Page:The Economic Journal Volume 1.djvu/528

506 Two principles on this subject seem intelligible. Rates may be fixed with reference to the actual cost of conveyance; a principle intelligible, but leading to consequences from which the advocates of it recoil. Rates may be fixed with reference to what the traffic will reasonably bear; a principle consistent with some abuses, but as it seems to me the only one which can be applied. Even those who quarrel with it usually end by proposing it in some disguised form. In a pamphlet on railway rates Mr. Horrocks thus describes a scheme of classification: ' Each article of the 4,000 and more received at the Clearing House classification should be subjected to a severe and careful scientific examination, as to its specific gravity, &c., in order to as- certain the maximum weight of that article which an ordinary rail- way truck would carry. In the next place, the value of the article should be ascertained, together with the liability to damage from wet, breakage, delay, theft, or any other cause. One or more ifidi- viduais practically acquainted with merchandise and its prices, and one or more individuals practically acquainted with the handling of traffic on railways, should have this task assigned to them. A standard should be agreed upon by each division of investigation, and the articles as examined, should receive values in accordance with it. Finally the respective values of each article should be collected, and its place lrmanently fixed in an amended classification, the names thereof being registered and published.'

What is this but a laborious attempt to discover what traffic will bear, at what price it can be carried consistently with a fair profit to carrier and customer--to anticipate the results of the higgling of the railway companies and tralers ? Sometimes it is said that rates should be 'just and reasonable.' This is the test recognized in the Railway Clauses Act 1845, s. 86: companies are empowered to make 'reasonable charges.' This may mean that the charges shall be whatever an arbitrator would determine. It may be an admission that no rule can be formulated. The language of the statute receives precision only if it means that the traffic shall be charged what it can bear that the rates shall be such as to be consistent with ordinary profits to carrier and customer. Two evils are possible with railways owned by private companies: they may artificially diminish the amount of trafiic by rates so high a to raise prices and lessen demand; they may diminish the profits of their customers below the usual rate--I