Subtle Railway Subsidies :
Page 51
If you've noticed an error in this article please click here to report it so we can fix it.
Will thev Last ?
• are, no doubt, feeling :pleased with themselves, but naturally their satisfaction is being carefully con cealed from the man in the street, as . they have not yet finished with road transport. Until their competitors are allowed to carry only what they cannot, and at rates quoted by the railways, the work of co-ordination with road interests will not have been completed.
The direct and indirect benefits which have recently accrued to the railways have been enormous. Their local rates assessments have been drastically revised and not only will future payments in this respect be substantially less, but the railways will also receive at least 50 per cent. of the monies which they have paid in rates during the past five years. The question of railway rating has again brought into the limelight that unique scheme known as the Railway Freight Rebates Fund, into • which 75 per cent.. of the . railway rates were paid for the purpose of enabling, the railAys' to convey the commodities of certain industries at cheaper rates.
How the Fund was Apportioned. The fund was apportioned as follows :--70 per cent, to coal for export and use at iron and steel works; 20 per cent, to certain agricultural traffic, and 10 per cent, to iron and steel; and pit props.
No doubt the purpose of this scheme was to grant an indirect subsidy to the industries concerned. The Chancellor, when inaugurating it, stated that the railways must not lose nor gaih on this refund, yet it enabled them to retain certain classes of traffic which might otherwise have gone by road, and in this respect the railways, besides the industries quoted, were in reality receiving a subsidy from the Government.
The only object that one can see .. in the establishment of the Railway Freight. Rebates Fund is that the 'Chancellor did not want to offend the finer feelings of the coal, agri When addressing the shareholders at the annual meeting of the Great Western Railway on. February 26 last, Sir Robert Horne had some interesting remarks to pass on the Freight Rebates Fund. He stated that had the companies been
free to utilize as they considered best the monies paid into this fund it would undoubtedly have been devoted to lowering the rates on the higher classes of traffic most susceptible to road competition.
Special Rates for 85 per cent. of Rail-borne Traffic.
Exceptional rates and agreed charges have already proved themselves to be a powerful weapon in railway hands. Actually, 85 per cent, of rail-borne traffic is quoted at exceptional or agreed rates, and Sir Robert Horne would like a subsidy of approximately 44,060,000 per annum to enable them to indulge in further raite-cutting.
With the advent of the new railway rating, it will be interesting to observe what happens to the Freight Rebates Fund. Agriculture and the coal, iron and steel industries still need assistance, yet the amounts now payable by the railways into the Fund will not be sufficient to meet this subsidy. One wonders whether the Chancellor will continue with the scheme and indirectly confer a benefit on the railways, or abandon it in favour of a direct subsidy to the industries themselves, Mr. F. W. Lampitt, of the Great Western Railway, considers that, as the railways are common carriers, they cannot select the best-paying traffic, but must afford reasonable facilities for dealing with all kinds .of goods, and are, therefore, at a disadvantage as compared with road transport concerns. Although the railways may be regarded in law as common carriers, in practice they are, through the medium of. exceptional rates and agreed charges, in a position to pick and choose their traffic 14 the mere manipulation of rates.
The law as regards undue preference in railway charging is a 'dead letter, so far as the higher-class traffics are concerned, as undue preference applies only to bulk transport. Bulk transport of such traffic, under present-day business .conditions, has, however; except in a few caNes, been shattered: Ttii change has largely been 'clue to road.,transport, which has given the, trader quicker service in distribution, although .rates are, in many instances, higher than those quoted by the railways.
A further offering from the Government, which was, no doubt, received with thanks by the railways, was the 432,000,000 loan at the meagre interest of 21 per cent. Would the Government prove such an obliging moneylender if approached by road-transport interests? Perhaps the security offered would. be insufficient to tempt it to open up the coffers.
Railway Chiefs Dissatisfied.
Nevertheless, the railways are not satisfied. Every chairman, when reviewing the results of 1935, expressed dissatisfaction with the operation of the Road and Rail Traffic Act, or the road-rail position. If we are to make Britain's largest private undertaking with invested capital of £1,092,500,000 a paying concern in the eyes of its directors, then we must give it back all the traffic which road transport has appropriated, as well as that which it has created, and stand ready to catch the overflow !
This course would at least reverse the present position as regards interest on capital, and would enable them to pay 81 per cent. interest on capital invested in the. railways proper and 2i per cent. on. investments in road transport and' thus eliminate one railway mumble! titANSX. c29