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Many apparent anomalies in railway rates arise from competition of the railways with the sea: others are the results of comparisons of the rates charged by railway companies, which must carry, if they are to carry the traffic at all, at the same rates as a company having a shorter route. Inasmuch as competition between railway companies is carried on extensively, many such disparities exist. The apparent anomaly in tin plates being carried from South Wales to Liverpool viâ Stockport, near Manchester, at lower rates than to Manchester, was referred to by Mr. Johnson Ferguson in the debate on the second reading of the Railway and Canal Traffic Bill. This arises from the Midland Railway Company competing with two shorter routes between these places, and from the rates by those routes being so fixed as to meet the competition by sea; the former company’s longer route is through Stockport (not Manchester), to which latter place of course there is no export trade, and at which there is no sea competition. This anomaly would be entirely removed by the Midland Company ceasing to compete for the Liverpool traffic; but the consumers of tin plates in Manchester would not in any respect be benefited by the change. The distance by the shortest railway route between London and Bristol is about 119 miles. There are two other railway routes, the shorter of which is 161 miles; there is also direct transport by sea; and by all of these routes there is competition for the conveyance of merchandise traffic. To suit the requirements of the trade between these ports, as well as to contend with competition by water, special rates are charged. Withdraw them, and either the interchange would not take place or the goods would have to be sent by sea. Of course the other railway companies carrying between the two places charge the same rates as those in force by the shortest railway route, otherwise they would obtain no share of the traffic; and these rates are necessarily less for the throughout distance than those charged for like descriptions of goods to some of the intermediate towns on the longer route.

To take one more illustration: steamboats ply between Liverpool and Bristol. Goods carried by railway between these two places by one or other of the three available routes must pass through some one of the following places:—Birmingham, Worcester, Hereford, Shrewsbury, Chester or Warrington. The local rates to all these intermediate towns may appear disproportionate to those charged between the extreme points. But is there any real injustice done? Is it disadvantageous to the public that railway companies should compete with sea carriage between different ports in the Kingdom? Should not railway companies be allowed to accept in respect of traffic so carried, which would otherwise be wholly lost to them, a less percentage of profit without being compelled to reduce all their rates to intermediate inland places to the same or proportionately less amounts? What injustice is done to those whoso goods are carried to and from intermediate inland places by the fact that their rates are higher, or higher in proportion, than the competitive rates, provided the rates to intermediate places are in themselves fair and within the Company’s legal maximum?

A third source of complaint of disproportionate rates arises from the competition between ports. Assume, for instance, port A to be 51 miles, port B 72 miles, and port C a greater distance from D, one of the great seats of manufacture and commerce. The merchants and shipowners at C and B desire to compete with A, and they induce the railway company to carry from all three at the same rates. The result is that the rates are lower for the throughout distance than to and from some of the intermediate places. The grounds of grievance would be removed by the railway company ceasing to carry from C and B at the same rates as from A. But the importation of foreign goods would continue; the only difference being that they would be carried through one port instead of two or more. And here a curious fact may be noted. If, in the case supposed, the railways between A and D, B and D, and C and D belonged to separate companies, in all probability no complaint would be made of the rates from A, B, and C to D being the same. On the contrary, competition being always desired by the public, it would be considered in that case advantageous and in the interest of the public. But because the lines between B and D and C and D belong to the same company as that between A and D complaints are made on account of the rates being equal. What is hailed in the one case as a benefit is decried in the other as mischievous and unjust.[18]

The chief explanation of differential rates have been mentioned; another cause less important is in operation. In carriage by road, cost may be roughly measured by distance, though even as to the expenses of cartage that is subject to exceptions. But this test—admitted to be practically useless as regards freight by sea—does not hold good of railway transport. Of the various kinds of outlay on the part of a railway company, a large portion remains fixed, whether the distance run by a train is ten miles or one hundred. Such, for example, are the cost of terminal accommodation, and the services of loading and unloading, and clerical work. Such, too, speaking broadly, are the interest on cost of construction, repairs of bridges and earthworks, the permanent staff of employés, and of signalling. Another kind of expenditure increases directly with the mileage run; for example, the provision of, and wear and tear of locomotives, rolling stock and permanent way, and liability for loss of or damage to goods in transit. Certain kinds of expenditure increase with the distance run, but not in the same ratio. Obviously wages, cost of locomotive power, and cost of haulage generally are not four times as much in the case of a train which has run a hundred miles as in one which has run twenty-five. With the progress of railways, with improved economy in the use of machinery, and in other ways, this tendency—recognised to some extent by the Legislature in the rates for short distance traffic—in expenditure not to increase in the same proportion as mileage distance, becomes an important element. The result of all this is to make mileage less a criterion of cost, and tends to place large towns at a greater distance at an advantage as compared with intermediate towns, and to give rise to differential rates.[19] It is also obvious that from many intermediate towns the quantities forwarded are not so large and regular as from terminal towns, and that from the former there is not a constant traffic to and fro.

The urgent demands of traders and producers have created differential rates; the interests of the public and consumers have maintained them; interests, it may be added, which have been little heard in any of the inquiries which have taken place, but which, if any change were meditated, would probably be found to have more at stake than the railway companies. They would ask,—Why should such special rates be withdrawn? They would be losers by the change. The railway companies also would be losers. So too would the public interested,