,.'^'. ^^^o •^.v".. .^^ IMAGE EVALUATION TEST TARGET (MT-3) 1.0 l.i tim ■ SO |56 U US |28 |2^ I4i|w 2.0 124 140 1.8 11.25 i 1.4 6" e ^ /2 / > >5 ^'^ y /^ PhotDgraphic Sciences Corporation 33 WEST MAIN STREET WEBSTER, N.Y. M580 (716)872-4503 S^ ,\ iV <^ [V ^ ■^ ^ 6> CIHM/ICMH Microfiche Series. CIHM/ICMH Collection de microfiches. Canadian Institute for Historical Microreproductions / Institut Canadian de microreproductions historiques Tecitnical and Bibliographic Notes/Notes techniques et bibliographiques The Institute has attempted to obtain the best original copy available for filming. Features of this copy which may be bibliographically unique, which may alter any of the images in the reproduction, or which may significantly change the usual method of filming, are checked below. L'Institut a microfilm^ le meilleur exemplaire qu'il lui a 6t6 possible de se procurer. Les details de cet exemplaire qui sont peut-dtre uniques du point de vue bibliographique, qui peuvent modifier une image reproduite, ou qui peuvent exiger une modification dans la mdthode normale de filmage sont indiqu^s ci-dessous. D D D D D Coloured covers/ Couverture de couleur I I Covers damaged/ Couverture endommag^e Covers restored and/or laminated/ Couverture restaurde et/ou pellicul^e I I Cover title missing/ Le titre de couverture manque Coloured maps/ Cartes gdographiques en couleur Coloured ink (i.e. other than blue or black)/ Encre de couleur (i.e. autre que bleue ou noire) I I Coloured pfates and/or illustrations/ D Planches et/ou illustrations en couleur Bound with other material/ Reli6 avec d'autres documents Tight binding may cause shadows or distortion along interior margin/ Lareliure serr6e peut causer de I'ombre ou de la distortion le long de la marge int^rieure Blank leaves added during restoration may appear within the text. Whenever possible, these have been omitted from filming/ II se peut que certaines pages blanches ajout^es lors d'une restauration apparaissent dans le texte, mais, lorsque cela dtait possible, ces pages n'ont pas 6t6 filmdes. Additional comments:/ Commentaires suppldmentaires; D D D D D D D D Coloured pages/ Pages de couleur Pages damaged/ Pages endommagdes Pages restored and/or laminated/ Pages restaur^es et/ou pellicul6es Pages discoloured, stained or foxed/ Pages ddcolor^es, tachet^es ou piqu6es Pageiii detached/ Pages d6tach6es Showthrough/ Transparence I I Quality of print varies/ Quality indgale de I'impression Includes supplementary material/ Comprend du matdriel supplementaire Only edition available/ Seule Edition disponible Pages wholly or partially obscured by errata slips, tissues, etc., have been refilmed to ensure the best possible image/ Les pages totalement ou partiellement obscurcies par un feuillet d'errata, une pelure, etc., ont M filmdes d nouveau de fapon d obtenir la meilleure image possible. This item is filmed at the reduction ratio checked below/ Ce document est filmd au taux de reduction indiqud ci-dessous. 10X 14X 18X 22X 26X 30X / 12X 16X 20X 24X 28X 32X plaire Bs details iques du int modifier xiger une de filmage The copy filmed here has been reproduced thanks to the generosity of: Thomas Fisher Rare Book Library, University of Toronto Library The images appearing here are the best quality possible considering the condition and legibility of the original copy and in keeping with the filming contract specifications. L'exemplaire filmd fut reproduit grdce L la gin^rositi de: Thomas Fisher Rare Book Library, University of Toronto Library Les images suivantes ont 6t6 reproduites avec le plus grand soin, compte tenu de la condition et de la nettetd de l'exemplaire film*, et en conformity avec les conditions du contrat de filmage. Id/ qudes Original copies in printed paper covers are filmed beginning with the front cover and ending on the last page with a printed or illustrated impres- sion, or the back cover when appropriate. Ail other original copies are filmed beginning on the first page with a printed or illustrated impres- sion, and ending on the last page with a printed or illustrated impression. Les exemplaires originaux dont la couverture en papier est imnrimde sont film*s en commencant par le premier plat et en terminant soit par la dernlAre page qui comporte une empreinte d'impression ou d'illustration, soit par le second plat, salon le cas. Tous les autres exemplaires originaux sont film6s en commenpant par la premiere page qui comporte une empreinte d'impression ou d'illustration et en terminant par la dernidre page qui comporte une telle empreinte. The last recorded frame on each microfiche shall contain the symbol -^ (meaning "CON- TINUED"), or the symbol ^ {meaning "END"), whichever applies. Un des symboles suivants apparaitra sur la dernidre image de cheque microfiche, selon le cas: le symbols — •» signifie "A SUIVRE ', le symbole y signifie "FIN". taire Maps, plates, charts, etc., may be filmed at different reduction ratios. Those too large to be entirely included in one exposure are filmed beginning in the upper left hand corner, left to right and top to bottom, as many frames as required. The following diagrams illustrate the method: Les cartes, planches, tableaux, etc., peuvent dtre film^s d des taux de reduction diff^rents. Lorsque le document est trop grand pour dtre reproduit en un seul clich6, il est film* d partir de Tangle sup*rieur gauche, de gauche * droite, et de haut en bas, en prenant le nombre d'images n*cessaire. Les diagrammes suivants illustrent la m*thode. by errata mad to tent une pelure, fagon d 1 2 3 32X 1 2 3 4 5 6 THE ENGLISH RAILWAY RATE QUESTION. The chief stages in English railway liistoiy may be de- scribed as follows : — First. There was the period of doubt and siispicif)ii as regards the national advantage and probable financial suc- cess of railways. This period was short. It really ex- tended only from the promotion of the Liverpool and Manchester Railway in 1824 until about 1840. Even while it endured there were incipient movements towards governmental encouragement of railway enterprise ; for Parliament was induced to grant a loan to the Liverpool Railway of $500,000, at 3i per cent, interest, — a low rate at the time. Parliament also exempted it from the pas- senger tax which was then payable by stage-coaches. This tax was practically imposed upon the railways in 1882; but the terms of its imposition gave the railways an advantage over stage-coaches which amounted to a not inconsiderable bounty.* Second. The great change in the attitude of Parliament and the public towards railways came about in the second period, wlien '• the extreme of determined rejection or dilatory acquiescence" was exchanged for " the opposite extreme of unlimited concession." f This, however, is putting the case rather too strongly. The concessions were never unlimited, although they were large. Even at that time the powers of the railway companies were defined by act of Parliament. The i)romoters of the com- panies were shrewd enough to ask not for vague powers, • Cf. Thomas Grahame, Treatise on Inland Intercourse in Civilized States, 18H, p.lOGet seq. t Quoted by Herbert Spencer, " Railway Morals anil Kailwaya Policy," Essays, American edition, p. 205. THE ENGLISH RAILWAY RATE QUESTION 281 — for vagueness is a two-edged weapon in a statute, — but for large, definite powers. For example, the maxi- mum rates for which they asked were largely in excess of what they intended to charge, and largely in excess also of what they did charge until the inflation of trade in 1870-74. They left a large margin for contingencies, but they demanded definite powers. Railway enterprise was encouraged by these statutory privileges ; and the increase of railway dividends, due to the rapid expansion of traffic and the relatively high rates, produced the rail- way mania of 1845. The railway Acts passed during this period were formed upon a definite model, and in one of the clauses of this model Act the principles of equal mile- age and of equal treatment were laid down.* The Regulation of Railways Act of 1844 f gave powers to the Treasury to revise the scale of "tolls, fares, and charges" of any railway company, when the dividends of the company exceeded 10 per cent.J The Railway Clauses Act of 1845 § enabled the railway companies to • " The rates and tolls to be taken by Tirtue of this Act shall at all times be charged equally, and after the same rate per ton per mile throughout the whole of the said railway in respect of the same description of articles, mat- ters, or things, and that no reduction or advance in the said rates and tolls shall, directly or indirectly, be made partially or in favor of or against any particular person or company, or be confined to any particular part of said railway, but that every such reduction or advance of rates and tolls upon any particular kind or description of articles . . . shall extend to and take place tliroughont the whole and every part of said railway . . . and shall extend to all persons . . . using the same." See copy in Grierson, Railway Rates, English and Foreign, 1886, Appen- dix, p. Ixxi. t7&8 Vict.,c. 85. } This limitation has been rather scornfully treated by critics of English railway policy, and no doubt with some justice, when regarded from the point of view of more recent practices of stock-watering, etc., which must render ineffectual dividend limitations pure and simple. In 1845, however, the rail- way system was yet in its raw youth ; and the anxiety of the legislature led it to the adoption of any feasible plan of preventing the railway companies from assuming the position of monopolies. The limitation must be judged in the light of experience at the time when it waa enacted. The force and interest of it, apart from questions of the easiness of evasion, vary with the dividends. §8«& 9 Vict., c. 20. 282 quartehly journal of economics vary the tolls upon the railway "so as to accommodate them to the circumstances of tlie traffic," thus withdraw- ing the " equal mileage " clauses of the earlier Acts. The same Act re-enacted the prohibition of "prejudicing or favoring particular parties." During the period from about 1840 until 1854 the rail- way network of England was i)ractically created. It is true that this network was built on no definite plan, that it was financed on no very sound princii)les, that there was much chicanery in promotion, and much mismanage- ment afterwards. Yet it was made, and made q lickly, — made much more quickly, perhaps, than it cruld have been made, had any other system been adopted. But the want of a plan, besides causing great waste of resources, resulted in discontinuity of lines. Transference of traffic from one line to another was inconveniently conducted, and sometimes even wilfully impeded. Combination or amalgamation of lines became both a public necessity and a public danger. Parliament endeavored to control amal- gamations by still more strenuously defining the powers of the companies. But the administration of such laws is always liard; and the mere repetition in successive Acts of clauses against undue preference, etc., suggests that the clauses in the earlier Ac<^s had been disregarded. Third. In order to obviate the inconveniences referred to, the Railway Traffic Act of 1854* "was passed, with the object of securing facilities for through or other traffic " and " equal treatment for all persons and arti- cles." t This act probably marks the beginning of effec- tive control, ond may thus be held to indicate the begin- ning of the third period. During this period, extending perhaps from 1854 to about 1870, there was in England a struggle in railway policy, as indeed in general industrial policy, between a tendency towards diminution of State •17&18 Firt., c. 31. t See Fourteenth Report Railway Commiscioners, 1888, p. 3. 4r- THE ENGLISH liAILWAY RATE QUESTIOX 283 control over industry and commerce, and a tendency towards increase of tliis control. And there can be no doubt that the Latter tendency won, at all events, for the time. Fourth. Tliis victory marks the beginning of the/o«r^/t period. Until about 1870 the presumption was against State and municipal control of any public service which was thought capable of being performed by private en- terprise. From that date the presumption has been quite the contrary.* In conformity with tlie tendency of the time the Rail- way Regulation Act of 18l!8 f developed the system of control. The greatly increased traffic had brought into existence conditions which could not have been foreseen, and therefore could not have been made the subject of legislation in earlier Acts. Among the new provisions in the Act of 1868 was one upon a subject of which more will be heard later; namely, specification of charge. Under Section 17 of that Act the railway companies were bound to furnish pa"ticulars of the charges for goods, and to differentiate between "conveyance of goods on the rail- way, including therein tolls for the use of the railway, for the use of carriages, and for locomotive power," and so much of the charge as may be " for loading and unloading, covering, collection, and delivery." The next important stage in the fourth period is marked by the Report of the Committee of 1872, and the consequent legislation of 1873. The economical conditions of the time must be kept carefully in view in examining the conclusions of this Report as well as in weighing the evidence given before the committee. For two years trade had been advancing "by leaps and bounds." The traffic receipts of the rail- *TIie purchase of the telegraphs by the government, 1807-08 ; the General Tramways Act of 1H70, which gave large powers to muuicipalities ; the numer- ous gas and water bills promoted by municipalities, — are a few among the many manifestations of this tendency about IH'O. 1 31 & 32 Vkt., c. 119. N; 284 QUARTERLY JOURNAL OF ECONOMICS way companies increased 20 j)er cent, between 1869 and 1872. Tlie ijvoportion of nel recei[)ts to capital advanced from 3.91 per cent, in 1867 and 4.22 per cent, in 1869 to 4.74 per cent, in 1872, — a point which they have never since reached. Rates liad gone up considcraliiy. The railway companies were doing their utmost to reap a full share of the golden harvest, and the possibilities of their reaping an inordinate share did not appear remote. Thus there naturally arose demands for legislative interference to prevent the railways from taking an excessive advan- tage of the powers over inland transport which amalgama- tion had secured to them. In the discussions before the legislation of 1873 it was the interest of both parties in the controversy to minimize the effect of previous legislation. The traders adopted this attitude because they wanted new and more strin- gent acts, and they had to show that tlie exl.;ting acts were inadequate ; and the railway companies had to show that all legislation of a restrictive kind was useless and pernicious. These dialectical expedients, to which the commissioners of 1872 fell easy victims, ought not, how- ever, to betray us into the belief that the legislation up to 1873 was wholly futile. It is difficult to believe that the railway system would have or could have safely de- veloped with greater rapidity ; and it would be diihcult to prove that any other policy could wisely have been adopted than that which retained the general principle in all Acts, that a railway company was wholly a creature of statute, and that special conditions should be legislated for as they emerged. From 1854 until 1872 the railway companies were obviously not allowed to do as they pleased, but tliey were given extensive powers. To call this system laiasez- faire is to misapply the expression.* It is rather a sys- • Of. Adams, Railroads, their Origin and Problems, p. 94, for a contrary opinion. a THE ENGLISH RAILWAY HATE QUESTIOX '285 tern of litnited ownership and conti()lle. TIIK KydLlSIl IIMLWAV KATE QUKSTION 287 Accovilinjj to decisions in these cases, differential rates were illegiil ; aiilit the railwiiy system into a condition of chaos. No doubt the traders exaggerated the diilicuUies of the situation, but it is certain that it had become too highly complex for the conservative and in- dolent mind of the English trader. He did not know what he was to be charged for the goods he desi)atched, and he objected to terminals which he did not understand und to which he affected to be unaccustomed. The mere evolution of industry contributed to this confusion. The Clearing-IIouse Classification had grown by accretion until it reached 4,000 items : the rates had multiplied until they became hundreds of millions. Some simplitication appeared advisable, and the Government was ultimately induced to undertake it. Besides, it seemed that action of some kind was necessary to relieve the pressure upon tlie miscellaneous trades,! which were suffering from the depression and were powerful enough to make their clamor heeded; while, on the other hand, railway interests were no longer so formidable in Parlia- *k5ee below, p. 2!)4. t On the development of the niiseellaneous trades at this time, see Mr. Giffen's Address to Section F, British Association, 1887. i< 290 QUARTERLY JOURNAL OF ECOyOMICS raent as once they were.* Therefore, tlie government (Lord Salisbury's) brought in and carried the Railway and Canal Traffic Act of ISSS.f This Act practically intrusted the Board of Trade with the formulation of ;i thorough-going revision alike of classification and of rates.J ^t also reorganized the Railway Commission, § en- dowed the Board of Trade with the privileges of a " can- did friend " of the railways and of the traders alike, entitling it to receive complaints from traders, and to confer with the railway managers on the subject of these complaints, without, however, giving the Board any magis- terial powers regarding either the railways or the traders in these matters. || These complaints were to be made the subject of annual reports to Parliament. The rail- way companies were also required to render to the Board of Trade such statements as the Board might from time to time prescribe.^ In undertaking the revision of the classification and the maximum rates, the following procedure was prescribed : Every railway company was required to submit to the Board of Trade "a revised classification of merchandise traffic, and a revised schedule of maximum rates and charges applicable thereto, proposed to be charged," and to state fully "the nature and amounts of all terminal charges proposed to be authorized in respect of each class of traftic, and the circumstances under which such termi- nal charges are proposed to be made. In the determina- tion of the terminal charges of any railway company regard shall be had only to the expenditure reasonably necessary to provide the accommodation in respect of which such charges are made, irrespective of the outlay which may have been actually incurred by the railway company in providing that accommodation."** *Fiimn(;iitl Reform Almanac, ISdl, p. I'-'H. 151 & Tt'i Vict., c. 25. t Ibid., Part II., §§ 24-;'.(). § Ibid., Part I., §j 'J-'.';!. li Ibid., § 31. 1i Ibid., § ;i'.'. *» Ibid., § 24, subsection 1. THE ENGLISH RAILWAY RATE QUESTION 291 The classification and schedule were to be submitted within six months, — extensions of time being granted in certain cases, — and then they were to be open to examina- tion and objection by all those whom the Board of Trade considered entitled to be heard. After having heard the evidence and formulated its classification and schedule of rates, the Board of Trade was instructed to endeavor to come to an agreement upon these with the railway com- panies. Should no agreement be arrived at, the Board of Trade was itself to determine what was "just and reason- able," and to embody this in a report. This report was to be presented to Parliament, and after the lapse of a recess the i)roposals contained in this report were to be submitted to Parliament in the form of Provisional Order Bills. No agreement could be arrived at between the Board of Trade and the railways. "Everybody was dissatisfied," and the board adopted the course prescribed in the Act. This inquiry was held in 1889-90 by Lord Balfour of Burleigh and Mr. (now Sir) Courtenay Boyle, on behalf of the Board of Trade, in the Westminster Town Hall. The inquiry lasted for eighty-five days ; and an enormous mass of evidence, filling eleven volumes, was received. The report to the secretary of the Board of Trade by the two gentlemen named constituted the classification and sched- ule whiwh they recoruniended as "fair and reasonable." This classification and schedule were afterwards embodied in a set of Provisional Orders. Although the classifica- tion was uniform, and the schedules of rates were nearly, though not quite alike, each railway company was legis- lated for by a separate Provisional Order Bill. These Provisional Order Bills were then presented to Parlia- ment. They were not promoted by the Board of Trade, but were held to follow upon the act of 1888. After passing the second reading, they were remitted to a Joint Committee of the House of Lords and the House of Com- mons ; and in the inquiry before that committee the !^ 292 QUARTERLY JOURNAL OF ECONOMICS T ■ [*.■ ' whole subject was threshed out once more. The com- raittee sat tor forty-two days, and heard counsel and evi- dence upon all the points, and made several important amendments to the bills. Finally, the bills reappeared in Parliament, where they were further amended ; * and after three years of close discussion the revised classifi- cation and rates became law on July 24, 1891, although the changes were not to take effect until August 1, 1892.t II. My purpose now will be to attempt to disentangle from the enormous mass of evidence some illustrations of the chief among the contested points in the theory of railway rates. It seems necessary to say a preliminary word about the manner in which tho Board of Trade and the Joint Com- mittee of 1891 have conducted this inquiry, and have car- ried into effect the conclusions at which they have arrived. Whatever may be the opinion as to the effectiveness of the legislative fixation of maximum rates or as to the ad- visability on abstract grounds of control over private en- terprises being intrusted to government departments, no one who watched the course of the three years of contro- versy from 1888 till 1891 could fail to be impressed with the acuteness and fairness with which both the Joint Com- mittee and the Board of Trade approached the subject, as well as with the comprehensiveness and thoroughness of their examination of it. The revision of the maximum rates was a work which could be expected to bring no gratitude. The railways were certain to be dissatisfied, if the traders were pleased; and, if some traders were pleased, others were certain to be dissatisfied. The arbi- ters among the rival interests were likely to olTend them all. * Hamard, Scries III., vol. .'Wi, cols. 2(i9 et seq. t The date was afterwiirds extended to January 1, 1893. THE ENGLISH RAILWAY RATE QUESTION 293 It is quite certain, nevertheless, that the method of re- vision of niaxinmni rates has had a fair trial. The issue may be unfortunate from causes external to the railway system pure and simple, or from some inherent defect in the principle, or from lack of judgment or temper on the part of the railway managers or the traders ; but it is unlikely that any more impartial investigation into the special condiiions applicable to railway rates in England will be undertaken in our time. Although railway companies frequently quarrel with each other,* when the question is one of demand for general reduction of rates, they stand together. Traders, on the other hand, are unaccustomed to united action. Their interests, as opposed to those of the railway com- panies, although in a superficial view identical, are really very divergent. It is the interest of the large trader to get low rates for truck-loads or for train-loads, whereas it appears to be the interest of the small trader to prevent the large trader from getting differential rates for large quantities. It is to the advantage of the trader who sends his goods to a distant market to obtain low rates, while the small trader with whom he is competing in the distant market looks upon low long-distance rates as an evil. It is to the advantage of certain traders in timber to have their goods charged by weight, while for other traders in the same commodity it is an advantage to have them charged by measurement. It is to the advantage of some traders to have a system of charges which involves de- tailed specification of charge, since an individual trader may prefer to render for himself some of the services which a railway company customarily renders ; while others object to specific charges as being equivalent to an •The time of the Railway Commissioners is largely occupied with the quarrels of railway conipaniea. In ISSli, 11 out of 12 cases before them were cases of railway against railway ; in 1S87, G out of V2 ; in 18.S9, 3 out of 11 j in 189(), 7 out of 28 ; and, in 18i)l, 1 out of 10. Annual Reports of the Railway and the Railway and Canal Commission for these years. I I fi 1.' ' 294 QUARTERLY JOURNAL OF ECONOMICS V, t ; ; attempt to extort additional rates. Here is a sufficient divergence of interests at the outset to puzzle the most benign and patient tribunal. Behind these more or less reasonable differences of opinion were various forms of unreasonable demands. It was obvious that a series of compromises must be effected ; and it was equally obvious that, on any principle of averaging, some must be levelled up if others were to be levelled down. These considera- tions did not at first enter into the representations of the traders. Revision of rates must mean for them reduction of rates: revised classification must mean that "no article should be rated higher than it is at present." * Lord Bal- four of Burleigh truly remarked that a classification and schedule would have to be devised which would " satisfy the most unreasonable of unreasonable people." It is not easy to find any definite principle which the Board of Trade consistently followed either in the classi- fication or in the schedule of rates. Sometimes it would appear as though the principle of " what the traffic would bear," and sometimes as though " cost of service," were the basis. What was really done was to take the clear- ing-house classification and the existing maximum rates, and deal with them in a purely empirical fashion. The principle adopted was avowedly, and perhaps under the circumstances unavoidably, the rule of thumb.f It is the general method of English legislation to effect a series of compromises without troubling about consistency in underlying theories. As the Board of Trade conceived its duties, three things had to be done : " (1) The codification and reduc- tion into order of the immense mass of scattered provi- *" First Principle of Classification," in the statement made on behalf of the British Iron Trade Association. Hoard of Trade Inquiry, March I'J, 1890, Statement, etc., London [IMK)], p. 19. tMr. Courtenay Boyle, statement for the Board of Trade. Report from the Joint Select Committee of the House of Lords and Ilnusr: of Commons on the Railway Rates and Charges Provisional Order Bills, 18'ji. IH THE ENGLISH RAILWAY RATE QUESTION 295 sions relating to the charging powers of the companies ; * (Si) the revision of the existing maximum charges; and (3) it was necessary in respect to some matters, particu- larly terminals, that charges which had not previously been fixed and defined should for the future be fixed and defined." f The intention of the Board of Trade was therefore to simplify the existing complexity of rates, and to make exhaustive specifications of what the railway companies might charge. This was the interpretation tlie Board of Trade put upon the instructions of the Act of 1888. The railway companies argued, or seemed to argue, that the sole duty of the Board of Trade was codification, while the traders seemed to argue that the sole duty of the Board was re- duction of rates. III. A commentary on the principal points which emerged in the course of these prolonged discussions falls natu- rally into the following heads : — A. The demand for specification of the ingbe- DIBJSTTS OF CKAKGE. B. Terminal charges: («) Station terminals; (5) Service terminals. C. Conveyance chaeciks: (a) Use of road; (6) Use of locomotive power; (1, Part I., p. 70. t Law Reports, Queen's Bench Division (1884-8.")), vol. xv. p, 530. t 8 & 9 Vict., c. 20, §§ 8(;-lll. § 3() A- 37 Vicl., c. 48, § 14. II -E'.fir., Thirteenth Report Railivdy Commissioners (188(1), pp. (i and 30. '{.E.g., Hall V. London, Brighton i\' South Coast Railway, L. R., Q. B. 1)., vol. XV. p. 530. ** Sect. '£i. Cf. also Mr. Coiutenay Boyle's statement. Provisional Order Bills Report, 1891, Part I., p. 221. THE ENGLISH RAILWAY BATE QUESTION 297 to panies are practically the only English companies which own their own mineral trucks.* The mineral trucks on other lines are almost entirely owned by traders. Again, some traders do not use the stations of the companies, but have sidings of their own, which they are entitled to have if they choose to pay for them; and, having paid for sid- ings, they do not expect to be called upon to -pay also for the stations which they do not use. Such traders clearly want, and of course have had, as matter of practice, rates lower than the total rates, which included services of which they did not avail themselves. Another equally important reason for specification of charge lies in the cir- cumstance that, as regards general merchandise, the Eng- lish railways are not alone " conveyers " of goods, but are also " carriers " ; that is, they undertake the business of "common carriers," — they collect and deliver. It may or may not be convenient or desirable that the trader should intrust the collection and delivery of his goods to the railway company ; and, if he does not do so, it is argued that he ought not to be charged for a service which is not performed for him. The extent to which this splitting up of rates may use- fully be carried was actively discussed during the contso- versy ; and the view adopted by the Board of Trade^was that the splitting up should be carried out exhaustively, so that there should be no room for any other charges than those specified. The traders also desired that a clear and broad line should be drawn as to what charges the railway company may legally make.f There were thus two elements in this demand for speci- • The latter company has owned all its mineral trncks for many years ; but the former only began the policy of acquiring trucks in IHKl, when 00,0(K) or 70,000 trucks were purchased from tlie traders on the system at a cost of about $it,0OO,(KX). See Report above quoted, pp. Sni, L',-)2, and 258, Queries 1179 and 1195. tMr, Woodfall for the Marquis of Bute as trader. Provisional Order Bills Report, 1891, Part I., p. 70. 208 QUARTERLY JOURNAL OF ECONOMICS fication of charges. One was that a specific cliarge sliould be made for each individual service, and the other that these cli irgcs should be iixcd, and not be subject to lluctuation. Here a curious question emerged. It was clear that, if tlie charge was to be fixed under the Pro- visional Order of the Board of Trade, the trader might be at the mercy of the Uoard, since at that particular stage of the proceedings the ijiutnliiin of none of the charges was fixed. It was therefore i)roposed, in several instances of this specification, to ])rovide for 'xn appeal to arbitration, the arbitration to be conducted by a nominee of the Board of Trade. Here, however, the railwaj' companies stepped in, and said : "No ' It ihe u'aarge is to be fixed, it must be fixed now. We will not submit to the arbitiation of the Board of Trade." Sometimes the railways gained their point, and sometimes the traders ; and thus on certain charges there is an appeal to the Board of Trade, and on certain others there is not. The traders, indeed, as sub- sequent proceedings ha e shown, have had their bugbear, "vagueness," barlshed a^ a price. Tlie publication of rates is a debated point upon which no definite provision is made in the bill, or, at all events, no provision other than that of previous Acts, which in this respect have not invariably been observed. The mo- tion that the railway companies should exhibit at their stations all the actual rates chargeable from those sta- tions was not accepted by the committee. Mr. Acworth has scouted this idea on the ground that such exhibition would require a forest of timber ; but he has himself made the valuable suggestion that changes in the rates should be published in the monthly journal issued by the Board of Trade,* as the rates on the French railways are pub- lished in the Moniteur. The trader may, however, under the Act of 188£, demand an exhaustive analysis of his * Nineteenth Century, vol. xxxi. p. 140. THE ENGLISH liMLWAY RATE QUESTION 299 rate,* so that he may, if he pleases, perform for himself any one of the services charged for.f B. When the railway companies promoted their bills, in 1884-85, to place the legality of terminal charges beyond question, the traders vehemently opposed them, because the proposals were unaccompanied by any modifi- cation of rates. When the Board of Trade proposed to deal with rates and terminals together, the railways were up in arms. J When, however, the traders and the railway companies came face to face with the Board of Trade, in 1889, they were both obliged to give WiVj. The traders had to submit to terminals, and tiie railway companies had to submit to the "confiscatory policy" of revision of maximum rates. The delinite provision of a charge for terminals followed, indeed, logicallj' upon the demand for specified ingredients of charge. Under the former Acts " the rate for ' conveyance ' was the only sum which was set out in definite figures. Tlie sums which might be charged for station and service terminals were left vague." § Terminals were, however, charged, || although there were no statutory powers to charge specific sums for them ; and the railway companies were ever doubtful until the decision in Hall's case ^ settled the question. In j)ursuance of the policy of exhaustive specification •Sect. 33, subsections 3 and 7. t Since the Act, with its attendant Provisional Order Confirmation Acts of 1H91 and lKi(2, came into force, some of the railway companies have, it would appear, refused to render the details of rates to traders. In order to affirm the state of the law on the point, the Board of Trade took in June, 1803, the opinion of counsel. This opinion was as follows : — " Upon a proper application beint; made under subsection 3 of Section 33 of the act of 188M, the company are bound to dissect the actual charge made, on the ground that the subsection applies not only to the maximum rates, but also to the charge made or claimed." Hansard, Series IV., vol. 12, col. 1045. t See above ; and cf. Grierson, Railway Rates, p. 80. ^Provisional Order Bills Report, 1891, Part II., p. 1075. II Ibid., p. 1112. 11 Quoted above. h/ 800 QUAIiTKIiLY JOURNAL OF ECONOMWH \* ■ of charge, the Board of Triide for the first time recognizud a distinction, which has now hocoino a .statutory distino- tion, between station terminals and service terminals.* The meaning of this distinction is obvious. Station terminals are charges for the use of station buildings or sidings, while service terminals are charges for certain manual operations. The pros and cons of the complicated question of station terminals cannot be fully given here, but the chief points may be suggested. In the first place, since some traders use tin station and some do not, it is clear that, unless there were a definite reduction to the trader who did not use the station, he would be paying for a service which he did not demand. jNIoreover, unless there were specific rates minus the terminal, no trader could tell whether or not the rate jjaid by his neighbor, wIkj loaded his goods at his own siding, fell within the law of undue preference. Again, if the terminal were included in the mileage rate, the long-distance traflic might be liamli- capped in relation to the short-distance traffic, though not necessarily. On the other hand, if the same terminal were charged irrespective of distance, as was the case in the Board of Trade schedule and is now in the Acts em- bodying the Provisional Orders, the short-distance trafiio would be handicapped in relation to the long-distance traflic. It happens that the kind of traffic which is most affected is the export traflic ; and it was therefore argued that the proposed terminal would act as a restraint upon exports. Again, it was shown that terminal facilities varied very much, and that a uniform charge for these would be unfair. The strongest argument, however, against terminals was the argument that the schedule of the Board of Trade jirescribed differential distance rates for conveyance, and that these secured for the company due payment in respect of the circumstance that short- * Provisional Order Bills Report, 1801, Part II., p. 6T. TUE ENGLISH RAILWAY BATE QUESTION 801 (listanco tiidlic was relatively more expensive to deal with than long-distanue trallic. (a) The meaning of station terminal is expressed in the following dofmition: "The maximum station terminal is the maximum charge which the C()m[)any may make to a trader for the use of the accommodation provided, and for the duties undertaken by tlie Company for whic' no other provision is made in tliis schedule, at the terminal station for or in dealing with merchandise, as carriers thereof before or after conveyance."* This definition must be taken in connection with the specification of ser- vices under service terminals. It is held to exclude specific charges for such services or duties as signalling, marshalling trucks, etc., which are held to be part of the necessary functions of the railway,! not susceptible of being made the subjects of Independent charge. (6) Service terminals are defined as consisting of (1°) lofiding, (2°) unloading, (3°) covering, and (4°) uncover- ing. Each of these is subject of separate charge, when separation of charge is re(iuired ; and no one of them may be charged unless the service is rendered. | Prior to 1845 very few of the railway companies did the business of carriers,§ and thus the question of termi- nal charges did not arise until after the railway system had developed to some extent. Terminal charges without specification came afterwards. It was only in the schedule of 1891, constructed by the Board of Trade, that, in obe- *An(il[isis of the lijitway Bates and Charges Order Confirmation Acts, 1891 and 1MI2. Pfivl Paper C— (It*:!'.', p. 102. t For which prol)ably they may be hehl to receive remuneration as "con- veyers," although this special point has not been fully tested. } In Cliiss C, for exanii)le, the following; are the chiirsjes : maximum station terminals, Is. per ton at each end ; maximum service terminals, — (a) loading, 3rf. per ton ; (6) unloading, IW. per ton ; (c) covering, 1(/. per ton ; (d) uncover- ing, Id. per ton. Provisional Order Bills Beport, ISiU, Part I., p. 154. § Cf. Mr. Littler, Q.C., in Hall v. London, Brighton id' South Coast Bail- way, L. B., Q. B. D., vol. XV. p. ->'J.H. 1 802 (fUARTRhLV JOURNAL OF ECONOMICS dience to tlie priiicipk' of exhaustivo disscotioii of charge, tlio KCpaiatioii between station and service terminals was made for the first time. * It is true that the four services detailed, with the serviie;. of collection and delivery which are now by implication excluded from terminal services in the legal sense, f were mentioned in the Act of 1873,J and traders were entitled to demand revision of them; but there was no jirovision lor specilication of charge such that the trader could determine whether or not he could perform any one of the services for himself more elliciently or more eeonomieally than the railway company was [ire- jiared to do it for him. Here, however, an im[)ortant legal i)oint arose. Had the trader a right to demand access to the premises (jf the lailway company for any purpose whatever? Under the Act of 1H5-1 the trader is entitled to "reasonable facilities" ;§ but it is open to doubt how far this provision will entitle him to insist upon performing services customarily performed by the railway companies. The Lancashire and Cheshire Con- ference proposed to the committee to make the powers definite, reserving powers to the railway companies to make by-laws; but this suggestion was not adopted. || While arbitration by the Hoard of Trade is applicable to station terminals, it is not applicable to service ter- minals. The attitude of both traders and of railway com- panies towards arbitration is curiously varied. When it is thought that arbitration will bo an advantageous jiro- vision for either party, it is argued by the other that it * Provisioned Order Bills Ueport, IHOl, Part I., p. ()7. t Collection and delivei-y aiul also woifjfliiiig may be charged a reasonable sum, to be deteriiiiiiud in case of dispute by an arbitrator appointed by the Board of Trade at tlio in.. } Sect. 15. § Compare Mr, Pope's statement, Provisional Order Hills Ueport, 1891, Part I,, p, 14C, with Mr, Balfour Browne's at p. 155. II Ibid., p, 143. TUB ENOLIsn IIAILW'AV UATK QUESTION n08 would he very absurd to (ix iiiii.!utal)ly si cliiirge which mi;,'ht, under certain cnuditinns, come to bo quite unreu- Houiil)h' ; or it is iirfjued that arbitration es(al)lishe8 no principle, and that it costs nearly as much as legal proc- ess. The railway couqianies accepted the principle of iirbitration so far us station terminals were concerned, but objected to it for service terminals. They demanded and obtained power of •'absolute cliarj,'e " not cliangeable by arbitratittn.* C. Although there is no legal ilefinition of "convey- ance," f the charges for conveyance are held in the Kng- lish railway system to be composed of the following in- gredients: J (rt) loll for the use of the road ; § (/*) liaulage rales, ()r the payment for the use of the loco- motive for haulage ; and ('•) payment for the use of wagons. The splitting up of rates into their constituents was much insisted upon [)y the traders. It was regarded as a great advantagi; to them.|| This realTiirmed statutory power in the hands of the trader to demand analysis of his rate has been one of the immediate causes of the recent friction between the railways and the traders.^ («) First, in regard to tolh. Although the apparent *Cf. Prorisionnl Order Hills Report, IHO], Pai-t I., p. xv, and Part .>., p. 1114. tSee, liowever, Wills, .1., ,iii(lt;)iii'iit in //'/// v. Loniton, Hrhjiiton iV .S'oh(A Coast Jiailwny, L. I{., Q. li. 1)., vol. xv. j). ."lO."). See also Provisiomil Order mils liejiorl, W.n, Piirt I., pp. .'U, ;i7, HI, ami 117. " Cunvoyanco " and "carriaijo" are not Hj-noiiynious. The niileape rate provides for that part of the duty which \a conveyance, and the Hhttion terminal (and the service terminal) for another part of the dnty which is perfonned by the railway companies an "carriei'S." C/. Mr. Bidder, (J.C, Ibid., p. 7."i. t Jleport, WU, pp. .'"ill and 47!K See also Griorson, Railway Rates, English and Foreign, lS,Mi, pp. !l(i, 11". § Si(,'nallin); is prolinhly included in this, although the point has not been legally tested. On the tradem' fear that Ki);nallinj» nii(jht l)o made the subject of a separate charge, see Provisional Order Bills Report, IH'.H, Part I., p. H2, II Provisional Order Hills Report, IKOl, Part I., p. Sfi. li Although the power is not novel. i' >) 304 QUARTERLY JOURNAL OF ECONOMICS intention of Parliament was to deal with the whole sub- ject of railway rate« in the Act of 1888, it was accepted as certain by the Board of Trade that, under tlie terms of the Act, wliile it was empowered to deal with rates and charges, it was not empowered to deal with tolls.* This defect in the drafting of the Act, if it was a defect in drafting, produced the curious result that, if the I'ailway companies were dissatisfied with the revised classification and schedule, — that is, if the reduction of rates were carried too far, — it was open to them to refuse to at-t as conveyors or carriers, and simply to fall back upon their function as road-owners and upon their statutory powers to levy certain tolls for the exercise of that function.! If the maximum rates and charges permitted to them by Parliament for the total of their services fell short of their powers of charge for one of these services, it might be- come their interest to follow this course. Such a policy would result in the development of haulage companies and of wagon companies, express companies, etc., sucli as are common in America, in order to undertake func- tions presently performed by the railway companies. J The railway companies maintained, and the contention was not rebutted by the opposing counsel, tliat the old Acts of Parliament were not repealed by the Act of 1^88 and tlie subsequent Provisional Orders, excepting in so 'Provisional Order lillts Rejiorl, lS!tl, Part I., p. 110 ; also Mr. Couiteiiay Boyle's statement, p. 47il. t Provlslomd Order Hills Report, IS'.tl, Part I., p. IIH ; also Grierson, Hall- way Rates, Emjllsh and Forelyn, 1(-K(i, j). !IT. t The private use of railway lines on payment of tolls is not nnknown. .See Powcll-Dutfryn case, ([noted Provisional Order Bills Report. IMH, Part I., p. I'JO. The Court of Chanuery decided in this case tliat the only diflicnity in tlie way of private jjersons running trains over a railway line is tliat siicli persons cannot compel the railway company to work the signals, — not because they cannot reciuire tliis to be done, hut because in the nature of the case they are not in a position lO see tliat tlieir ordera are carried out. .Some tradew sl'Ciu not indisposed to attempt to frighten the railway companies by suggesting that private comiiaiiies might establish stations and charge lower terminala than the railways. Cf. Ihld., p. 'Jt!4. TUE ENGLISU RAILWAY RATE QUESTION 305 far as they fixed rates and chan/es, the tolls being left untouched.* Saving, however, this "last trench" of the railway companies, the old tolls were practically abolished ; and conveyance rates, including them as one of three in- gredients, were substituted. (/)) In considering the second ingredient, haulage rates, it is to be observed that the principle adopted in the earlier English railway Acts for the fixation of maximum tolls was the principle of " equal mileage." This arrange- ment was drawn from the canal regulations, and also from the fixed tolls of the horse railways which preceded the loctmiotive lines ; but the development of traffic produced differential rates, and was accelerated by tliem. There are two leading points in the discussion of haulage rates in the English system. These are : (1) the graduation of rates for distance, with or without a minimum of chargeable distance ; (2) the graduation of rates for ton- nage, with or without a minimum of weight, varying with the classification. On both of these points there is a cross- current of interests. The interest of all large traders is to reduce the powers of charge for quantities ; and that of some large traders, those dealing in goods which are customarily transported to a distance, is to reduce long- distance rates. On the other hand, it is the interest of small traders! to prevent the large trader from having the advantage over him which would be secured by a differential rate in respect of quantity ; and it would be the interest of traders, large or small, whose traffic is *Mi'. liiddcr, Q.C. rrovislonal Order Hills Report, IMH, Part I., j.. 478. T Or iippeai's to be ; for, if the railway comiiaiiy makes a laiRO net profit on a lai'^e wliolesale traffic at a low rate, it will be able to cbarfje lower rates for small quantities than would be possible if its net profit were redueed, owing to the restriction of tlie wholesale traffic to tlie ".nds which could afford to pay a hi);Ii rate. The effect of a differential i.inll' in respect of (juantity would, however, be to restrict the small trader to a purely local market. He coidd not compete against the larfje trader in a distant market, since the difference in rates of carriage in respect of quantity might suffice to ijive the large trader a profit. 306 QUARTERLT JOURNAL OF ECONOMICS mainly local, to oppose a differential distance tariff. The railway companies' interest lies in obtaining both the highest niaximnm powers and permission to give differen- tial rates in so far as these might be necessary to secure paying traffic. The railway companies' interests thus coincide at a certain point with those of both small and large traders. (1) Differential Rateft in Respect of Distance. — Such rates may be calculated by two methods : (a) by simple gradation, — so much for 10 miles, 20 miles, 50 miles, and soon; or (i) by the cumulative method, — so much per mile for the first 10 miles, so much less for the next 20 miles, so much less for the next 50 miles, and so on. The first method is open to the objection that the charge for, say, 19 miles will be positively greater than the charge for 21 miles, unless the reduction at each stage is infinites- imally small. This objection was surmounted by the "overlapping clause," which prescribed that the rate for one distance was not in any case to be less than the rate for a shorter distar.ce. This method, with the overlap- ping clause as a rider, was the metliod of the English system prior to 1892. Now, however, under tJie new regulations, the second, or cumulative, method has been adopted, which is free from the objection of overlapping, although for long distances it involves some calculation. Given the expediency of differentiation of rate in terms of distance, there seems little to object to it on grounds of principle. The question of minimum chargeable distance is neces- sarily associated with the question of terminals. Ter- minals are not chargeable on Class A (heavy goods) ; and on such goods it appeared to the Board of Trade fair to give a relatively high minimum of distance, for the reason that the cost to the railway for a short haul was greater than the amount yielded by the conveyance rate on a mileage basis pure and simple.* In this concession to * Pruvisiuhiil Order Hills Report, 1)><>1, I'art I., p. 'JiK). THE ENGLISH RAILWAY RATE QUESTION 307 the " cost of service " principle the Board of Trade fol- lowed precedents as well in connection with the same matter as in connection with additional mileage allowances for tunnels, etc., — as, e.g., the Severn Tunnel, — and for bridges, — as, e.f/., the Forth Bridge. The older Acts gave a minimum chargeable distance of 6 miles for heavy goods conveyed at low rates ; but the more recent Acts had slightly increased the maximum conveyance rate, and had given a minimum chargeable dis- tance of 3 miles.* The new regulations give a minimum chargeable distance where no terminal is charged of 6 miles, where one terminal is charged 4^^ miles, and where two terminals are charged 3 miles.f There is a proviso to the effect that, where goods pass from one line to another in the course of a journey within the minimum applicable to the class, they are not liable to a double short-distance charge.^ The larger proportion of the traffic on the English lines is short-distance traffic.§ The average journey in the South Wales coal region is 20 miles. || In the Stour Valley district 35 per cent, of the traffic is transported for distances under 6 miles.l^ A vivid illustration of the mode in which short-distance traffic is conducted in Eng- land is given by Sir Henry Oakley, manager of the Great Northern Railway. " Here is a particular train upon a par- ticular morning. It starts with 6 wagons. At the first station it stops at it puts off 1 and takes on 4, at the next it puts off 3 and takes on 3, at the next it puts off 1 and takes on nothing, and at the next it puts off 6 and takes on 3, and it goes on over a journey of 76 miles. By working traffic between stations on that 76 miles, and col- lecting through traffic, it lands with 25 wagons at the 'Provisional Order Bills Report, 1891, Part I., pp. 287, 296. t Ibid, p. 3i:}. i Ibid., pp. 321, 322. ^Report, Part II., p. 112C, Query 1032"). II Report, Part I., p. 249, Query 1107. 11 Ibid., p. 293. 808 QUARTERLY JOURNAL OF ECONOMICS end, the greatest weight it has ever had on the whole journey." * Tlie railway conipanies profess that the short- distanco traffic does not pay.f The bulk of the short-dis- tance traffic consists of minerals, — coal and iron ore, fur example, from the pit-montli to the iron works, or, in the case of the former, for shipTnent coastwise or for export.^ The remainder of the short-distance traffic is of the sort described above. § Some of this tralhc, especially on branch lines, is probably often conducted in an unnecessa- rily expensive manner. || According as we regard it from the point of view of the " cost of service " or from the point of view of " what the traffic will bear," the reduced rate per mile for the long haul rests either upon the principle that it costs less per mile to move a ton 100 miles than it costs to move it 10 miles, or upon the principle that the distance to which traffic can be procured for carriage is in reciprocal propor- tion to the rate per mile.^ (2) Differential Rates in respect of Quantity. — In the * Provisional Order Hills Report, l.SiU, Part I., p. iSOil. The average speed of these local trains is ti miles an hour. Ihid., p. 'MM\, Qiiery 14(11. t " It has forced itself upon our minds constantly that, jiractically, the long- per cent, of the entire cost of locomotive power used on the line. Proceedings Institution oj lilichonicul Engineers, 1H7.S, p. IS?. II See the remarks of Mr. IJcrgeron, Iliid., 1S70, p. 147; and cf. Herbert Spencer's criticism, " Railway Morals and Railway Policy," Essays, p. 301. ^From the point of view of railway administration both principles must be taken into account. Cf. Atti della Commissione d' Inrhiesta sidl' Exercizio delle Ferrovie Italiane, 1K84, Parte II., vol. ii. ji. 957 et seq. THE ENGLISH ItAILWAY RATE QUESTION 309 ■ earlier Acts there was no minimum of quantity. There were equal tonnage rates within the class ; and the class was fixed with exclusive regard to the nature of the goods, irrespective of quantity.* Under the railwaj- clearing- house classification the mininium of weight was fixed at 4 tons for goods heavy in relation to their value i^er unit of weight, and at 2 tons for light goods.f '• Iiis limitation grew up in practice within the maximum total rates. I Tliere are two elements in the fixation of the min- imum quantity : (1) the minimum quantity consignable at a certain rate, and (2) the minimum load at a certain rate. That these elements are distinct § will be obvious when one considers that the same trader — a chemical manufacturer, for example — might send in one consign- ment separate packages of different goods which could not be loaded in the same truck without danger. Such goods are subjected to a provision for a minimum load inde- pendently of the provision for a minimum consignment. || The increasing size of the trucks in use on the railway system rendered such provisions necessary from the rail- way point of view;^ and the large traders demanded concessions in rates in consideration of large consign- ments. These large traders, whose business required rela- tively small consignments, together with the small traders, objected to a high minimum of weight at a certain rate, because they were unable to take advantage of the reduc- tion by consigning in large quantities. It happened that the agricultural interest was involved in this question, not * " In no important act is there any limit of consignment for tonnage rate." Mr. Coiirtenay Boyle, Provisiomil Order Bills Report, IfSlH, Part I., p. 503. t Provisional Order Hills Report, l.S'.tl, Part I., p. 407 et seq. t Ibid., p. so;!. § Ibid., p. rm. II These are in Class 10. Ibid., pp. 504 and 510. IT In lK(i0 the largest truck had a en )aeity of C tons, in ISOl of 10 tons. Provisional Order Bills Report, IHUl, Part I., p. 510, Quii ics ;J475 and iUTG. See also Proceedings of Institution of Mechanical Engineers, 1.SS4, p. 416. " The average daily load of goods trucks does uit exceed one-half." Ibid., p. 431. 310 QUARTERLY JOURNAL OF ECONOMICS 80 muc)i because agricultural produce was usually sent in lots of less than 4 tons, — for, as it happened, the con- signments usually exceeded that quantity,* — but because artificial manures were customarily sent in lots of 2 tons and under 4 tons.f There were also many products of iron manufacture which came in the same category as chemical manures in this respect. These interests pre- vailed at the Board of Trade inquiry, and the minimum consignment in the heavy class at a low rate was fixed at 2 tons.J But this did not satisfy the railway com- panies nor the large traders,§ and they succeeded in in- ducing the committee to raise the minimum from 2 to 4 tons. II Perhaps the chief consideration which weighed with the committee was that the railway companies had reduced actual rates for long-distance traffic on the basis of a 4-ton limit, and that reduction to a 2-ton limit might weaken the argument for maximum rates approxi- mating to the existing actual rates. The differential rate as finally adjusted follows the classification. Heavy goods are charged according to the rate in Class A, if they are in 4-ton lots ; according to Class B, if in lots of less than 4 tons ; and in Class C, if in lots of less than 2 tons.^ Apart from the inferior limit of consignment, there is the question of graduated rates for quantities. The Board of Trade proposed to divide heavy traffic into three divisions as regards weight of consignment: (1) consignments under 10 tons ; (2) those between 10 and ^Provisional Order Hills Report, IKOl, Part I., p. 510, Query 3470. t 76iW., p. 504. t /i((/., p. 4X7 f< sf7. § JifW., p. 48S. II IliiiL, p. xxxi. 'ilbid., pp. .")30 and .")40 ; .also p. xxxii. Note. — In England the goods ton is 2,240 pounds, .and the mineral ton is 2,.352 pounds. In America the ton is 2,(KH) pounds. The ratio of ^American to English weights is thus 1 to 1.12 and 1 to 1.170 for goods and minerals re- spectively. These important differences are generally overlooked in attempts to compare rates. THE ENGLISH RAILWAY RATE QUESTION 311 250 tona; (3) those above 250 tons.* These figures were employed to define precisely the indefinite expres- sions "truck-load" and "train-load." But the traders in 4-ton consignments now united with the traders in smaller consignments to defeat the 10 to 250 ton pro- posal, which was clearly made in the interests of the large traders.! Since, again, high maximum powers were what the railways wanted,:): and since the railways and some of the traders united their forces, the stronger battalions were against the proposal ; and so the committee were constrained to throw it out. The differentiation of rate thus existing is that indica.ed above in connection with minimum consignments. Having offended the small traders b}' fixing tlie minimum consignment at 4 tons, the committee propitiated them by rejecting the train- load proposal of the Board of Trade. § (cO The third ingredient of the conveyance rate is the payment for the use of the wagon. The clause dealing with this point, as finally adjusted, states that in cases where the railway company do not provide trucks "the charge authorized for conveyance shall be reduced by a reasonable sum, which shall, in case of difference between the company and the person liable to pay the charge, be determined by an arbitrator to be appointed by the Board 'Provisional Order Bills Report, ISOl, Part II., p. 1075. As regards the 10 and 2,")() ton gradation, the reduction of rate applies only to Classes A and B ; as regards the 10-ton gradation (the second division), it ap])lies oidy to Classes Candl. Ibid. t There were alleged to be only (i or 7 coal-traders in London who could deal with train-loads. Ibid., p. IIIW, Query 10()01. For the arguments of the large traders, see Statement British Iron Trade Association [ISIW], p. 18. t The railway companies denied that there was any material difference in cost between handling traffic in truck-loads collected from several different tradera and handling traffic in train-loads forwarded by individual traders. Some colliery ownei's agreed with this visw. Provisional Order Bills Report, 1891, Part II., Query 101211 ; .also Query 107."0, § Provisional Order Bills Report, 18',)1, p. xlix. 812 QUARTERLY JOURNAL OF ECONOMICS of Trade." * The provision of trucks is not obligatory upon the railway in respect of Class A and certain other selected goods in Class H, — lime, for instance. In the older Acts the charge for wagon hire was not invariably specified ; but, where specified, it was, as ^, rule, one- eighth of a penny (^Jg- cent) per ton per niile.f The traders were exceedingly anxious to have this portion of the dissected rate definitely fixed.J Some urged that it should be fixed at one-half the rate mentioned.§ But the differences between one railway and another, and be- tween one set of traders and another, were found to be so great that the charge for wagon hire was not fixed at a uniform specific rate ; but it was held to be included in the conveyance rate, specification to be made by the rail- way companies to the traders on the general principle of specification of ingredients of rate. The question is an exceedingly difficult and important one ; for in practice it may occur that the rate for Class A, which is exclusive of wagon hire, — the railway com- panies not being obliged to provide wagons for that class, — may, when the wagon hire is added, actually exceed the rate for Class B, where the companies do customarily provide the wagons. The rate of wagon hire must there- fore be kept at a point below that under which this state of charge would arise. It seemed difficult to do this ar- bitrarily with equal justice to all the interests; and there- fore, as in other cases of a similar order, the matter was left for settlement by arbitration by the Board of Trade in case of need. In connection with this the following features of the * Provisional Order Bills Report, IKOl, Part I., p. 55. The number of tradew' trucks on the London & North- Western Railway system alone aniounta to .S4,(K)0, while the number of trucks owned by the railw.iy company is oidy 54,550. liailwaij and Canal Truffle Act, 1H8S, Return in pursuance of Sect. .'i2, etc., c. 5<.«0, isyi), p. 10. t Provisional Order Hills Report, 1«91, Part I., p. '-'(>;i. } Ibid., p. 1056. § Statement by Mining Association of Great Britain, '^. The Board of Trade, in seeking to attain uniformity, was obliged, on one hand, to invade the privileges of the rrilway comijanies, and, on the other, to trespass upon the feelings of the traders by raising the classification of cer- tain goods.f In cases of new articles arising, the Board of Trade is now empowered, under Section 2'4 of the Act of 1888,§ to class such articles ; but it has no power to alter the classification or the maximum rates fixed by the Pro- visional Order Confirmation Acts of 1891 and 1892. In the fixation of the maximum rates, the Board of Trade applied a uniform scale to the railway companies, • The British Iron Trade Association. See Statement [1800J, p. 19. ^Provisional Order Bills Report, 1891, Part I., p. 18. t The bulk of the discussion upon classification wa.s in connection with manufactured iron. See Mr. Courtenay Boyle's statement, Provisional Order Bills Report, 1891, Part I., p. 612 et seq. §51 & 52 Vict., c. 25, § 24, subsection 11. Slfl (iUAHrKULY JOURNAL OF ECONOMICS BO far iiH HeciiuMl priicticiihlt'. Vet tlu; difftMences are not iinimi)ortaiit. Tin; following' table exhibits the niodo in which tliti Hcule has been applied : — MAXIMUM nATKS. I. II. III. Abaolutety the lome. Slightly higher than SllubtlvhiKherthan L. & N. W. ny. Oreiit Wt'HtiTii Great Northurn Midland (ireat KiiHtem HrlKhton Hoiith-Wpsti'm Houtb-KaHti'rn L., C. & Dover The chief differences are in Classes A and H. In the higher l ea the rates are practically the same.* The following tables f illnstrate the ditTercuces between the proposals of the Hoard of Trade, the railway com- panies, and the traders : — TABLE A. Board ok Tkadk Cumulative Scale. CLA3M, For first M miics. For next 30 mile.s. l.SOrf. For next 60 niiicg. For rcniiiinder of distance. c i.aoii. 1.20d. 0.70d. 1 2.20 1.85 1.40 O.UO 2 2.C5 2.30 1.70 i.;.r. 3 3 10 265 1.75 l.(!5 ■1 3, GO 3.15 2.20 1.80 6 4.30 3.70 3.25 2.30 ♦Lord Balfour of Burleiffli, Prorisional Order Hills Hejiort, IKOl, Part I., p. 411'J. The terminals are uniform. See Ihid., p. liv. tFrom Provisional Order Bills Report, 1891, pp. Iv, Ivi. t THE KNOLISll liAIDVAV liATK (QUESTION 817 ot in TAUI.E B. Railway Companirb' Cumulative 8oalk. Alleged to he the Ei/uleulfnt of the Normanton Scale. CbABI. Kor tlmt 20 lulleH. Kiir next 30 mllui. For next SO miles. For remnindcr of dlitance. 2 40d. l.SOd. 1.10(1. O.Wd. I '.'.80 1.70 1.00 1.20 a 3.00 2.B0 1.80 1.70 8 3.30 2.80 2.40 2.20 4 3.00 3.40 3.00 2.(10 5 4.no 400 3M a. 78 en in- ter TABLE C. Tbaueus' Cumulative Scale. Class. Forflrstao nillM. For next 80 miles. For next 60 iiilles. For remainder of distance. 1 2 3 4 8 lid. 1| a 3 3i lid. U u 2 3 Id. U li U 2i 2» Id. 1 u 2 ai The above tables contain exclusively suggested maxi- mum " conveyance " rates. I.. OLD MAXIMUM RATES.* Coal, coke, etc. (now Class A): Up to 50 miles .... Beyond 50 miles . . . Per Ton per Mile. IK id. • From the leading Act of the London and North- Western Railway, lfi46 (9 & 10 Vict., c. 204). Cf. also Hunter, The liailway and Canal Traffi. Act, 1888, Loudon, 1880, p. 142. 318 QUARTERLY JOURNAL OF ECONOMICS Per Ton per Mile. Heavy goods (approximately Class B) : Up to 50 miles lid. to lid. Beyond 50 miles Id. to lid. Heavy goods (approximately Class C) : Up to 50 miles 2d. Beyond 50 miles lid. Higher goods (Classes 1 to 5): Up to 50 miles 2id. to 3id Beyond 50 miles 2d. to 3d. NEW MAXIMUM BATES. Cumulative Scale i-iiorosEn nv Board of Trade and now ADOPTED.* Rates per Ton per Mile In Fracliuns of Id. (,' vents). msi tna T.JS ■^ ♦J ~ 3 ~ 3 — 3 u 1" "2 1- •3 5« ■a s "C t;C "S «H a . to — o « £,4> N at? ^1 m 2&g £•3 ii SS3 Sfe3 feS5 feS SS b p^ ta u. en Class A, minerals, etc., exclu- sive of charge for trucks . . 0.95(J. 0.85d. 0.50d. 0.40d. 3.00d. Class B, including trucks . . 1.60 1.20 0.80 0.50 Class C . . ... 1.80 2.20 266 3.10 3.60 4.30 1.50 1.85 2.30 2.65 3.16 3.70 1.20 1.40 1.70 1.75 2.20 325 0.70 0.90 1.35 1.65 1.80 230 Class 1 Class 2 Class 3 . . ... Class 4 Claas S * Provisional Order Bills Report, 1891, pp. 1, liv, Iv. James Mavor.