RAILWAY COMPETITION.

ADJUSTMENT OF RATES. FURTHER REPLY TO CRITICISM. " BASIC RULE OF COMMERCE." Allegations of unfair competition on the part of the Railway Department, which were made 1 / Mr. <~"harle.j Rhodes, chairman of directors of the Nortnert Steamship Company, Ltd., were iffl'ec) to yesterday by Mr. E. Casey, divisional superintendent of railways. Mr. Rubies' original remarks, made at the company's annual meeting, drew a reply from Mr. Casey, which was made the subject of further comment by Mr. Rhodes in Thursday's Herald. " With reference to the figures quoted by Mr. Rhodes regarding varying rates to the stations mentioned by him in his last statement, it is as true as it is plain that a deviation has been made from the scale of rates generally applicable throughout the system," said Mr. Casey. "This deviation has been rendered necessary by the circumstances operating in the particular cases, and is simply an application of the rudimentary rule of commerce that you sell your commodity in each market at the best price you can get in that market. " For instance, the Northern Company itself has a rate from Auckland to Whangarei, and the scale of the charges now before me shows it to be higher than the rate from Auckland to Awanui, notwithstanding that the distance between Auckland and Awanui is much greater than j the distance between Auckland and Whangarei. Fixing a Minimum Rate. " This is quite justifiable on the same principle that special rates are chargeable on the railways. We start out from the ordinary scale, which is a general standard from which diversions have to be justified by special circumstances. But where special circumstances do exist, as, for instance, in the case of competition by alternative means of transport, then the railways, as also tho Northern Steamship Company, or any other transport concern, must euner siiaue us rate ui uu witlioul the traliic. "I he question as to the minimum rate vvhicli tlie i\ or tiler n Steamstnp Company, lor instance, can ahoid to charge lor any particular traliic, is oon lor tiiai company to decide, an l 1 believe it is in the best position to decide that question. By parity of reasoning, i think the. public will be quick to,conclude that the same aj)plies in the case of the Railway Department. "The position is indeed very elementary. It resolves itself into the question whether the Railway Department is to have the traffic or not at such prices as it decides are a minimum at which it feels itself justified in handling the traffic. This decision can best be made by the department, just as we leave Mr. Rhodes or his officers to decide the same question for the Northern Steamship Company. Reduction in Manure Rate. " Mr. Rhodes makes special reference to the reduction in, the manure rate. This reduction was made solely as a matter of Government policy, and was designed to increase production throughout the country. We believe it has been effective, as a wonderful increase in the quantity of manures used, particularly in the North Island, has amply demonstrated. In return, the Railway Department looks with confidence to receiving from those farmers who have benefited by the decreased rate an accretion of traffic from the increased produce that will be received from the land. " " I would like to emphasise that the railways to North Auckland and the Bay of Plenty were constructed to give a service to those districts whici they have not previously received. Needless to say, in giving that service other interests, such as for example those of the Northern Steamship Company, might be adversely affected. Nevertheless, the demand having arisen for the superior service afforded by rail connection, the Railway Department has to meet it, as it was designed to do, and this it is endeavouring to do and apparently with a measure of success Rangitaiki Plains Butter. " Mr. Rhodes mentions the matter of the rate on butter from the Rangitaiki Plains Dairy Company's factory to Tauranga. There is a suggestion that in some way the dairy company has been penalised in this connection. The facts show quite otherwise. Some years ago this company decided to ship through Tauranga instead of Whakatane, and was successful in getting a low rate of freight from the Public Works Department, a rate very much below the ordinary classified rate. With the advent of the through rail connection from the Bay of Plenty, the necessity for the rate no longer existed and it was accordingly cancelled by the Public Works Department. The position now is that the dairy company is paying the ordinary rate for dairy produce to Tauranga. " It will readily be seen the suggestion by Mr. Rhodes that the charge is a penal one is not borne out by the facts. The Rangitaiki Plains Dairy Company now has the option of railing its output to Tauranga at ordinary rates for shipment at that port, or of sending direct by rail to Auckland. " Loss " on Railway Working. " Mr. Rhodes would apparently prevent the department from obtaining traffic by means of special rates on the ground that there has been a ' loss ' on railway working. Ignoring for the moment the argument that might well be maintained against his use of the word ' loss ' in this connection, it is sufficient for my present purpose to point out that had it not been for the existence of the special rates, with the consequent increase of business and contribution, be it ever so small, to meet fixed charges, the loss would have been to the extent of such contribution increased and the burden on the taxpayers greater accordingly . " In conclusion, I would correct also a very material misstatement by Mr. Rhodes which was no doubt quite unintentional. He referred to the class ' A ' rate from Auckland to Morrinsville as 70s Id a ton. This should bo 47s 7d a ton."