COST OF SERVICE.
One favourite proposal, often refuted but constantly renewed, is
to base rates on the actual cost of conveyance _plus_ a reasonable
return on the capital invested. Whether this would benefit the trade
of the country we shall by and by consider.
But it is no light presumption against this principle that, though
so often proposed, especially by theorists, nowhere has it been
carried out. Obviously cost of conveyance bears no relation to
value of goods--the mere transit of some descriptions of very
valuable goods costs as little as that of low priced articles. It
will be generally found that when pressed, the advocates of this
theory are not prepared to maintain that for a cwt. of coals and
a cwt. of copper the charge should be the same. They shrink from
the application of their own principle, recognising, as is the
fact, that it is absolutely inconsistent with any classification of
goods, such as traders and the Board of Trade have been urging the
companies to adopt.
Inconsistent as such a principle is with any kind of classification
of goods, and leading to the consequence that a rate might be the
same for a bale of cotton as for high priced silks, its effect might
be to revolutionize trade. But there is a preliminary difficulty;
how is the cost of conveyance to be ascertained with anything like
accuracy? How is the cost of conveying a particular consignment or
even the average cost of every kind of traffic to be found? What
the transit of full loads of coal in this country, or of grain
in America, from point A to point B costs may be approximately
found. Allowances may be made for the maintenance of the permanent
way, for cost of engine power, and the wages of drivers, guards,
&c.; and calculations, more or less accurate, can be made as to
the cost of conveyance even over lines of varying gradients. The
solution even of this simple form of problem would be difficult.
When in cases before the Railway Commissioners it has been attempted
to discover the _actual_ cost of conveying a particular kind of
traffic, the operation has been laborious. The companies interested
have been compelled to incur great expense in procuring returns and
information, and the result has in general been only approximately
accurate. Very complex and difficult is the real problem. A large
portion of the traffic of the country is carried in trains which
pick up and set down wagons at intermediate stations. In the same
truck may be goods of all classes and different quality or bulk
for different destinations. One article of great bulk and light
weight may be carried in a truck by itself or along with articles
of great weight and small bulk.[4] There is a further difficulty
in the fact that, while certain fixed expenses remain much the
same, no matter what may be the volume of traffic, the movement or
operating expenses increase with the traffic. It may be confidently
stated that no trustworthy data as to the cost of conveying each
consignment or each class of goods in the actual intricacy of
business could be obtained. At best only estimates could be roughly
arrived at by arbitrarily making allowances and assumptions. Will
those who talk about cost of service reveal the formula by which
they can accurately calculate the cost of carriage of a particular
article carried in the same truck with a dozen others, all coming
from different places and destined for different stations over three
or four different lines, the cost of no two of which has been the
same, and the working expenses of which are totally dissimilar? If
they have discovered this formula, it remains to be stated how it
may be applied.
[4] NOTE.--See illustration of cubical contents in proportion to
weight, page 83.
So serious are the difficulties in the way of ascertaining the facts
as to cost of transport, so varied are the circumstances in this
country, that it is not surprising that in every instance in which
the principle has been brought before a Parliamentary Committee or
Royal Commission it has met with the condemnation expressed by the
Select Committee of 1872--“it is impracticable.”[5]
[5] For attempts to calculate cost of service, see A. Fink on “_Cost
of Railway Transportation_,” New York (1882); Hadley on “_Railway
Transportation_,” p. 261; _Sax’s Die Eisenbahnen_ 1.60 and 2.361;
_Lardner’s Railway Economy_; and the Italian Parliamentary Inquiry
(_Atti della Commissione d’Inchiesta sull’ Esercizio delle Ferrovie
Italiane_) part II., vol. II., 962.
If the use of each wagon were charged for, according to its
capacity, the cost of conveyance per truck could, no doubt, be
approximately known. Whether such a system is the best for railway
companies need not be here considered; certain it is that it is
extremely undesirable in the interest of the trader. According to
it, he must pay for a five or a ten ton wagon, whether he filled
it or not, and whether the merchandise which he sent was silk,
bales of cotton, or fruit. The system of charging so much a wagon
instead of so much a ton--_wagenraum tarif_, as it is called--is,
to a considerable extent, in force in Germany and Holland. In both
these countries, however, it has been found incompatible with the
necessities of commerce to abide strictly by this principle. One
curious result would be brought about by charging per wagon--there
would be a return to practices some forty years ago given up in
England as needlessly costly and unsuitable to business. Every
customer of a railway does not want a whole truck. He wishes to send
ten cwt. of bales or a cask weighing one hundredweight; he could not
send his goods if he had to pay for a full truck. To provide for the
wants of the great mass of traders and the ordinary requirements of
business, intermediaries between the railway companies have sprung
up in Germany and Holland. Indeed, the great bulk of the traffic in
the latter country is carried by carriers or forwarding agents in
full wagon loads. The company is practically only a toll taker. The
forwarding agents charge the consignor or consignee of the goods
sums over and above the tolls or rates paid to the companies. So
far as a large part of the public is concerned, the rates of the
companies are, in those countries, mere paper rates. Not being able
to take a full wagon, small traders must pay what the forwarding
agents demand, or make special terms with them. This is very much
the state of things which existed in England before 1844, when the
companies were, as a rule, merely owners of the road, locomotives,
&c., and when they left to private persons the business of carriers.
Those who can recall that time, or who reflect what the results of
such a system would be, will scarcely wish for its return; it would
be indeed a lamentable retrogression, injurious alike to the public
and the railway companies.[6]
[6] See the unqualified condemnation of the system in the Italian
Parliamentary Report already quoted: “The natural system was a
system eminently theoretical. To-day all doubt on the subject is
removed; this system was tried for five years, and it proved very
unsatisfactory.” Parte II., Vol. III., p. 954. It is pointed out
with truth that the so-called “natural system” is injurious to small
industries and small towns.
See also page 18.