Fixation of Railway Rates:
railway freights are fixed on the principle of "What that traffic wilt bear". By
the phrase "what the traffic will bear" is meant the fixation of railway rates
according to the freight bearing capacity of each service performed by the
for instance, carry different classes of passengers and different kinds of
goods. The paying of each capacity passenger is different. A rich passenger can
afford to pay higher fare than the poor. Similar is the case with the other
commodities. Some commodities are highly valued and others are low priced. A
highly priced commodity can stand a higher charge than a low priced commodity.
instance, railways carry gold as well as coal. The gold is highly valued and the
coal is very low priced. If a uniform rate carrying all kind of goods and for
ail classes of passengers is fixed, it may not be possible to cover the total
cost. The railway acts on the principle of what the traffic can bear. It charges
different rates according to the freight-tearing capacity of each service of
good and thus maximizes its profits.