THE

LAW MAGAZINE AND REVIEW.

No. CCCLXIV.-MAY, 1912.

I. THE INCREASE OF RAILWAY RATES.

AT

T the conclusion of the great railway strike in August, 1911, the Board of Trade issued a summary of the terms on which the strike was settled and the men returned to work. By far the most important clause, so far as traders and the commercial community of the nation were concerned, was the last, wherein the Government agreed that railway companies should have powers to increase their rates within their legal maxima to meet the extra expense incurred by the increase of wages to their staff.

This announcement caused a certain amount of uneasiness among all sections of the community who were accustomed to send or receive goods by railways, and it was not until the House met in October, 1911, that Mr. Buxton, the President of the Board of Trade, was able to announce, in answer to a question put by Mr. Charles Bathurst, that the Government had no intention of rescinding sect. I of the Railway and Canal Traffic Act 1894, but it was their intention to bring forward a measure to allow the railway companies to increase their present rates within their legal maxima in order to recompense them for the additional expense they would have to meet in raising the salaries of their staffs.

This naturally brings us to the question-What are the powers the railway companies at present possess in levying

rates for the carriage of goods, how have they been acquired, and whether they have used those powers fairly and to the benefit of the traders at large, so as to encourage trade, and to what extent any further increase of rates under the Railway and Canal Traffic Act 1894 will benefit the companies to the detriment of traders and consumers? Perhaps, finally, the public may be allowed to ask what steps the Government and the Board of Trade propose should be taken to investigate the proposed increases, and see whether the trade of the country will justify the same?

It would be out of place here to describe in detail the struggle between the carriers and the railway companies for the carriage of goods in the early days of locomotive traction, and the rivalry between the respective railways for goods traffic of later years.

Rates for the carriage of goods are governed on each railway by their respective Acts of Parliament, and although a maximum charge was allowed, the actual rates charged were considerably below the maximum. Even so, the traders complained bitterly of the charges made, particularly where there was no competition with a rival company or by means of water. These complaints necessitated the Government passing the Railway and Canal Traffic Act 1888, in consequence of which the whole subject was fully investigated, first at the Board of Trade Inquiry conducted by Lord Balfour of Burleigh and Sir Courtenay Boyle, in the years 1889 and 1890, and afterwards by a Joint Committee of the two Houses of Parliament under the Chairmanship of the Duke of Richmond in 1891-92.

Lord Balfour of Burleigh and Sir Courtenay Boyle, after a most patient inquiry, lasting eighty-five days—where the representatives of all the great railway companies sought to justify the rates charged, and all the trades and industries of the kingdom were able to present statistics and explain most fully why their respective industries could not stand the

excessive rates the railways demanded-issued a valuable report,' which even now, some twenty years later, deserves most careful reading. At the same time they drew up a fresh classification of goods and a schedule of rates, which they hoped would be a basis for all the railway companies in the kingdom. These were embodied in Provisional Orders, and submitted to a Joint Committee of the Two Houses, with the Duke of Richmond as Chairman, as above mentioned. The Provisional Orders of the greater railways occupied the time of the Committee during the year 1891, and of the smaller railways during the year 1892.

Throughout both these inquiries one point stands out more clearly than all others, viz., how anxious the representatives of the railway companies were to impress upon Lord Balfour of Burleigh and Sir Courtenay Boyle, and upon the Duke of Richmond's Committee, that it would be suicidal for them to increase their rates beyond those actually in force, and that although they were most eager to retain their maximum rates-which by-the-bye they had not been accustomed to insert in their rate books-yet it was not their intention to charge more than the present rate.

Let us examine some of those statements, and see whether they used the powers acquired to the interest of the railway companies or to the benefit of the traders :

(A) Before the Board of Trade Inquiry.

Mr. LAMBERT, on 13th November, 1889-Q. 2050:-"There will be no material alteration of rates so far as railway companies are concerned."

and Mr. HARRISON, on the 9th December, 1889-Q. 5209in answer to Mr. POPE, Q.C., said :—“ I am afraid, if we could raise the whole of our rates to the proposed maximum, there would be very little traffic left for us to carry."

and again.-Q. 5210:- "I look at it that the rates of to-day are probably about the highest rates that we could get,

1 Cd. 415, Aug. 19, 1890.

and any advance of those rates would not be in the interest of the traders or the company."

and Mr. LAMBERT, on the 20th December, 1889-in answer to Mr. Jeune Q. 9156 :—“ The same circumstances as exist to-day in the matter of competition, will no doubt. exist for years in front of us, and I do not myself see any possibility of substantially increasing our rates beyond what they are to-day. Circumstances may arise, such as increase in the cost of materials and labour, which would render it only fair and reasonable that the railway companies should be able to increase their rates, in which case the traders could well afford to pay them."

(B) Before the Duke of Richmond's Committee.

Mr. LAMBERT, on 2nd June, 1891—Q. 5217 :—“We have got the best rates that we can get."

Q. 5219" If we put it up we destroy traffic or interfere with it in some way.”

Q. 13683-"I have said more than once that we do not see our way by putting up the rates for special articles to recoup ourselves for loss on others."

Mr. HARRISON, on 16th June, 1891-Q. 8568:-"Shall you with increased powers of charge, increase the existing rate; is that your intention ? " "No, it is not our intention to alter the existing rates at all."

Sir HENRY OAKLEY, 9th July, 1891-Q. 13866:-"If we thought now that increase would not damage the trade, we would make an addition at this

moment."

As shown above,

It is interesting to note what followed. the representatives of the great railway companies stated very clearly that their rates could not be raised, and that they had no intention of taking such a step; yet within a few months of the last sitting of the Duke of Richmond's Joint Committee of the Two Houses of Parliament in 1892, the representatives of the railway companies decided not only to raise their existing rates to the legal maxima allowed by the Provisional Orders (Confirmation Acts)

1891, 1892, but to do this without notifying the Board of Trade, and as far as possible to conceal it from the traders. By the Railway and Canal Traffic Act 1888, sect. 33, sub-sect. 6, the railway companies were required to give fourteen days' notice of what rates they intended to increase, and to what extent, and these had to be displayed in a conspicuous place at the railway stations, and in addition, advertised in the principal newspapers, so that traders could not fail to see them. What the railway companies did is best expressed in the Report of the Select Committee of the House of Commons, 1893, [Cd. 462]:—

"On November 4th, 1892, there was a Conference at the Board of Trade with reference to the notices to be given by the railway companies of any increase of rates, and the form such notices should be given in the case of new rates which the companies were about to issue. The representatives of the railway companies at this meeting asked the Board of Trade to dispense with the form of notice they had authorised for ordinary increases of rates under the Act, and to allow the rate books of each station to be treated as notices."

Sir Courtenay Boyle, in his evidence before the Select Committee (p. vi), stated: "That in giving this dispensing power, the Board were not aware of the intention of the companies to insert in their rate books temporarily, their maximum rates, or even permanently to raise their rates to recoup themselves for reductions elsewhere."

"It appears that the legal maximum rates under the new Acts having been ascertained as far as was possible, these rates were sent down to the station-masters, who were instructed to charge them in lieu of the old rates. It is admitted by the railway companies that these rates were in vast numbers of cases greatly in excess of rates previously charged, and far more than sufficient to recoup themselves for losses caused by reduction of maximum rates below the actual rates." (Report, p. viii.)