal company, or a trader. In case of dispute regard- ing the rate or its apportionment the matter is brought before the Commission. In apportioning the through rate, the commissioners are to consider the special circum- stances of the cases, and are not to compel any company to accept lower mileage rates than it may for the time legally be charging for like traffic, carried by a like mode of transit on any other line of communication, between the same points, being the points of departure and arrival of the through route. Reasonable facilities in general must be such as can reasonably be required of the railway company, due allow- ance having been made for the way in wliich the service is already performed.' Similarly, in a reduced through rate there must always be considered whether there is a commensurate advantage to the railway company.' Prima facie, it is against public interest to interfere with vested legal rights, unless some compensation or equiva- lent is given. There must, therefore, be evidence both of public interest and reasonableness in favor of the rate and route sufficient to outweigh the former considerations.' The fact that two competing routes will tend to make either company treat ihe traders more reasonably is a consideration bearing on the question of public interest.* At the same time the Commission will not grant a through rate which creates unhealthy competition.^ If there are ^Newry Navigation Co. v. Greal Northern Ry. (Ireland), 7 Uy. and Canal Traffic Cases, 176. ^Plymouth Incorporated Chamber of Commerce v. Greal Western Ry. ik L. A S. W. Ry.. 9 Ry. and Canal Traffic Cases. 72; 10 ibid, 17. ^Didcot. Newbury A Southampton Ry. v. Great Western Ry. it I,, (fr .S'. W. Ry., 9 Ry. and Canal Traffic Cases, 210. *Plymn'Uh, Devnnport * S. W. Ry. v. Great Western Ry. <{- /.. * .S. W. Ry., 10 Ry. and Canal Traffic Cases, 68. iDidcot. Newbury '-" ter Ship Canal possessed t'l,^^^^^^^^^^^ quays, although these railways we esLSv^'-;" ''' service, constituted it a milJl ^^ ^°'' "^ ^^u -tion Of .ho co„.ii::i„vr„tpro:.;raTh '"''»■ *' ^«*o'. A-™..„.„ ^ .•„„«„,„„„„ „ ^,^ ■"•• '" "-^ ■ •""" ^'"■'" •■•-ffi" Cas... «2. >0 Ry. and Cana, Traffic Car!?*" ''^^ ^■'^-<" ">"-" «.- * i. * ,■. „,;,,., 'Forth Hridar ,t ,VorM Rr,V,«/, ;. ,. ^ s,.^i .!^ r ^""' "* ^-»: """Ti^r:.:::; r '"- ''- - '-- ENGLISH RAILWAY AND CANAL COMMISSION 9 ground that the railways possessed by the dock company did not constitute a railway within the meaning of the act.' In 1903 a further application of the same com- pany, subsequent to its acquisition of a short railway with which it had made connections, was refused on the groimd that the difficulties of exchange of traffic did not justify the granting of such an application. The Commission has looked at each through-rate case by itself. It has refrained from proposing a through rate. It has limited its action to the acceptance or rejection of the proposed through rate as brought before it. The power to propose through rates has been of little value to the traders. Normally, they have not been possessed of the exact knowledge necessary to the making of a through rate, with the result that they have been successful only in one out of five applications. The following sum- mary gives details with reference to the through-rate applications formally acted upon by the '^.mmission:— By canal company. By dock company. 1 By railway company. By traders. By munici' pal corpora- tion and traders. Year. 1 i li 1 5 1 1 1 1 1 1 1 S 1 t j 2 No action p rior to 1895. 1895 1 ! 1 1896 1 _ - _ 1 _ _ _ 1897 1 - _ _ 3 _ _ ' _ _ 1 189S - _ - - _ _ ~ i - _ 1899 - - _ _ 2 1 - i - _ _ 1900 - _ - - _ _ j _ 1 1901 - - _ _ _ - t - _ 1902 - _ 1 _ _ _ j 1903 - - - 2 - - 1 1 ^London and Eatt India Dockt Co. v. Great Eattern Ry. & Midland Ri/., 11 Ry. and Canal Traffic Cases. 57. Thi.s was a majority decision, Pefl dissenting. The decision of the Court of Appeal was Riven by Mr. .Tustice Wrigljl, who wa« a member of the Commission when the Manchester Canal ease was decided. He distingui.shed the rases. 10 QUARTERLY JOURNAL OF ECONOAflCS III. Undue Preference ■he invesligalion of ,S82 ,7° °'"''' """''" ''"""S ta domestic rate S, ','"',""'">• '"""'"'i-' ™,t«l plained ,hot Se P,^ . " '"«"'' ''^""^ "■<"- f™. give p*., La^l t "■" ''""* "" '"»"'"« a. the same'r 'r^re "iv™ ■;" Tf ? ■"=* >»'"" Fo-iuamentary discussions of 1887 inrl i«8s *i, were constant complaint- of nr f , ^^^ ^^'"'"^ stated that no ZZT P'"^^''^"*'^' '"''ites- It was traffic coui J be con. d T""' ''"''""^ ^'^^ railway preven. pr erential it 1 T "'''''' "^'^'^ ''''^ »«^ The government held t '" T "' ''^''^'g" P'-°d"''ts.' be made hZZnEnJ^rr'^^'V' ''^^""^^ ^^ould chandise because of o^gt."''"'"^ '''' '^'''^^ -- The undue preference section of the Act of is«« vides that where for fh^ ^' ^^^^ PJ'o- rates are chaSto o e .1 '?"""'' ^^^"•^^^' '«-- other or anv diff PP"' '^^"^ ^'^ 'charged to an- preference 1 be HU^ir' ^°"^*'i-« ^ -due ,,^ ., ™ "'^ ^^'^^^■'^y- In considering ' »ee evidence of J H Rnif n .« ;."= t;lt'^'S';«.«' ■■-• •" --. .... ... „. ,™, ,„. *Lord Salisbury, Hansard ISSK .h; . »ra, 1888, third series, vol. 323, p. 1052. ENGLISH RAILWAY AND CANAL COMMISSION 11 whf'ther the action complained of constitutes an undue pn i-rence, the commissioners are to consider "whether such lower charge or difference in treatment is necessary for the purf)ose of securing in the interests of the public the traffic in respect of which it is made. Provided thai no niihvay company shall make, nor shall the commission- ers sanclio,. any difference in the tolls, rates, or charges made for or any difference in the treatment of home and foreign merchandise in respect of the same or similar ser- vices."^ The final clause of the section prohibits a higher charge for similar services, for the carriage of a like de- scription and quantity of merchandise, for a less than is charged for a greater distance on the same line of railway. The concluding clause of the .section is not only wiiier than the "long and short haul" claases of the American stat- utes, it is also much wider than the prohibition hitherto existing in English legislation. An attempt was made by the railway interest to have a "long and short haul" clause placed in the legislation. It was argued that where a question of preferential rates came up, the comparison should in fairness to the railway, be made with traffic car- ried over the .same portion of the line.' It was held, however, that the consideration of this matter could safely be left to the discretion of the Commission. Complaints concerning undue preferences have occupied a prominent place before the Commission. Broadly 1 1 have italicized this so as to bring out the distinction of ti^atnient between home and foreign traffic. In tb" ■'", introduced in 18S7, clause 25 provide consi(h'red as affecting the justifiability of a group rate.' On the (juestion of (hfferential rates the Coniniissi')n has reversed itself. As has bee;i indicated, the Conunission is empowered to consider whether the rate conii)lained of '"is necessary for the purpose of securing in the interests of the public the traffic in respect of wliich it is nuide." In 1890 ' complaint was made that lower rates on grain and on flour were given from CanlifT to Birmingham than from Liverpool to Birmingham. The distances were respectively 173 and 98i miles. The railway company contended that this was on account of competition, and that the lower rate was necessary (1) in its own in- terest, (2) in the interests of the public. Direct inland communication exists between Bristol and Birmingham by way of the Severn River and canal navigation. There is also a combined sea anil rail route. Justice Wills pertinently .said Parliament had dealt with the matter of undue preferences with a "faltering hand." It had left to the Conmiission the responsibil- ity of deciding many things which would more n-iturally have been laid down in legislation.' The somewhat in- choate nature of the undue preference clause is, however, more correctly attributed to its compromise origin. While it was intended, in a general way, that the phrase "in the interests of the public" should protect the interests of the consumers. Justice Wills was undoubtedly correct in saying that Parliament had no clear idea of what it meant. He considered that the "public interest" must 'Pickering Phippt. etc., 87-88. 'Liverpool Corn Tradcrt' Auociation v. London f: EXGLISll RMIAVAY AXD CA\.\L CO.W.U/.S'.S/O.V 15 i I i I again in 1892.' Complaint was made of an unduo prpf- ercnco in flour and grain lu'twccn the Sovcrn ports and Birmingham, on tlio onf' hand, and Birkenhead and Bir- nangham, on the othrr. While the rate from Birkenhead to Birmingham, a distance of 9H miles, was ll.v. (k/., ;' rate from Bristol to Birmingham, a ditanee of 141 miles, was 8.S. Qd. The ra''way contended that the apparent anomaly was attributable to water competition. Both a majority and a minority decision were given In the dissenting opinion, delivered by Sir Frederick IVel, it was held that, while the eviilence justified low rates from the Severn ports, at the same time the liirkenhea ! rate should be reduced so as to give a lower mileage rate. 'Die majority opinion upheld t' railway position. The : -.tes complained of were attributable to effective coirpetition, maintained by a competing raih'aj and bj' wa»er comj)e- tition. The existing ineaturo, he oontinu:!^^"^:^.^ ^:':;:: "" ''• ^'"^^ eases where the traffic could not bo' b i, / VT,""^ rate was raised, and where at tJ.« ""'" "^" '^ the lower unfair to deman.i 1 a chiton Si'"'"' '' ""'^''^ '^^ raUway. in carrv.n, traffi^ n a ate" ' ■'''' ^^^ sea-borne traffic nu.t 2w "h/? ^""'P-^^'^'^e with public interest i^volv.l The ,? "" '\^'"^* P..^;.s Obtained by e...a,n^t^--:^ co"::i::;:\:t^r''^jn::r^^^^^^^ as in the United States as a f , w f ' / ""' ^''^^''^' T»ffi ^i'*'^"«' ^*"P'" ond Other, y.L.dtyur„ Traffic Cases, 83. " '^^ "^' ffv- "nd Other,, 8 Ry. ,nd -an». 332. PiJcering Phipp,, etc.. 102 and 103. •S« statement of Lord Salisbury, Han«rd 1887 thi^ ■ luuva, 1887, third series, vol. 314 KsausH nMi.i\y .\.\n r.i.v.i/. ro.u.u/.s.svo.v 17 nizod offpctivo romiM'tition us a just Kicaf ion «)f .i lower rate for the loiigrT distHlirc. WhiTc a higher titi' is charged for the shorter than for tlie ^n iter distance, the less Ix'injj included in the greater, tiie ('onimissif)n has held that, in the al)HPnce of effective eonijx'tition at t • longer distance point, such an arrangement is not ju-^fi- fiable, and ti)at the shorter ilistance j.oirit should share on a mileage basis \v the low rate gi\< ii to the longer dis- tance point.' The effect f)f com|M'tition has also been recognized in the case of export traffic. In 19();{, in the Spillers & Bakers case, a low ".shipment" rate was held nece.s.sary to obtain traffic. It was considered impossible to raise this ra*e, and the dissimilarity of circumstances did not warrant a comparison of the higher tlomestic r ite vith the lower export rate.' In 1904 a britiuctte rnmnifactr" ,i firm claimed that it was unduly prejudiced, sine it paid the domestic rate on it.s raw material, while the manufactured product came into competition abroad with coal carried on a low export rate. The Commission upheld the principle of export rates, and further found that the railway was under no obligation to regulate its charges with reference to the ultimate competition com- plained of.' From an early date English railway law has held that wholesale rates for large shipments do not constitute an undue preference. So early as 1858 in Nicholson's case, a leading case, it was decided that carrying at a lower rate in consideration of large quantities and full train loads at regtilar periods was justifiable, provided the real object was to obtain a grr .itei profit by i educed cost of carriage. In taking this point of view, it was recog- y ' Timm * Som v. .V. E. Ry.. Lane. * York liy.. and Olhtri, 11 Ry. and Canal Traffic Caw!). 214. '.S7«/;iT« St Baktr: Ltd. v. Talf Vale Ry., 20 The Timi-ji I-. K. 101. * LanciuhiTt Patent Fuel Co.. lAd. v. L. A.S. iV. Ry., Great (,'intrnl Hy,.cnd Othera, ,\ .nummary will be founil in the Railwru Timet, .\uffust 13. 1104. 18 ''■"™'' -^''^•v.. o. .«,,,„,,, was rrcogniz,,! that Jowor nt . . 'I"""" °^ ^^^'^ i^ «^»rai,.loa.l sl.ip,„.nts c" T^Wvf' '^ ^''""' '"'''^"■'^e wo.«ht into trucks.' Tho J. ' •' ^" ^"'^'^ ^ ^^''^'''ffr -^".-^ .a. He. .4=\r;;^tr r ^["'" the estabh-sf,e„., ' '" """ '""" '>■"«'• <■-;, ..,T' ' """ '^■"«" ^^--. ^-.-i; ■'WnW// .iT,■■ "■"' (-"..Hi Iraffi '*• CllNt'S. Traffi. ■cas.?".^;;""""',;"'""' «'"- •<■ r.. ,. „ „H , ,. me * Co.. ul ,uprn. p. ooj, ESdUSlI RMIAVAY AM) r.l.V.lA COXfXflSSlOX 19 of the present Coiiiinissioii has not been clear-cut. In some cases it has recognized (juantity as a justification for a rebate.' But it has in other cases atteinpteil to confine cost to mere economies of hooii-keeping, attributable to more prompt .settlements, etc.;* and it has expressed the dictmn that rebates in respect of (juaMtity would justify a differentiation of charges in so many cases that the rule against preference would be in danger of disappearing, "and the small trader would be in a more helpless posi- tion than the position in which he now is."' While tlie traders recognize the value of export rates, and the effects of competition thereon, the conditions wiiich affect the import rate are often neglected, and the low rail rates given on imported goods are often attrib- uted to the stupidity, if not turpitude, of the railways in pref(>rring home to loreign goods. When the Act of 1888 provided that the Commission should not". sanction any difference ... in the treatment of home and foreign merchandise in respect of the same or similar services," it was claimed that this absolutely forbade preferential rates, and that the home traffic would therefore be car- ried at the .same as that of foreigners.* Notwithstanding this enihusia.stic prediction there is at present a reiterated demand for a select committee to investigate the cjuestion of preferential rates. The iliscussion of preferential rates in England has proceeded along lines familiar to every student of the effects of water cumpetition on railway rates. "Why," 'Daldy and Otiieri. ut nujirn. p. .11(1. Sep also Uirkrlton Main ColUrru Co. V. IhM ,{• Hiirmln/ H}j.. Itiiihinii Timen. July -'.1, ISMW. In iIuh oiuw the cotiKid- fnitinn of the lnwcr rate was a iiiinitiuiin (if :)S,(KK) tons per annum. -' H.ff.. Charrinuton, SelU. rtr., ytt supra, '2'M). ' Ibiil. Ml. <\Viigh(irn anil Stevens, Heport upun the I'roceexting' t'l the Imjuiry held hu the Hoard .>/ Trade. ISKIt, l.siKI. pp. 12 anil 100. This repiirl I.) lh,> Ijinc-a.-hire and Cheshire. Devon and l.'ornwall. ami Irish ('.inferences (trailers' Drganijatiuns) , wtt.s piihlisheil at Manchester in IHSK). It contains a searching but extremely acriil uriil hiiisHed exaniiiiation of the railway position. w t t ' ■; ' .$ . » U.3JU '^^luuf i % ^' . jr^ -HyOf «► •^*^' **^i~ ' -i«'''( 1'^ .1';^ '] ^ cL^ yY. EA!m \'Mrs,iiiiaL'M. a^.ja 20 QUARTERLY JOURNAL OF ECONOMICS asks one, "if they (the railways) can carry at a profit from foreign countries, can they not carry home proiiuce at the same rate?'" If the London & North-western carried a trainload of meat from Liverpool to London at 25? ecause it was American, it should be able to do the same wherever the meat came from.' "Ex hypothesi they (the railways) alread}- got a profit out of the prod- uce they carried, ... and what they would have to do was to put the English farmer and producer on the same foot- ing as the foreigner.'" The question of preferential rates was brought before the Commission in 1895 in an exceedingly important case, which lasted eight days.* Complaint was made that the railway charged lower rates from Southampton docks to London on the following goods of foreign ongm-wool, hay, butter, cheese, lard, hops, fresh meat, bacon, hams- than it charged on similar articles of home ongm, which were normally carried a shorter distance, and that the services rendered in respect of the foreign traffic were not less than those rendered for the home traffic in the proportion that the rates were lower. A few ex- amples will serve to show the nature of the dispanty complained of: — Distance travelled. Rates on fresh meat, hay, and hops to London. Station. Rate for moat. Rate for hay. Rate tor hops. Southampton docks Southampton town Alton Botley 76 miles 76 " 45 " 76 " 17». M 26». :! 0». 2,i. 27t. 6d. bt. g«. 8. Stl. 6>. 20f. lOd. 20«. 22». 7d. I Ixjrd Henniker, Hansard, 1885, third series, vol. 315, p. 412. •Mr. MundcUa, Hansard, 1888, third series, vol. 329. p. 413. • Mr. Chamberlain, Hansard, 1888. third series, vol. 33g. p. 445. ..lfan««n Hou.e A,^natu.n on Railuay and C.nal y-"'?:' '"^ ''« f "^ '^'"^ iom V. London 4 Sauth^-Um Railway. 9 Ky. and Canal Traffic Cases, 20. ENOLISH RAILWAY ASD CANAL COMMISSION 21 Back of the complaint lay a competition of ports for foreign traffic. The London docks were in competition with the Southampton docks, which were owned by the London & South-western Railway.' Competition existed between the all- water route to London and the water and rail route via Southampton. At first the railway endeavored tc justify the apparent anomalies on the grounds that the rates complained of were made on the basis of water competition, and that, besides, they were balances of through rates. But the Commission ruled that .':uch matters could not be consid- ered in evidence undo the provisions of the .\ct. Under these conditions the railway had to fall back on the unsat- isfactor andard of cost of service. It was shown that the rati. ,or the home traffic covered a variety of services —e.g., receiving, weighing, loading, covering, superintend- ence, provision of station accommodation, switching — which were not included in the rate on the foreign goods. The foreign merchandise was less valuable, less liable to damage, more easily and expeditiously handled, could be dealt with at times more convenient to the railway, always in larger quantities, and generally in a much more eco- nomical manner. On account of better baling, to cite one example, three tons of foreign hops could be loaded into a truck that would hold only two and a half tons of English hops. The traders contended that such conditions of traffic as regularity and quantity, while admitted, were not capable of being included in the "similar services" spoken of in the undue preference .section. Their contention was in substance that, while there might be differences in tlu; case of home traffic because of dissimilarity of circum- 'Whfin these liorks wore .-u-quireri by the railway in 1892, it was anticipated they would be a formidable competitor of the London docks. For information de.Hcriptive of the highly developed facilities for handling traffic at the South- ampton docks, see Railway Age. July 1, 1904; Uailwaii \rwt, January 7. ltf(J5. 22 QUARTERLY JOVRXAL OF ECOXOMICS Stances, in the case of the foreign traffic it was intended that there should not, on any account, be any difference in favor of foreign goods. Had the contention of the traders been successful, it would have established a principle. But the decision of the Commission, which has been claimed as a victory by both parties, was of a compromise nature, and pro- ceeded on the careful lines already laid down that undue preference is a matter of the facts of the particular case. The lirticles with which the decision concerned itself were hops, fresh meat, and hay. These were the only articles in which there was any considerable traffic from the sta- tions intermediate between Southampton and London. The rates quoted on the other articles were simply " paper" rates. Sir Frederick Peel, who ilecided on the facts, held that the differences between the home and the im- port rates on meat, hops, and hay were not justified.' While his colleagues accepted this opinion, it was with hesitation. They both had doubts as to the al! -^cd pref- erence on meat,' and justly so. The average consign- ment of foreign meat from Southampton was 37 tons. In a period of seventeen months 10,638 tons of meat were shipped in 286 consignments. On the other hand, from Salisbury, the leading English meat centre concerneu, 231 tons in 825 consignments were shipped in the same period. It is apparent that, where the whole series of costs would be so different, the Commission strained the idea of cost of service to the breaking point, and in doing so favored the home producer. The decision was based on the idea, manifestly correct, that it was the intention of the statute to eliminate com- petition from the factors to be considered. At the same time the majority of the Commission are satisfied that the real factor controlling tlie rate situation in this case lAfaiMion Houte cate, 38, 39. ' Ibid. 32 and 43. ESGLISH RAILWAY AM) CAXAL COMMLi.SKJX 23 is water competition. As was said by Justice Collins, there was " no reason or principle in leaving out of account the fact of a rival route by rail or water from the point of departure to the point of arrival in the case of poods from abroad and taking it into account, as it clearly may be taken into account, where the comparison is between home goods only.'" This unsatisfactory decision, which cost the traders £2,()00 in law costs, obtained no general principle for the traders, and at the same time forced the railways to depend upon the artificial justification of cost of service. While the decision is of such a nature that in a case where there is real competition of home and *'oreign products a tliiTerent verf'^'-t might be given, no further action in regard to prelevontial rates has l)een taken before the Commission. In 1699 the question of preferential rates was brought before the Board of Trade under the conciliation clause, but no satisfactory agreement could be obtained." It was Mr. Chamberlain who introduced into the legis- lation the clause under di-scussion. The agitation in re- gard to preferential rates has been given an added vigor by his preferential traile movement. Back of nmch of i.'ie outcry concerning jjref_'rential rates is a hazy protec- tionism. The support Mr. Chamberlain has obtained, for example, in the iron and steel industry is in consiilcrable part due to preferential rates on i-'-n and steel products, although the matter is complicated by the export rates given by the railways of competing countries.' The control over docks by railway companies, which was trr' 'Manaion Houte ca»e, 32. See also the statement of Lord Cobham in Didcot. Seu-bury A Smitham iiton liij- Co. v. (}rmt Wcttrrn Hy. A L. Section 27 of the draft Keport of the Setrrt Commilire of 1882. p. xxviii. 'The pmctioe of consinninK K'kHs on throunh rales i« increasing. .\t the same time Continental railways— c.».. those of Belgium— refuse to loake th-viunh rates, except with railway rotiipanies. .\s to the allegcil evil effects of such ar- ranRements, see remarks of Mr. Hanbury. president of the Br„inl of ARricullure, Hansard. I9()2. fourth series, vol. cviii. p. 1640. See also Bo\l,> unil Waghorn, op. fit., vol. i. p. .^04. 'Lancashire ami Yorkshire Railway Hill. For text of the Instruction see Han- sard. I'.KM. fourth .scries, vol. 131. p. 1473. « wmk EXGUSII RMLUAY AXD CANAL COAfMISSIOX 25 petition from many points. To cite but a few examples- AJgenan fruit and vegetabjps, French hops, Danisli butter and eggs, compete with tiic home products. The hop rates complained of when President Hatlley wrote still exist. Not only do the English farmers complain of preferential rates, there is also complaint from Ireland that the existing rate basis discriminates against Irish eggs, butter, and bacon. It should be noted, although such a consideration is ruled out by the Railway Com- mission, that the low rates complained of are balances of through rates. It costs about £10 for freight charges to place one ton of Algerian fruit or vf>getables in London. In fruit shipments the foreigners have had the advantage that a considerable number of the British growers are not giving suflicient attention to grading and packing and, in general, to the requirements of consumers. The follow- ing may be taken as examples of the complaints in regard to Danish competition: — (mixed route). Esbjeru (Denmark) to Birmingham 553 miles Esbjeru (Denmark) " " 553 Armagh (Ireland) •• " 35;^ Annasb (Ireland) " " 353 •< Commodity. Hate per ton. butter egga butter eggs 47«. M. .■is.. 8rf. 42». tirf. 50». Od. The apparent disparity of rates on a distance basis di.s- appears when it is remembered that on the Danish products there is a long water haul, and that there is also the dif- ference between a car lot and a less than car-lot basis. The Danish rates are quot?:' -i minimum consignments of ten tons, while the Irish rates are based on three hun- dredweight. The more enlightened FJnglish farmers recognize the effects of water competition. They know tliaf it would not benefit them to have the through rat.; raised, as it would simply mean that the foreign produce would' move more cheaply by an all-water route ■When the London r 26 QUARTERLY JOURNAL OF ECOSOMICS & South-castprn Railway in 1887 i)laeiMl foreign hops on tlie same rate l)a.«is as domestic liups, the result was that the former moved by water to Loudon. The English producer was injuriously affected by the increased com- petition which lowered tlie price. At present appr()xi- mately 90 per cent, of the Continental produce im- ported by way of Boulogne antl Calais goes by water to London. \\'hile the farmers recognize the superior facil- ities for handling foreign goods, they at the .same time consider that the disparity between home and foreign rates is too great.' Some part of the complaint in regard to preferential rates is attributable to misunderstandings in regard to rate conditions as well as to a lack of initiative on the part of the farmers. The Royal Commission on Agriculture stated in 1S97 that, while co-operation among fanners was necessary in order to obtain lower rates, this matter could not be helped on by legislation.' But little has been done by the farmers to accomijlish this.' While there is much unorganized complaint in regard to agricultural rates, the fanners are presenting very little evidence before the Departmental Committee, wliich is at present investi- gating the matter. The railways have been more willing than the farmers to co-operate. For forty years the Lon- don & North-westeni has been collecting small consign- ments of agricultural produce along its lines. These it forwards in bulk, delivers them to the London salesmen, pays market dues, collects the proceeds from the sales- men, and forwards the balance to the shipi)ers. The London & South-western, which does a large business in l/v.r;,. evidence of W. W. Berry, a prominent hop-nrower ot Kent , before the Royal Commiuion on Agricultural Depre„io„. 1X97, answers to que.t.on» 49,190, wXo. 49,258, See aho statement of Mr. Sinclair, Hansard, 1904, fourth series, vol. 136, p. 29.i. ' Final Report, p. 529. 3See statement of the president of the Board of ,\Kriculture, Hansard, 1902. fourth seriea. vol. 10,H. p. 1039. ESaUSII RMIAVAY A\D r.l.V.U. COM.UISSlnX -jj Vnvkniiv freight, undertook roconfly to supply the fiirniers aloUK its lines with r..pi,.s of Pratt's The Oujanuation of Arjrvulture. All of the railways have heeu active in giving special rates to encourage agricultural shipments.' Hut, while the Danes are shipping [jroduce into Jinghuid on relatively low rates, which are the result „f c(M.perali(.n, 70 per cent, of the domestic agricultural shipments on' the Nortli-(.astern Railway are below three hundredweight, and (KJ [wr cent, fall below one ton. IV. CONTKOL OVEli AcTIAL HaTKS. In dealing with the rate policy of the Conunission, a distinction must bo made between the period prior to 1894 and that subsecpient thereto. Though it ha Hoard of Trade, as embodied in the Provisional Orders Acts, meant in all cases the systematization and in many cases the reduction of the maxima, the outcome was not satisfactory to the traders, some of whom wanted a general n-duction of rates, regardless of the cost to the railways. The change of status in regard to reasonable rates introduced by the Act of 1888 was more apparent than real. The former Railway Commission had stated that, in addition to there being a necessity that rates charged should be within the maximum, there was also the added requirement that 1 For full (lelail concprnin? tiip special :',rranKeinent!. made liv Hrilish rail- ways in ,h,s regard see liailwuu liat» and facilu.e,. cof.y of corr,'..|,„ndenee he- twee., the lioanl of Asriculture at.d Fisheries and the Kailway Companies of Creat Br.tam. e.n., H.04. A large nun.ber of .leta.l. bearmg „n the quesiion of prefer- ential rates will be foun.l in I'rMf^Railuaw a,ul their Kale,. Tin. hook has come to hand since the material contained in this section was .-et up. Jlieportoi the JouU Select Committee on ItaUu.au CcmparaeB Amuluamatian. lo7J, p. XXXIV. 28 QUARTERLY JOURS AL OF ECOSOMICS they must he rpa^«nabl<^' No IcruI action had been taken, however, in regard to this matter. Two juciicial decisions given in \^K\ and in 1887 seemed to uphold the position that a maxinnim rate sanctioned by Parliament was con- clusively reasonable.' Hut the statements in these deci- sions are simply dicta, since the cuestion of reasonable- negs of rates was not directly involved. The Act of 1888, however, settled that the maximum rate wa.'^ conclusive of reasonablenes-s.* At the outset of its work the only way in which the Commission was brought in touch with, rates was through thj provisions concerned with undue preference and with through rates. The Commission will not state before- hand that a rate is preferential.* One of the conmiission- ers. Sir Frederick Peel, has taken the position that certain powers over actual rates were given to the Commission. He has construed the statement in the " unilue preference"" clause which tlirects the commissioners to consider " whether the ineciuality cannot be remedied without un- duly reducing the rate charged to the complainant" to give a power of reducing the higher rates.' Concern- ing this interpretation there is .some doubi. Justice Wilis holds that the words in ciuostion do not confer any rate- making power, but simply indicate the circumstances to be considered." In an Irish case in 1897, in which the question of distributive rates was involved, it was held iJi'ouri;i lieporl of the Uadwaij fnmmiuiinnrra. p. «, Section U. 2Se- M,imt,e>ter.Shr,iiehl <{- l.inrnhMire Co. v. Brown. » App. V:x<. 71.^.. and Ore,U \Ve,lrrn Ho'uay Co. v. .\lcC„r,h„. 12 App. Ca-. 21H. In the latter case Lord W.;t»on took the position, ••Pnmo farie. I an, ..rrpared to hold that a rate sanc- tioned by the legislature mu»l i>e taken to be a reasonable rate." -See Art of I SSS. Section 24, Sub-section (1. and Sub-sect.oii 10. Htport of Board ol T.Mit:. 1S90. nn Ciiuiiliration of Merrhandite Traffic, etc.. p. 17. * /n re TafT Vale Hy. Co. 11 hy. and Canal Traffic Canes •SU. 'Note his dissenting opinion ir. the Liverpool Corn Traders' Ass,jciation case in l(on. ^^ 'lVe,t Ham C„r,H,ralion v. Great EaUern Ry.. 9 Ry. and Canal Traffic CawK. ^E.a.. In re London Hefnrm Union v. Great KoMtern Ry. 10 Hv. ami Canml Traffic Cases, 2.80 Wee Fercu*""! p^.'.-t- p- -,)*« .^ / n t i-- 30 QVAHTEHIY JOVHSM. OF KCOXOMiCS formpr rocard cotniM'tition and convciiii'iicc as tlic riioHt i!n|M)rtarit fartors. Tlu" latter lay more stress on ilistaiiee. The appeals from the Comnimsion have settled tiiat coni- |)etiti(m is as ini|K)rtnnt a. factor in connection with rates as geojjraphieal position. The (lue-stion of the reasonableness of partieiilar rates was suddenly Sroupht before the Coininission in 18HL The adjustments necessary in jjiittinn into force the rates under the revised maxima were jireat. The fact that fully one-half of the traffic is carried on exceptional rates, which are Iwlow the class rates, still further complicated matters.' At the same time there was an a|)parent desire on the part of some of the railways to give 'le traders an objpct-les.son in regard to the disadvantages of the legis- lative intervention which had brought some maxima below the actual rates formerly charged. And so the maximum cla.s.s rates were published as the actual rates effective January 1, 1893. The outcry which followed (piickened the work of ailju.stment, and led to an under- taking on the part of the railways that the rate increase should not be more than 5 per cent. But this did not prevent the enactment of a piece of panic legislation, pas.sed hurriedly and without due consideration.' Hy this act it was provided that, where rates were directly or indirectly increased after December 31, 1892, they were prima facie unreasonable. The fact that the rate complained of was within the maximum was not to be a justification of the increase. The Commission was given power to deal with complaints arising under this act, sub- ject to the provision that an application was first to be ' For detail concerning these rate" see "Report on the Question nf Slow Freights (Ennlan.l)." by Henry Sniart, Bullttin of Ihr International Kaihcau Cnnwi-M. July. 1904. 'A mas., of .letail pro and con will be found in the evidence attaclied to the Report of the Select CommiUee of 1H»;). Se» also Muvor. •The l.iinliih Ilailway Rate Question," Quarterly Journal of Ernnomici, .\pril, 1894; Acworth, The Ele- mentM of Railwau Economict. pp. H7-l.'>4. Ksai.isii HMLW \y \sn r.iv.i/. royrxfissiox 31 niiulo t(i the Hoard of Tmlo. Over wvpritoon huad' ,( complaints werr bioiiKht iM-fcro tho Hoard of Trade (m>- twcrn the duto of tin- jmssanc of the act and tlir end of Fohniary, 1S95. In the investigations leading up to the Provisional Ordorx legislation the trad.-rs had all ah.ng Ix'en desir- ous of having the actual rates serve as tnaxirna.' The evident intention of the majority of the memlwrs of the Select Conunittep of I, SOU was tjiat the rates in force at the end of 1S02 should he the maxima. In taking up the new functions imposed hy the revo- lutionary Act of !,s<)4, the Commission ha.l a full appre- ciation of tl tliculties of the new jurisdiction. .lu.s- tico Collins said, "I caimot .suppo.se that Parliament in- tended to take the management of the.s<' great trading cr)mpanips [the railways] (,iii of the hands of the practi- cal men who work them, and to place it in the hands of the Railway Commissioners." The Conunission had no intention to exercise a rate-making power. It was its intention to construe the legislation strictly. In the interpretation of t!ie .statute there was, however, a dif- ference of opinion between the coituni.ssion.'is. Lord Cohham held that the Conmii.ssion was not con.peteiit, of its own knowledge, to .say whether a rate was rea.son- able or not. "\o tribunal, however expert, would imder- take to .say that a (i.s\ (W. rate for the carriage of coal from Derbyshire to London is rea.'-onable, but that (i.-. OJrf. is unrea.^onabie." The legislature had, however, given a standard of rea.sonablene.ss in the rate of l.slL', and the rate could not he increased above this unless good rea- sons were shown.' In endeavoring to obtain some defi- nite standard of measurement of reasonableness, the Com- ' A-.u.. M,p,.cli of J. ». Balfour lirnww. already cite.!, p. 171. Kvi.l.nre of Mar^shull >t,.ven, l,ef.,re the Select C.mmittce of l>i9;). aii»wer» to nue»ti.,n, 2UH and in7.' ""''"' ■"''""""" '■""' <""•• '-W- V. Muitand Ry.. 9 Ky. an.l Cai.al Traffii; Ca«ei, sAWw^,' ■0^5*' 5^1. WUk^ 32 QUARTERLY JOURNAL OF LCOXOMICS mission ruled out all reference to competition, or to that more inclusive system, charging what the traffic will bear.' The opinion of the traders, that the rates in force at the end of 1892 should be maxinnun rates, received a partial support from Lord Cobham, who held that the fact that a rate had not been increased prior to 1892 created a strong; presumption against the railway because it had not increased the rate when it had the unchallenged right to do so;^ but Justice Collins held that conditions prior to 1892 could be considered, and that the reason- ableness of a rate was to be tested by conditions existing or apprehended before the legislation came into force.' Later decisions have taken into consideration conditions subsetiuent to 1894.'' There still remained the (luestion of the criterion of reasonableness. Justice Collins held that this should be cost of service. Reasonableness, he held, nmst be measured by reference to "the service rendered and the benefit received." This, in his opinion, pointed to cost of ser 'ice as the base, because "the service rendered and the benefit received was unaffected by the [)rosperity or misfortune of the parties to the contract.'"^ This sciuared with the views of the traders, who held that the true basis of a rate was cost of .service." The fact that the legislation provided, in the first instance, a rate of an ante- cedent period as a criterion of reasonableness would seem to .show an intention of ruling out in the present rate 'E.g.. ChnrUu- and Sarrtlinn Cnliriril Co. v. .Vorth-tattrrn Ry.. 9 Ry. and Canal Traffic Cases. 140. In lilurk A Son» v. Paledonian Uy.. ftr.. U Ry. and Canal Traffic I'a^-a. 17(' ihe Court of Sessions refused, on appeal, to grant the process which would eimljle the railway companies to investinale the liooks of the applicants to see what I heir prohts had been .luring a given pe-iod. ' Derby Silkitone Coa' . ra«e, l.'tO. Mbid.p.lll. 'E.g., Black it Sum, ut tufira. ^Dmby Silktione cote. Illi. The - ^•'»7. *ffi-- ENGLISH RAILWAY AXD C.l.V.l/. COM.XflSSlOX 33 any consideration of what the traffic won' ! boar; for, if ciiargiiifr \vhat the traffic would he.- m i^c nn->'U,' were admitted as a present criterion i' nv.soiia'nien":. , it is difficult to see how the past ratt co^n:] serve u a standard of reasonableness, when, presu: .S.^ v. -lat the traffic would bear was soniethinji essentially different. The increases in rate.s complained of, which have for the most part arisen in connection with coal traffic, have in a number of ca.ses been indirect, attributable to de- crea.«os in the allowance made for wastaj^e in the coal traffic, etc. The criterion the Commission has found it neces.sary to adhere to— cost of .service— has tied it down to an arbitrary arrangement. To meet this condition, the railways have had recourse to technicalities savoring, in .some instances, of subterfuge. In one ca.se it was al- leged that the increa.se complained ..f was attributable to an increa.se in the cost of cartage as distinguished from conveyance charges. The former fell under terminal services, over which the jurisdiction of the Commission was limited.' No general principle has been established in the unrea- sonable rate cases. The railways had claimed the right in 1893 to increa.se the rates by r, per cent, as compared with the rates in force in 1892. While the traders never recognized the validity of this claim, the Board of Trade by 1898 had accepted this arrangement as justifiable. The important Smith and Forrest ca.se, which came up in 1899, was intended to test this arrangement.^ Com- plaint was made by the oil refiners of Liverpool and Man- chester that an increase of 5 per cent, was unrea.sonable. The increase was in part direct, in part indirect, attributa- ble to decreases in cartage rebates. Tiie matters involved K\fan,ion Howie AuoHation. etc. v. L. & \. W. Ry.. 9 Ry. aiul Canal Traffic V^"' ■ ,,m ''** "P«':"J'y the remarks of Lord l>her in the appeal proceeding., 156. 2 Smith * Fanett v. L. * ;V. W. Ru. and Other: 1 1 Ry. »nH r,ns! Traffic Cases. 34 QUARTERLY JOURNAL OF ECONOMICS wore pertinent to the whole freight traffic of the United Kingdom, and affected future as well as past rates. The railways introduced statistical evidence showing that, because of various increases in cost, particularly in the case of labor, expenses were 5.1 per cent, higher in 1892 than in 1888 and 6.3 per cent, higtier in 1898 than in 1892. The railways desired to carry the conipari.sons back to 1872, when many of the old rates had been fixed; but the Commission considered 1888 a sufficiently re- mote date, and comparisons were made with the condi- tions of 1891. It was found that an increase of 3 per cent, would be justified. The Commission has thus shown its intention to look at each case by itself. If a 5 per cent, increase should be found justifiable in a particular case, it would not necessarily have any bearing on a later de- cision. The desire of the Commission not to engage in any rate-making experiments has kept it from making any statements as to general rates. It has concern. 1 itself with the reasonableness of particular rates. The Com- mission has painstakingly endeavon^d to get at the cost involved. The decisions have been compromises. Where decisions have been against the railways, damages have been awarded on th(> basis of the dift'erence between the increase and what was deemed a justifiable increase; and the railways have been ortlered to desist charging the unreasonable rates. In a recent case an attempt was made to obtain an expansion of the unreasonable rate jurisdiction.' It \\as contended tliat it was unrea- sonable to increase a rate, altliough the increased rate was still below the point to which it had been decreased in 1894. The Commis.'^ion did not, however, i)ass upon this question. It is apparent that, if such a contention were accepted, still more rigidity would l)e introduced 1 Xt ilium A Askiim llemiitile Iron Co. v. Furneu Ky. anil Ol/ier^, rep< rted in liatiti-au Timm, .January 'Jl, lltu.t. ENGLISH RAILWAY AXD C.WAL COMMISSIOX 35 into the system. The traders' jinticipation.s as t(. tlie effec; of the Act of 1894 have been nullified by the will- ingness of the Coinniission to consider conditions ante- cedent to the legislation. The whole position, it must be recognized, is an exceedingly artificial one. While the position taken by the Commission is strained and un.satisfactory, it is difficult to see, when it was specifi- cally referred back to the conflition.s of 1892, what other method it coul a, Bu„ne„ b.nlerpr,,,,. pp. l,|-|(j:i, contain,.,! i„ Ashley'. lirrH.h Irui,^. ly expensive. Th(> same conditions existed in comiection with the Commission 1 In this connection !*ee the statement of .Sir B. .Samuelsoii, wiio wjis very active, on the trailers' aide, in the steps Icailinu up to the leRislation of 1,S88. Hansard. 188:t, third series, vol. 278, p. 1887. - In 190.3 the cost of maintenance of the Commission amounted to £(j.497. •■'Sic Uadway and Canal Commission Procedure. Schedule III.. Woodfall, op. cU. See also Senate Committee on Interstate Commerce, ut supra, vol. v.. Appendix B, p. 220. The Commission fees in rate cases. a.s a maximum, do not exceed £5. ^.'/■,'AL.'ir ♦'. EXaUSn HMLWAY A\/, (M.v.lA fO.U.U/.S.sVO.V :{9 of 187;} In the luxly of hiwyors fuund practisiiig hoforo the Commission arc many whose names are prominent in the Parliamentary bar,— a prarticc wiiose fees are high. The legal work before tlie Commission lias tended to fall into the liands of a relatively small number of practitioners.' Prior to isy4 it wi.., the practice (o allow costs for two lawyers, unices when some especially tech- nical matter was involved.^ Since 1S94 there have l)een. on the average, two lawyers on each side in tiie traders' cases. Cnder these conditions the expen.se, in a ease contested before the Commi.ssion, runs from £15<) to €200 a day. The individual trader is able to le.^.sen his ex- pense where, as in the sidings' rent cases, a group of tra.ssions are held in the capital cities of the countries con- cerned. It is cheaper to have tlie cases taken to the tech- 'In the 58 trailers' caws covereil by the reported ll in local matters, it is apparent that thi.v procedure 'is un- fitted for nuittera of more general interest. There would also be a defect in that the way is open for a lack of ex- pedition. Appeals may be taken on points of law or e(|uity from the decisions of the county court. In the consider- ation of these appeals the high courts are empowered to draw inferences of facts. E.xceedingly small matters are appealed at present. In 1904 one appeal was concerned with an alleged overcharge of UW. on a railway journey.' It has been suggested, however, that the cost of .-ppeals under the proposed jmisdictjon should, where the appeal is by a railway, be borne by the railway.' When the Act of 1S94 was under discu.ssion, it was claimed that the legislation was " "'"'"■">■ 'i"'-^ a-l '•''••'r«- Art of ISUl. lh,s section ,s cnrerned with special charge, that ...av he „.aae hy rail- ways for special services. j •»" ^Athlon V. I.nrir. it Ynrkihire liy.. 2 K. H. 1904. 31;). 'Wajthora and Sleve-ig. op. oil., p. 65. ri\ I/, roiM/.'.s.s/o.v .|;{ iiiatcly (.ri.'-half of fhcsc were pivsnitcl w the |>.Ti.i(| IS!H> I'K).'). Tlic following siiiiiiiiiiry sIhiws the rrsult ol till- more iniportiuil appliciitions: — Sevrntli Hr|,.,rl. j Kiitlilh l(..|>,,r(. HlilNcirii. AfPllrATlova, INflf) HNI,I. ClnniiifioBtion ... I)>'l»jH in rrinvpyanre.^, riwilitir^a, pto. Kiiiilliirs ami i.ilN on raniili Ital.'«, ilifTpri'iiiittl UttI*"*. |>reff>rcntjitl Kali"<, Ihrniiirli ruti'iiilihiirip.l . Hull-. ihi.iuKli rat.'-, reilurlion .if Itiit.-". nnriMi-..pii,.i(i|i., r.-.luriiipM.if ftphat*-. rurtuKi. Mphalp. »t8ti./!i ipniiinnlM ' Splll.-.|. ^ •"<"■• 37 I .p-ful. >*<-"M g 4 IN IH 3 [ ii'.iir- •p."(ul. 4 I L'tt Tliorc well', then, iiiidcr those lica.lings satisfactDpy agn'o- riicnts in ahout one-fifth of the arjplirations made. While the ronciliation work of the Hoard of Trade lias iiif't with a fair degree of siiece.s.s in . Fourth liepurl of Ihr -tonrd nf Trrule o/ Procmt,,^, under .Stcl.vn 31 of th, ICaUwau and ( aiml Tniili Act, 1S88 p. U. 44 QUARTERLY JOURSAL OF ECOSOMICS inary hoaring Iw'fon' t\w Hoard of Trailo is noccssary. Howovcr, siiipc the (Ictcrtiiiiiatioii of tlu' Hoard on such a matter has no IcRal cffoct, the proliininary hearing has become simply a perfunctory matter. The Hoard of Trade is unwilling to exj)re!*s an opinion; while the rail- ways are unwilling to take any position that may he used against them liefore the Commission. When tlie rate increases of lS%\ were under discrssion, the Mansion House Association proposed, on hehalf of the trailers, to accept the decision of the lioard of Trade on these rates if the railways would also pledge themselves to accept the decision. Hut to this the railways would not agree. To the attempt to give the Hoard of Trade power over rates the railways are strongly o|)posed. This position is also supported by the Hoard of Trade itself. It has constantly claiiiicil that the strength of the conciliation procedure of the board is wholly attribu- table to lack of compelli'ig power. It is averse to any in- creased jurisdiction over rates being conferred upon it. It also believes that, if a new rate tribunal is organized, it should, while e(|uipped with a conunanding personnel, be of the "advisory" ty|)e. VI. Table I. indicates Tiat, from the traders' standpoint, the most important matters brought before the Commission arc sidings' rent charges, preference, unreasoniil)le rates, charges for .services at sidings, and rea.sonablc facilities. Attention has already been directed to the importance of sidings' traffic in British railway working. For many years the small traders engaged in retailing coal had been using the trucks as storage warehouses. The railways objected to their sidings being crowded with loaded trucks. The colliery owners, to whom the rolling stock belonged, i:\af.tSll KM /.WAY AM) r.l.Y.I/. r()\fMlSSIf)\ 45 also (ihjccted. FornuTly tlir railways had charKiMl df- niiirrap- charges imw.l on ihc avt-rap- iitiic a truck was (liiaiiicd on a siding. In iS'.J.j the railways dccidcl to charKc dornurrago base! on the actual tiinc a truck was detained on a siding over anil above tl,,. (j„„. n.'ces>ary to unload it. Since l.SUr) many application- dealing with this arrangement have been brought hetore the Cmimis- sion. Some have come tip under the heading of legality ^ 47 and tliis of neeossity involved the rebuilding of the rail- way station. This implication from the law of 1S.54 was promptly overruled.' Undoubtedly the pre.sence of a judge on the Commission has made the relations with the higher courts more har- monious than was the case with the Commission of 1873. There has not been that tendency, so conspicuous in the relations of the federal courts to the Interstate Commerce Commission, to regard the Conmiission as an amorphous interloper. In one case, it is true, the Scotch Court of Sessions claimed that, if a decision as to fact depended upon a conclusion in law, then there could be an appeal. This line of argument, wliich, if followed, would soon undermine the finality of the Commission's decisions on questions of fact, has not been adopted; and there has been a ready recognition by the courts of the finality of the Conmiission's decisions on ({uestions of fact. The result of this is seen in the attitude of the courts to the decisions of the Comnii.'^sion. Down to 1904 there have been, as is indicated in Table III., thirty-eight appeals. The Connni.ssion has been overruled in four ca.ses, while in two others it has been sustained in part and reversed in part. The decisions of the Conuni.ssion in the traders' cases have more finality than in the cases between rail- ways. While nine-tenths of the applications before the Conuni.ssion have been concerned with traders' rights, there have been only eighteen ajjpeals in the traders' cases; wiiile there have been fifteen ap[)eals in cases wiiere railways alone or railways and dock companies have l,een concerned. From the .standjioint of the trader a ([uestion of impor- tance is the willingness of the railway to obey tlie orders of the Comnii.^sion witiiout fighting tiie matter to the la.st ditcii. While, on the whole, the railw..;s have l)een loval 1 Dartntlnn Lonil Hnnrd v. /.. it- .V. IT. Uij. K Hy. ami Cunal Traffic Cn . 2!6. 48 QUARTERLY JOURNAL OF ECONOMICS Kl-J to the decisions of the Commission, examples may be found on both sides. In 1902 the railway reconsidered its first intention to appeal the Charrington, Sells case. The re- sult was that a large number of cases, in which the same set of facts was involved, were settled out of court. The London & North-western, as a result of the decision in the first Corn Traders' case, gave up the attempt to com- pete for the traffic with which the case was concerned, and readjusted its rates accordingly. On the other hand, it was necessary, in the case which the Mansion House Association won from the same railway in 1896, to have supplementary proceedings before the Commission in 1897 before the cessation of some of the rates complained of was obtained. The involved uncertainties of English railway law have also played their part. The railways have been able, acting within the law, but depending upon legal, not commercial, conditions, to modify the redress given by the Commission. In 1889 a decision, under the undue preference clause, found that existing rates were interfering with the distributive business of the Irish town of Newry. Two years later complaint was made because one of the rates complained of had been raised. The railway successfully justified this, on the ground that the section of road, on which there was an increase of rate, was expensive to work on account of cost of gradients, etc. In 1900 the firm of Cowan & Sons, paper manufacturers, failed in an application to the Commission for a rebate on sidings' charges. In retaliation for this application the railway company, which for twenty-eight years had delivered coal at the private siding of the firm in question, refused any longer to deliver coal at the siding. While the railway was at the same time delivering coal at the sidings of adjacent competing firms, it delivered the coal for the Cowans at a near-by station, and they had to haul it back to their siding. The decision of the Commission "'.-■'(ffi^*"' ■ 'maL:?^^- ENGLISH RAILWAY AXD CANAL COMMlSfHON 49 in favor of the Cowans was overruled. It was held that the arrangement between the railway and the trader in this case was a purely voluntary arrangement, creating no prescriptive rights against the railway. It was not till 1904 that legislation, bringing such si(ling.s within the facilities clause of the Act of 1854, and thus supporting the Commission's decision, was passed. The Commission, whenever there is an u ^v of facts,— e.g., in many of the sidings' rent cases, 'alt with cases in groups giving a decision which ^(. a set of cases. The unwillingness of the courts to give the tlecisions of the Commission a more general effect has assisted in tying the decisions down to the facts of a par- ticular case. In October, 1901, the Conunission decided that certain coal rates charged by a number of Scotch railways were unreasonable. The rates were discon- tinued, as regards the complainants, in December of that year. Three other traders, who were subjected to the same rates, but who had not been parties to the suit, later brought action in the courts for damages because the railways had continued to charge them the rates com- plained of. The court held, however, that the decision of the Commission had no general effect. Although the rates had been found unreasonable, the court would take no cognizance of this unless they were also illegal.' The functions committed to the Commission are ex- tremely diverse. AVhile it has, with evident innuendo, been called the Traders' Court, it has, in adilition to deal- ing with rate matters, an extensive jurisdiction in regard to arbitration of matters referred to it by the Board of Trade; e.g., differences between railways involving such matters as running rights, number of trains under a run- ning arrangement, arrangements in regard to connec- l Lnnarktkire .Slerl Co., Lid. v. Cnlediyntan Hu.W Scoti Law Tirnc-i Hpptirtn, 407. 40S. A prelimiimry decision of the court ha.l hi-M Ihat the Coiiimission's decision was of geni-ral effect. Ibid. 225. 60 QUARTERLY JOURNAL OF ECONOMICS tion in a through train service over a connecting line, division of expenses between the owning and the controlling company, differences between the Postmaster-General and railways in regard to postal payments, questions arising in connection with the introduction of improved brakes, complaints in regard to the water supply of London. In addition it serves as a court of appeal from the Board of Trade in cases arising out of the rules made by the Board of Trade under the railway labor acts, and has alternative jurisdiction in the workmen's trains ap- plications. In addition to jurisdiction under special acts the Commission exercises functions finding their legal sanction in some nineteen general acts. Not only are there complaints at present in regard to preferences on imported products, there are also com- plaints concerning the rates and facilities given home products. Complaint is especially active in the case of Irish agricultuf ' products. Comparisons, unfavorable to domestic rate, are constantly being made with for- eign rates. TIiU question of shipments on "owner's risk" rates gives rise to many complaints. The criticism of the Commission on Agriculture of 1897, that the rate regulative legislation has not given clear effect "to the intentions of Parliament,'" is general among the traders. That the Commission has not accomplished much that was expected of it is a patent fact. Its procedure has not met the case of the small trader. At the same time the rate regu' ive procedure that accomplishes all that is expected of it is not absent from England alone. The Commission, it must be remembered, was organized, not to reduce rates or to intervene actively in matters of rate regulation, but as a court to settle differences. As a court, it has performed its functions. While there was, at the outset, some tendency on the part of the judi- 1 final Report, paragraph 526. Is^f^JT^ST^^ST '9m ^'.^m M^ Jbj-" ' iui. >*l?"t:;i '^i..»SSi«'3iM'' ^^ ESGLISU RAILWAY ASD CASAL COMMISSIOS 51 cial members to look at matters from a legal staiuipoint rather than from the standpoint of facts, the tendency has been, in more recent years, to meet the conditions rather than to bend the conditions to meet preconceived theories. On questions of railway law the Conunission has been, on the whole, more in touch with the facts than the ordinary law courts. While the expense attaching to litigation before the Commission is readily apparent, it may be queried in how far there is a justification for expecting either a cheap settlement or a settlement, at the public expense, of important business matters. So far as England is concerned, the attempts to obtain cheap settlements, in the face of the existing involved body of railway law, would mean, if successful, results of little worth. VII. In the United States the Federal courts have recog- nized the debt of the Act to regulate Commerce to the Engli.sh regulative legislation. But, when comparison is made of the constitution and functions of the English Commission with those of the Interstate Commission, differences at once appear. The English Commission is a court. The American Commission has the functions of a referee or special com- missioner. The former has final decision in regard to fact and a limitation on the right of appeal, with the re- sult that appealed cases are normally settled within a year. The latter has no finality of decision in regard to fact, and appeals from its decisions have taken from two to nine years to decide. While the English Commission has been overruled in the period ending 1904, wholly or partly, in six out of thirty-eight appeals, the Ameri- can Commission has, in approximately the same period, been overruled in twenty-nine out of thirty-eight -fJ*i...c*> 52 QUARTERLY JOURNAL OF ECOSOMICS appeals.' While the Interstate Commerce Commission has, practically from the outset, claimed, as a necessary implication from the language of its enabling statute, an amendatory rate-making power, the English Com- mission, organized as a court, has, almost without excep- tion, kept aloof from making implications extending its jurisdiction, and has denic any intention to exercise a rate-making power. While the members of the Ameri- can Commission hold on a limited tenure and the Com- mission is a bi-partisan organization, the tenure of the lay commissioners in the English Conunission is for good conduct, there is a pension on retirement, no question f bi-partisan organization enters in, and the provision is made that one of the commissioners shall have techni- cal knowledge of railway affairs. The judicial members of the English Commission are assigned to it for five years; but during the period they are not engaged in the Com- mission work they perform their regular duties as judges of the high court. In the details of the regulative policy which has devel- oped under the Commissions, resembl.i nces and differences appear.' The English regulative policy is not in harmony with that of the United States in regard to the extent to which competition is to be considered as a justification of rate anomalies. While the English legislation eliminates competition in the case of import rates, the American position, as established in the Import Ratr .^se, states that competition is to be considered as affecting both import rates and domestic rates. In the case of domestic rates the English Commission at first would not recognize com- petition as. the justification of anj anomalously low rate- basis unless a well-defined "public interest" was thereby »Soe Table III. See al»o Appeiulix D, p. 3.31, vol. v.. Heanngt of CommiUe4 on Interatate Commerce, etc., 1905. 'There is no recognition, in the workinR of the English Commission, of re- sults arrived at iri the regulative policy of the United States. -^ . r jTf fapn£^i«f:.rjQnriE:;^m I m I I I I I « ^ M I ] M I I n I ^ I X I I I 1 I ?4 u? M I CI 1 1 « I iC t t I I - w I I -. I o N I I I ' I I i I rt M I ) 5 2 s> - — a; 3 3 C III E ■/; u ■ i I -I la & • & = ^ ? -C '• ? i s S = S £ r 2 ii§|l ^ - ? :H = t- » t: »: r! « b -f^ -» *. (^ 3. 0/ i< a. c >. >. i < =^ - ^ -i! 2 b ji _,..._- .^ i _ », C '5 a .== a .i i I ■ ^i,'.;f. "«''»:.«rifr-i:JALk'vr._^^ 5pj • ," "■* "-■ ■/^'■S2S»i"^'^!^ •*»*^' •«' n,t- ESGLISH RAILWAY AND CASAL COMMISSJOX 57 s s c 3 MS? i ° S 5 S5 O g £ 23 XIJIII-IIIIII § « I « p -. g - I I -• I I I I .» I -. I I ■*! 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