Page:The Economic Journal Volume 1.djvu/522

500 100 or 500 miles; and that they could obtain, by giving low rates, traffic which would not otherwise be moved. Everywhere it became a maxim of railway management to vary the rates according to the circumstances of the traffic, to charge what, according to the common and much misunderstood saying,' it will bear.' That abuses came in its train, that some districts were unduly favoured, is true. A point apt to be slurred over, by reason of the question being usually regarded almost exclu- sively from the view of the companies or their customers, is that this change, diminishing the effect of distance, reducing if not aunJhilating geographical advantage, is of priceless value to consumers.

Obviously the interests above described may be conflicting.- Those of the railway companies may in certain circumstances conflict with those of the community. Desiring to earn the largest possible net income, they may do so by carrying a small quantity of traffic at a high rate. Vhether this is often done may be doubted; it would be possible only where there was no com- petition; and the promoters of a new line could go to Parliament with an overwhelmingly strong' case if such oppression were proved. Still such a state of things is conceivable. With some commodities, the 'margin of utility' of which is great, it is perfectly possible, at all events for a time. There is a second danger; short distance traffic may be, and sometimes has in fact been, made to pay unduly for long distance traffic. I do not refer to the numerous cases in which a company earns a much larger profit on one part of its system than on another--to the instances in which a company, rather than lose its traffic altogether, conveys it at rates just sufficient to pay a little more than the working expenses, but totally inadequate 'to pay a dividend on the whole system. Most producers on a large scale obtain different rates from different branches of their business. Any one with much experience as an arbitrator or otherwise in estimating the value of business assets will tell you that the profits on particular contracts or with particular customers vary from zero to 50 per cent. A gas company may be earning 15 per cent. on its gas; it may be disposing of by-products, such as coke and tar, at prices yielding less than 1 per cent. Mr. Taussig has lately pointed out that the business of a railway company is joint