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TRADE and

4th November 1932
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Which of the following most accurately describes the problem?

Keywords : Business / Finance

INDUSTRY

versus THE SA

LTER REPORT

AT a conference held in London on September 28, at which delegates from 66 national organizations representing trade and industry throughout the country were present, a resolution was passed to the effect that the issues raised by the recommendations in the Salter Report are so vital to the interests of British industry, and the principles involved are of such importance, that a considered reply should be prepared on behalf of agriculture, road construction, vehicle manufacturing and selling, haulage and goods carrying, trade (wholesale and manufacturing), trade (retail and distributive) and public passenger transport, the various opinions to be submitted to a committee of seven which would prepare the joint reply.

The Case Against the Report.

The members of the Rail and Road Conference were the heads of the four group railway systems, behind them being their skilled and powerful organizations. These members had a common interest, a common policy and could act as one. On the other side, the interests of the four representatives of goods transport were divergent and had behind them no organization for their assistance. Trade and industry were unrepresented.

The Salter Conference omitted entirely to consider the nature and extent of the regulation which should he applied to goods transport by rail, and contented itself by proposing the regulation of goads transport by road, with a view to hampering the freedom and utility of such transport.

The conference was in the nature of a preliminary inquiry into the questions at issue, with the object of defining them and setting out their limits, and, failing the fulfilment of that purpose, could be held to have failed altogether.

• rhe report is a partial and incomplete document failing to set out the pertinent facts relative to both road and rail transport upon which a proper judgment can be framed. It appears only to examine and determine a thesis advanced by the railways, which, prior to the conference, had been the subject of extensive propaganda. It therefore starts with certain preconceptions of -its objects from which it never escapes.

When one comes to analyse the rept:ft in detail, it is found that instead of following its early promise and producing recommendations of a judieial character, it has become a document definitely biased in favour of the railways, ignoring general principles acceptable to all fair-minded people. The basis is a false assumption as to a fair annual charge for the use of the roads, followed by arithmetical calculations which do not bear strict inquiry. It [hen suggests distribution, at an already inflated figure, of costs over the various sections of road transport, in a fallacious and unfair manner. The recommendations embody a series of cumbersome, restrictive regulations which, in certain circumstances and in certain areas, would definitely destroy commercial road transport and seriously handicap the general trade of the country.

The Truth Concerning Road Competition.

In examining the extent to which railways and roadways are in competition, the trade committee points out that as regards passengers, the number carried by the railways in 1931 was 1,247 millions, only 89 millions fewer than in 1927 before the road controversy had seriously opened, and only 85 millions fewer than were carried in 1913, before road passenger transport had become a disturbing factor. The decline is only 8 per cent., which should be regarded as unappreciable and not unexpected. In the same period, 1927-1931, the average receipt per passenger has fallen from 12.0d. to 10.7d., or 11 per cent., and the loss is due much more to a reduction in fares than to the decline in the volume of traffic.

The coach and bus traffic on the roads amounts to 5,500 million passengers annually, bus and short-distance-coach traffic accounting for 90 per cent., traffic little competitive with the railways but prejudiced by the proposals. The traffic left in issue is about 550 million passengers, but the B28 ascertained loss is only 80-90 millions, over five-sixths of which is traffic which has not, so far, used the railways, and which has largely been freshly created by the new facilities, the restriction or suppression of which would injuriously affect the interests of the public.

The railways profess to ignore the competition of private cars, but taking statistics prepared by the Society of Motor Manufacturers and Traders, it appears that there are one million private cars averaging nearly 7,000 miles per annum and carrying two passengers. This represents 14,000 million passenger-miles, which, at id, per passenger-mile, represents a potential revenue of £43,750,000. The privatecar traffic has increased by 471 per cent. between 1922 and 1931, and the number of private-car passengers carried annually throughout Great Britain for other than mere local journeys amounts to approximately 150 millions. All these the conference ignores and even encourages by proposing a relief from taxation.

The Fall in Rail Traffic.

Turning to goods and mineral traffics, in 1927 coal and patent fuel amounted to 196 million tons; in 1931 it fell to 174 million tons, or 11 per cent., but this is traffic which only exists on the road as supplemental to rail transport. In 1927 minerals and heavy merchandise in Classes 1 to 6 were 66 million tons; in 1931 this had fallen to 47 million tons, or 29 per cent., but this traffic rarely goes by road except as supplemental to rail transport. Other merchandise in 1927 amounted to 60 million tons, and in 1931 to 48 million tons—a fall of 20 per cent. This is traffic which might, to some extent, be expected upon the roads ; so that the traffic at stake is some portion of this 12 million tons, which is less than 4 per cent, of the total carried in 1927, and, measured by receipts, is less than 10 per cent. Statistics issued by the Ministry of Transport make it impossible for the railways to sustain their claim that road competition has become destructive of their traffic, from the fact that the traffic was not there to be carried.

The serious decline in traffics occurred only in 1931. Is it suggested that goods transport by road suddenly grew in that year? The figures for goods vehicles show that there is no indication of this, and that the increase over the four years, 1928-1931, aggregates only 18 per cent., whilst that for 1931 over 1930 is only 3.5 per cent.

It is more easy to destroy traffic than to divert it. The policy of the railways, as embodied in their propaganda, is destructive, whatever may he said to the contrary. Facilitea create traffic, lack of them destroys it.

There are numerous good reasons for the existence of road transport, which countervail against the bald allegation that it is competitive with rail transport. The competitive field is much smaller than is imagined, and if all the railways desire by way of burden and restriction be granted, the gain to them would be of little account in solving their problems.

The railways claim that their running lines, which are. equivalent to the roadways, cost them 164,000,000 annually, but it would be impossible for them to prove a claim in excess of £45,000,000.

The committee draws attention to a letter published in The Times for January 25, 1841, in which that paper strongly upholds the turnpike-road system against the railways, and laments the turning of "the stream of profitable

traffic into a few great arteries, instead of suffering it to eireulate through all the veins and so contribute equally to the enrichment of the entire body."

Referring to the roads, The Times also said, regarding the turnpike system, that " It had the effect of distributing travelling in its natural proportions over the whole surface of the country; of enabling everyone to proceed at all times from one given point to another by the most -direct and hamediate route." Thus in 1841 The Times was concerned for the road system of the country and for the capital involved in such system, regarding the railways as unfair competitors of the turnpike, but, despite this, progress triumphed and the railways came into being, despite the large capital loss involved. To-day the interest has shifted, but the conservative fear still remains that now methods of transport may impair the usefulness of the railways atid reduce their earning capacity, and, therefore, the capital value of their securities.

What the Report Means.

If the report means anything it is that road traffic, whether goods or pasSenger, must be reduced so that railway traffic may increase. The taxation proposed is intended to curtail the number of vehicles employed and the mileage they cover. The vicious circle has started, for, as road user diminishes, contributions by each transport unit must increase. The private cars which receive, gratuitously, concessions under the report of to-day, will find these illusory at the next quinquennial revision, if the report is to have the effect desired of it. They will enjoy the task of filling the gap in revenues to meet road expenditure.

flow would the shrinkage of road user come about? Clearly those services will be withdrawn which are least remunerative, but these may be just the services which should be retained in the public interest, perhaps those most advantageous to the railways. The weapon suggested is a dangerous one which injures more readily than it amends. Sir Josiah Stamp, lecturing on taxation in 1911), said that the worst method of assisting certain trades is by discriminations or differentiations in taxation.

The dilemma which faced -the conference was the impracticability of increasing the burden of taxation on the heavier classes of vehicle without first relieving that on the lighter classes, and filling the gap so created by what it is Pleased to call "sumptuary" taxation. It was not, presumably, that it wished to favour the lighter classes ; it was that it wished not to favour the heavier classes. The total amount to be'raised by taxation was, in its estimation, ft-10,900,000, that actually raised in taxation was 158,500,000, and this was slowly increasing. There was no margin between the two figures to allow of any appreciable increase in the level of taxation over even a part of the field. This dilemma apparently disturbed the conference's examination of the problem and led to the adoption of several ingenious devices.

The report refers to the anomalous position of vehicles which escape the petrol duty, and proposes to increase licence duties to provide against the loss of the petrol tax. The issue is not quite such a simple one as the report suggests, for it is necessary to have regard to the relative cost of the fuels used in relation to the work performed. It will he found that steam-raising by coal or coke is not so inexpensive as might be thought, although steam-driven vehicles meet more advantageously certain operating conditions. Again, electricity is much more expensive at this time and is used only in exceptional circumstances. Further, there is a public issue to be met—the need for developing fuels which are based on coal and can be manufactured at home in preference to fuels based on oil which must be imported.

The 25 Per Cent, Rebate Too Restricted.

The report suggests that where heavy vehicles are used within confined limits, a 25 per cent, rebate should be made

in the licence duties. The proposal is confined, perhaps necessarily, to heavy commercial vehicles employed in dock areas, but it should embrace not only movement from docks to warehouses, but from docks to works, or from works to works or to railways within the area. It should also cover all centres of trade, and particularly local delivery services. Similar considerations would also apply to public-service vehicles employed upon routes defined by the Traffic Commissioners. For example, bus business in London is confined to the London Traffic Area, and, in major part, to even a smaller area—the Metropolitan Police District.

The report ignores the fundamental Issue as to whether the basis upon which railway rates are built up is sound, in view of -the changes that have taken place since it was introduced. The railways no longer enjoy a monopoly of economic advantages in the carriage of goods. The cost to the trader of carriage by road is mainly based upon operation costs, and so long as this remains the case, is it proper for the governing principle of railway rates to be to charge what it is thought that the traffic will bear?

.7s, Before discussing any regulation of rates for road transport, surely -there must be some review of this issue in connection with railway rates? Is the charge to the trader for ever to remain on the basis of what the trader can afford and never to bear any relation to the tractive effort or the railway's operating costs? The problem is primarily how to free rail transport, not how to restrict road transport ; secondly, how to cheapen -rail transport, an.d not how to raise the cost of road transport.

The country requires cheap transport, but this cannot remain in operation Unless it bears a reasonable relation to the tractive effort involved and the cost of operation, or, alternatively, is subsidized at the expense of another section of the community.

The Lesson of Passenger-vehicle Licensing.

The country is not unacquainted with what has happened with regard to public-service vehicles under the Road Traffic Act, 1980. It has watched a new bureaucracy spring into existence with all that it means in delay and expense. Even to-day, 'the initial procedure with regard to the licensing of public-service vehicles has not been eons eluded, and if it were not for the transitory provisions, many of the passenger services on the roads might be dislocated. The country has observed the introduction of a system of route licensing which is based on different principles in different areas, and has noted a system of appeals which is without adequate safeguards.

There is obviously no adequate reason for preventing any ancillary user entering the haulage business should he desire to do so, provided he be on the same terms and conditions as anyone else.

One is forced to the conclusion that the object of paragraph III D (i) is to prohibit all hauliers from such territories and routes as the licensing authority may decide. If this be so, the existing transport facilities -will be reduced to those of the rails, and, possibly, canals and air, Unless the conference intends to create a privileged class of haulier protected by specific route licences. The professional haulier might be denied a licence to compete with the railways on a particular route, which is to the advantage of the trader, but the trader himself could carry his own goods without question along this same route

without the railway having redress. This would be a definite penalization of the road-haulage industry.

It appears that the conference has in mind restrictive licensing rather than route licensing. If so, this is an obvious attempt at the suppression of a legitimate trade in favour of its railway competitors and is against the interest of the community generally.

The second sub-section of paragraph III is tantamount to telling a haulier that he may operate his vehicles but is barred from certain localities. Powers exist which enable certain traffic to be diverted from specific roads, and these should be quite sufficient. It is obvious that if motor vehicles pay a fair share they are being unfairly treated if they are debarred from traversing such roads, which should be made to fit the traffic, and not the traffic to fit the roads.

Should it be deemed that the transport of goods by motor vehicles belonging to the railways is an ancillary use, it is obvious that road haulage is on the way to complete extinction. The conference desires to free ancillary users from all restrictive clauses, but railway-owned vehicles could never be interfered with.. Local cartage would pass to the railways, and if hauliers were prohibited in populous areas, no goods could move into or out of these except through the railways, unless moved by the actual owners of the goods.

A Vindictive and Unconstitutional Principle.

Paragraph III D (iii) allows the licensing authority to take into consideration convictions registered against the applicant or his employees for the previous year, in respect of offences regarding the vehicles or of his bankruptcy. This is peculiarly vindictive. It establishes a new principle that, having suffered one penalty, the offender shall, on that account, suffer another, and it is opposed to every principle of English law.

The proposal to keep journey records would add a vast amount of unnecessary details to the haulage industry, and if applied to ancillary users would materially add to the cost of production and distribution of the trading community.

The railways have for some time been conducting an attack on road transport. Owing to its lark of co-ordination and diverse character, road transport has never become sufficiently organized to make an effective reply, but under the final attack, delivered under cover of this report, road transport and the trade and industry dependent .upon it have at last come together to state their ease.

Trade and industry admit their dependence upon the railways, but they would represent also their dependence on road transport, and would gladly see co-operation between these two forms, hut before this problem of division of function can be settled, the whole railway position must be reviewed. For instance: Is the capital of the railways intact? Is not much of the expenditure now represented by assets which are obsolete? Should not some of the profits of the past have been applied to writing down the capital? Are the services offered as efficient as they might be? Have they ventured into auxiliary businesses which are a burden on their finances? Are they now seeking developments, such as furniture removal, which cannot prove remunerative? Arc they spending their resources improvidently on merely advertising features, like special expresses, to the neglect of their general business? Must not the railways face up to the problem of cost of service? Do they even know what their various services really cost? Are all the railways built now required? Are not some lines so lightly used that their closing would help to curtail the railway loss? Are not some lines so badly served that they cannot compete with road services or afford the facilities required?

At the end of the case is a most interesting summary, from which we can give space to only a few extracts.

As regards annual road cost over the next five -years, £60,000,000 is extravagant and unsupported by evidence. The total annual road costs which, as a maximum, can be charged against motor vehicles do not, it is shown, exceed £40,000,000.

It is not fair that property, increased in value by the construction of new roads and improvements, should not bear a proper share of their cost proportionate to that increase.

Taking the position indicated in the Report of the Royal Commission on Transport, that road users should pay twothirds of the annual cost of the road sytem and the ratepayers one-third, then the amount to be found by road vehicles during the next five years is estimated at £35,250,000. The present amounts paid by all forms of motor vehicle aggregate £58,500,000, and of this sum no less than £31,200,000 is paid by commercial vehicles, or nearly the whole sum that is required. Instead of there being any justification for an increase in the taxation, there is an unanswerable case for a substantial reduction. The amount required could be obtained if(a) the present vehicle licences were halved; (b) the petrol tax were reduced to 6d. per gallon. Any taxation in excess of this share is for revenue purposes, which, at any rate so far as commercial users are concerned, is unsound in principle.

A Bureaucratic System Injurious to Trade.

The fact that regulation or control is required for hours of duty ef drivers, rates of pay and conditions of employment, and fitness of vehicle is no justification for the institution of a system which only tends to become costly, complex and bureaucratic, and to hamper trade and industry.

All those interested in road transport, directly as providers or indirectly as users, unite in repudiating the proposals to secure protection, and the proposal that the Minister should have power to prohibit the carriage of certain classes of traffic by road.

The conference, without establishing a groundwork, proceeded to elaborate proposals for which it was ill-constituted and unfitted. To indicate its one-sided character, the report makes no recommendations with regard to the railways,.except to relieve them of certain obligations.

All these questions still remain to be considered, and it is recommended that the proposals of the Royal Commission on Transport, that there should be set up an advisory council to the Minister of Transport, should be put into execution, and that, with wider terms of reference, the whale subject matter of the report should be once more thoroughly considered.


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