S. 90, “And whereas it is expedient that the company should be enabled to vary the tolls upon the railway so as toaccommodate them to the circumstances of the traffic, but that such power of varying should not be used for the purpose of prejudicing or favouring particular parties, or for the purpose of collusively and unfairly creating a monopoly either in the hands of the company or of particular parties, it shall be lawful, therefore, for the company, subject to the provisions and limitations hereinafter and in the special Acts contained,from time to time to alter or vary the tolls by the special Act authorised to be taken, either upon the whole or upon any particular portion of the railway as they shall think fit; provided that all such tolls be at all times charged equally to all persons, and after the same rate, whether per ton, per mile or otherwise, in respect of all passengers, and of all goods or carriages of the same description, and conveyed or propelled by a like carriage or engine passing over the same portion of the line of railway under the same circumstances, and no reduction or advance in any such toll shall be made either directly or indirectly in favour of any particular company or person travelling upon or using the line.”
S. 90, “And whereas it is expedient that the company should be enabled to vary the tolls upon the railway so as toaccommodate them to the circumstances of the traffic, but that such power of varying should not be used for the purpose of prejudicing or favouring particular parties, or for the purpose of collusively and unfairly creating a monopoly either in the hands of the company or of particular parties, it shall be lawful, therefore, for the company, subject to the provisions and limitations hereinafter and in the special Acts contained,from time to time to alter or vary the tolls by the special Act authorised to be taken, either upon the whole or upon any particular portion of the railway as they shall think fit; provided that all such tolls be at all times charged equally to all persons, and after the same rate, whether per ton, per mile or otherwise, in respect of all passengers, and of all goods or carriages of the same description, and conveyed or propelled by a like carriage or engine passing over the same portion of the line of railway under the same circumstances, and no reduction or advance in any such toll shall be made either directly or indirectly in favour of any particular company or person travelling upon or using the line.”
Personal preferences were forbidden. But the companies were to accommodate their rates to the circumstances of the traffic, the Legislature’s mode of expressing the rule that the traffic should pay what it could bear; and within the statutory maxima, the companies were to be free to alter their tolls as they thought fit.
How far this was altered by s. 2 of the “Railway andCanal Traffic Act, 1854,” need not here be considered. It is enough to say here that, so far as s. 90 was concerned, differential rates were not only not prohibited, but distinctly sanctioned. S.90 required equality only in regard to traffic “passing between the same points of departure and arrival, and passing over no other part of the line.”[35]
For more than forty years railway companies have been conforming to these principles. They have been developing long as well as short distance traffic, and aiding the opening of new industries. They have done so to their own advantage, for though the return on the capital expended on railways has been small, it has been obtained on a large volume of traffic. They have been able to benefit the commerce of the country to a degree which would have been impracticable if, instead of rates being elastic and freely accommodated to traffic, the traffic had beenforced to adapt itself to the rates. Producers pay what they find it worth while to pay; they pay no more. In framing the statutory classification, the Legislature assumed that producers would probably find it worth while to pay the authorised charges. The companies find out what such producers can in fact pay, and what rates will best promote traffic. What preferable rule could be substituted?
One inconvenience incidental to the course taken by the railway companies has been experienced. The actual classification in use does not follow the meagre, and in many respects arbitrary, statutory classifications; the latter may not be a guide to the former. This was one of the grievances laid before the Railway Rates Committee in 1881 and 1882. Traders, it was said, could only with difficulty ascertain the companies’ powers to charge for goods not enumerated in their Acts. The representatives of the railways agreed with some of the witnesses who gave evidence on behalf of the traders as to the original classifications in the Acts of the companies having become obsolete. They explained that from time to time they had been rectifying, in the manner already described, the defects of the statutory classification, and that, acting on information communicated by manufacturers and merchants, and guided by their own experience, they had framed and generally adopted the Railway Clearing House Classification, which embraces some 2,700 articles, and which is, on the whole, fairly adapted to the requirements of trade. They added that the companies were prepared to agree to a revised maximum classification in lieu of the original classification.
Accordingly, the Committee recommended—
“That there should be adopted over the whole Railway system one uniform classification of goods.”
“That terminal charges should be recognised, but be subject to publication, and, in case of challenge, to sanction by the Railway Commissioners.”
The Board of Trade thereupon intimated to the railway companies their intention of introducing into Parliament a Bill with the view of carrying out some of the recommendations of the Committee, and requested them to prepare a standard maximum classification for general adoption.
This was done. The companies were also prepared to assent to a codification of their maximum rate clauses, having due regard to their existing powers, so as to assimilate them to the new classification. But they stipulated that certain, rights which at that time were considered by some to be doubtful—in particular, the right of the companies to charge for terminal services—should, as; recommended by the Committee, be recognised. The Bill introduced in the Session of 1883 by the Board of Trade was not proceeded with. Acting therefore on a suggestion which was made to them, several of the companies introduced Bills in the Session 1884-5, with a view to consolidate the maximum rate clauses, and secure the adoption of a general classification, and the recognition of terminals. But the companies received from Government no such assistance as they had reason to expect. The mere consideration of their Bills was strongly opposed, the Board of Trade eventually joining in the opposition; and the measures had to be withdrawn. Last Session the Board of Trade introduced a Bill, not only to compel the companies to do what they, by their Bills introduced in the Session of 1885 sought to do, but also to make it obligatory on them to accept such altered rates and tolls as the Board of Trade, with thesubsequent sanction of Parliament, might lay down, and to submit to periodical revisions thereof—requirements so contrary to the conditions on which the companies provided the capital for the construction of the railways, that it is difficult to believe that the effects of the provisions of the Bill could have been clearly understood. The companies unanimously objected to a measure which amounted to confiscation. It is probable that a satisfactory arrangement would have been come to; but owing to the dissolution of Parliament the Bill was not proceeded with. In view of the desire of the public for a new classification, the recommendation of the Railway Rates Committee, end the general assent of the companies, it may be assumed that in the course of the next Session the subject will again be brought forward; and it is therefore desirable to consider the principle on which a classification should be framed.
In the earliest Canal and Railway Acts the basis of the classification was the nature, bulk and value of the articles carried. The lowest tolls were applicable to articles carried in large quantities, such as lime, dung, coals, and rough stone; the medium tolls to grain, timber, &c., and the higher to manufactured goods, and the more valuable articles of merchandise, such as wool, tea, wines and spirits, &c. On canals, this classification was in force, notwithstanding the fact that they were at first only toll takers, and did not incur any cost in conveyance or any risk—services and liabilities for which the carriers charged the public beyond the tolls. The numbers of articles enumerated in the original Acts were, as previously stated, from 50 to 60, divided generally into from three to five classes. The present Railway Clearing House classification, which has been revised fromtime to time, contains seven classes. The following is a comparative statement of the number of different articles enumerated in it during the last 34 years:—
Judging from remarks which have been made[36]as to the “inconsistency and want of classification,” it appears to be the view of some persons that this classification has been framed by the companies in an arbitrary manner and without regard to the necessities of trade. Nothing could be more erroneous than this assumption. Of necessity it is from the traders themselves that the railway managers have primarily obtained the information by which they have been guided in framing the classification. The questions to be determined in fixing rates are not simple; the elements to be taken into account are many. Whether the traffic is considerable, whether the cubical contents are large or small in proportion to the weight whether it is carried in large or small quantities, whetherthe merchandise consists of raw materials or manufactured goods, articles of necessity or luxury, must be considered. The requirements of traders with conflicting interests, the different views taken by the companies, and the desire to encourage special industries must be studied. In practice what takes place is this. When a new article of commerce or of manufacture is introduced, the merchant or manufacturer calls on the railway company immediately interested to have it classified and to fix the rates. Of course, there is an endeavour to get it placed in the lowest possible class. Such applications are carefully considered; and they are from time to time discussed by the managers at their conferences. Thus the classification is continually under consideration and revision; there is a constant process of re-adjustment to the changing circumstances of trade. So-called anomalies there no doubt are, and departures from the basis on which a classification should be framed. But the Railway Clearing House Classification, which is the result of this continual effort to adapt charges to new conditions, answers reasonably, if not perfectly, the requirements of trade.[37]
It must be borne in mind, in framing a new standard classification, that it will be the maximum beyond which the companies must not go. If adopted generally over all railways, the scales of maximum rates must allow scope for the local necessities and peculiarities of different districts of the country. Inverness-shire and Cornwall, as well as Staffordshire, Lancashire, and Yorkshire, agricultural, manufacturing, and mining districts, must all be considered. There must be sufficient elasticity in the scaleof maximum rates to allow of the charges being remunerative on short distance traffic. Goods coming under the same generic name often vary considerably in cubical contents in proportion to weight, value, and risk of damage, as well as in the extent to which they are carried; all considerations not to be forgotten in constructing a uniform classification. The following few examples, taken casually from consignments actually carried, illustrate the remarkable variations in the weights and bulk of some of the traffic:—
The value of goods coming under the same description, and the risk in conveying them, frequently vary as much as the cubical contents. No matter what pains are taken to frame a fair classification, it is to be feared that any classification based on a careful consideration of the nature and value of the articles carried, and all the varying circumstances of trade—and an omission to consider any such element would work injustice—must appear to some traders to be more or less anomalous. Some will still consider they have a grievance to lay before Chambers of Commerce.
It may be well to state how the problem has been dealt with on the Continent. The particulars given may be instructive to those who hastily recommend an adoption of the systems in force abroad.
In France the classification of goods and rates is in a transition state; and a large portion of the trading and manufacturing classes are discontented with the charges at present made by the railway companies. With a view of simplifying the tariff, in 1879 the Minister of Public Works took steps to frame for adoption on all the French Railways a classification divided into six classes. Subsequently an attempt was made to prepare a uniform scale of railway rates diminishing according to distance. But after a long enquiry, and full consideration, the proposal was abandoned. In 1883, the Paris, Lyons, and Mediterranean Railway Company proposed the adoption of a revised tariff, which professes to afford, on the whole, a reduction in the rates as compared with the former tariff. It was sanctioned by the Minister ofPublic Works in August, 1885. It consisted of six classes for general goods in any quantities, and six for goods of the special classes, which are generally carried in lots of one and five tons. The latter six classes were in substitution for the many special tariffs formerly existing. The Eastern of France Railway Company also revised their tariff, re-adjusting the classification, and reducing the number of their special tariffs to 28. An article formerly carried at a special tariff between certain specified stations is now charged at the fourth class rate. But when carried generally, and not between particular stations, such an article remains, as before, in the second class. The Northern of France Railway Company have also revised their tariffs on a somewhat similar basis.
Long debates on the subject of the charges under the new tariffs, and on the railways generally, took place in the Chamber of Deputies, in February and March last. There were complaints that the “reformed tariff,” and particularly that of the Paris, Lyons, and Mediterranean Company, had not brought about the anticipated reductions, and that, while in some cases lower rates for certain goods carried in large quantities had been conceded, higher rates had been fixed for similar goods sent in small quantities. The rate for 5 ton lots, for instance, is lower; but that for lots under 5 tons is generally higher. The larger traders had derived a benefit from the change; but the small traders and consumers compared with what they were, are placed at a disadvantage. So far the other companies have not made any alteration in their tariffs.
Thus it will be seen that in France there is no uniform classification. The tariffs of the companies, with the exception of the Ouest, Nord and Est, are composed of a different number of classes, and the number of articlesenumerated in the classification also varies. Articles, too, are not included in the same classes on all lines. For instance, the Ouest enumerates 1686, the Nord 1519, and the Paris, Lyons, and Méditerranée, 1425. The tariffs are divided—
The following examples show how the classifications vary:—
In Germany, Holland and Belgium there is no such classification as is in force in this country. Generally speaking, goods of all descriptions, except wagon loads of 5 and 10 tons, are charged according to weight, irrespective of their nature or value. In Germany the railway tariff consists of 8 classes, viz.:—
The system actually existing in Germany is a compromise. Previous to 1878 different systems existed inNorth and South Germany. The classification in use in the former was governed by the value of the goods; while that in force in the latter was framed with particular reference to their weight and measurement. In that year, however, an attempt was made to reconcile the two systems; the “Reform Tariff,” as it is called, was established on all the German railways. There was a concession to the Southern system; rates for goods in covered trucks in five or ten ton lots were adopted. The North system, on the other hand, was recognised by establishing the Special tariff classes, in which the relative value of the goods has been taken into consideration. The actual classification is therefore dual; it is a compromise between two totally different systems. Obviously it does not accord with the requirements which have been put forward by, or on behalf of, traders in this country.
In Belgium, also, there is practically no classification except for traffic in full truck loads. The tariff consists of—
For Tariffs 1, 2, and Class I. of tariff No. 3, there is practically no classification. All goods up to the specified weights are included, without reference to their value or nature. Only in respect of the wagon-load classes of tariff No. 3 does any classification exist. In this classification, which applies to all the Belgian railways, about 639 articles are enumerated. It is assumed to be framed with reference to the value of the goods, the mode of transit, the amount of the company’s responsibility, and the circumstance of the goods being carried in open or covered trucks.
In Holland, the classification is very similar to that which exists in Germany. Goods are divided into two classes, i.e., “Stückgut” or “Piece” goods, to which belong all consignments less than 5 tons carried by goods train; and “Truck Load” goods, which includes goods in truck loads of 5 or 10 tons, or which pay as for those weights. The “Stückgut” class is subdivided into two classes, and the “Truck Load” class into four classes. The total number of articles enumerated in the classification is about 242. Although the bases of the tariffs charged for conveyance differ, the classification is practically the same on all the railways in Holland. The following is an example of the classification of goods on the Dutch Rhenish Railway. It will be seen that such articles as coffee, cheese, butter, in consignments of less than 5 tons, are included in the sameclass as coal, coke, gravel and raw iron; a feature not likely to be imitated by admirers of the “scientific classification” supposed to exist abroad.
This diversity of system and practice will give some idea of the difficulty experienced in framing a classification suitable to each country, or, indeed, to various portions of the same country. The difficulty will be still better understood by observing the different manner in which goods placed in the 2nd Class, under the Railway Clearing House Classification, are classified in other countries.
In the table headers below:
The following is a comparison of the number of articles included in each classification, so far as such exists, in France, Germany, Holland, and Belgium:—
The number of articles which the companies proposed to provide for in the standard classification by their Bills deposited in the Session of 1885, was 2,656, classified as under:—
Assuming that any maximum classification to be framed should comply with the conditions which have been already stated, and that it should accommodate trade in all districts of the country, the classification suggested by the railway companies in their Bills will bear the test of any fair inquiry. When the change which we have indicated is carried out—when the maximum rate clauses of the companies are consolidated and revised on an equitable basis having regard to the present powers and to the new classification—traders will be able easily to ascertain whether the charges made by the companies are within their Parliamentary powers.
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 judgmentof 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 warehouseaccommodation, 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 conveyancealong 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 thatthe 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 bypayments 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:—