THE INCREASE OF RAILWAY RATES.
THE decision of the Minister of Transport to raise the railway rates on merchandise has been accepted with equanimity because every one knew that it was inevitable. The hard fact that a shilling is now only worth sixpence must be recognized, and all prices and incomes must gradually be readjusted to the new peace basis on which the wages of nearly all the working class are now fixed. We could not hope to retain the railway rates of 1913 now that the railway authorities have to pay twice as much as before for coal and materials, and far more than double their old wages-bill. In the year of transition from war to peace the State has borne the deficit on the working of the railways, which was estimated by the Board of Trade in July last at £60,000,000. But no one has seriously suggested that this immense subsidy should be continued. The country cannot afford it, in the first place. Moreover, subsidies are economically unsound. They exert a demoralizing effect on all concerned in an industry, and they tend to create unnatural conditions of trade. The railway subsidy has reduced the railway authorities to a state of lethargy. They have had no incentive to economy, and they have been discouraged from taking any steps to improve or extend their services because they did not know from day to day what the Government might do next. It is common knowledge that the goods traffic is hopelessly congested for want of wagons, but the railway companies have not been in a position to raise new capital for the purchase of rolling- stock. All the docks remain choked with merchandise that cannot be distributed, ships are delayed because they cannot unload, and our exports are held up for want of shipping. Thus we all suffer greatly from high prices, the adverse American exchange, and scarcity of coal and other necessaries, which may all be traced in some degree to the inefficiency of the railways under State control with a subsidy. Furthermore, the maintenance of the pre-war railway rates has induced consignors to use the railways in preference even to the subsidized coastwise shipping for heavy goods, such as China clay and even coal, that used to be sent by sea for the sake of cheapness but are now transported at lower cost by land. The railways, already unable to deal with their old traffic, have been saddled with this new traffic diverted from the coasting vessels. The State subsidy in this case has actually helped to make the smooth working of the railways almost im- possible. The removal of the subsidy and the raising of the railway rates will tend to make the new heavy traffic revert to its normal routes, thus setting free a great deal of rolling-stock for ordinary merchandise.
It speaks well for the good sense and public spirit of the trading community that the large increase of rates has been received almost without a murmur. The new Order is expected to raise the income of the railway com- panies by fifty millions a year, and thus to reduce their deficit to manageable proportions, if not to wipe it out. The fifty millions will have to be paid by somebody, and must fall on the general consumer. Thus the railway rates on coal have been raised by a quarter, with an extra charge of threepence a ton ; the effect will be that our coal will cost us two shillings a ton more. The rates on foodstuffs have been increased in the same degree, and the price must therefore rise except for milk, which is to be carried at the old rates, and for Irish cattle and dairy produce. The rates on building materials are at least forty per cent. higher, so that houses must cost more to build ; and the steel trades predict a considerable increase in the price of iron and steel, which must make machinery more expensive, and thus raise the price of all manu- factured goods. It needs but little effort to see how higher railway rates must, for the time being, have an adverse effect on all trade and industry. On the other hand, manufacturers, merchants, and retailers, who will instantly feel the effect of the increased rates, may comfort them- selves and their customers with the reflection that the ultimate result should be beneficial to them all. A slow and congested railway service is dear at any price. If the higher rates promote efficiency, as they should do, they may tend to reduce prices instead of increasing them. At present the interminable delay of goods traffic leads to great waste. A manufacturer with an important order to execute in a given time may be prevented from com= pleting it because his materials are reposing in a remote goods yard or siding. A merchant who has perishable wares to sell may lose all his profit because they do not arrive till weeks after they are wanted. In such cases, typical of many, it would pay the consignee handsomely if he could secure speedy delivery at double the old charges. We need not then assume that higher railway rates must mean permanently higher prices, provided always that the railways are well managed on ordinary commercial lines. If the Ministry of Transport swathes them in red-tape, then of course the increase of rates will lead to no improve- ment at all. But we still hope for better things of Sir Eric Geddes.
Apart altogether from the financial consequences of the new railway rates, it is a good thing for trade and industry to have the matter settled. Nothing is so para- lysing or ruinous to commerce as uncertainty. A definite decision, one way or the other, is nearly always better than hesitation on the part of the Government to face an un- pleasant task. The trading community will start the New Year with more cheerfulness now that it knows the worst about the goods charges. It would be well if the chief trade dispute now outstanding could also be ended. The strike of the iron-moulders, which has lasted over three months, has caused endless difficulties in the iron and steel trades, because these skilled workmen supply the castings that are the semi-raw material of the engineers and machine-makers, and for want of the castings the whole trade is coming to a standstill. The strike was wholly unjustified, for it was declared by three small Unions, who alone refused to accept an arbitration award affecting the whole of the engineering trades. Rather than wait a few weeks and repeat their application for still higher wages, the moulders, led by Mr. Henderson, decided to strike. They have since refused a compromise which their leader arranged with the employers. Recently the main strike has become entangled with a minor dispute at West Brom- wich between the Iron-Moulders' Union and the General Workers' Union, some of whose members have been in the habit of making rough castings. The Iron-Moulders' Union has sought, late in the day, to assert a monopoly of the craft against the labourers belonging to the rival Union, and the unfortunate employer at West Bromwich has been made the victim. The Employers' Federation asked the moulders' Unions to agree to a general resumption of work, at West Bromwich and everywhere else, as a prelude to a fresh arbitration, but the Unions, for reasons which we do not understand, insisted until Wednesday on maintaining the local strike affecting a few men at West Bromwich. If the personal considerations could be eliminated, the dispute should be capable of settlement. As it is, the iron- moulders have lost heavily by striking, have thrown many thousands of men in other trades out of work, and have put employers and their customers to a great deal of expense. No one has benefited or will benefit in the least degree. If the Minister of Labour can help Mr. Henderson and his Unions to make a graceful retreat from a wholly untenable position, he will open the New Year as happily as his colleague the Minister of Transport.
Previous page
