Apart from the charges for freight and passenger transport to which reference has been made above, railways commonly quote " special rates " for goods traffic which has to be obtained by active competition with other transport agencies. These special rates represent departures from the ordinary schedule, and in Great Britain and the United States a great part of the total weight of goods conveyed by rail is charged for on the special-rate system.
The institution of these rates may in certain cases be due to the presence of waterway or other railway competition. The cost of transport by waterway is normally low and the competition for the carriage of goods of low intrinsic value is therefore severe; and where the competition arises from the presence of another railway, the competing line which possesses the shortest route naturally has an advantage over its competitor. In other cases the competitive influence may be exerted by a road motor service; but from what- ever source it springs the question whether the quotation of special ailway rates as a means of securing the traffic is justified is one vhich can only be determined by a consideration of the particular ircumstances of each case.
Water Transport. The expenses of transportation by water, like
- hose of rail transport , fall under two main heads : (a) the fixed charges,
vhich do not vary very much with fluctuations of traffic; and (b) the vorking expenses, including the costs involved in the actual move- nent of goods and passengers, the terminal charges which depend ipon the volume of the traffic and not upon the distances for which it , conveyed, and lastly, the general expenses which vary very little ,-ith increase or diminution of business. As in railway management, he gross receipts must be sufficient to cover both the fixed charges nd the working expenses, and provide a reasonable return upon the apital invested.
With regard to fixed and general charges, water transport services iffer somewhat from railways. In the case of transport by sea, there re no considerable general charges for maintenance of way nor any xed charges consequent upon the construction of such way. Con- duction is limited to wharves, docks and vessels with this equip- lent, and can be proportioned more or less directly to the amount of affic to be carried. There is therefore less likelihood of excess in jst of construction and less necessity to accept additional items of affic at less than average rates merely in order to make a fuller use ? the plant provided.
In the case of canals, or of other waterways on the adaptation of hich considerable sums have been invested, the conditions with gard to fixed and general charges obviously present a closer semblance to those which obtain on railways. The ownership of wharves on inland waterways is ordinarily dis- 1 net from that of the vessels which use them ; and wharf charges ould be such as to yield in the aggregate a normal return on the pital invested in the purchase of land and in the work of construe- in, i.e. the equivalent of a fair rent for the land occupied, plus a asonable rate of interest on construction cost. In water transport competitive influences operate more freely an on railways, and, in the case of ocean services, the choice of ute is determined mainly by physical and economic considerations. 'teris paribus, the choice is determined by the location of the ntres to be served, and the route taken will follow the shortest IBS between them.
In the case of inland navigation the course of a river will itself termine the route to be taken, whilst in the location of a canal the inciples which operate are similar to those which determine the ation of railroads.
Transport on natural waterways, and especially by sea, is less mopolistic in character than railway transport, the " sea road " ing open to all competitors ; and at terminals also such water trans- rt is more subject to competitive forces then is usually the case . :h railways.
| With regard to rates for freight, the general principle is that, on
IE whole, these rates should bear some resemblance to the cost of
I 'riage, whilst with regard to particular articles discrimination
- y be made according to their character and value. There is,
- ffever, one case in which rates for water transport may be far
ow cost, namely, in those cases where certain goods may be used
i ballast. On a particular route, for example, the demand for cargo
.ce for shipments in one direction may be considerable, whilst in
other direction the demand may be very much weaker. In such
- ase cargoes may be accepted for the return journey at very low
i 2s, apart from the fact that they may prove useful as ballast.
toad Transport. The principal factor in the modern development
< oad transport is the advent of the mechanically propelled vehicle, 1 use of which is rapidly extending. In road motor services, as in t case of other transport agencies, the question of return on capital
< enditure is important. The amounts expended upon the purchase
< 'ehicles and upon the purchase of land and the erection of garages ( lere these are not rented) must be taken into account. Where 1 i and garages are rented, the annual charges thus created must t covered by the gross receipts. Depreciation, repairs and renewals, f , and wages must also be provided for.
'he responsibility of road motor undertakings for a proportion of t cost of maintaining the roadways which they use is now coming t >e recognized, but they still escape the heavy capital expenditure s i as the provision of railway way and works involves. In the
case of these road undertakings, therefore, the fixed charges are of less importance, and such capital charges as they do incur (e.g. in the purchase of vehicles or in the provision of garage accommoda- tion) can be more easily proportioned to the amount of traffic.
The gross receipts, and therefore the rates for freight and passen- gers, must be such as to cover both the fixed charges and working expenses, and must therefore bear some relation to the costs involved ; but in the stage through which road motor transport is now passing there can be no doubt that, in the fixing of rates, the necessity for competing-with railway services (especially for short-distance traffic) and with other road motor services is a governing factor.
Air Transport. The possibilities of transport by air remain to be revealed, but it is significant that, already, regular mail and passenger services have been instituted and that, to a limited extent, the aeroplane is being utilized for the carriage of goods in small parcels. The general economic principles governing this form of transport are similar to those which operate with regard to those other transport agencies which use a way provided by nature and escape the construction and maintenance charges which the provision of an artificial permanent way would involve.
Ownership and Control. The question whether the ownership and/or control of transport undertakings should be vested in the State, in municipal bodies, or should be in private hands, was in 1921 still the subject of considerable controversy. In some countries State ownership and, with it, State control of railways are accomplished facts, and even the working of the lines is undertaken by the State. In other cases, State ownership is accompanied by a strict control whilst the actual working of the lines is leased to private companies. In yet other instances State control goes hand in hand with private ownership and manage- ment, whilst in some cases (as in the United Kingdom prior to the war, and in the United States) railways are privately owned and managed, and are subject only to State " regula- tion," particularly in respect of matters concerning public safety and the like.
Many tramways are municipally owned and worked, being subject to State regulation in respect of public safety, whilst in the case of water transport State interference is usually limited to the grant of subsidies, coupled with a relative measure of con- trol and with regulations for safety. In most cases, however, transport by sea is subject to safety regulations alone.
The advocates of private enterprise contend that the economic development and operation of transport is best achieved when public interference is absent or is limited to such matters as concern the public safety. They urge that, as public ownership or control involves official management, the great incentive to make a profit which is the mainspring of private enterprise and stimulates efficiency is removed. They urge that in the absence of this spur to efficiency, management tends to become slack and wasteful, that the element of political pressure is present, and that the vigorous enterprise which is essential to development and progress is seldom forthcoming. Experience has shown that these contentions are very largely correct.
On the other hand, the advocates of State ownership and con- trol contend that as transport services possess the character of public utilities, they are proper subjects for public ownership and control, that they should be operated in the public interest alone, and that any profits which may result from such oper- ation should properly accrue to the State or to the municipality as the case may be. They argue also that by the centralization of management of which public ownership and control admit, large economies in administrative and overhead charges can be effected, and that the wasteful competition and duplication of services can be avoided.
In weighing up the contentions of these two factions, it should be borne in mind that, whereas private ownership must of neces- sity be worked on an economic basis in order to exist at all, in the case of State ownership it is impossible to say definitely whether a service is being worked efficiently or economically.
Government Regulation. The extent and nature of the regula- tion of transport by Government has varied very considerably at various times and in different countries. Where, as in many countries, the railways and canals have been built or acquired, and similarly the roads, to a varying extent, built and main- tained, by the State, the extent of Governmental regulation is naturally great. In other cases notably in Great Britain and
