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Aspects of The Railway Problem I. Competitive Aspects of Road and Rail Freight and Passenger Rates1
Published online by Cambridge University Press: 07 November 2014
Extract
Competitive rates for road and rail transport have their origin in an unacknowledged, unintentional, but nevertheless acute competition between three groups of public authorities. Dominion, provincial, and municipal governments, yielding to the varying pressure exerted on each, have provided a framework which enabled or forced every transportation agency in the country to operate at rates below a strict cost-of-service basis. The result might be termed transportation chaos except that, so far, the system has not broken down. Since transportation is an essential economic function, it is inconceivable that it should be allowed to do so. In our wild, unplanned efforts to maintain it, however, there is every indication that a breakdown in public credit may be involved. The results of this policy reach the public through high taxation that is only partially offset by artificially low competitive rates based on uneconomic costs. It cannot continue indefinitely. Pressure of taxation, if nothing else, will eventually force a rationalization of the transportation structure. One might even go so far as to suggest that a discussion of the competitive aspects of rates is essentially a study in applied (or misapplied) public finance.
- Type
- Articles
- Information
- Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 5 , Issue 1 , February 1939 , pp. 40 - 52
- Copyright
- Copyright © Canadian Political Science Association 1939
Footnotes
1
This paper was read at a round table conference at the annual meeting of the Canadian Political Science Association at Ottawa, May 24, 1938.
References
2 Breed, C. B., Clifford Older, and Downs, Wm. S., Report on Annual Highway Costs, Province of Ontario, made to the Railway Association of Canada, pp. 22–5.Google Scholar
3 The Highway and the Motor Vehicle in Canada, 1936 (Ottawa, Dominion Bureau of Statistics), p. 23.Google Scholar
4 Breed, et al., Report on Annual Highway Costs, p. 25.Google Scholar
5 The provincial Government did contribute towards the cost of “connecting links”—i.e., portions of main provincial highways passing through incorporated cities and towns.
6 The Tax Burden on Owners of Real Property, submission to the Royal Commission on Dominion-Provincial Relations, by the Winnipeg Real Estate Board. See also the brief of the Canadian Federation of Mayors and Municipalities and The Burden of Municipal Taxation on Real Property, submitted by the Calgary Association of Owners of Real Property.
7 Breed, et al., Report on Annual Highway Costs, p. 90.Google Scholar
8 Ibid. While a ten-fold increase in road rentals would seriously hamper motor transport, there is a considerable misunderstanding about the effect which doubling or trebling road rentals would have on rates. For example, it developed in evidence before the Commission that one operator whose traffic totalled about 13,000 tons in 1936, would have had to add only .9c. per hundred pounds, and two large operators whose hauls were longer and whose tonnages were 60,000 and 160,000 respectively, for the same year, would have had to add no more than 1½c. to 2c. a hundred to their rates to cover the increase. This would not by any means put these operators out of business, nor would it greatly curtail their ability to compete with the railways. On the contrary, by eliminating the marginal operators of the “shoe string” variety, it might do much to stabilize the industry.
9 In 1931, Thomas H. MacDonald, Chief of the United States Bureau of Public Roads, who developed the impact force theory of highway stress, stated: “We would not build roads much less than 7 inches at the edge and 6 inches in the centre, no matter what kind of loads we were going to carry. If we built thinner surfaces they would curl up like tissue paper in the rays of the sun. They would warp; the frost heave would destroy them.” Further, “The roads are more destroyed really by climatic and soil conditions than they are by any use that is made of them by the public” (I.C.C. Docket 23400, Co-ordination of Motor Transportation). This testimony has been quoted time and again and even in briefs before the Chevrier Commission—notwithstanding the fact that further tests by the Bureau of Public Roads, published in November, 1935, showed that the thicker the pavement, the more likelihood there was of developing stresses due to changes of temperature!
10 Calculated from data in Breed, et al., Report on Annual Highway Costs, table V, p. 90.Google Scholar
11 In the case of one branch line 33.1 miles in length, “The entire population served by the railway was 125 people, but it was pointed out that they had gone there in anticipation of mineral development, and it was very doubtful if any alternative means of transportation would be satisfactory, notwithstanding that the railway was expensive to operate on account of snow in winter, particularly, and that therefore it was not proper to grant the application” (Proceedings of Special Senate Committee investigating the Serious Railway Condition and Financial Burden Consequent Thereto, May 10, 1938, p. 131).
12 The Transport Act, 1938—“An Act to establish a Board of Transport Commissioners for Canada, with authority in respect of transport by railways, ships and aircraft.”
13 Statistics of Steam Railways of Canada, 1936, p. 32.Google Scholar
14 Statement to the Royal Commission on Highway Transportation in the Province of Ontario by Gray Coach Lines, Limited, Toronto, November 22, 1937, p. 22.
15 Statement of the Ontario Association of Motor Coach Operators to the Royal Commission on Transportation in the Province of Ontario, Toronto, November 22, 1937, P. 20.
16 Even in provinces where publication of tariffs, etc., is required by statute, these regulations are apparently more honoured in the breach than in the observance. In Ontario, although the Lieutenant-Governor-in-Council is vested with power to require publication of tariffs, the power has never been invoked, and two of the largest companies in the province, in giving evidence before the Commission, admitted that about 50 per cent of their entire tonnage is carried at rates below their published tariff and that favoured shippers get special rates. They have no alternative if they are to withstand the competition of “shoe string” operators.