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which the flocks pass. In France landowners have always been able to protect themselves by inclosing their holdings, but in Spain, where this right was denied them, they suffered exceedingly (see MESTA).

In Algeria, numerous tribes of nomadic Arabs still regularly migrate every spring with their flocks of sheep from the boundaries of the Sahara, where they spend the winter, to the high table-land known under the name of Hauts Plateaux, and forming a broad zone parallel to the Mediterranean between Morocco and Tunis. As long as these bare and scarcely inhabited plains, held by the Arabs under their system of collective ownership, do not attract European colonisation, these migrating flocks, numbering several millions, will be allowed to continue their wanderings twice in the year, but difficulties will begin whenever European cultivation invades these regions.

[G. Couput, Les laines et l'industrie lainière de l'Algérie, Algiers, 1889.-J. Briot, Etude sur l'économie pastorale des Hautes Alpes, 1884.Article "Transhumance" in the Nouveau Dictionnaire d'Économie Politique.-Roscher, Nat. Oek. des Ackerbaues, pp. 304-306.] E. ca.

TRANSIT, TOLLS ON. See INTERNAL CUSTOMS AND TOLLS.

TRANSPORT,* COST OF INLAND. The modern organisation of industry could not have been established without improved methods of communication between producers and consumers. The railway and the factory have gone hand in hand in their development and in their economic results. With the means of transportation which existed two hundred years ago, large industries would have been impossible. The substitution of turnpikes for common roads, of canals for turnpikes, and of railways for canals, was as essential a part of industrial progress as was the development of the steam engine or of the factory system. Each of these improvements meant at once an increased investment of capital, a lessened cost of doing the actual work of transportation, and a vastly increased amount of actual carriage of goods. The large capital made it at once necessary and possible to make lower rates for the sake of developing business. The development of business, in turn, made further investments of capital and further reductions of rates possible. When the railway was first invented it was not thought possible to carry goods at less than 1d. per ton per mile without serious loss. Twenty-five years ago most of the railway systems of the world were carrying goods at about 1d. per ton per mile. To-day the average rate in France is but d.; in Germany, d.; in the United States, less than d. per ton-mile.1 Nevertheless, so great has been the increase in traffic that the gross receipts per mile of road at these low 1 The English lines give no figures of ton-mileage.

rates are in many instances much greater than they had been at the higher rates which prevailed previously. The average freight charges on the New York Central and Hudson River Railway are to-day less than half what they were twenty years ago. But the traffic is four times as great.

Yet these figures by no means measure the full effect of railway transportation in abolishing the effect of distance as a limit to the sale of goods. Only a small part of these charges is actually due to differences in distance traversed. The immediate expense of carriage has decreased even faster than the general expenses of railway transportation as a whole. Every improvement in economy has rendered larger train loads possible without corresponding increase in cost, and has thereby reduced the expense of carrying goods as compared with that of loading or unloading them. A few years ago the carrying capacity of a waggon was not much greater than its dead weight. To-day the former can readily be made twice as great as the latter. In other words, twothirds of a train load may be made paying weight instead of only one-half. Meantime, the weight of the locomotives has been somewhat increased, with a much more than propor tionate increase in the carrying capacity. With a track adjusted to the standard of modern train economy and a reasonably level country, it is possible to carry gross train loads of more than nine hundred tons, of which six hundred may be actual goods carried. Omitting terminal charges and internal, the direct expenses of hauling such a train-train-men's wages, fuel, and other supplies, and repairs of rolling-stock need not be over 2s. per mile run. Or, by simple division, the direct cost of hauling a ton a mile, independent of terminal charges and interest, is not over one twenty-fifth of one penny. Or, to put the matter in another form, an added distance of one hundred miles haul makes but 4d. per ton difference in the cost of carriage. Conditions like these are not frequently realised, but they represent a possible limit of economy on any road of the first rank, and show how thoroughly railways have supplanted other means of inland transportation in efficiency and economy.3

While the cost of haul has been constantly reduced, the terminal charge has remained much more nearly constant. In some instances, with the overcrowding of population in large cities, it has actually increased. Such a state of facts makes equal mileage rates impossible. On a waggon road, or even on a canal, it costs nearly twice as much to carry goods two hundred

2 This is a high estimate. The direct expenses per train-mile on English reads are barely 15d. and on American roads about 20d.

3 Some of the wheat-carrying roads of the United States realise these conditions on parts of their mai line.

arrange rates on this system hold that the expenses of a railway are roughly divisible into two classes, one connected with the receipt and delivery of goods or passengers, the other with their actual carriage. They believe that fairness requires that each ton of goods should pay a definite terminal, plus a carriage rate proportionate to the distance. Such is the theory on which English railway schedules are arranged. But this system, though much better than the equal mileage plan, does not really meet the facts of the case. A large part of the expenses of a railway are not, properly speaking, either mileage or terminal charges. They do not attach to any particular piece of business, but to the operation of the railway as a whole. Interest on cost of construction remains nearly the same whether the traffic be large or small. Maintenance of way is to be charged by the year rather than by the ton of traffic. these expenses are indirect, in distinction from the direct expenses of loading and hauling the goods or passengers carried. The consequence is that each railway rate really consists of three parts a mileage rate for the carriage, a terminal for the expenses at either end, and a tax which the business is made to contribute toward the indirect expenses or fixed charges of the railway as a whole. The amount of such a tax which it is possible to pay depends more upon the value of the goods than upon anything else. Thus we find that all railways, whatever their nominal schedule of charges, actually classify their various shipments, not according to the direct cost of doing the business, but according to the value of the service rendered.

All

If it were possible to ascertain the cost of doing each piece of business, and to arrange railway schedules accordingly, the regulation of rates would be comparatively simple. But the introduction of this element of taxation complicates the matter almost beyond belief. It is, as Professor Taussig has pointed out (Quarterly Journ. of Econ., v. 438 seq.), a case of "joint cost of production" on the very largest scale; one where the general expenses are so great that the apportionment of such expenses to the different parts of the traffic is a matter of vital importance. This work of apportionment or taxation gives the railway

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authorities a power which they are liable to use in an arbitrary manner. They are guided by the general principle of lowering rates where business will thereby be developed; in other words, where the burden of a high proportionate tax is most severely felt. But in the application of this principle they are liable to make mistakes. Nor has any satisfactory way been found of preventing these mistakes. The older systems of regulation proved illusory. Maxima were of little use, because of the right of the railways to produce inequalities by variations within the maximum limit. This power grew wider from year to year as railway economy became more highly developed, because the difference between the legal maximum and the possible minimum rate increased. Much was expected from competition of different carriers upon the same line. But this also proved futile, because of the superior public economy of having the business concentrated in the hands of one company. Nor was competition between different lines of any more avail. Where it existed at all it drove rates down so low that such points contributed almost nothing to the indirect expenses of the railway. intermediate points were thus burdened with an undue share of the fixed charges. The growth of cities was artificially stimulated at the expense of the country. The business of large shippers was favoured, while that of smaller ones suffered. So great were these evils that contracts to abolish competition at terminal points by the division of traffic were generally regarded as useful to the public as well as the railways.

The

When competition was finally recognised as unsuccessful, recourse was had to legislative provisions for enforced equality between dif ferent shippers. The Railway and Canal Traffic Act of 1854 provided that no preferences should be given; in other words, that all persons shipping the same goods between the same points should be treated alike. The power to tax must not be used as a means of personal discrimination. The commission appointed under the act of 1873 attempted to carry this enforced equality still further, and to say that no greater aggregate charge must be made for a shorter than for a longer distance over the same line; and still later, that the longer distance must as a rule be charged actually more than the shorter one. Of these two principles the first is, as a rule, right; the second is of doubtful utility. Distance is often so unimportant an element as compared with terminal charges that the system of group rates is often the only practical or logical one. Interstate Commerce Act of the United States provides that no more shall be charged for a shorter than for a longer distance, but does not forbid the roads to charge as much for one as for the other. The whole tendency of good

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tion of inequalities rather than toward allowing either the perpetuation of old ones or the creation of new.

There is no doubt that the abuse of the taxing power may be very much diminished by conservative action on the part of the legislatures and courts. But the continental nations have not been satisfied with this degree of control, and have gone far in the direction of state ownership. Theoretically there are strong reasons for putting the taxing power in the hands of the state, but in practice the dangers of state railway management seem to outweigh its advantages. In the conduct of so complicated a business as railway management, the state officials have the same temptations to inequality as those of private corporations. As the Italian commission of 1881 said wellwhen a state attempts to tax industry it is more omnipotent and less responsible than a private corporation. The standard of efficiency reached by the continental roads is also far from being equal to those of England or the United States. Nor do the state railways of India or Australia furnish an exception to this rule. State railways sometimes give cheaper rates than private ones, but they rarely give anything like the same quantity of service, nor have they developed traffic to the same degree in proportion to the population. On the whole it may be said that government officials have no such stimulus to efficiency and economy as is felt by the representatives of a private business; and as long as this remains true, many advantages claimed for state railways will be found on closer observation to be illusory. Increased publicity of management and more direct responsibility to certain sections of the public will often do more to regulate abuses in railway management than could possibly be done by the transfer of the roads to government officials; while the difficulties and risks of the latter course would be vastly greater than those of the former.

[Within the limits of this article it has only been possible to touch upon a few of the leading points in the history of transportation rates and their regulation. International comparisons have been but sparingly made because of the different methods of keeping statistics in different countries. A large part of Mr. Jeans's book on railway problems is worse than useless on this account. The leading books on the economic side of the railway question are, for England, W. M. Acworth, The Railways and the Traders, London, John Murray, 1890; and Cohn, Englische Eisenbahnpolitik, Leipsic, 187483; for America, A. T. Hadley, Railway Transportation, New York, Putnam's, 1885; for the continent of Europe, E. Sax, Die Eisenbahnen, Vienna, 1879; and of a somewhat more technical character, Ulrich, Eisenbahn

Economic Theory of Railway Location, though written for engineers, contains much that is useful to the student of political economy. The reports of the successive parliamentary committees of investigation, of the United States senate select committee on interstate commerce of 1885-86, and of the Italian commission of 1878-81, may also be consulted to advantage.]

THE

A. T. H. ECONOMIC

TRANSPORTATION, EFFECT OF. In attempting to estimate the economic effect of transportation, two things have to be considered-its effect on the country which transports the convicts, and that on the colony which receives them. To estimate the economic effect on the country which disposes of its convicts in this way is a much simpler task than to estimate the economic effect on the colony. In the latter case so much depends on conditions and methods, many of which have never had a fair trial. Only in England and Russia has the system been carried out with any thoroughness, and in the latter country much is still in the experimental stage. There are two distinct periods into which the history of transportation in England may be divided: (1) from 1619 to 1775, and (2) from 1787 to 1846.

1. In 1619, James I., by sending one hundred dissolute persons out to Virginia, practically converted a law passed by Elizabeth in 1597 for the banishment of rogues and vagabonds into an Act of Transportation. It was not, however, till the reign of George I. that the system came into common operation. The evidence as to the number of convicts transported to the American colonies is conflicting, but Dr. Lang (An Historical and Statistical Account of New South Wales) comes to the conclusion that there were in all about fifty thousand. The method used was very simple, and whatever may have been its moral effect, its economic effect would seem to have been beneficial. The English government sold the services of the convicts during their sentences to the captain of the ship which conveyed the convicts to America. He resold them on arrival to the colonists, who employed the convicts to work like slaves under overseers on the plantations. In England, it may be assumed these convicts would have preyed upon the community as thieves or vagabonds, or have been supported by it in prison: in the colonies the conditions of labour were such that no skill was required, while the work could be directed and enforced by an overseer. fact that the colonists were willing to buy the services of the convicts, and also the fact that they were in the habit of kidnapping free men, shows that such labour was in demand. The resources of a new country made it easy for the convicts to obtain a living when their sentences expired. The evidence as to the extent of the

The

demand for convict labour is conflicting: in 1692 Maryland prohibited the landing of convicts, but in 1718 mention is made of "the great want of servants in His Majesty's plantations." While a contemporary historian, quoted by Dr. Lang, speaking of the convicts, says "their labour would be more beneficial in an infant

settlement than their vices would be pernicious." The inference is that the colonists were glad to have the services of the convicts where no other labour was to be had, but for many reasons slaves, when they became easy to obtain, were more convenient, while it was not considered safe for the latter to see white men working as slaves. If the demand for convicts as labourers had ceased in the colonies, the government would have been obliged to adopt a less simple method of transportation, but the war of independence put an end to the system.

In an

2. Transportation had more influence on the economic development of the Australian colonies. A detachment consisting of six hundred male and two hundred and fifty female convicts founded New South Wales, Van Diemen's Land, and Norfolk Island in 1788. For the first few years the convicts were engaged in clearing the land, making roads and bridges, and building houses. Road-gangs consisting of some of the worst criminals, who were employed in making roads and bridges under the direction of government officials, always remained part of the system. The inevitable hardships of the first few years were greatly increased by the ignorance of the convicts and their dislike of agriculture. account of the colony of New South Wales by David Collins, late judge advocate and secretary of the colony, it is stated that "more labour would have been performed in this country by one hundred free people than had at any time been derived from three hundred convicts." In 1795 convicts were, for the first time, assigned to settlers as servants. As this was the most economical way of disposing of the convicts, the government was willing to give large grants of land to any respectable settler who would employ the convicts, but the supply was generally greater than the demand. The great number of capital sentences before the amelioration of the law through the exertions of Sir S. Romilly (commenced 1808), and of consequent commutations into imprisonment for life, i.e. life sentences, led to an increased need for disposal of long-sentenced prisoners. There were 1314 sentences to death in 1819 (66 in 1849), and often 2000 to 3000 convicts were sent out in a single year. Gov. Macquarie (1805-1821) considered that the colonists only needed one-eighth of the convicts. This system of assignment has been allowed, even by the opponents of transportation, to have been beneficial from an economic point of view. Owing to the thinness of the soil, flocks were scattered, and shepherds in great request. isolation of a shepherd, and the fact that his calling required no skill, were conditions favourable to convict labour. In 1849, when for moral, civil, and political reasons the rest of the colony of New South Wales was opposed to the con

VOL. III

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tinuance of transportation, the squatters, in a letter to Charles Buller, M.P., pleaded for its continuance on economical reasons: the cost of a convict, they asserted, was £10 a year less than that of a free labourer. The conditions of labour in towns were not so suited to the employment of convicts. Mechanics and clerks would not use In this case, the effectiveness of transportation as a their special skill without the hope of some reward. means of colonisation was opposed to its effectiveness as a punishment. As soon as free mechanics settled in New South Wales, the class of convict mechanics entirely disappeared. The condition of the emancipated convict was in every way satisfactory from an economic point of view. On his release he was given thirty acres of land, or fifty if married, and ten extra for every child. The large fortunes which were made by the convicts formed one of the chief objections urged by its opponents against transportation as a punishment. The small number of women convicts, however— in 1840 there were only seventeen women to one hundred men-interfered with the efficiency of the system as a means of colonisation. In attempting to sum up the effect of transportation on the Australian colonies, the same terms may be found applicable which were used to express the effect of the system in the American colonies. The labour of the convicts was economically beneficial to the colony, both in founding and developing it, where no better labour was to be had. Where other labour was to be had, there was no longer a demand for the services of the convicts, except as shepherds where the flocks were not valuable. As early as 1838 there was a demand in New South Wales for ten thousand free

labourers, and for only three thousand convicts. In England, during this period, two points in connection with the economical effect of the system were the subjects of dispute. It was denied that it had a deterrent effect: it was also declared to be unnecessarily expensive. In the first case it was a serious drawback from the economic point of view, if it led to more citizens becoming chargeable to the community, but there is no sufficient evidence to show that this was the case. The following statement is taken from the Report The evidence as to the expense is most conflicting. on Transportation. From 1786 to 1837, one hundred thousand convicts were transported from this country to the Australian colonies.

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Australian colonies objected. The Cape Colony successfully resisted a proposal to send there. In 1846 the system came to an end. The Australian objection now extends to the French use of New Caledonia, because of the escape of convicts thence.

At the present time Siberia is the only colony to which convicts are transported, with the exception of some penal settlements belonging to Spain in Africa, and also the French penal settlements in New Caledonia and French Guiana. The latter have been described as "prisons at a long distance from home." The evidence as to the economic condition of the Siberian convicts is scanty and conflicting. According to Mr. de Windt, it is obviously apparent to any one who has studied the Siberian exile system without bias that the object of the government is not so much to punish crime as to colonise Russian Asia. With this purpose in view the convicts are in many cases retained in prison for a very short part of their sentences, and every convict on release is given as much land as he can cultivate. But, according to Dr. Lansdell,

Treasury, p. 578; Treasury Bills, p. 579; Treasury Bond. p. 579; Treasury Department of the United States, p. 579.

TREASURY. This department of state is generally looked upon as the chief of the departments of the British government, having at its head two great parliamentary officers, the first lord of the treasury, who usually leads the government of the day in the House of Commons, and the chancellor of the exchequer, who is

will not allow their daughters to marry convicts, and the latter do not as a rule reform. In the island of Sakhalin, however, the case would seem, according to Mr. de Windt, to be somewhat different; the Government, besides granting the convict land, lends him a sum of money, and this money is as a rule returned. As convicts of Russian nationality are never allowed to leave the island, and as escape is almost impossible, the conditions are somewhat different from those on the mainland. The worst feature of the Siberian system would seem to be the want of employment for the convicts; while in prison most of them are quite

idle. The silver mines of Nertchinsk are now the only ones in Siberia where convict labour is employed, the rest of the mines are falling into private hands. Even the Nertchinsk mine cannot be said to be productive; three to four thousand prisoners are employed, and in 1893 the output of the entire district did not amount to one ton. Although convicts have been sent to Siberia since the middle of the 17th century, owing to the drawbacks in the climate, the want of civilisation in the natives, the extent of the country, and the want of means of communication, the system would seem not to have achieved at present any definite econ. omic effect, except in the island of Sakhalin, which would seem to be well cultivated by the convicts. The expense of such a system must be very great, and the different reasons for which people are sent to Siberia would make the economic effect of their absence from Russia difficult to determine. Transportation in itself can hardly be said to have any distinguishing economic effect. Everything depends upon methods and conditions. It is

evident from the above sketch of the history of the system that only some of the former have as yet had a fair trial.

[There is no work on the subject, and but little attention seems to have been paid to the economic point of view in books on transportation. The chief authorities are:-J. Hill Burton, Emigrant's Manual, 1851-52, esp. N.S.W. p. 17, Tasmania, p. 105.-Dr. Lang, Transportation and Colonisa- |

In this department the budget of each financial year is prepared and settled, the estimates, when passed, are administered, and all questions of national finance and currency ultimately considered. Under its general supervision are all the revenue departments, the MINT, the General Post Office, and various minor offices.

The first germs of the present treasury office are to be found in the EXCHEQUER (q.v.), to which office the lord treasurer was in early times attached. The treasurer tended to become the most important of the exchequer officers, having duties in both courts-that of account and that of receipt. In early times he was empowered to appoint a vice-treasurer. The chancellor of the exchequer appears to have been originally an officer appointed with a view of controlling the treasurer. The earliest record of such an appointment is in Henry III.'s reign (1234 A.D.); the present functions of the chancellor seem to have taken their rise in Henry VIII.'s reign when he was also appointed

under-treasurer.

The office of treasurer was first vested in a board of commissioners by James I. in 1612, and this paved the way for its separation from the office of exchequer, which may be considered to have been completed about 1660.

The exchequer from that time became the subject of considerable attempts at reorganisation by act of parliament, notably in 1688 and again in 1782 (Burke's Act); though the first comprehensive effort of this kind was the act 57 Geo. III. c. 84, which enacted that the duties of the officers of his majesty's exchequer should henceforth be discharged in person, and that the persons so discharging them should be unable to sit in parliament. In 1866 the old exchequer was formally abolished and the new exchequer and audit office arose (see AUDIT OFFICE).