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The Pamphlet Collection of Sir Robert Stout: Volume 72

Birkenhead Railway

Birkenhead Railway.

Coal Rates: Legal rate per ton for 6 miles, 3d; rate charged, 9d. 10 miles: legal rate, 7d; rate charged, 1s 1¼d. 17 miles: Legal, 1s 1¾d; charged, 1s 8¾d.

As examples of preferential rating, I quote the following, given on the Caledonian Railway in favour of the Aberdeen Commercial Company

Ordinary rate: 3 miles, 1s 3d; rate to Commercial Company, 5d. 22 miles: Ordinary rate, 4s 6d: to Commercial Company, 3s 4d. 42 miles: Ordinary rate, 8s 4d; to Commercial Company, 5s 4d.

I speak within bounds when I say that thousands of similar instances to the above could be produced. I have selected these few at random; they are by no means the worst that can be found. Professor Hunter gave evidence before the British Royal Commission of 1881, that the companies charged from three to ten times their legal rates.

Mr. Findlay gave evidence before this Commission to this effect, "I believe that to certain stations north of Sudbury or Harrow we charge a higher rate than we do to London, simply because it is within our power."

Mr. Waring says that "The unalterable rule of the railway directors is to get all they can" and shows that the law is futile to protect the public.

However, we need not talk of law in New Zealand. There is no law for the public in this country. The law has been most care-fully drawn to protect the Commissioners from the effects of wrong doing in their efforts to "get revenue "from the public, but as to the people, they must take their chance as best they may.

Seeing that our railways are now worked as if they belonged to a company, and on "commercial principles," if such a term can be applied to a thing that is utterly and absolutely without principle, it may be as well to pursue the subject a little further, and show some of the things that have been done in America under the system we have page 6 legalised here. I present only a few of more notorious cases.

In America there exists, or recently did exist, a set of men called "eveners." A number of railway companies agree to "pool" their traffic and profits, each line taking a certain agreed-upon per centage. The "eveners" enter into a contract to "even up" these percentages, in consideration of certain rebates allowed to them, but refused to everybody else.

A party of these men in Chicago entered into an engagement with the various trunk lines running East from that city, by which they were to receive from the companies forming the trunk line "pool" a rebate of £3 on every car load of live stock that passed over their lines. This rebate was paid them not only on live stock shipped by them-selves, but also on all the live stock sent over these rails by other people. The effect was that they secured an advantage of £6 per truck load over those competing with them, whom they soon brought to ruin, and thus secured a virtual monopoly of the trade.

As showing the power this differential rating system gives the controllers of railways over any particular industry these gentlemen may chose to speculate in, I direct attention to what was done with the coal trade of Pennsylvania.

The owners of certain railways in that State were also owners of certain coalmines and they wished to acquire a monopoly of the coal trade, and also to keep down the wages of the men employed in the mines. The miners had struck for higher pay, and the private mine owners yielded to their demand. The railway companies, however, determined not only to keep down the price of labour, but also to ruin these owners, and acquire their property for themselves.

They therefore raised the freight rates to the private owners to three times the former rate, the result being that they soon secured 195,000 out of a total of 270,000 acres of coal land. Having thus acquired the monopoly they proceed led to limit the output so as to keep up the price. This they did by suspending operations for a quarter of the working time in each year.

I commend this fact to the careful consideration of what are called the working classes, and would impress upon them the fact that our Railway Commissioners have it quite within their power to do these things here, and that there is no law or power of any kind that can punish them for so doing.

There is no class of trade or commerce that the abominable system it is intended to fully develop among us cannot reach and destroy, or turn to the private advantage of the controllers of the railways, or those they may wish to favour.

The New York Central Railway Company entered into a contract with a firm of millers by which they undertook to carry all their freight for forty seven per cent, of the current rate, "provided, however, and this agreement is made upon the express understanding and consideration that the said millers shall regard and treat this agreement as confidential, and will use all reasonable precautions to keep the same secret."

By means like these dozens of mill-owners were ruined and their property acquired by the favoured few who had "gotten in on the ground floor" with the railway magnates. To one unfortunate fellow who complained that the freight charged him absorbed nearly the whole of his profit, they said "Send us a statement showing the details of your business, in order that we may see that your profits are not more than you represent them to be." Knowing that he was entirely in their power, and hoping to make friends, he sent them the statement. They immediately raised his freight rates, so as to absorb the whole of his profits, and very speedily had him in the Bankruptcy Court and his property in their possession.

The most notorious of all these cases is that of the Standard Oil Company. It would be impossible in the space of this paper to give a description of the transactions of this company with the Railway Companies. Briefly, the railway people entered into a secret contract with the Standard Company, by which they undertook to give them such special freight rates as should effectually secure them against all competition in the petroleum oil trade. The result has been that the Standard Company soon ruined all their competitors, and now enjoy a complete monopoly of the oil trade, a monopoly the effects of which have been felt all the world over.

It has been proved in evidence that the differential rates given in favour of this company amounted during ten years to the enormous sum of one hundred million dollars (£20,000,000). This was almost as disastrous to the shareholders in the railway companies as it was to the competitors of the Standard Company. This case is a good illustration of what the controllers of railways have the power to do.

I commend the examples given above to., the earnest, careful consideration of my fellow-colonists, and I direct their special attention to the fact that we have given to three absolutely irresponsible men—two [unclear: o] whom are known to be wedded to this system, such powers to enforce it as have page 7 never before been held by any company or other set of men in any part of the world.

If we are simple enough to imagine that sooner or later these powers will not be taken advantage of, we deserve the fate that will surely come upon us.

I know that our Commissioners say that these practices "are not in force on the New Zealand railways and never have been." Perhaps so, but in their mad attempt to "get revenue" out of their "abominable no-system" they will soon be driven to their wits' ends, and what then? Ah, what then? I say they will resort to more differential rating.

The question is, is there any necessity for using this system? I assert emphatically, that if the intention is to use railways honestly, in the interests of the whole people, that there is none whatever.

The only legitimate excuse that has ever been urged in favour of differential rating is the statement that it brings the distant producer nearer to his market. The introduction of a stage system would effectually do away with this excuse. Then all fares, rates, and charges ought to be taken down to the lowest possible point and made fixed and definite for a number of years.

If this were done, and there is no legitimate reason why it should not be, the expansion of trade and commerce would be something enormous. People would have confidence in establishing industries in suitable localities; now they never know when the railways may be used to ruin them, therefore manufacturing industries are only started in the immediate neighbourhood of great towns.

Under such a system our railways would act as fosterers of our national industries. As it is, the Railway Commissioners use our railways, and exert themselves to the utmost to destroy our coastal and river steam companies, our tramcar, coach, omnibus, dray, and lorry proprietors.

What an act of folly! How can we expect to prosper? If our railway transport charges were made fixed, and at the lowest possible point, these other transport agencies, in-stead of competing with the railways, would naturally adjust themselves to their proper positions, and act as feeders to them. They would, as it were, work at right angles to, instead of, as now, on parallel lines with our railways.



Wilsons and Horton, Printers, Queen and Wyndham Streets.