F.—ECONOMIC SCIENCE AND STATISTICS 137 
desirable to approach, and of determining at what point the advantage 
of getting closer to cost of service is outweighed by the complications, 
inconveniences, and expense involved in doing so. Moreover, there is the 
point that any change-over to a system of charging based essentially on 
cost of service would cause a very considerable disturbance in the present 
distribution of economic resources and activities. Various economic 
equilibria have been established on the basis of the present system of 
charges—e.g. location of plants, organisation of the heavy industries, etc., 
all of which would be disturbed by such a fundamental change. The 
' matter is, for example, linked up with our present export industries, 
since in the past the mainstays of our export trade have been the coal, 
iron, steel, heavy chemical, and heavy engineering industries, all of which 
obtain the advantage, under the present system of differential charging, 
of low railway rates. Obviously, a change of such magnitude would 
create great opposition from many people who would fear that their 
position would be adversely affected. There is, indeed, little doubt 
that public opinion would strongly resent any sweeping changes. On 
the other hand, should the nature of our export trade change in character 
in the future or should we develop our home markets at the expense of 
our exports, there would probably be less opposition to the change. 
Nevertheless, as Mr. Wood has indicated, some change in the structure 
of railway charges must be made, unless the competition between rail 
and road transport is put on a more equitable basis, or their competitive 
superiority in given cases can be more clearly established. 
Prof. Pigou has emphasised the importance of the time factor in relation 
to peak loads ; but it is also necessary to consider the load factor itself. 
Some advocates of railway reform, such as Mr. M. F. Farrar, have based 
their proposals on a consideration of this factor. It must, I think, be 
admitted that the load factor, both in relation to time and volume of 
traffic passing in a given consignment or on a given section of line is of 
considerable importance. ‘The influence of this factor is already seen 
at work in current railway practice. For though railway rates are based 
in the main on the value of the service, other factors are also taken into 
account. An example of the influence of the time factor is that of reduced 
fares on certain suburban routes for traffic outside the peak hours. The 
load factor is also taken into account in ‘ minimum consignment ’ rates, 
the rate for small consignments, and in those special or exceptional rates 
which are granted in consideration of the traffic passing in bulk—e.g. full 
wagon or full train loads. 
The question is how far could the practice of charging according to 
the load factor be extended with advantage. Costs to a railway are at a 
minimum when its capacity is fullyemployed. It could, I think, be argued 
that charges should be varied according as the particular demand for 
transport services increases or diminishes the load factor. If certain 
traffics involve only the partial utilisation of equipment which nevertheless 
has to be provided—e.g. traffic passing in less than full wagon or full train 
loads, provision of additional terminal facilities, etc-—then it might be 
said that the charges should be higher than for traffic which gives a better 
utilisation of equipment. 
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