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The Pamphlet Collection of Sir Robert Stout: Volume 76

Birkenhead Railway

Birkenhead Railway.

Coal rates: Legal rate per ton for six miles, 3d: rate charged, 9d. Ten miles: Legal rate, 7d; rate charged, 1s 1¼d. Seventeen miles: Legal rate, 1s l ¾d; 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: Three miles, 1s 3d; rate to Commercial Company, 5d. Twenty-two miles: Ordinary rate, 4s 6d; to Commercial Company, 3s 4d. Forty-two 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.

page 62

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 carefully 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 tilings that have been done in America under the system we have legalised here. I present only a few of the 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 percentage. 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 themselves, 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 raiting system gives the controllers of railways over any particular industry these gentlemen may choose 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 coal mines, 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. page 63 Having thus acquired the monopoly they proceeded 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 millowners 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 page 64 attention to the fact that we have given to three absolutely irresponsible men—two of whom are known to be wedded to this system, such powers to enforce it as have 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, instead 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.

Auckland, Memorandum for

Samuel Vaile

, Esq.

"With reference to the several discussions we have had with you upon the advisability of introducing throughout, the New Zealand Railways, the low fares you have advocated, we beg to state that, after full and deep consideration, we are prepared to agree with you in respect of the following:—

page 65

"That the increase in the number of passenger fares taken would be three times as many as at present, or an increase of two hundred per cent, upon the present issue.

"That the average fare could not sink below one shilling.

"That the increased passenger traffic would not perceptibly increase the working expenses.

"Ridley William Moody


"T. D. Edmonds


"Jas. Stodart."*

Opinion of Mr. William Conyers, C.E., formerly Commissioner South Island Railways.

In a long letter to me Mr. Conyers, whom at that time I had never seen, says:—"I agree with Messrs. Moody, Stodart, and Edmonds in their report on your system, and you may use my name to that effect. In answer to your first, query, I am of opinion that the number of passenger fares would be three times the present number—that is, an increase of 200 per cent. (" I wrote you this before, never having seen their report at the time.') 2. The average fare, which is now, including season tickets, and probably parcels, dogs, etc., only 2s. 3d., could not sink below one shilling. 3. Three passenger's could be carried as cheaply as one."

In concluding these papers on the railway question, I again avail myself of the opportunity of returning my hearty thanks to those; numerous friends, who, from all parts of the colony, and from many places beyond it, have sent me valuable information, and have otherwise assisted me. My thanks are especially due to the press of New Zealand, not only for the very liberal space they have afforded me, but also for the able way in which a large portion of it has advocated a trial of the Stage System.

To those members of Parliament who, in the numerous debates which have taken place in the House, have also urged a trial of the new system, both the country and myself owe a deep debt of gratitude.

Often I think with feelings of deep regret, of how the band of able men who helped me in the earlier stages of the controversy has been scattered, and thinned, from various causes. Some have left the colony, others have been laid aside through sickness and old age, and others have passed away.

page 66

Of the first railway men who gave in their adhesion to the new system, Messrs. James Stodart (of the Great Western) and R. W. Moody (of the Great Northern) have gone to their long home, and Mr. W. Conyers (Commissioner of our South Island Railways) has left the colony. These all in 1884 gave the above certificates that the Stage System was financially sound.

Sir Henry Atkinson, who gave me strong support on the inquiry of 1886, Sir Frederick Whitaker, Mr. Macandrew, Judge Bathgate, and Mr. T. Denniston, and Sir George Grey have also all joined the great majority. I remember them with gratitude and deeply regit t the loss of their able assistance.

During the last conversation it was my privilege to have with Sir Harry Atkinson, I mentioned the pressure that had been pub upon me to shorten the long distance stages in the thinly populated districts. I remember well what he said, it was this: "Whatever you do, Mr. Vaile, never yield on that point, for if you do it will destroy the whole thing." "Yes," I said, "I am well aware of that, there is no fear of me yielding, but I am sure that is what the officials will do if they can only get the chance, and (that is why I am so anxious the trial should take place while I am here."

Of this distinguished group, I had most opportunities of conversing with Sir George Grey, who constantly urged me to stick be my task. Once he did this in a manner so characteristic of him that I think the incident worth recording. It was during the Parliamentary Inquiry into the Stage System in 1886, and at a period when the officers of the Department, by the most unscrupulous misrepresentation, seemed likely to gain a complete victory' over me, that one day I overtook him in Molesworth Street. We walked down the hill together and the following conversation took place:—

"I remember you, Vaile, when you were a boy, and your people lived at the corner of Khyber Pass Road." "Yes, Sir George, that was in the early forties." "Yes; do you remember, Vaile, the war at Wanganui, in old Rauparaha's time?" "Yes, Sir George." "And, you remember, I proclaimed martial law," "Yes, very well." You know, Vaile, there were a lot of fellows there that wanted to sneak out of their share of fighting, and I was determined they should not, so I proclaimed martial law, and appointed a time in the mornings to hear anything any of them had to say. So you know, Vaile, the fellows used to come to me with all sorts of excuses asking to be allowed to leave. One hod got a sick wife, another had a new baby, another felt very ill, and so on. Well, I used to listen to them all, but I never let them off.

"One day we had an engagement and several of our men were wounded, among them a man named McGregor. A bullet had struck him on the cheek, knocked out some of his teeth, and passed out through the other cheek. Some mornings after page 67 I saw McGregor coming with the rest. His head was wrapped up in a blanket, and he was looking very dismal. I knew Mac, he was a good fellow, but. I thought I would have a laugh at him, so I said: 'Well, Mac, I suppose you are like the rest. You think you have got a real good excuse to get off now. But Mac flared up at me, and said: 'I'd have you know, Captain Grey, that I'm a Scotchman, and a hielanman at that. I don't want any leave from you, Captain Grey. I did not come for that, and I won't leave here until I've had my revenge on the wretches.' So Mac walked off in a rage."

Just then we reached Parliament House, to which he was going. Turning, he offered his hand and said: "Tata, Vaile, don't forget Mac." "All right, Sir George," I said, "I shall not forget, you may rely on me to do the fighting. Good-bye."

Well, I have done the fighting, done it to the very best of my ability, for thirteen weary years, since then, and again I ask my fellow colonists to do their share. If whenever a candidate presents himself for election, a pledge is extracted from him that he will urge a trial of the new system, and similar pressure is put on those already elected, the matter will soon go through. It is not much to ask and can be easily done.

decorative feature

* Mr. Moody was for 17 years employed in various capacities on the Great Northern and other English Railways.

Mr. Edmonds was trained on the Great Western, England, and in this colony was chief clerk on the Hurunui-Bluff Section.

Mr. Stodart was for 21 years on the Great Western line (for a number of years in charge of the Swindon district); four years on the London, Chatham, and Dover line, and five years on the Bombay, Baroda, and Central India line.