Art. 6.-THE ECONOMICS OF INLAND TRANSPORT.

1. First and Second Reports of the Select Committee on Transport. H.M. Stationery Office. [Cd. 130, 136.] November 1918.

2. Four Reports of the Royal Commission on Canals and Waterways, with Appendices. H.M. Stationery Office. [Cd. 3183, 3716, 4839, 4979.] 1906-10.

3. Interim Report of the Coal Industry Commission. [Cd. 84-86.] March 1919.

THREE points in space require only three lines of intercommunication, six points require fifteen lines, twelve points require sixty-six lines, and so on. The network of lines increases nearly in proportion to the square of the number of localities. If the localities increase from 100 to 200, the lines of communication increase from 4950 to 19,900. If, then, we suppose that each of these lines is of measurable breadth, it becomes clear that a stage will be reached when the whole of the intervening space will be covered with lines of transport, leaving no area available for any other of the elementary purposes of existence except that of traffic alone.

The problem of transport, therefore, raises no difficulty until population reaches a certain density. One footpath sufficed for the cottages on Darnell Waste, but six roads intersect Darnell Park; and the river, which once was crossed by one wooden bridge, is now nearly hidden from view by half a dozen stone viaducts. Before each of these was erected there had intervened a time when the problem of transport became acute; it had become a necessity either that traffic should be regulated or that new lines of communication should be established.

Granted the increasing urgency of transport problems, it is desirable to consider whether any general principles are discoverable whereby these problems can be attacked. What kinds of transport are there to be provided for, and how can they best be dealt with so as to harmonise individual needs with the convenience of the community? We may distinguish five kinds of transport, to one or other of which classes all movement of commodities may be assigned:

(a) Transfer from place of origin to place of manufacture, or from place of production to place of consumption.

(b) Transfer from one process of manufacture to another.

(c) Transfer from factory to seller (wholesale).

(d) Transfer from seller to consumer (retail). (e) Mere removal.

It seems obvious that of these five classes the first is of paramount importance. The progression from producer to consumer is a vital part of the economic organism. It might suit the purposes of political economists of the classical school to assume that the producer has in all cases a consumer at hand ready to absorb his product at the market price; but, as a matter of fact, the consumer has now retired into the distance, and is to be approached only through byways guarded by toll-gates where sit the intermediaries of commerce taking toll of all goods that pass. Classes (b), (c), and (d) are largely concerned with forms of transport which are non-essential. They add nothing to the value of the article but frequently detract from it. Individual convenience often determines the course of commerce. The maker of an article finds it more convenient to have dealings with a few people personally known to him than to discover for himself the ultimate purchaser. He thus prefers to make contracts for the exclusive rights of sale and purchase for a certain period or over a certain area; and under these contracts the goods are delivered in bulk to be afterwards split up into smaller consignments.

This system is responsible for much waste of energy. For instance, a large consignment of Manchester goods reaches the wholesale dealer in the congested Cripplegate district of London, where it blocks for hours the streets wherein Shakespeare and Milton once lived. There it remains until it is split up into parcels and sent in different directions, the larger part of it perhaps retraversing the route by which it came and finding ultimate purchasers in the North of England not far from its place of origin. From the point of view of the community at large such a process is not merely unnecessary but positively harmful, since it interferes with traffic which is really essential, enhances the ultimate

price of the goods and frequently has a prejudicial effect on their quality. Nor is it necessary to the business of the individual merchant whose ends it is supposed to serve. Goods which are intended to change hands several times need not be actually delivered until the ultimate purchaser is discovered. The methods of the Baltic or the Stock Exchange, whereby cargoes or shares are sold many times over without actual delivery, are no less applicable to dry goods or hardware; and much of the traffic which blocks the streets of great distributing centres might be economically represented on paper in the form of warrants and delivery orders, the goods themselves not being moved until their ultimate destination is known.

The coal trade is that which gives rise to the greatest amount of traffic. If the coal of Britain could be converted into power at the pit-mouth, three-quarters of the railway sidings would become unnecessary. In this case also customs which have grown up in the trade tend towards a block of traffic. It is necessary, of course, that loaded trucks should stand at a port until the ship's bunkers are ready to receive them. But it is not necessary that a merchant should be able to keep a number of loaded trucks standing on the lines for six months until he finds a purchaser at a better price. Nor is it necessary that coal should be carried by rail at all when it can be carried far more economically by canal.

These irregularities and excesses of transport have arisen naturally out of a course of free commercial intercourse; nor do they become noticeable until they conflict with equality of freedom for all alike. But, as the density of population increases, it is inevitable that such conflict should arise. A point is reached at which traffic control becomes necessary if chaos is to be avoided; and the necessity has long been recognised and the control provided in the streets of our large towns, in the approaches to public buildings and upon occasions of public resort. The more serious consideration has now arisen whether a similar system of control should not be exercised over the movement of goods in general throughout the country.

This question cannot be considered without reference

to the existing resources or means of transport and the manner in which they have been dealt with in the past. The whole history of our inland transport extends no further back than a century and a half, before which all conveyance of goods was effected by pack-horses traversing roads which were barely distinguishable from sheep-tracks. Almost simultaneously began the improvement of roads and the construction of canals; a good mail service had barely been established on the new main roads when the first line of railway was laid; and Brindley's canal plans had only been partially worked out when the Liverpool and Manchester line was opened for traffic. As each of these methods appeared, it was regarded as completely superseding all that had gone before, with the result that for the last seventy years the railway has had a practical monopoly of longdistance traffic.

The immediate effect of the construction of canals was a great reduction in the cost of transport, due, of course, to the elementary fact that a horse can draw on a canal from six to eight times the weight that it could draw on a good road. The canal companies were able to quote rates of transport which seemed amazingly moderate to those who had been accustomed to cart or horse hire; and not only so but they were able to pay dividends to their shareholders ranging from 20 to 50 per cent. and in some cases to nearly 100 per cent. per annum. Many shareholders had received their original investment several times qver before the railway menace became serious and the crash came. If the State had purchased the canal system before that date, it would have had to pay 40 millions sterling for what could now be acquired at less than six millions.

As soon as the London and Birmingham line was opened, the public made up its mind that canals were obsolete. Many of the new lines ran side by side with canals, whose owners were only too glad to dispose of them to the railway company. Thus about half of the total canal mileage fell into the hands of the railways, which have since been free from external competition.

The story of the decline of canals and the advance of railways is too familiar to be repeated here. The salient features from an economic standpoint are as follows:

(a) Two canal companies in the coal districts which are themselves carriers of goods flourish exceedingly and succeed in carrying goods with profit at a rate which a railway company could not approach.

(b) The effect of the disuse of their own canals has been very prejudicial to the railway companies. A large capital expenditure has been incurred in the provision of additional lines and sidings for the accommodation of traffic which could have been carried more economically by their own canals. Evidence was indeed furnished to the Royal Commission showing that one railway company had thrown away 300,000l. a year by the non-usage of a canal in their own occupation.

(c) Of the different kinds of traffic carried on by railway companies only one portion, namely the passenger traffic and the goods carried by passenger train, shows a really satisfactory profit. That part of the revenue pays the expenses and provides the dividend, thereby concealing the fact that the ordinary goods train barely covers its expenses, and that the mineral traffic is run at an absolute loss. This result is partly to be attributed to the fact that slow locomotive traction is mechanically uneconomical. Each method of traction has its own definite speed of maximum efficiency, and that of the locomotive is about thirty miles an hour; at speeds above and under that rate there is an inevitable waste of energy. But the absence of profit in goods haulage is far more due to the inefficient management whereby nine-tenths of the life of a goods engine is spent in shunting and 95 per cent. of the life of a waggon is consumed in idleness.

(d) The unrestrained manner in which the various railway systems grew up is largely responsible for their present unsatisfactory position. Any scheme was sanctioned by Parliament, so long as it could show adequate financial backing. Opposition came purely from landowning interests or from rival and competing lines; and there was no supervision in the interest of the community at large. Consequently the extent of mileage is in excess even of present requirements; and, as a further consequence, a substantial part of the capital stock of the railway undertaking represents merely the outlay originally required to buy off opposition or the expenses of subsequent litigation. The railway interests, by their