CHAPTER III COST OF TRANSPORTATION AND RATES OF TOLL ESTIMATES OF COST In the days of the first railways, both in the United States and in England, it was thought that the rates of charges for transportation on railways would be made up similarly to those obtaining upon ordinary roads and canals. From the beginning, however, the supporters of railways urged that rates would be much lower upon that means of conveyance than on turnpikes. Thus, Oliver Evans, in 1804, submitted a statement to the Lancaster Turnpike Company which was intended to show that one steam carriage such as he proposed would yield a larger net profit than ten wagons each drawn by five horses on an ordinary turnpike.1 And in 1812 John Stevens was even more definite and sanguine. He stated that much of our internal commerce was at that time only effected at a cost of 50 per cent. on the value of the commodity transported, whereas the railway would make a saving of at least nine-tenths of this charge and reduce the cost to about 5 per cent. Stevens proposed government ownership, arguing that a 5 per cent. toll, in addition to the 5 per cent. cost, would yield an enormous revenue; while at the same time it would save the remotely situated farmer some four-fifths of the charges he was then paying.2 In another place he estimated that one ton might be transported 280 miles for 50 cents, which would mean a rate of 1 Niles' Register, III, Addenda. p. 5. Evans, however, did not contemplate a way of rails such as Stevens projected; see above pp. 185 and 196. 2 Doc. tending to prove the sup. adr. of railways and steam carriages, etc., p. ix, Introd. about .178 cents per ton per mile. He showed that, even allowing double this amount, the cost would be only one-third the estimated rate for the canals, and so the state might collect a toll in addition, and still allow relatively low rates. Stevens' estimates were made on the basis of steam locomotion. 4 3 In Strickland's report, an English engineer's estimate is cited to the effect that the expenses of operating a locomotive would be less than 30 shillings for drawing 50 tons a distance of 60 miles in ten hours. This would equal less than half a farthing per ton per mile or about .22 cents." These estimates, it will be observed, are very low-lower, probably, than the cost could have been at that time. There was no basis for a true estimate of depreciation and cost of repairs or replacement. B. H. Latrobe, who was opposed to railways, took the ground that, with a few exceptions, sufficient traffic could not be developed in this country to warrant the cost of constructing a railway. In the documents relative to the comparative merits of canals and railroads which were added to the English report on steam navigation, Jonathan Knight, engineer for the Baltimore & Ohio Railroad Company, gave the cost of transportation as being not greater than .75 cents per ton per mile," and stated that on a level road it might be as low as .5 cents per ton per mile. These figures were based on a railway adapted to horse power. In 1836, in a speech advocating a railway in place of the National Road, it was stated that the government would only need to charge about 2 cents per mile to keep the former in repair and pay costs of transportation. * Ibid, pp. 20-21. See above, p. 190. Counting a shilling as 22.2 cents. Exec. Docs., 1831-32, No. 101, p. 149 ff. Ibid., p. 156. Mr. Jackson (H. of R.), Cong. Debates, 1835-36, p. 4495. This may refer to passenger rates. ACTUAL RATES* In a document laid before Congress in 1831, the actual cost of transportation was given as 3.53 cents per ton per mile." This cost was obtained from a road operated by animal power. It is interesting that a report to the New York canal commissioners, made five years later, stated the cost of transportation on a level railroad to be 3.5 cents,-practically the same amount. This report was severely criticised by railway men, however, as being based on a poorly constructed road which could not be called typical,10 and it did not make allowance for the saving in time that resulted from the use of steam locomotion. In 1831 the Pennsylvania canal commission, in its annual report, stated that the cost of transporting coal on the Mauch Chunk railway and on ten miles of railway from Tuscarora to Port Carbon was 4 cents per ton per mile, and that the toll on the latter road was 1.5 cents per ton per mile, making a total charge of 5.5 cents.11 In 1832 we find figures drawn from the early operation of a more perfect road. In debate over a proposed subscription to the stock of the Baltimore & Ohio railroad, Mr. Smith of Maryland read a statement of the cost of transportation by that railway.12 For transporting a barrel of flour from the Point of Rocks to Baltimore, a distance of about seventy miles, this was 27 cents; the transportation of a ton of iron cost $3.17. This makes a per ton per mile rate on iron of about 4.5 cents. As to passenger fares, we are told that in 1835 it cost $2.50 to travel from Washington to Baltimore, a distance of about thirty-eight miles, and this fare of over 6.5 cents per mile was remarked upon as a triumph of the railway over the stage.18 See p. 214 for further cases. Exec. Docs., 1881-32, I, No. 18, p. 164: Mules and horses... Hands Repairing wagons Oil for wagons 10 See Ringwalt, Dev. of Systems of Trans, in U. S., p. 49. 11 Exec. Docs., 1831-32, No. 18, p. 178. 12 Cong. Debates, 1831-32, Sen. May 24, p. 952. 1 1/3 cents 1 1/3 cents 13 Cong. Debates, 1835-36, H. of R., p. 4495. In 1840 H. S. Tanner wrote that In a committee report of 1848-49 we find a general statement as to cost of transportation and something concerning the freight rates of the time. The average expense of transportation on the best managed roads of the country was reported to be about 2 cents per ton per mile. On the authority of the Baltimore and Ohio's 1848 report, the committee stated that the actual cost of transportation to that company was 1.849 cents per ton per mile, while the rate charged was 3.96 cents for a like unit.14 Most of these statements of actual rates were given by those interested in canals and opposed to the perfection and extension of railways; and in any case were those charged upon short, imperfect, horse-railways. Yet these were the only railways which had been in operation long enough to afford a basis for such statements. While the enthusiastic or far-sighted might foresee lower charges, it was natural that the high rates actually charged on such railways as there were should form an effective argument against their further introduction, and the broad and buoyant optimism of the men of those days surely appears in the slight retarding effect which was exerted by the imperfections of these first railways. LIMITATIONS ON RATES IN CHARTERS As stated at the beginning of the chapter,15 it was at first thought that railway rates would be made up similarly to those on canals and highways; hence it was customary to distinguish two elements in the charge: one for cost of the service rendered, another for "toll," being the net earning on the service.16 Furthermore, it was thought necessary to provide De Gerstner had concluded that 5 cents was the average passenger fare of the time. See A description of the Canals and Railroads of the U. S. (1840), p. 22. 14 Rep. of Com., 1848–49, No. 145, p. 28. 15 p. 206. 16 The former was a payment for transportation; the latter, or toll, was a payment for use of track, or "way". This proper and logical use of the terms was reversed in some cases, and it is the "toll" which varies with the direction of the traffic according to the charter of the Baltimore & Ohio. for tolls on vehicles which might run upon a company's railway without belonging to the company. As illustrating the latter point, and giving a manner of limiting rates very common in the earlier days, the charter of the Brunswick Canal & Railroad Company may be presented. Section 7 of the act by which this railway company was incorporated runs as follows: and the said company “蓉 shall be entitled, and they are hereby empowered, to demand and collect by way of freight or toll, on all goods, wares, merchandise, and productions of the country or vehicles of any description, conveyed and cars over and upon said railroad, such rates of toll or freight as the board of directors of said company may find necessary to adopt from time to time in their regulations of toll; Provided, That during any twelve months together, the net amount shall not exceed 25 per cent per annum upon the aggregate amount of money they shall have actually expended in making, constructing, and keeping in good repair the said railroad.'17 * The limitation of tolls by stipulating that they should not yield more than a certain percentage on the capital invested was quite general. For instance, a charter of 1835 restricted it to 20 per cent. ;18 in the same year another charter provided that if the rates of toll charged enabled the railway to pay more than 15 per cent. on its capital stock, "then the said rates of toll and transportation shall be so reduced as te enable them to divide 15 per cent. and no more;"'19 and in 1836 the act incorporating the Illinois Central prescribed that if the average net earnings of ten years should amount to more than 12 per cent. on the cost of the road, the legislature of Illinois might reduce the rate of tolls.20 Such limitations were of little importance and could easily be evaded. They are chiefly significant as indicating a tendency to restrict and control. 17 Exec. Docs., 1836-37, III, No. 122. This was a Georgia corporation created in 1834. Its charter appears in the documents of Congress in connection with a memorial. 18 Exec. Docs., 1834-35, III, No. 126. 19 Rep. of Com., 1837, No. 238. 20 Rep. of Com., 1836-37, I, No. 121. |