A History of Inland Transport and Communication in England

by Edwin A. Pratt

There is no suggestion that railways should be exempted altogether from the payment of local rates; but the complicated, anomalous and exorbitant system of taxing the traffic on their lines has long called for amendment.

So far back as 1844 Mr Gladstone's Committee declared they were "satisfied that peculiar difficulties attach to the application of the ordinary laws of rating to the case of railways which give rise to great uncertainty and inequality, as well as to expense and litigation, and they therefore consider that the subject is one which will properly call for the attention of the Legislature when any general measure for the amendment of the law and practice of rating is before it."

In 1850 the unsatisfactory nature of the law and practice in regard to railway assessments was pointed to by a Select Committee of the House of Lords on "Parochial Assessments."

In 1851 Lord Campbell adjourned the case of R. v. Great Western Railway Company, and expressed the hope that "before the next term Parliament might interfere" and relieve the court from the difficult position in which they were placed when called upon to administer the existing law with regard to the rating of railways. He added, in reference to the matters arising in the case then before the court: "If we settle those questions we may be considered as legislators rather than as judges, making rather than expounding law."

In 1859 Mr Justice Wightman, in R. v. The West Middlesex Water Company, said: "The whole subject matter appears to me to be involved in so much difficulty and uncertainty that I cannot but hope that the Legislature may interfere or make some provision adapted to the rating of such companies as that in question."

Among still other judges who have expressed similar views and indulged in similar hopes may be mentioned Lord Justice Farwell, who, in January, 1907, in the case of the Great Central Railway v. the Banbury Union, said: "Fifty-six years ago Lord Campbell protested and implored the Legislature to intervene. His voice was the voice of one crying in the wilderness, and I suppose ours will be equally ineffectual if we make the same appeal."

Then, also, the Royal Commission on Local Taxation, in the report they presented in 1901, made various recommendations in regard to the assessment of railway companies; but the advice of Committees and Commissioners has been no less unavailing than the protests of judges.

Meanwhile, and pending the long-delayed action by the Legislature, the railway companies have themselves done what they could to protect the interests of those they represent, or of those for whose wants they cater, by appealing against excessive and unjust assessments, and in many of these appeals they have been successful. Such appeals have been warranted, not alone by unfair increases of assessments but by the fact that taxation based on earning powers ought to be reduced as those earning powers decline; and on this last-mentioned point the Assessor of Railways and Canals in Scotland is quoted in "The Rating of Railways" as having said:—

"There is the undeniable fact, which the Board of Trade returns amply prove, that the companies are now carrying on their business at less remunerative rates than formerly. The average fare per passenger carried, and the rates per ton for goods and minerals handled, have fallen enormously; while, at the same time, working expenses have been continually going up, mainly owing to the demands for higher wages and shorter hours of employment, and the more stringent regulations of the Board of Trade as to block-telegraph working, brake-power, etc. Further, the increased gross or net revenues could not have been earned without a large capital expenditure for additional and more costly plant. It is well known that what would have satisfied the public twenty years ago would be deemed wholly inadequate to-day. Competition has compelled the companies to advance with the times; engines are now more powerful, carriages more comfortable, in many cases even luxurious; trains are better heated and lighted; continuous brakes and also the newest type of telegraphic instruments for signalling and working have been provided; stations are better furnished and equipped—all of which would mean a greatly increased outlay on the part of a tenant, which outlay he would undoubtedly take into account before deciding what rent he could afford to pay."

The considerations here presented in regard to the general question of railway taxation are strengthened by the fact that, although a railway company is a commercial enterprise, it has not the facilities possessed by commercial enterprises in general in meeting any increase in cost of production or working expenses by an increase in its charges to the consumer, or the person equivalent thereto. In this respect an ordinary industrial concern, producing goods for sale, is a free agent to the extent that it is restrained in its charges only by market and economic conditions; whereas the railway company, producing for sale the service known as transport, may not raise a single rate or charge in regard to the transport of goods without incurring the liability of having to "justify" such increase before either the Board of Trade or the Railway and Canal Commission. It has even been recommended recently by a Departmental Committee of the Board of Trade that like restrictions should be made to apply in the case of increases of passenger fares.