PROPOSALS FOR FIXING RATES BY RAILWAY COMMISSION--CONCILIATION
COURTS.
One of the many proposals for fixing, or controlling rates was
contained in a clause in the Railway and Canal Traffic Bill of last
session. It was intended to confer on the Board of Trade the power
at any time, “on the application either of a railway company, or of
any Local or Harbour Board, any Council of a City or Borough, any
representative County body which might hereafter be created, and
Justices in Quarter Sessions assembled, any Public Local Authority
which is now or might hereafter be established, any Association of
Traders or Freighters, or any Chamber of Commerce or Agriculture,
who should obtain a certificate from the Board of Trade that they
were entitled to make such application, to revoke, amend or vary
the maximum rates.” This would have been a totally new departure
in legislation. Such statutes as the Railway and Canal Traffic
Act of 1854, and the Regulation of Railways Act, 1873, exhibit
an inclination on the part of Parliament to jealously limit the
powers granted to the companies. The tendency of the Courts of
Law has been to construe the Acts strictly against companies and
give the public the benefit of all doubtful points.[90] But it had
never before been supposed that the powers to charge the rates and
tolls contained in the original Acts, under which the companies
undertook the construction of the railways, could be indefinitely
altered, as proposed in the above clause. No such recommendation
was made by the Railway Rates Committee of 1882. After what took
place in the discussion of the Bill, both in Parliament and out of
it, and the announcement of the then Attorney General, “that no one
contemplated a perpetually recurring revision,”--which the clause
provided for--it is not probable that any such suggestion will again
authoritatively be made.[91]
[90] NOTE.--The following remarks, contained in the report of the
Joint Committee of 1872, on the subject of periodical revision of
rates, are worth reading--
“The difficulty has been felt by many of the witnesses, and they
have accordingly suggested that there should be a periodical
revision of rates and fares.
“Here, again, we are met in the first instance by the same
difficulty as before. The companies will, if experience is any
guide, constantly, for their own sakes, charge less than their legal
maxima. Is this revision to take effect on their legal maxima, or
on the actual rates as they voluntarily reduce them? If the former,
its results will be small; if the latter, it will be difficult to
effect, and may bear hardly upon the companies in stereotyping a
temporary or experimental reduction. In fact, the proposals for
revision of rates, if they are to be effectual, really presuppose
some such determination of rates according to a fixed standard as
we have considered above. If there are no special rates, it is a
comparatively simple thing to make a general reduction. If there
are special rates it becomes a very difficult task. But a still
more serious question with respect to periodical revision is the
question--On what principle is it to be performed, and by whom?
If it is to be purely arbitrary, if no rule is to be laid down to
guide the revisers, the power of revision will amount to a power
to confiscate the property of the companies. It is not likely that
Parliament would attempt to exercise any such power itself, still
less that it would confer such a power on any subordinate authority.
Accordingly the witnesses have suggested that the revision should
take effect under conditions which would reserve to the companies a
reasonable amount of profit, and to some revision founded on this
principle, it appears from the evidence that some, at least, of the
principal railway companies would not object.
“This leads to the further consideration of the important question,
whether it is possible or desirable to fix by law a maximum of
profit, or dividend. If it is not possible or desirable to do so,
any periodical or systematic revision of charges by any authority
subordinate to Parliament, may be pronounced impracticable.”
[91] See the language of Lord Penzance in _Pryce_ v. _Monmouthshire
Canal and Railway Company_, L. R. 4 A. C., p. 206.
Another proposal of a somewhat similar character is, that the
Railway Commissioners, or some other special tribunal, should fix
the rates. Were a Court for the control of rates established with
the consent of all concerned, there would remain the question on
what principle are the rates to be framed? Are they to be according
to equal mileage, or, if not, in what other manner? What better mode
can be suggested than the past practice, which, as has been shewn,
has been beneficial to the community? Nor is it easy to understand
how any Court could fix all the incalculable number of rates, and
hear and determine all the practical questions certain to arise.
Even if a trifling proportion of the rates were fixed in this
manner, and the task in those cases were performed, with reference
to all the many circumstances now governing rates, complications and
difficulties must arise, and the Court would be placed in a position
of great, if not insurmountable, difficulty. So many anomalies
must be authorised that it would be impracticable for the Court to
decide consistently with precedents. In all probability the control
would either become nominal, or the whole system would have to be
recast. Nor must the serious loss of time by the staff of railways
in attending to such inquiries, and the consequent diminution of
the efficiency of their work in the actual regulation and conduct
of railway traffic be lost sight of. The costliness of inquiries
before such a Court is a secondary, but not an unimportant, matter.
In the hope of obtaining reduced rates, or of compelling a company
to raise the rates of a competitor in trade, or to raise the rates
to and from competing ports, some traders and merchants, separately
or combined, might risk the expense of applications to such a
Court.[92] But the general interest could not be promoted by the
creation of any such arbitrary and anomalous Court.
[92] In the case of the application of the North Wales Colliery
proprietors to the Railway Commissioners against the Great Western
Railway Company, on the ground that they charged coal from South
Wales to Birkenhead, 159 miles, at the rate of ·454d. per ton per
mile, as against ·893d. per ton per mile for their coal for 28
miles, the expense incurred by the Great Western Company, exclusive
of the time occupied by their own staff, was £1,433; and the time
which was taken up in preparing for, and in attending, the hearing
was very serious.
Reference is often made to the experience of the United States
in regard to the supervision of railways as if it should be a
guide to us. There each State may legislate with reference to the
construction and regulation of its own railways. At first everything
was done to facilitate their construction. They were proceeded with
in advance of, or concurrently with, immigration and settlement.
Many States have made large grants of land to railway companies.
In some States a few individuals, from five upwards, may form
themselves into a railway company, and under general laws construct
railways between any two places, regardless of the wishes of others
and the considerations which here form the subject of Parliamentary
inquiry. No scale of maximum rates, as a rule, governs the charges
for conveyance; and great variations in them are in fact made. Only,
however, in recent times, when railways have become numerous and
their extension is not so urgently needed, have State Legislatures
interfered with their management.[93]
[93] The rates for “interstate” traffic in the United States are
not at present subject to any Government control, but are made at
the discretion of the companies to meet the requirements of trade,
competition by rail and water, and of cities. Two Bills for the
regulation of the interstate traffic of railways have recently been
before Congress; one, the “Reagan” Bill, which proposes to fix the
charges, to prohibit any discrimination, and to make it illegal for
railway companies “to combine or to pool” their receipts without
stringent provisions and penalties. The other Bill, entitled the
“Cullom” Bill, proposed the appointment of an Interstate Commission
consisting of five members, but did not provide for any specific or
maximum rates for the transportation of passengers or merchandise,
except that they should be reasonable and that there should be no
unfair discrimination; while laying down the principle that the
rates should be in proportion to the distance carried, it proposed
to give to the Commissioners power, in their discretion, to allow
lower rates to be charged for long, as compared with short distance
traffic. The former Bill passed the House of Representatives and was
rejected by the Senate; the “Cullom” Bill passed the Senate, and was
rejected by the House of Representatives.
The expediency of establishing maximum rates has been discussed in
some States. But another course has also been tried; Commissioners
have been appointed for the purpose of fixing reasonable charges.
Where maximum rates have been fixed, in no case, so far as can be
ascertained, have the Legislature altered, or the Commissioners
interfered with the powers conferred if the rates charged are
within such maximum. Some of the Commissioners fixed rates on so
unremunerative a basis as to defeat their object and to prevent
the introduction of capital, and the construction of railways. The
result was that in one State after a trial of about two years, the
law establishing such a tribunal was hastily repealed.[94]
[94] Report of the Committee of Commerce, House of Representatives
of the United States, March 8th, 1886.
“The Committee on Commerce, to whom was referred the bills (H. R.
309) to establish a Board of Commissioners of interstate commerce,
and for other purposes; (H. R. 770) to regulate interstate commerce
through a national court of arbitration (H. R. 1,572) to create
an interstate commerce commission, and to regulate its powers and
duties; (H. R. 1,669) to establish a bureau of transportation
in the Department of the Interior; (H. R. 2,412) to regulate
interstate commerce and to prevent unjust discriminations by common
carriers; and (H. R. 3,929) to establish a Board of Commissioners
of interstate commerce, and to regulate such commerce, beg leave to
report said bills back to the House, and ask that they be laid on
the table, and to report the accompanying bill as a substitute for
H. R. 2,412, and recommend its passage.
“The subject matter of these bills has been so fully and elaborately
discussed for several years past, that it is not deemed necessary in
this report to enter into an elaborate explanation of the provisions
of the bill reported to the House. Your committee may state,
however, that the several bills referred to them rest upon three
different theories.
“House bills 309, 1,572, 1,669 and 3,929 are framed upon the idea
of providing a governmental commission, and of making detailed
regulations of freight rates. The theory of these bills did not need
the approval of the committee.
“House bill 770, ‘To Regulate Interstate Commerce through a National
Court of ‘Arbitration,’ looks to the establishment of a court with
power extending in some measure to the regulation of commerce
between States, with provisions extending to the regulation of
subjects not believed to be within the jurisdiction of Congress, and
not embracing in its provisions matters of regulation believed to be
necessary in a bill of this kind; and a single court to be held at
Washington City, as provided in this bill, would not be sufficiently
convenient to the people.
“The bill which we report to the House, and which is an amendment
of House bill 2,412, is based upon the theory of furnishing civil
remedies in the courts of ordinary jurisdiction to parties for the
most conspicuous grievances complained of in railroad management,
prohibiting what should not be done, and commanding what should
be done; proposing remedies for the violation of its provisions,
and avoiding any attempt at detailed regulation of freight rates.
This was deemed best as the first effort at legislation upon this
subject. The interests involved are so large, and their successful
management so important to the country, that it was not deemed
advisable to run any risk of embarrassing the management of the
railroads of the country, and at the same time it was deemed
necessary for the protection of the interests of the people to
control and circumscribe the exercise of the monopoly powers of
these corporations, to prevent them from making extortionate charges
and unlawful exactions upon the people.
“The examination of this subject will show that the attempt to
establish a system of legislative rates is impracticable, for the
reason that what would be a reasonable rate for one road would be
ruinous, perhaps, to others, as the charges for the transportation
of freights are largely controlled by the amount of business done by
the several roads.
“For instance, what would be a reasonable rate of charges on the
Pennsylvania Railroad would not be a reasonable rate upon a road in
the new States and in a sparsely settled portion of the country.
“The same difficulty lies in the way of attempting to protect the
people by the adoption of maximum rates. What would be a reasonable
maximum upon one road would not be reasonable upon others. A maximum
high enough to protect the railroads against harm would be too
high to benefit the people on most of the roads, and a maximum low
enough to protect the people on some roads would be ruinous to the
interests of many other roads, so that it is not believed best to
attempt to protect the interests of the public by the legislative
rates or by the maximum rates.
“The bill which we report to the House, instead of adopting either
of these plans, provides that the charges of the railroads shall be
reasonable; that persons engaged in the transportation of interstate
commerce by railroads shall furnish without discrimination the
same facilities for the carriage, receiving, delivery, storage
and handling of property of a like character, and shall perform
with equal expedition the same kind of services connected with
contemporaneous transportation.
* * * * *
“These constitute a portion of the leading features of the bill
which we report to the House. It is believed that the enactment and
enforcement of such a law will provide for the just and necessary
abridgment of the monopoly powers of these corporations, and
protect the people against unreasonable charges and extortionate
exactions, and will at the same time not interfere with or embarrass
the management of railroad corporations in anything which it is
reasonable and just they should do. And the Committee believe it
wiser and better to provide for the enforcement of the provisions
of such a law through the instrumentality of the ordinary courts of
justice, and by the judges and juries of the country than by the
orders of a commission. The machinery of the courts is already in
existence, and will require no additional expense, and is within
convenient reach of the people everywhere, and is fully able to
adjudicate all cases which may arise under this bill and by methods
with which the people are familiar, while no plan of a commission
which has been proposed could be conveniently accessible to all
the people, and if a plan should be presented which would provide
a jurisdiction convenient to all the people it would necessarily
be cumbrous and very expensive. In this view a commission is
unnecessary, unless it is the purpose of Congress to enter upon the
detailed regulation of freight rates.”
The rates charged in the United States are mainly governed
by competition with water carriage, or between the companies
themselves. Occasionally they are so reduced over large districts
as to be totally unremunerative. As soon, however, as the struggle
between competitors is ended, and an arrangement is arrived at,
the rates are suddenly raised. The circumstances of England and the
United States are so unlike that, even were those tribunals suited
to the latter, no case would be made out for establishing here a
Court armed with such powers. Here railway companies can make
charges only within their statutory maxima; there, as a rule, no
statutory maxima, or prohibitions of undue preference, similar to
those enacted here, are known. Here no municipalities have largely
subscribed to the capital of railways, no grants of public lands
have been made to them, as have been freely done there.[95]
[95] Poor’s Manual of Railroads for 1885 (page xv.) gives a list of
Railroads of the United States sold under foreclosure. The following
is a brief summary:--
Mileage. Capital Stock. Funded Debt. Floating Debt. m. $ $ $
1882 668 20,751,457 23,999,065 10,073,769 1883 1,190 24,587,704
38,197,926 2,481,608 1884 714 12,894,000 13,061,000 422,533
To legislation in Continental countries as to the fixing of rates,
we only briefly refer; in Appendix III. are full details as to
the law on this subject of Prussia and the German Empire. It may,
however, be here observed that the Prussian General Railway Law of
1838 provided for a reduction of rates when the net profits exceeded
10 per cent.; that the concessions to private companies stipulate
for the control of the Government over rates; but that, in recent
concessions, greater freedom is accorded to the companies, which
may, within certain maximum limits, modify rates at pleasure. Such
legislation is well worthy of attention; only it may be suggested
that it is not reasonable to pick out for commendation this or that
provision without regard to its concomitants--to propose to adopt
provisions to the disadvantage of railways, and to ignore those
which recompense them.
In Germany exist District Consultative Councils or Conciliation
Courts, which deal with all questions relating to conveyance of
goods on railways, and with the application of existing tariffs and
the introduction of new local tariffs. It has been stated that those
Councils or Courts are of great practical utility. Whether this be
so or not the circumstances under which Conciliation Boards are
appointed in Germany are very dissimilar to those of the railways
in this country. Their constitution is peculiar; similar elements
do not exist here. These Boards are composed of representatives of
the Government as workers of the railways and representatives of
the traders as users of them. Both, however--the nominees of the
Government and the traders--may be said to represent the owners
(in reality--the public) of 85 per cent. of the lines, who are
liable for any loss in working them. In this country neither the
Government nor the traders are the owners.[96] Moreover, in Germany
the representative of the Government which controls the working of
the railways, has, in fact, the power of fixing any rate by his
final decision, whatever may be the views of the traders or the
Conciliation Boards. In the last resort the owner of the lines
controls the rates.
[96] The railways in this country are governed by directors who
have shares in the respective undertakings, and represent the
shareholders (assumed to be about 500,000), but generally their
interest in the railways is relatively small compared with that
which they possess in land, manufactories, collieries, ironworks,
and commerce &c., besides which from their local connections,
and as public men, they are keenly alive to the requirements of
agriculture, trade and commerce, and in reality represent those
interests to a much greater extent than is sometimes assumed to be
the case.
Were such Councils established here their duties would not be so
light as those which fall to them in Germany. There the questions
to be considered must be few, the time occupied in deciding them
short, owing to there being practically no competition, and to the
great bulk of the rates being based on a mileage scale. Much more
complex questions would arise here, much longer time must be taken
up in deciding them in England, where rates are adapted to all the
requirements of trade and competition in its many forms.
In Holland, Belgium, and France, railways have been constructed
with, in some cases, considerable financial assistance from the
Governments, and under concessions for certain periods. Not
unnaturally or unreasonably the Governments have reserved the right
to control the rates and charges to be made while a concession is
in existence, or when it ends. It will be found, however, that when
there is power to reduce the rates before the expiration of the
concession, the State guarantees the dividend in the event of loss
arising from the compulsory reduction. Such is the case in Holland.
The Dutch Law (Article 29) provides that reductions in the tariff
can at all times be ordered by the State. But if, in consequence
of such reductions, the net gain of the company be diminished,
compensation is to be paid out of the State Treasury, and any
dispute as to the amount of compensation is decided by a Court of
Justice. In no case, however, must the amount of compensation raise
the net profits of the year or years for which it is demanded above
8 per cent. of the Company’s capital. Thus the right to control
rates is part and parcel of a system wholly unlike our own. It
exists in a country where the State has helped to construct, and to
a very large extent actually constructed, railways. It is alien to
this country, where capital for the whole of the railways has been
provided by private individuals, on the faith of the powers to levy
the tolls and rates fixed in their private Acts.
In the Railway and Canal Traffic Bill (1886) was also embodied a
proposal to the effect that any person who was of opinion that a
company was charging an unfair or unreasonable rate might make a
complaint to the Board of Trade, who were to be entitled to call
on the company for an explanation and to appoint one of their
officers, or a competent person, to communicate with the company
and the complainant, and to endeavour to settle the difference
amicably between the parties. The Board of Trade were from time to
time to submit to Parliament reports of the complaints so made, the
results of their proceedings, and such observations as they should
think fit. The effect of this provision would have been startling.
Even where a rate was within a company’s powers--although undue
preference was not alleged--at the instance of a trader desirous
of obtaining a reduced rate which had been refused by a company
and believing that either his own circumstances or those of other
traders entitled him to communicate with the Board of Trade, the
railway company would be called upon to prove to the Board of Trade
that the claim of the trader ought not to be granted. It would be,
in effect, litigation made easy and cheap, whether the complaint
was good or bad. The President, Vice-President, Secretary, or
Assistant-Secretary of the Board of Trade could not spare the time
necessary to master the numerous difficult questions and details as
to the rates.[97] Notwithstanding the great ability with which that
department is conducted, these officials could not deal with such
questions in the same way or within the same time as the traders
and the representatives of the companies are able. The companies
would probably be burthened with correspondence and discussions on
matters already fully gone into in negotiation. The discussion would
be necessarily carried on through subordinates or nominees of the
Board of Trade, who, it is not presumptuous to say, would be neither
interested in, nor specially trained to deal with, such questions.
Suppose that the representatives of the Board of Trade and the
railway companies disagreed as to the necessity or reasonableness of
a reduction in rates, the former would have no authority to compel
the companies to comply with their views. Would not the result
probably be a cry that Parliamentary powers should be conferred on
the Board of Trade to enforce their conclusions? Such a policy would
in the end place the railway companies of the country, whose capital
has entirely been raised by private enterprise, in a worse position
than the railway companies in Holland where the State has done so
much for them, or in France, where it has guaranteed the dividends.
[97] In a case of the kind referred to, which was brought before the
Board of Trade when the Bill was before Parliament, as a skilled
officer of the company was occupied 150 hours, in preparing the
information alone to reply to the Board of Trade, irrespective of
the time occupied by others in analysing the information, and in
corresponding with the Board of Trade on the subject, all of which
had no practical result.
When we are invited to place in the hands of a tribunal the control
of the rates, it is expedient to note the difficulties which the
Railway Commissioners seem to have felt in dealing with the various
questions raised before them, and the manner in which they have
dealt with them.
In determining under the Traffic Act questions of alleged undue
preference, they have been obliged to express their opinion on the
reasonableness of particular rates. As to the legal correctness
of their decisions, nothing need here be said; for the present
purpose it may be assumed that they are open to no legal exception,
and we fully recognise the ability and care which they manifest.
Only their economical effects are here considered. There would be
no difficulty in showing that they have acted upon principles, so
far as they have acted upon any, which have not merely not been
sanctioned, but have been condemned, by every Royal Commission or
Select Committee which has inquired into the subject, and by almost
every economist of eminence. On the part of the Commissioners there
have been--not unnaturally--some waverings in opinion. But on the
whole, they appear to have attempted to frame rates according to
cost of service; and they appear not to admit that the existence
of competition is a reason for varying them. Now, in the first
place they apply--it may be added, necessarily apply--the cost of
service principle in an imperfect fashion. They deal only with
undue preference in regard to the same or very similar articles.
They do not say, what consistent adherence to the theory would
compel them to say, that a ton of coals and a ton of tin ingots
must be carried at much the same rate; they are bound by the
existing classification, which forbids this. Occasionally their
decisions are indeed curiously inconsistent in many respects, as
was probably inevitable, where they were called upon to face the
commercial results which would have followed a too rigid adherence
to some of the principles by which they felt themselves bound.[98]
In the case of the _Nitshill and Lesmahagow Coal Company_ v.
_Caledonian Railway Company_,[99] the defendant company claimed to
charge more for carrying cannel coal, which, it was alleged, cost
38s. a ton, than they charged for carrying splint, which cost 15s.
6d. On the principle on which the classifications in most special
Acts were framed, this would be reasonable; the more valuable
article could bear more, and ought to pay more. But the Railway
Commissioners decided differently. “As the quality of coal does not
affect the cost of carriage to the railway company,” they said,
“we are of opinion that the two kinds of coal ought to receive the
same treatment.” If this principle had been carried out since the
beginning of railways, if rates had been settled without regard
to the value of merchandise, the prosperity of many districts and
industries would never have been developed. In the second place,
the cost of carriage is, inevitably, sometimes guessed at rather
than calculated. We have already stated the nice calculations
which must be entered into in order to determine the exact cost of
carriage; calculations in which it is practically impossible to
attain accuracy. Many elements in cost, the Commissioners cannot
accurately measure; the data do not exist. In the third place, the
effect of their later decisions is to exclude, practically, if not
theoretically, competition from the considerations to be taken
into account. This is, not only for the reasons already stated,
contrary to sound commercial principles; it is contrary to the
language of the early decisions of the Court of Common Pleas, which
distinctly recognised competition as rightly taken into account
in fixing rates. In _Garton_ v. _Bristol & Exeter Railway Co._
(1 N. & M. 1859, p. 218), for example, the Court of Common Pleas
decided, among other reasons against the validity of a certain
charge, because, in the words of Byles, J., “it is not shown that
it is rendered necessary for the purpose of meeting and overcoming
competition”.[100] The early judgments of the Railway Commissioners
themselves recognised the right to take into account the existence
of competition. In _Foreman_ v. _Great Eastern Railway Co._, decided
in 1875 (2 N. & M. 202), the point in dispute was the validity of
a scale of charges for the carriage of coal from Peterborough to
Norwich and Great Yarmouth and intermediate stations. The Great
Eastern Company were alleged to give an undue preference to coal
consigned to such stations, as compared with the carriage of
sea-borne coal from Great Yarmouth to Norwich and the stations
between it and Peterborough. The Commissioners observed: “Nor does
the Traffic Act prevent a railway company from having special
rates of charges to a terminus to which traffic can be carried by
other routes, or other modes of carriage with which theirs is in
competition,” a dictum inconsistent with the view “that cost of
service is the necessary measure of rates.” In a case decided the
same year, _Thompson_ v. _London and North Western Railway Co._, 2
N. & M. (1875) 115, the Commissioners speak dubiously. They observe
with respect to the argument that “the Traffic Act prohibits only
undue advantages, and that an advantage given by a railway company
to obtain traffic for which it competes with another railway company
is not undue” (p. 120). “Such a proposition cannot, in our opinion,
be laid down unreservedly. It may be true in certain circumstances;
it would not be so in others, and what degree of favour can be
lawfully shown to some person to the prejudice of others under
the pressure of competition can only be decided in any case that
arises by reference to its special circumstances.”[101] In still
later judgments there is a faint recognition of the fact that the
existence of competition ought to be taken into account; _e.g._, in
_Richardson_ v. _Midland Railway Company_, decided in 1881 (4 N. and
M. 1) the Commissioners say: “The difference (between the Burton and
Newark rates) or part of it, may possibly be required by the route
from the same district, not being the same all the way to the two
places, and by the separate portions of line passed over being more
costly to work or construct in the one case than in the other; or,
again, may be required by a competition for the conveyance of the
particular traffic between the two termini, existing in one case but
not in the other. They proceed to speak of “due allowance for such
causes of difference,” which implies that allowance must be made
for both of such causes. But in the _Broughton Coal Company’s_ case
(4 N. and M. p. 191, 1883) the Commissioners use somewhat different
language. They observe that “if goods of the same kind are carried
to the same destination over the same railway for distances that are
not the same, and the gross charge from the intermediate distance
is as great as from the more distant one, there is a preference of
one traffic over the other within the meaning of the Traffic Act of
1854; and that it is not sufficient to rebut this presumption to show
that the charge for the longer distance has been reduced to meet a
competition from another route.” Lately the Commissioners have, to say
the least, lost sight of the element of competition in determining
rates; and in all the applications to them, there is no clear instance
in which they have found the circumstances in which it ought, in their
opinion, to operate.
[98] In Lees _v._ Lancashire & Yorkshire, 1 N. & M. 352, the
Commissioners relied to some extent upon a principle which they do
not appear to have since put in force. The question was whether
the company gave an undue and unreasonable preference to the
Corporation. The Commissioners said that undoubtedly a preference
had been given, but they declined to say it was unreasonable (1)
because the Corporation did not compete with the complainants; (2)
because _the preference was for the public benefit and convenience_
(p. 367); (3) because of the nature and magnitude of the coal
traffic of the Corporation.
[99] 2 N. & M. 39.
[100] See the head note on the case, and the language of Williams,
J.; also the observations of Cockburn, C. J. in Harris _v._
Cockermouth and Workington Railway Company, I. N. and M., p. 703.
The latter judge, referring to “fair and sufficient reasons” for
differences in rates, says, “As, for instance, in respect of
terminal traffic, there might be competition with another railway.”
[101] The reporters append the following note to the case.
“It appears that competition between two railways, or by sea or
canal, is sufficient justification for a railway company reducing
its fares to the public, who are affected by such competitions, and
can take advantage; but that a railway company cannot, merely for
the sake of increasing their traffic, reduce their rates in favour
of individuals unless there is a sufficient consideration for such
reduction, which shall lessen the cost to the company of conveyance
or other services rendered to them by such individuals,” vol. 2,
p. 121. Probably this represented the general opinion of the legal
profession in 1875.
In the report for 1883 the Commissioners refer to “the fair
pecuniary interests generally of the company carrying” (p. 1.) as if
they might be taken into account.
Among the multifarious complaints against railway companies is
one to the effect that companies, instead of competing with and
underbidding each other, combine to charge equal rates. This is an
illustration of the curious inconsistencies of some of those who
criticise the working of railways. Such a practice would be, as will
be seen in the next chapter, opposed to the ideas of others who urge
that rates should be based on scientific and uniform principles.
Such competition, too, would inevitably lead to valid grounds
for complaints, in the opinion of others, of undue preference in
contravention of the Railway and Canal Traffic Act of 1854. The fact
is, the practice has been tried and abandoned. In the days of road
carriers, competition in quoting low rates generally ended in the
submission or ruin of one of the parties. Here, and in the United
States, experience shews that all such competition on the part of
railways must end in combination. However severe the contest may
be, and however great the losses in carrying it on, each of the
railways continues to exist; they do not disappear like private
traders engaged in a disastrous war of competition; and in the
end they come to terms. In thus acting, they only do what is done
in other industries. In the principal trades of the country are
associations which arrange the prices of their products. Colliery
proprietors, for example, agree as to the price of coal. Although
the hardware merchants seldom vary their price lists, they agree
from time to time as to the rate of discount to be allowed. The
steel rail manufacturers of Germany, Belgium, England, and Scotland,
had recently an arrangement regulating, if not the proportion to be
produced by each country and district, the price at which rails were
to be sold.