2 2

BERN.

First Section-The Economic Literature of France in the Eighteenth

. General Public Law.

FACULTY OF PHILOSOPHY.

SEMINARS, ETC.

Philadelphia.

A NEW SYSTEM OF RAILROAD PASSENGER

FARES.

INTRODUCTORY NOTE.

[Abstract of a paper read by Professor Edmund J. James, of the University of Pennsylvania, before the American Academy of Political and Social Science, Philadelphia.]

For the last nine months a most interesting experiment in railroad management has been going on in Hungary. The railroad managers in Hungary, and more particularly the minister of commerce, became convinced some time ago that a great reduction in passenger fares would have to be made. The passenger traffic in Hungary had remained, under the prevailing system of management, almost stationary for some time, and was far behind that of Germany and the other leading countries of Europe. It appeared necessary, therefore, to do something to develop travel, if possible.

As a result, a new system of passenger tariffs was worked out and put into operation on the first of August, 1889. The method adopted was that commonly known as the zone-tariff system, in which the rates are fixed not according to the number of miles traveled by the passenger, but according to the number of zones traversed or entered upon during the journey. Starting from a given centre, the railroads are divided into fourteen zones or stretches. The first zone includes all stations within 25 kilometres of the centre; the second all more than 25 and less than 40; the third, all between 40 and 55 kilometres, etc., each zone after the first up to the twelfth being 15 kilometres long, or, as we should perhaps better say, wide. The twelfth and thirteenth zones are 25 kilometres wide, and the fourteenth includes all stations more than 225 kilometres from the capital. Tickets are sold by zones, being good for all stations within the zone.

Two grades of local tickets were adopted, the first being to the first station and the second to the second. The third station comes within the zone ticket.

A normal fare was adopted per zone (taking 40 cents as the gulden) of 20, 16 and 10 cents per zone, according to the class one uses-first, second or third. The fare for any zone up to the twelfth is found by simply multiplying the number of the zone into this normal rate. The fare for stations in the thirteenth zone is fourteen times the normal rate, except for the second class, in which case it is a trifle less. The fare for stations in the fourteenth zone, which includes all stations more than 225 kilometres, is sixteen times the normal rate with the exception of second class fare again, which is a trifle less. This system, as will be shown in a moment, introduced a great reduction in the average fare and an enormous reduction in the long-distance fare.

How radical a change this system implies for a large part of the traffic can be seen in the extreme cases, i. e., in those in which the reduction has been greatest. The fare for all stations in the fourteenth zone, which, as said above, includes all stations more than 225 kilometres from the capital, are 8, 5.80 and 4 gulden respectively for the three classes, corresponding to $3.20, $2.32 and $1.60. The greatest distance which can be traveled for this sum is 731 kilometres, or 457 miles, making the rate per mile from Budapest, for example, to Kronstadt 70, 51 and 35-100ths of a cent for the three classes respectively. If we had the same rate in this country, it would be possible to buy a railroad ticket to Chicago from New York for $3.00. The fare from New York to Philadelphia would be 32 cents.

The above is, of course, the extreme rate at one end, but the extreme rate at the other end of the same zone is still a great reduction on old rates in Hungary, as will be shown in a moment. It represents also a much lower rate than we have anywhere in this country. The station at the limit of the zone nearest to the starting-point would, of course,

be 225 kilometres, about 140 miles, the rates to this being the same as to the farthest one away, i. e., 2.2, 1.7 and 1.1 cent a mile for the three classes. If we count the extreme distance within the other zones running backward from the fourteenth, we shall find the rates to be about 1.7, 1.1 and .6 of a cent a mile, which are far below anything which we can show in the way of low rates for such distances.

The reduction, as compared with the old rates, is enormous. The old rates from Budapest to Kronstadt were 44, 31 and 22 gulden; the new are 8, 5.8 and 4, a reduction of 82 per cent. This represents the extreme reduction, the per cent. of reduction growing smaller as you go nearer to the starting-point. At Klausenburg the old rates were 24, 17 and 12, as compared with the rates just given, the distance being 400 kilometers, a reduction of 66.6 per cent. At Medzo Telegd, a distance of 271 kilometres, the reduction is still more than 50 per cent., and at 100 kilometres the reduction is still nearly 50 per cent., while local reductions have also been very considerable.

The simplification of the tariff is very great. Under the old system, the number of distinct tickets which had to be kept in every large office was nearly 700. It is now only

92.

The railroad tickets are now placed on sale like postage stamps at the post offices, hotels, cigar shops and other convenient places. The public is greatly pleased at the discarding of the complicated machinery of ticket selling as practised under the old system.

The most interesting thing, however, in this experiment, is the way in which the passenger traffic has increased under the stimulus of the new rates.

The time is too short to enable us to draw definite conclusions, but the facts are striking and significant. The number of passengers during the last five months of 1887 was 2,389,400; during the same period of 1888, was 2,381,200; while for the same period of 1889-the first period under the new system-it