Railway Rates: English and Foreign :: SECTION XI. TERMINAL CHARGES.

SECTION XI. TERMINAL CHARGES.

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]

The equitable mature of the claim of the railway companies to make terminal charges has been admitted on several occasions by some, if not by all, of the railway commissioners. Their refusal to consider terminal charges as legally justifiable has arisen only from the doubt which existed in their minds as to the strict construction of the words of the clauses; and that question has now been decided by the Queen’s Bench Division in “Hall v. The London Brighton and South Coast Railway Company.” Some portions of the judgment of the Court in that case deal only with the construction of the sections of the particular Private Acts of the defendant company; but the remarks of the Judges upon the general principles which govern the railway companies, claim to make terminal charges, explain so clearly their natural equity as well as their legality, that they may not improperly be quoted:—

“This notion of the railway being a highway for the common use of the public, in the same sense that an ordinary highway is so, was the starting point of English railway legislation. It is deeply engrained in it. In the early days of railways it was acted upon at least occasionally, and in respect of goods traffic, and although it enters but slightly into modern railway practice, 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 is firmly grasped and steadily kept in view. Those states of things were from this point of view to be expected and to be provided for by legislation. The company might be merely the owners of a highway and toll takers for the use of it by other people with their own carriages and locomotives. That state of things would be worked out by the railway company possessing the mere line of railway from end to end, and by the persons making use of it, buying or renting contiguous land whereon to keep their rolling stock, and have their offices, availing themselves of the powers of Section 76 of the Act of 1845, and getting on to the railway by means of sidings connected with the railway.

“A second state of things, as we know from the evidence in this case to which by the consent of the parties we are at liberty to refer, prevailed extensively for many years after the railway system was in full operation, and for some years at least after the passing of the Act of 1845. The railway company provided the line and provided the engines and trucks, but they were not carriers. The large warehouses and sheds wherein goods were received, sorted, loaded, covered, checked, weighed and labelled, and trucks or carriages marshalled and prepared for convenient removal to their various places of destination—a corresponding work was done in respect of goods arriving from a distance—the staff of clerks, book-keepers, porters, workmen, and horses necessary for these operations were all provided and maintained at the expense of the carrier, and no portion of them fell upon the company. The company, on the other hand, as owners of the rolling stock, for the use of which, as well as of their railways, they received payment, provided whatever accommodation they needed in order to keep in convenient proximity to the places where the carrier had his depÔts the necessary supply of rolling stock.

“The third state of things which might exist simultaneously with the second, or might be the one prevailing exclusively on a particular line, existed when the company were themselves the carriers of the goods, and when as carriers they provided the accommodation and performed the services above described.

“The company might thus be: 1, toll-takers and neither conveyers nor carriers; 2, conveyers but not carriers; 3, carriers. It would naturally be expected that in the first case they would have powers to take tolls, and tolls only, and that in the second, they would have power to make charges, which should include tolls and charges for the use of rolling stock, and it would seem reasonable enough that (inasmuch as they would probably have much greater facilities for keeping and using their rolling stock to advantage and with economy than any other person could have) where they provided both trucks and locomotives as well as took tolls, the maximum charge should be lower than the aggregate of the three separate charges which they might make for, 1, use of railways; 2, use of carriages; 3, locomotive power.

“It would seem natural also to expect that where the company were carriers, inasmuch as they performed the identical services which they perform under the second head, and others besides, they should be allowed to charge the same sums as they might charge when falling under the second category, plus those which are appropriate to the extra services and liabilities which fall upon them when they undertake the duties and business of a carrier.

“The contention of the applicants appears to us singularly unreasonable. It was proved before the Railway Commissioners, and is not disputed, that the actual cost to the company of the accommodation and services, which, for many years after the railway system was very largely developed, and all the principal lines in the kingdom were at work, were on some of the most important railways in England provided by independent carriers, and did not fall upon the railway company, amounted to 1s. 5d. per ton; and it is admitted that, even with the help of the six-mile clause, the company, if the contention of the applicants is correct, would, in the case of traffic carried not more than six miles, have to carry goods coming under class 5, at a dead loss, which may be approximately stated as 8d. per ton for station services alone, besides getting nothing for the use of railway and trucks and for providing power.

“The charges of and incidental to ‘conveyance,’ as we have explained that phrase, are properly measured by the mile of distance travelled over. The terminal services of station accommodation, loading, watching, checking, and the like, have no common measure with the distance run, and are the same, whether that distance be two or two hundred miles....

“Our answer, therefore, is that the providing of station accommodation, and work of the general nature indicated to us by the Railway Commissioners, appear to us to be capable of falling under the definition of ‘services incidental to the duty or business of a carrier,’ and prima facie to do so. Whether in any particular case they do so, or to what extent they do so, must be a question of fact for the Commissioners, the line we should draw being, that whatever is necessary for ‘conveyance’ in the sense in which we have defined it—being all capable of being measured by reference to the distance travelled—is covered by the mileage rate. Whatever is properly incidental, not to conveyance, but to the performance of the duty and business of a carrier ... that is to say, is actually performed and is done at a terminal station, may be made the subject of a separate reasonable charge.

“How could the Legislature ever provide for every single station on this line, for every terminal station, what was a proper charge? It could only be done by limiting it, as it has done, by ‘a reasonable sum,’ and it is for the Railway Commissioners to say what is a reasonable sum, under the circumstances at each terminal station. ‘No station is to be considered as a terminal station in regard to any goods conveyed on the railways of the company unless such goods have been received thereat direct from the consignor of such traffic, or are directed to be delivered thereat.’ Therefore terminal stations are recognised, and terminal charges are recognised distinctly.”

Sir Bernhard Samuelson observes that terminal charges are a necessary corollary of the Foreign mileage rates,[44] the scientific basis of which he so much approves; the equity of, and right to make terminal charges is equally a corollary to the system upon which the rates in this country have been fixed. The maximum charges for the user of the road, the user of the truck, and the provision of the engine are capable of being fairly measured by reference to the distance travelled. They are, therefore, properly the subject of a mileage rate. But the providing of station accommodation, and work which the Railway Companies perform as carriers—as distinguished from mere conveyance—have no relation to mileage. They must reasonably be—as it has been held in the case of “Hall v. The London Brighton and South Coast Railway Company,” they legally are—the subject of an additional charge.

We may here correct a common error. The opponents of terminal charges are in the habit of speaking and writing of them as if the companies claimed that they might at their own discretion demand such payments as they thought fit.[45] The railway companies have never contended that they were entitled to make arbitrary terminal charges. Indeed, such a contention would be a legal absurdity. On the contrary, they have always submitted that, while their right to make those charges was undoubted, the amount must not only be reasonable, but also be subject to review by the Railway Commissioners under the 15th Section of the Regulation of Railways Act, 1873. Sir Bernhard Samuelson is inaccurate in stating that the railway companies proposed by their Bills of last Session to make those charges subject only to their own discretion. While strongly relying both upon their legal right and the justice of their claim, the railway companies were willing to submit proposals to the consideration of Parliament for a re-settlement of their powers in this respect. But they expressly provided that the Railway Commissioners should have power to hear and determine any question or dispute which might arise with respect to the amount or reasonableness of any terminal charge made by the company, and that any decision of the Commissioners as to terminal charges should be binding and conclusive on all Courts and in all proceedings whatsoever;” words borrowed from s. 15 of the Regulation of Railways Act, 1873.

A few details as to the law and practice on this subject in Continental countries may be useful. And, first, as to Germany. When the question of the introduction of a new tariff for the German railways was under consideration, it was agreed that in previously fixing the railway rates, sufficient consideration had not been given to the expense incurred at the sending and receiving stations, irrespective of the distance the traffic was carried. The result of the calculations which were made was that those expenses should be estimated at 12 marks per truck load of ten tons. This was accordingly adopted as the standard figure for all goods carried in wagon loads, while for small consignments the charge was fixed at 20 marks. The addition of those normal allowances to the rates on traffic to be carried short distances would have considerably increased the charges previously made. It was accordingly agreed, as a compromise, to graduate the terminal charges for short distances; the graduation being simply the means of avoiding what might have been considered a large increase in the railway rates, in consequence of the adoption of the “reform tariff system.” These terminals represent the working expenses at the forwarding and receiving stations, the labour of receiving the goods from sender, marshalling or shunting the trucks to the sidings set apart for the delivery of the goods, and also the expense incurred by railway companies for stationery and clerkage; but they do not include the expense of loading and unloading, except in the case of Grande Vitesse and “Piece Goods,” They vary from 10d. per ton in full truck loads of 10 tons, to 2s. per ton of general goods, and in the special tariff classes, which include minerals, from 7¼d. in full trucks of 10 tons to 1s. 2½d. per ton.

In Belgium there is a fixed charge of 1 fr. per ton of 1,000 kilogrammes for the use of station and for clerkage; but it does not include loading and unloading, or booking, counting, or advice of arrival of goods, for all of which services extra charges are authorised and, in fact, made. This is practically a terminal charge.

In Holland the terminal charges vary from 1s. 2d. to 1s. 6d. per ton in the truck load classes, and 2s. 6d. per ton in respect of ordinary or “piece” goods in quantities of less than 5 tons. In the latter case the cost of loading and unloading is included in the terminal charge, but not in the truck load classes. In neither case are weighing, counting, stamping freight note, labelling or advice of arrival included. For all of these services extra charges are made.

In France only small charges varying from 20 cents. per ton for goods in full truck loads, to 35 cents. per ton for goods in less quantities, are made for the use of stations, though there are various charges for loading and unloading, booking, advice of arrival, and other services. Either, therefore, the traffic for short distances is carried at a loss, or no adequate return to cover the use of station and conveyance is obtained—a course, which, assuming the outlay upon a railway is entitled to a fair return, is opposed to sound commercial principles.[46]

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