A History of Inland Transport and Communication in England

by Edwin A. Pratt

The general position has been further influenced by the existence of an ever-active sea competition, which is said to affect probably three-fifths of the railway stations in the United Kingdom. The rates for traffic between Newcastle and London, or any other two ports, will necessarily be influenced, if not controlled, by the possibility of the commodities going by a coasting vessel if the railway company should try to get more than, in these particular circumstances, such traffic will bear. The amount of the railway rate in such a case as this will, in fact, be determined far more by the element of sea competition than by any question as to either presumptive cost of service or actual mileage.

It may well happen that between two other points, in regard to which there is no sea competition, the rates are higher than between two where there is sea competition, although the distance is the same. Here we have the elements of one of those "anomalies" which have often been urged as a reason for equal mileage rates. The inequality in the rates is, however, directly due to the inequality in the conditions. It is not a case of making the no-sea-competition places pay a rate in itself unreasonable; it is simply a case of charging the sea-competition places no more than they would be likely to pay. There may be an apparent inconsistency; but an increase in the rates where the sea competition exists would not necessarily be of advantage to the trader in the district where there is no such competition, though it might lead to the traffic going by sea, and involve the railway company in a loss of revenue which would not improve their position in giving the best possible terms to the inland trader. Nor could any claim by the latter to be put on the same footing as the trader on the coast, who has the alternative of sea-transport open to him, necessarily be made good. Discrimination of places, in addition to the discrimination of trades, there certainly may be; but it is a discrimination due essentially to geography and economic laws.

Other apparent anomalies arise from the fact that where two or more railway companies have lines running to the same destination, the rates charged by each and all of them are, by arrangement between the companies concerned, generally governed by the shortest distance. Here, again, the idea of equal mileage rates is found impracticable. If the rates charged by each of the companies were arbitrarily fixed at so much per ton per mile, the line with the shortest route would naturally get all the traffic. When all charge the same between the same points all of them benefit, and the traders have the advantage of several routes instead of only one; though there is still the "anomaly" that the trader whose consignment is carried twenty miles, and the trader whose goods are conveyed thirty miles or more to the same destination both pay the same rate.

How the general principle of a sliding scale, under which the charge per ton per mile decreases with distance over twenty miles, works out in practice may be shown by taking the case of merchandise in Class 5, the rate for which would be 4.30d. per ton per mile for a distance of up to twenty miles. For the next thirty miles the rate would be 3.70d. per ton per mile, for the next fifty miles 3.25d., and for the remainder of the distance 2.50d. If, however, the consignment travels over the lines of two or more companies on a through rate, the application of the scale begins over again in respect to the territory of each company concerned. The greatest degree of relative advantage is thus gained by the trader whose consignments travel throughout on the lines of one and the same company.

In any case, however, the effect of the principle is that traders in, say, Cornwall or Scotland are enabled to compete far more effectively on the London market with other traders who are located much nearer to London and thus pay less for rail transport, yet, it may be, do not have the same advantages in respect to economical production as the trader at the greater distance. The "tapering" railway rate—in addition to giving the companies a greater volume of long-distance traffic, and bringing greater prosperity to the long-distance places—thus helps to establish equality in the general conditions in regard to a particular market, whereas the equal mileage rate would keep the distant trader to markets within a circumscribed area, and shut him out from others at which he might otherwise hope to get a far better sale.

In the United States the effect of this "tapering" rate, when applied to large volumes of traffic carried for distances of 1000 or 2000 miles or even more, is to give a very low average rate per ton per mile, and especially so when such average is worked out for the whole of the goods and mineral traffic in the country. The United States average is, in fact, for these reasons, much lower than the corresponding average for this country, where both the average haul and the average weight per consignment are considerably less. Then, also, as the charges for terminals remain the same, whatever the length of haul, they make a material difference in the rate per ton per mile for a haul of five, ten or twenty miles while assuming infinitesimal proportions per ton per mile when spread over a haul of a thousand miles.

There is thus no real basis for the comparison formerly so often made between average cost of transport per ton per mile in the United States and the United Kingdom respectively. The only fair method of comparison is to discard averages altogether, and contrast charges for actual consignments of equal weight carried equal distances in the two countries; and comparisons made on this basis will be found to favour the British lines rather than the American.

In some instances group rates are in operation for a series of producing centres or for a series of ports, the rates being common to all the places or ports included in the group. This arrangement is of advantage to the general body of the traders concerned, since it puts them all on a footing of equality, without reference to differences in distance; and it is, also, of benefit to the railway companies since it simplifies the clerical work and helps further to avoid unremunerative competition.

Another important feature in connection with railway rates is the distinction between "class" rates, which represent the authorised maxima given in the railway companies' scales for the various classes already mentioned, and "special" or "exceptional" rates, in which the companies concerned have made reductions below their maximum powers, whether for the encouragement of traffic or because of such reductions being warranted by the volume or other conditions of the traffic already carried. In "The Fixing of Rates and Fares," by H. Marriott (1910), it is stated that "probably about seventy per cent of the traffic between stations in the North of England is conveyed at 'exceptional rates,' much below the statutory authority."

In my book on "Railways and their Rates" I have already given, as follows, the general principles on which these special or exceptional rates are fixed:—