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The Relative Level of Crow's Nest Grain Rates in 1899 and in 1965*

Published online by Cambridge University Press:  07 November 2014

John Lorne McDougall
John Lorne McDougall*
Affiliation:
Queen's University
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Extract

During the nineteenth century and the early part of the twentieth, the value-of-service basis for railway rates ruled unchallenged. Over the last forty years, and especially the last twenty, that system has been undermined from so many directions that it is rapidly becoming untenable. Willy-nilly, railways are being forced over to a cost-of-service basis by the competition of other carriers and by the relocation of industry. So long as they are expected to be self-supporting (and the logical problems of operating nation-wide utilities on any other basis are daunting), any traffic or service that does not pay its full costs must inevitably come under review. The cross-subsidization between different types of traffic which once took place as a matter of course is no longer possible, and railways are compelled to know their own costs and to sell their services in competition at rates based, to an ever-increasing extent, on cost. In the last fifteen years, for example, competition has converted the old class rate structure, which was the heart of value-of-service rates, into a mere shrunken survival, historically interesting, but no longer worthy of serious consideration.

There are other surviving specimens of value-of-service rates, but the Crow's Nest schedule for grain rates is the only one covering a major traffic. For historic reasons, the rates, in terms of current money, are now at or below those first established at September 1899, despite the change in prices and wages in the intervening period. There are, therefore, compelling reasons to examine them now.

Le niveau relatif des tarifs du nid-de-corbeau (crow’s nest) en 1899 et en 1965

Le Niveau Relatif des Tarifs du Nid-De-Corbeau (Crow’s Nest) en 1899 et en 1965

D'après un accord conclu en 1897 avec la compagnie « Canadian Pacific Railway », les tarifs de transport des céréales de l'ouest des Prairies à Fort William furent réduits uniformément de trois cents les 100 livres durant les deux années à venir. Selon ce nouveau barème, les recettes du transport des céréales par tonne-mille équivalaient approximativement à 75 pour cent de celles provenant du transport des autres marchandises. Cependant les recettes par wagon-mille étaient nettement au-dessus des recettes moyennes provenant du transport des autres marchandises par suite de chargements plus lourds.

Entre 1918 et 1922, on permit une augmentation des taux de transport des céréales mais en 1922 ils furent ramenés à leur niveau initial. Cette situation est encore la même en 1965. En 1925, l'entente fut abrogée et par une loi tous les tarifs de transport par chemin de fer en direction est furent réduits au niveau du tarif du Nid-de-Corbeau (Crow's Nest). Par la suite, des règlements fixérent le même barème à la Côte du Pacifique, à Churchill, et à la ville de Québec via la ligne Nationale Transcontinentale.

Etant donné l'accroissement considérable des prix durant le vingtième siècle, le transport des céréales ne rapporte par tonne-mille que 25 pour cent ce que rapporte le transport des autres marchandises. Les recettes par wagon-mille s'élèvent à 42 pour cent de celles des autres marchandises mais c'est à cause de chargements plus lourds par wagon.

Si nous faisons la comparaison avec les tarifs en vigueur aux Etats-Unis, pour Duluth et Seattle au milieu de l'été 1965, les taux canadiens par mille rapportent 24 à 30 pour cent ce que rapporte un chargement en direction est vers Duluth pour des distances équivalentes, et 26 à 38 pour cent ce que rapporte un chargement en direction ouest vers Seattle.

Type
Research Article
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 32 , Issue 1 , February 1966 , pp. 46 - 54
Copyright
Copyright © Canadian Political Science Association 1966

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Footnotes

*

This paper was presented at the annual meeting of the Canadian Political Science Association at Vancouver on June 12, 1965.

References

1 Revised Statutes of Canada, 1927, chap. 170, sec. 325 (5) and (6), repeated in ASC 1952, chap. 239, sec. 328 (5), (6), and (7).

2 Statutes of Canada, 1925, chap. 52.

3 Re Crow's Nest Rates. 1925, Supreme Court Reports, 155.

4 Cf. Report of the Royal Commission on Transportation, 1951, chap, x, and the Board of Transport Commissioners, Waybill Analysis: Carload All-Rail Traffic (Ottawa, annual), Table 1.Google Scholar

5 Canadian Railway Commission Order #36769 of Sept. 2, 1925. Cf. Currie, A. W., Economics of Canadian Transportation (Toronto, 1954), 88–90.Google Scholar

6 Effective August 20, 1931.

7 33 Canadian Railway Cases, 127 ff.

8 New construction which reduced the distance was also important in reducing the charge per cwt. from a few shipping points. For example, the rates from Saskatoon and Edmonton were reduced by 4 cents and from Prince Albert by 6 cents. To the shippers, any reduction is valuable, but this is conceptually different from the reductions named above.

9 Allowing 2/3 of oat production for feed, 18.3 per cent of the 1898–1900 average grain production available for shipment originated in the Northwest Territories (now Saskatchewan and Alberta) and the balance in Manitoba. See, Annual Report of the Department of Agriculture of the Northwest Territories, 1902, 27–9Google Scholar, and Report of the Department of Agriculture and Immigration of the Province of Manitoba, 1902, 7–8.Google Scholar

10 Canada, Sessional Paper 39, May 7, 1895.

11 Fargo to Duluth, a distance of 218 miles, took a grain rate of 15½ cents or 1.46 cents per ton-mile. Ibid., p. 5. The spread between Fargo and Michigan City would indicate an out-of-pocket increment of about 1 cent per ton-mile.

12 Ibid., 5–6.

13 There is a discrepancy between the verbal text and the numerical examples. I have followed the latter.

14 For flour in barrels and for bran and shorts in straight or mixed carloads, the minimum weights were 30 and 50,000 pounds in 40 and 60,000 lb. capacity cars, respectively. CPR Tariff 543.

Supplement no. 6 thereto dated June 16, 1902, adds minimum weights for 80,000 lb. capacity cars, namely 74,000 lb. for wheat, barley, and rye, and 60,000 for oats.

15 When the 80,000 lb. cars are introduced their minimum revenues in grain service become 21.6 cents per mile in hauling wheat, barley, and rye and 18 cents in hauling oats.

16 By the Bureau of Railway Economics, Association of American Railroads, Washington DC, in a letter of June 29, 1965.

17 Five per cent were marked 30,000 and 40,000 lbs. It is assumed above that these are cars in the process of being strengthened to carry 40,000 lbs. and that at 1899 they were of 30,000 lbs. capacity.

18 Shortt, Adam “Railroad Construction and National Prosperity: An Historic Parallel,” in Proceedings and Transactions of the Royal Society of Canada, 3rd series, VIII (1914), 295–308.Google Scholar

19 Report of The Royal Commission on Transportation, 1961, I, 49–51, 58, and 62–66 Google Scholar: “The shortfall of revenue on variable costs in 1958 was of the order of $2 million for the Canadian Pacific and $4 million for the Canadian National” (64).

20 The largest single expense is for labour which is in excess of 50 per cent of railway operating expenses. Between 1958 and 1964, wages per hour went up from $2.00 to $2.58. DBS Railway Transport, annual, VI, Table 4.