Railway Rates: English and Foreign

by James Grierson

We come to another common complaint against railway companies,—the one which, next to that relating to differential and import rates, has lately been most heard of. From time to time during the last 30 years, and especially of late, the right of railway companies to make charges for what are known as terminal services beyond the remuneration for actual conveyance has been challenged. On the part of the railway companies there has been no change of practice. No new kind of charges has been imposed; those in dispute have been made from the very beginning of railways in this country. Introduced by the common carriers upon the railways, they were continued by the railway companies. On the strength of the right to receive these charges, companies took upon themselves the carrying business, constructed large goods stations, with vast siding and other accommodation, and in providing land, premises and appliances, expended an enormous amount of capital, not necessary for earning the statutory mileage rates. The legality of such charges has been, after full argument on appeal, upheld by the Court of Queen’s Bench (Hall v. London Brighton and South Coast Railway Company, L. R. 15 Q. B. D. 505): their equitable character is not less clear, and the contention to the contrary is, in the words of the joint judgment of Mr. Justice Wills and Mr. Justice Mathew, “singularly unreasonable.”[40]

“We have already mentioned the anticipation, in the early days, that the railway companies would merely furnish the railway and charge tolls for the use of it by carriers and others, who would employ private locomotives, carriages and wagons. The notion was borrowed from the experience as to canals and highways; and it has been well said that ”no proper understanding of a good deal of our railway legislation, and pre-eminently of clauses relating to tolls or charges, can be arrived at, unless it (the theory) is firmly grasped and steadily kept in view.”[41] On railways, as on canals, there were three states of circumstances which it was considered must be provided for: First a railway company, like a canal company, might simply provide a highway, looking to the tolls alone for the use of that highway for a revenue upon their capital; secondly, without themselves being carriers, the railway company might provide trucks and locomotive power, as the canal companies provided boats and haulage power on the canal; or, thirdly, both the canal company and the railway company might be carriers upon the highway which they themselves had provided, and find the wharves, stations, other necessary premises, accommodation and appliances, and the capital for that purpose.

The owners of lands along the banks of canals were entitled to construct, in connection with them, wharves, basins and warehouses; and we find in the earlier railway Acts, and in the Railways Clauses Consolidation Act 1845 (subject to which all railways since that date have been, constructed), similar powers with respect to railways conferred upon adjoining owners. They were authorised to construct sidings and junctions for the purpose of making communications between their own lands and the railway. It was intended that a trader should load his wagons on his own premises, carry them over the railway and take them off the railway again at another siding or communication, paying the railway company a mere toll for the use of the length of line over which the traffic was in fact worked. Nor was this a mere theory. For many years upon some of the railways in this country the work of carrying merchandise was, to a considerable extent, actually performed by large firms of carriers, such as Pickfords, and others, who provided their own siding accommodation with the railways, and built or rented their own stations and warehouses. During this period the railway companies, so far as this part of their traffic was concerned, merely provided the highways, the wagons and the engine power, and hauled the traffic from its place of origin to its destination; and they undertook no responsibility as common carriers in respect of the goods. The carriers provided the station accommodation, loaded and unloaded the goods, checked and weighed them, and handed over the loaded or unloaded trucks to the railway company in a convenient position for the engine to be attached to them. Of course, the carriers, who undertook all liability as such, charged the public not only the tolls which they paid to the railway company, but also a considerable additional sum to cover the risk of their Common Law liabilities, the cost of providing station and warehouse accommodation, clerkage and invoicing of goods, and other services beyond the haulage of the trucks.[42] Upon some lines the state of things which we have described existed for many years. But gradually the railway companies began to undertake the duties and responsibilities of carriers. They purchased or built, often at enormous expense, the necessary terminal accommodation which, under the previous system, had been provided by private carriers; and they made to the public charges similar to those which the carriers themselves had before made for corresponding accommodation and services. The companies raised the large sums required to furnish this accommodation and for their working capital as carriers, upon the faith that they were entitled to stand in all respects, in the place of the carriers or forwarding agents, and to make reasonable charges for accommodation and services not covered by, and obviously having no relation to, the mileage rates for simple haulage from point to point.

This view has been sanctioned by the Legislature in almost all Railway Acts passed since 1845. The charges which a company are authorised to make are of three kinds—first, tolls for the use of the railway as a highway; secondly, charges, in addition to the tolls, for the use of carriages, wagons, and for locomotive power where such of them are provided by the company—in other words, for conveyance along the railway. A third class of charges becomes due when the company not merely convey the goods, as they would for the carriers who had their own station accommodation and staff, but are themselves the carriers; cases where, in addition to providing the highway, vehicles, and locomotive power, they perform “such services as are incidental to the duty or business of a carrier.” These services include the providing of stations, warehouses and sheds, where goods are received, sorted, loaded, covered, checked, weighed, and labelled, and trucks marshalled for convenient removal to their various places of destination, and the maintenance of a large staff of clerks, book-keepers, porters, workmen, engines and horses necessary for these operations. In this last case the company are entitled to make, in addition to the charges proper to highway, rolling stock, and locomotive power, a reasonable charge for the services, often costly and onerous, rendered in their totally different capacity of carriers.

It is undisputed that if the railway companies were not carriers and acted as toll takers only, they would be entitled to claim their full tolls. But what would be the result if they put in force such a right? The carriers or forwarding agents who would replace them, naturally would, as they formerly did, levy such payments as would cover the cost of station accommodation, and all the services performed in respect of the carriage of goods beyond the mere conveyance along the railway. Can it have been in the contemplation of the Legislature that railway companies were not to be entitled to make the same charges?

Suppose a Bill were before Parliament for the construction of a railway, and a clause requiring that the mileage rates should cover the cost of terminal accommodation were inserted, and the promoters accepted the Bill with such a restriction. The construction of a station at the terminus of the railway in a large town is very costly, and it would be to the interest of the company to make the station outside the town where land and works would be cheap. They would thus save capital upon which they would obtain no return, and, at the same time, they would be entitled to charge the public the full cost of cartage, whatever the amount might be. The Great Western Company, for instance, might have constructed their terminus at Wormwood Scrubs—from which place the cost of cartage to the City would probably be 7s. 6d. per ton, which the public would have to pay. With the view of affording better accommodation and of reducing the expense of cartage, they have erected a station under Smithfield Market, at a cost, in interest on outlay, maintenance, and other terminal expenses of an average of 3s. 8d. per ton. According to the opponents of terminal charges the Great Western Company are only entitled to be paid a mileage rate proportional to the distance from Wormwood Scrubs to Smithfield, that is, as for seven miles, to cover the use of the railway and the station. To take other illustrations, could it be supposed that the London and North Western Railway Company would have spent several millions of capital in providing expensive station accommodation in the immediate vicinity of the Docks in Liverpool, instead of receiving and delivering the traffic at Edge Hill, or that companies would have constructed vast stations in London, Manchester, Leeds, and many other important places, unless the cost was to be covered by payments in addition to the mileage rates? So inequitable and opposed to the real interests of traders is this contention that it is difficult to understand how it could ever be put forward.

One of the allegations before the Railway Rates Committee in 1881-2, was, that the companies carried some traffic at too low rates, and, to compensate themselves, imposed higher rates than otherwise would be necessary on other traffic. Now, if railway companies were not allowed to charge for terminal accommodation and services, one effect would be that in consequence of the cost of the construction and the expenses of stations, short distance traffic would be actually carried at a loss.

In recent years terminal charges have been recognised in every Act for the construction of new railways, by the introduction of a clause of which the following is a copy:—

“No station shall be considered a terminal station in regard to any goods conveyed on the Railway, unless such goods have been received thereat direct from the consignor, or are directed to be delivered thereat to the consignee.”

If the railway companies were not entitled to charge terminals for the use of the stations, the insertion of such a clause in Acts of Parliament would be meaningless; the intention of the clause evidently was that the companies may not charge terminals in respect of any intermediate station or junction, and the fair inference is that they may do so at the sending or receiving station.[43]