The chief complaints which have been discussed fall under two heads; first, the statements expressed in many forms that rates on the Continent are lower than rates here, that this difference injures our trade, and that English railway rates ought therefore, to be reduced; secondly, that rates are based on no principle, that a scientific system ought to be adopted, and that import, transit, and certain other special rates, as the greatest anomalies, ought to be prohibited. A few words remain to be said to summarise my arguments as to each of these statements.

The facts and figures mentioned at pages 144-8, and elsewhere have shown, it is hoped, that for instance, the exportation of iron or coal—the articles more often mentioned in the controversy—is not prejudiced by the railway rates charged in England as compared with those charged abroad. There has been, undoubtedly, some loss of trade in particular markets. For instance, coal was formerly sent from this country to Antwerp, Rotterdam, and Amsterdam. It is now replaced by Belgian and German coal. Is this very surprising? Is it reasonable to expect that colliery proprietors on the Continent would not supply coal, or the Governments, the proprietors of the railways, not convey it at anything above cost price rather than allow foreign coal to be imported, their collieries to stand idle, and their people to be unemployed? Coal of superior quality can be shipped at Newport and Cardiff at from 6½d. to 1s. per ton. What abatement could reasonably be expected from rates based on such a very low scale? What effect, if a reduction were made, could it have upon the alleged foreign competition, and upon the depression in trade?

The prices of coal are low because of over production, and undue competition between colliery owners. The extravagant prices obtained by colliery proprietors in 1873-4 led to the opening of many new collieries in the South Wales, Northern and Midland districts of England, as well as in Germany and elsewhere. The result was to create a capacity of output far beyond the demand—160,000,000 tons per annum now as compared with 127,000,000 tons in 1873. The desire which exists in every district for reductions in railway rates is not so much to meet foreign, as home competition; the strength of that desire is ascribable to the activity and intensity of the latter competition.

In regard to export trade, the inland producers of manufactured goods must be at a disadvantage as compared with their rivals on the sea coast. But no complaint that the railway companies had diverted traffic from England abroad by exorbitant rates was made out before the Railway Rates Committee. The Royal Commission on the Depression of Trade have heard much evidence to that effect, but they have not thought it necessary to call upon the railway companies for any reply. To very different causes—some of them far reaching and deep—is due the depression which interested persons would attribute on superficial grounds to the operation of rates.

Upon the policies pursued by foreign Governments in regard to the construction and working of railways, it is unnecessary to pass any opinion. No trustworthy judgment is possible without fully considering all the circumstances—especially the difficulties to be encountered and the objects which the Governments had in view. It is enough to point out how radically different are the railway systems here and abroad—how much at variance are the policies pursued by our Government and by those of Continental States. Here the sole principle running through railway legislation has been to depend upon private enterprise, and to encourage competition between the companies.[112] Parliament has afforded no assistance to them, except indeed conferring the power to purchase, often on payment of exorbitant prices, the necessary land. Even when property of the State has been required by a railway company, the Government have, as a rule, been as exacting in their terms as any of the now maligned landowners, wholly different has been the policy of Governments abroad. Not only have railways been saved the payment of extravagant compensation or legal expenses in obtaining powers to construct the railways or acquire property, but inasmuch as the public in France did not, as in England, come forward to provide the necessary capital, the State supplied large portions of the capital of some railways, and contracted heavy obligations to promote the construction of others. In Germany, the State is responsible for the interest on the capital, the Government alone bearing any loss arising from charging low rates or otherwise. That also is the position of the Government in Belgium, which is responsible to the extent of 71 per cent. of the railway system in that country. The principles which have guided the Belgian Government in fixing railway rates appear from the extract from the report of the Debate to be found on page 115. At an interview which M. Vandenpeereboom, the Belgian Minister of Railways, Post and Telegraphs, was good enough to grant the writer, this was confirmed. Asked “what had been the object which the Government had in fixing the tariff; whether they had in view the obtaining of a fair interest on the outlay as a commercial undertaking, or whether the object was to develop the resources of the country, looking to a return on the outlay as a secondary consideration,” M. Vandenpeereboom replied “that the object had been to develop the resources of the country, and therefore a return on the capital was not of primary importance.” These fundamental differences cannot be disregarded; the fruits of systems so radically dissimilar cannot be expected to be the same.

If the State here, as in France, had provided without charging interest towards the capital expended upon the railways in this country, the same proportion as was so provided by the State in France (say upwards of £200,000,000), and guaranteed from 7 to 11 per cent. dividend on the remainder of the share capital; if it had, as in Holland, found three-fifths (£480,880,000) of the total sum expended on British railways, and accepted less than one per cent. interest upon the advance, the railway companies in this country could have afforded to carry at rates considerably lower than they now carry. It would not have been unreasonable in that case on the part of traders to have called on them to do so.

But the benefits, such as they are, of the Continental system cannot be fairly claimed without bearing the cost. Other countries, having in view advantages from railways, have paid for them with public money, and are prepared to pay still further for them at the expense of the taxpayer; it would be an unreasonable and scarcely honest policy to try to get indirectly the same rights and advantages without payment.

Our Government have been called upon to reduce the rates of the railway companies upon the complaint of traders that they have to compete with French, German, and Belgian traders, who are served by what, speaking generally, may be termed “subsidised lines.” To such an application the answer of the Government of this country, who have hitherto declined to aid the sugar manufacturers in their competition with those in France, supported though the latter are by State bounties, cannot be doubtful. Nor would purchase by the State remove all the differences which have been mentioned. Some of them cannot now be overcome. If the Government did purchase the railways, and by reducing the accommodation to something like that given on the Continent, were enabled to diminish the working expenses; if they placed the railways on the same footing as regards duties and taxes as the Government lines in Germany, the fact would remain that the railways in this country have cost from 45 to 120 per cent. more than those on the Continent, and that in wages alone there is a disparity which they would not be able materially to alter.

The volume of trade in England, it may be said, is greater in proportion to that of other countries; this should be considered, it may be argued, as an equivalent for the greater cost of construction and working of the railways. The fact that the average dividend is only 4·02 per cent.—that is, two-fifths of the dividend which in 1844 it was considered the railways should pay—is one of several answers to this contention.

A few remarks may be made with respect to the second class of complaints—those which relate to the mode of fixing rates.

The chief question is, What rates will at once yield a fair return on the capital of railways and best accommodate and develop the trade of the country? The early Acts provided that they should be fixed according to mileage. This, as we have seen, was altered by s. 90 of the Railway Clauses Act 1845. Are railway companies no longer to carry out the provision of that Act, and continue to charge rates “so as to accommodate them to the circumstances of the traffic?” That principle has guided them for forty years, and certainly ought not to be altered without good cause and full consideration. Instead of merely inveighing against the present mode of fixing rates as unscientific, those who are dissatisfied should explicitly state what mode they would substitute, and make clear by full explanation that it would be at once fair to the companies, and not injurious to the trade of the country. To charge according to actual cost of conveyance, or on a strictly mileage basis, has been shown to be impracticable and impolitic. What other modes can be suggested?

If the mode of fixing rates adopted in France, Holland, Belgium and Germany—systems which differ from each other—are suited to those countries they would be inapplicable here. In practice they have to be modified. In Holland, for instance, the theory is mileage rates, but the greater portion of the traffic conveyed by railways is, in fact, carried on under special contracts wholly inconsistent with the principle upon which the railway rate system is nominally based, which, if imitated in this country, would afford continuous occupation for the Railway Commissioners.

The main complaint against the English companies is that they so charge differential rates as to encourage foreign competition. The effect of these rates is apt to be overestimated or misunderstood. The benefits which the manufacturers derive from the low export rates—based upon exactly the same principle—are entirely ignored. It may be a matter of doubt whether it has been prudent on the part of railway companies to consent to some of the import rates complained of. Indeed, this doubt may be entertained, even if there is no substantial grievance, and it may be desirable that Parliament or the Board of Trade should institute an inquiry into the subject, which affects not only the interests of railway companies, agriculturists, and manufacturers, but also those of consumers, steamboat proprietors, merchants, and sea-ports.

No system of rates can be suggested, much less adopted, which would satisfy the desires of all traders. When the recommendation of the Railway Rates Committee is carried out—when one uniform classification is adopted over all the railways, and the maximum rate clauses of the Companies are consolidated and revised on the basis of their existing powers—any difficulty in ascertaining whether the charges are within the companies’ powers will be removed. The reasonableness of the charges for terminal services will be determined by the Railway Commissioners.

Instead of the many scales of tolls now in force on all large systems of railways—due to their being built up of originally independent lines—one or at most two scales of tolls will govern the entire systems of companies. By this process a great improvement will be effected. Many of the anomalies in the rates will be removed. But it is to be hoped, in the interest of the trade of the country as a whole, that no legislation affecting railways, while preserving the existing provisions against undue preference, will interfere with the right of the companies to charge, within their maxima, differential rates such as the traffic will fairly bear; a power which has enabled them to meet the requirements of producers and consumers in varying circumstances.

These observations have not been written with a view to prove that there is no scope for criticism in the management of railways in this country, but are made with every desire to comprehend and appreciate all reasonable objections. They do not pretend to solve all difficulties of the railway problem; but they may, at least, show the serious dangers which would arise if some of the crude and popular proposals often put forward were adopted, and may aid in arriving at a safe and equitable settlement.