RAILWAYS and the TRADE of GREAT BRITAIN.

By CHARLES LEWIS EDWARDS, F.S.A.A., Chief Accountant, Great Northern Railway Company.

[Read before the Royal Statistical Society, 17th March, 1908, SIR FRANCIS S. POWELL, Bart., M.P., Hon. Vice-President, in the Chair.]

I FEEL I ought at the outset to plead for some moderation in your criticism upon my inability to do anything like justice, within the scope of a single paper, to a treatise upon such an important subject.

I also feel that it will fall short of the high standard of excellence of statistical papers given before this Society, because of its deficiency in statistical data.

In approaching a subject of such national importance, and considering the relationship of the railways with the trade of the country, I find it difficult to arrive at any other conclusion than that the terms are synonymous, and their interdependence absolute and complete.

It is neither possible to dissociate the one from the other, whether you consider import or export trade, home and interprovincial trade, nor easy to discover one single instance where railway transport does not form a component part of the whole cost, either of production or distribution.

I therefore hope this will be considered merely as an introduction to a subject deserving of critical investigation in its several branches at the hands of more experienced statisticians than myself.

National Importance.

The threatened strike that recently hung like a thundercloud over our heads, if it served no other purpose, certainly brought before the entire British nation, both commercial and private, its dependency upon the railways for its commercial life as well as for its actual means of sustenance.

The outstanding feature of the experience so fresh in our memories was, I think, the absolute lack of definite comment, either in the press or in the train, of the possible effect of a national strike if the food supplies to this great city were interfered with for a single week.

This could not be attributed to the lack of interest in the movement, but, in my humble opinion, to want of realisation of the part that the railways of to-day play in every essential of our national life.

Ways of Communication.

The extent to which our railways afford means of intercommunication within the Kingdom, although unfortunately there may be many glaring examples of indirect access between contiguous centres of activity, is a most important item in the economy of that national life.

In new countries, before the construction of good roads and bridges, the railways solved the problem of communication, and opened up new tracks of country hitherto inaccessible.

In this country, private railway enterprise stands pre-eminent, government aid, either provincial or national, having been made in a few instances only in Scotland and Ireland.

First Railways.

Lest we forget we need to be reminded of such engineers as Stephenson, Trevithick and others who overcame difficulties in order to accomplish their desired project.

enormous

. The present generation owe a heavy debt of gratitude for the privileges which they now possess to the spirit and enterprise of private and business men of that day, who subscribed the necessary capital not only for the actual cost of their construction, but to defray the heavy legal and parliamentary expenses incurred in overcoming the opposition of land owners before the necessary sanction could be secured. Notorious examples are known of the price paid for land required for railway purposes, and even then with onerous clauses embodying heavy obligations and conditions in favour of private individuals, many of which have since been redeemed at considerable cost in order to cancel and remove obvious obstacles to progress.

The circuitous windings of many of the railways so apparent on the map of England are not due in every case to the difficulties of the engineer to traverse that particular piece of country, but to the enforced deviation and consequent increase in the capital cost of the line in order to leave undisturbed some particular piece of property. In other words, every interest was then considered superior to the national and patriotic one of the best and shortest means of communication between the points in question.

The expenditure incurred in securing legislative authority to construct early railways was enormous. The parliamentary costs

(according to "Whitaker") of the Brighton Railway averaged 4,8061. per mile, the Manchester and Birmingham 5, 190l. per mile, and the Blackwall line 14,414l. per mile. The preliminary, legal and parliamentary costs of one trunk railway running into London is equal to 197 per cent. of the total capital expended.

The total paid up capital of the railways in the United Kingdom (as per Board of Trade return, 1906), viz., 1,286,883,3411., less nominal additions on consolidation, conversion and sub-division of stocks (195,285,651l.) = 1,091,597,690l.

If we apply the equivalent of 2 per cent. for preliminary, legal and parliamentary costs to this figure, we find that 21,831,953. is represented thereby.

The interest required at 3 per cent. per annum upon this outlay is 764,1187.!

Although we may claim to be wiser than our predecessors, we are bearing, and must continue to bear, the burden enforced upou us in earning the necessary interest upon the capital so expended. Not that the cost of construction to-day is by any means reduced, on the contrary, the demands of local authorities under the plea of public safety, more than replace the expenses borne by our early railway pioneers, by an outlay of another character.

Rates.

The question of rates of charge between the commercial community and the railways is so complex that justice could not be done to it within the compass of this Paper. But whatever form the scale and classification of rates may take, whether resting upon thousands of rates varying in condition and risk, or upon a simpler scale, it is clear that, if the increase of costs of materials is to be met, as well as concede to the staff of the railways some additional remuneration to meet the increased cost of living, something more elastic than now exists must be found in the procedure laid down by Parliament for dealing with increase or decrease of rates.

When complaints are made against the excessive rates, it is necessary to remember facts relating to the early construction of the lines before the existing transport charges can be clearly understood. An alteration in the fares or rates of a railway from whatever cause, has a far-reaching effect, as there is hardly an individual who is not affected in some degree either directly or indirectly.

The public are constantly told that as a nation we cannot expect to continue to compete successfully with our neighbours unless we can secure our inland transport as cheaply as our competitors are able to do.

Whatever may be the arguments of British v. German transport costs, it is important that we should compare the conditions under which the railways of the two countries were constructed, profiting as the latter country did by our earlier experience and the greater necessity for military considerations.

Anyone who has read that excellent work by Mr. E. A. Pratt, on the subject of German v. British Railways, cannot fail to be convinced that the conditions of transport, together with the services rendered to the trade are entirely dissimilar.

He claims to effectively explode the theory that German transport costs are relatively cheaper.

The condition of our canals and the question of water transport has occupied, and is still occupying, the attention of a Royal Commission, and the country awaits its report.

The real object of the investigation is to ascertain whether transport by water can be conducted at a less cost than by rail. After all, "transport" by rail at present means something more than mere transport. It means cartage to and from the manufactory and the rail, as well as free storage in many cases for several days at both ends. All this, and more, must be done by canals, with or without State aid, if they can be made available at a cheaper rate than railways.

The modernisation of our canals and waterways, either in substitution or as secondary ways of communication of our railways, is considered by some as the cure for all ills.

I think we may all fairly anticipate the Royal Commission report to say that enormous sums of money will be required if any practical result is to be obtained.

Who will be willing to provide, without any prospect of a return, the necessary capital?—the public or the Government ?

State Aid.

Every new country recognises that, in order to encourage the development of a railway system, the State must make some sacrifice to achieve an object which will ultimately redound to the benefit of the whole community.

We find in such countries that in order to encourage new railways, amongst the privileges conceded are free grants of land, exemption from customs duties on the imported materials requisite for the construction and exploitation of lines, as well as freedom from local taxation for a period of years. In some cases the aid given by the State may take the form of a guaranteed interest upon the capital expended, the State making up the deficiency during a fixed period in any year in which the requisite

amount may be short. The State giving these privileges and benefits naturally reserves to itself the intervention and control of rates and charges so that the community at large are protected by State scrutiny. The State, therefore, provides by other means the necessary funds for the execution of public works, until such time as a railway is able to bear its proper share of burden of taxation and not before.

The absolute necessity of an ample system of railways for the conduction of our immense volume of trade, both internal and external, is so obvious that one can but measure the extent of our prosperity by the development of railways.

Although to a great extent their original construction may have preceded industrial expansion, it is fairly correct to assume that their subsequent extension has been contemporaneous with the necessities of our expanding commerce.

One has but to compare our trade position before the advent of railways with what it is to-day to understand what an important part railways have taken in its development.

Light Railways.

Until the passing of the Light Railways Act, 1896, we find that the railway enterprise of this country was beset with every conceivable opposition and difficulty.

Upon the passing of this Act, for the first time, State aid was offered for the promotion and construction of Light Railways.

The working of this experiment, although successful so far as at present applied, is, I think, somewhat disappointing from the railway point of view as doubtless a larger development under these powers as feeders or secondary lines to our great trunk systems was anticipated.

Taxes.

Taxation on transport in any shape or form, whether imposed upon the individual or upon his products, is as much an iniquity as was the tax on windows in the last century.

We have only to look at the legislation prior to 1883 which levied a tax upon passenger travel. The so-called parliamentary fare became the price of the privilege of travelling by the slowest train which stopped at every station either in the early hours of the morning or at the dead of night to avoid paying a higher fare which was subject to tax.

To suggest that the price of your season ticket includes an addition for government tax is not unlike buying some patent medicine, the cost of which includes the inconvenient addition of 1d. for government tax.