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first and second class rates by the same train, in order that the commerce between different the difference in charge having some regard to sections and localities might go on steadily difference in the carriages which are allotted to and uninterruptedly. The railroad compathe classes respectively. In some sections col. nies perceived also that their interest lay in ored persons are required to take separate cars, the same direction; and they not only entered though charged the same rates as others. The into close business relations with each other, carriers making this requirement assume to but in many cases formed consolidations. give to colored persons accommodations equal | The tendency to consolidation excited public to those given to white people, and are re distrust, being looked upon as a device to quired by law in some States to do so; but to avoid competition and to deprive the pubcomplaint is made that this is not always done. lic of the benefits of having more than one
Then, on all roads of any considerable line of transportation for the same traffic, length parlor and sleeping cars are run, which which, in some cases, had been the chief inin most cases are owned by outside corpora ducement to the building of particular lines. tions, and a special charge made by the own. Laws were therefore passed forbidding consolers for seats or berths in them. The palace idation; but these were avoided by taking and sleeping car corporations, like the express leases of roads, or by acquring a controlling companies, as has already been said, do not interest in the stock, and then entering into understand that they come within the contem- permanent running arrangements. plation of the Act, so as to be subject to its pro- But it sometimes happened that the manag. visions; but the persons accommodated by ers of a road deemed it for its interest to work them must also have tickets for passage from in complete independence, and while making the railroad companies, and as to those it is profit out of the local conveniences it supplied not doubted that the same rules of uniformity it found means to add to these a further profit and impartiality apply as in other cases. from the inconvenience it could cause to the
Previous to the passage of the Act it was cus- business of other roads. It therefore discrimtomary on many of the roads of the country inated between other roads; it hindered the to give reduced rates to the class of persons business of one while it furnished all possible known as “commercial travelers"; but this facilities to the business of another; and this was made illegal by the provisions in the Act it was enabled to do because it was not comagainst unjust discrimination. 1 Interstate pellable by law to make joint running arrangeCommerce Reports, p. 8 (ante, 18]. It was ments or joint tariffs for business with other also common in some quarters to give special roads. Such action was likely to incommode rates to land lookers, explorers or settlers, who the public quite as much as it did the road were supposed to be looking for or establish which was discriminated against, but it seemed ing new homes in a section where their pur- impossible to deal with it adequately by law. chase, settlement, or improvement would ben- To make railroads of the greatest possible efit the carrier giving them, but this also is service to the country contract relations would held to be now forbidden. í Interstate Com- be essential, because there would need to be merce Reports, p. 208 [ante, 611]. The opin joint tariffs, joint running arrangements, an ion of the Commission as declared in these interchange of cars, and a giving of credit to cases is that, under the Law, it is no longer a large extent, some of which were obviously competent for the carrier to discriminate beyond the reach of compulsory legislation, among passengers enjoying the same accom- and even if they were not, could be best setmodations, by means of any special classifica- tled and all the incidents and qualifications tion dependant upon occupation or other con. fixed by the voluntary action of the parties in dition or circumsiance of a personal nature, control of the roads respectively. except as the Law itself, by the twenty-second Agreement upon these and kindred matters section, has in terms authorized it.
became therefore a settled policy, and short X. VOLUNTARY ASSOCIATION OF RAILROAD independent lines of road seemed to lose MANAGERS.
their identity and to become parts of great
trunk lines, and associations were formed Nearly every railroad in its origin has been which embraced all the managers of roads in independent of all others, and in the early his. a State or section of the country. To these tory of such roads they were commonly pro associations were remitted many questions of vided for as local conveniences, with no pro common interest, including such as are above vision of the great high ways of trade and com- referred to. Classification was also confided munication which they have since become. to such associations, it being evident that It was in many cases thought to be important differences in classification were serious obthat a road should be kept as distinct in its stacles to a harmonious and satisfactory interbusiness from all others as possible, and at change of traffic. But what perhaps more their termini in some instances they were not than anything else influenced the formation of allowed to have the same freight or passenger such associations and the conferring upon stations with other roads, lest the local dray. them of large authority, was the liability, men and backmen should be deprived of a which was constantly imminent, that destrucprofitable employment.
tive wars of rates would spring up between When the great possibilities of railroad serv. competing roads to the serious injury of the ice came to be better understood these primi- parties and the general disturbance of business. tive notions of local benefits gave way before Accordingly, one of the chief functions a more enligbtened public sentiment, and the of such associations has been the fixing of fact was recognized that the public interest rates and the devising of means whereby would be best subserved by making the con- their several members can be compelled or nection between the roads as close as possible, linduced to observe the rates when fixed. And. in devising these means the chief difficulty ous from the place of shipment to the place of was encountered. Agreements upon rates destination;
(and no break of bulk, stoppage, or inwere voluntary arrangements which could be vent the carriage of freights from being and being departed from at pleasure, and if they had treated as one continuous carriage from the place behind them no sanction, they were not likely break, stoppage, or interruption was made in good 10 stand in the way of a war of rates when faith for some necessary purpose, and without any the provocation to one seemed sufficient. intent to avoid or unnecessarily interrupt such con. Accordingly, the scheme of pooling freights tinuous carriage or to evade any of the provisions or the earnings from traffic was devised and put in force through the agency of these associ. And in the third it is declared that, ations, as a means wbereby steadiness in rates
Every common carrier subject to the provisions might be maintained. The scheme was one of this Act shall, according to their respective which was made use of in other countries and powers, afford all reasonable, proper, and equal had been found of service to the roads.
facilities for the interchange of traffic between The pooling system was looked upon with forwarding, and delivering of passengers and prope
their respectives lines, and for the receiving, distrust by the public, mainly because it erty to and from their several lines and those seemed to be a scheme whereby competition their rates and charges between such connecting between the roads could be obviated, and rates lines ; but this shall not be construed as requir. for railroad service put up or kept up to un-ing any such common carrier to give the use of its reasonable figures. But if railroad managers gaged in like business.
tracks or terminal facilities to another carrier ensupposed that by this scheme they were to stop competition among themselves, the result The fourth section of the Act has also im. has not answered their expectations. The portant possibilities as a restraint upon reck• competition has still gone on; each road less rate wars. The reductions when such striving to obtain as large a share of the busi- wars are in progress have generally been made ness as possible, and no agreement among them chiefly at competitive points a considerable could altogether prevent a yielding io the distance apart; and when a reduction of rates pressure of shippers for lower rates.
at such points involves also a reduction to or In 1877, when the pooling system was put from a great number of intermediate points, a in force by the Trunk Line Association, the resort to a cutting of rates that goes beyond rates charged on the first, second, third, and the warrant of legitimate competition becomes fourth classes of freights from New York to Chi- unlikely in proportion as it would be injurious cago were respectively, 100, 75, 60, and 45 cents to the party inaugurating it. a hundred pounds. They are now 75, 65, 50, The pooling of freights and of railroad and 35 cents, but the classification as to many earnings, so far as the Commission has knowlarticles has in the meantime been reduced, edge or information on the subject, came to so that the actual reduction is greater than an end when the Act took effect. But as pool. these figuers would indicate. Rates from ing was only one of several purposes had in Chicago to New York are also proportionately view in forming railroad associations, the less. A similar result has been apparent else leading associations have not been dissolved, where. The pooling system has done much but have been continued in existence for other to maintain steadiness in rates, but the manag. objects. Among these objects are the making ers have not been able by means of it to keep of regulations for uninterrupted and barmo. rates up to former standards. It has done nious railroad communication and exchange something, however, to check a prevailing of trafficwithin the territory embraced by tendency to consolidation. The motives to their workings. Some regulations in addition consolidation are diminished by any contriv. to those made by the law are almost if not alance which removes obstacles to the inter- together indispensable. Thus, while the change of business and increases the facilities seventh section of the Act forbids the carriers and conveniences for uninterrupted com- preventing, shipments from being continuous mercial intercourse.
by the device of changing time schedules, car. The Act to Regulate Commerce, expressing riage in different cars, etc., it has not underin that particular the desire of Congress to pre taken to provide for the making of such time serve to the people the benefits of competition, schedules as would facilitate the continuous contains the following provision :
shipment, or to prescribe rules for the loading That it shall be unlawful for any common carrier and movement of cars for that purpose. How subject to the provisions of this Act to enter into ever desirable this might have been if it were any contract, agreement, or combination with any practicable to make rules which, while general other common carrier or carriers for the pooling in their nature, should be sufficiently definite to divide between them the aggregate or net pro- for enforcement as laws, it was doubtless percxus of the earning of such railroads, or any por-ceived by Congress that these and many other the pooling of freights as aforesaid, each day of its matters of detail, though they might be of continuance shall be deemed a separate offense. high importance, could not be wisely and ef
But while thus prohibiting pooling the Act fectively dealt with by general legislation, but undertakes to give by other provisions some that such legislation must chiefly be restricted of the securities which railway managers had to provisions for regulation and to prevent hoped might be realized from that device. abuse. The seventh section provides
Moreover, these matters of detail, to a consubject to the provisions of this Act to enter into tract, and also of credit, when one company
That it shall be unlawful for any common carrier siderable extent involve the element of con. or implied, to prevent, by change of time schedule, tickets and the collection of freight moneys; any combination, contract or agreement, expressed becomes the agent for another in the sale of carriage in different cars, or by other means or devices, the carriage of freights from being continu-l and they then require the assenting minds of
parties; and the number of parties whose of less value. With this method of arranging minds are to be brought into accord being tariffs little fault is found, and perhaps none commonly very considerable, an association of at all by persons who consider the subject officers or agents is made the means of bring- from the stand point of public interest. In. ing about the desired unity of action, and is deed, in the complaints thus far made to the also made a common arbiter, to prevent fre- Commission little fault has been found with quent and serious disturbances.
the principles on which tariffs for the transClassification, also, as has been said, is not portation of freight are professedly arranged, by the Act taken out of the hands of the car while applications of those principles in parriers, though a certain power of supervision is ticular cases have been complained of frevested in the Commission; and classification is quently and very earnestly. not only best made by joint action, but if it Among the reasons most frequently operatwere not so made and the methods of the roads ing to cause complaints of rates may be menthereby brought into harmony, it would prob. tioned: ably become indispensable, however undesir- The want of steadiness in rates; able it might otherwise be, for the Law to un- The disproportion between the charges for dertake to provide for it. Moreover, when long and those for short distances; classification is made and put into effect it The great disparity between the charges becomes necessary to make provision for in- made for transportation by roads differently spection or some sort of supervision of its ap- circumstanced as to advantages; plication, in order to prevent its being em. The extremely low rates which are comployed as a device for giving preferences as pelled by competition in some cases, and between shippers. A fraudulent classification, which may make rates which are not unthrough connivance of the agent in making reasonable seem, on comparison, extremely out deceptive shipping bills, has often been high. resorted to for this purpese; and as the fraud Some others will be mentioned further on. affects the competing carriers as well as the The want of steadiness in rates is commonly shippers who are discriminated against by the fault of railroad managers, and may come means of the cheat, the carriers and the public from want of care in arranging their schedules, alike are interested in such a supervision of or from want of business foresight. But the work of all the roads as will be likely to more often perhaps it grows out of disagreedetect the fraud. Self interest on the part of ments between competing companies which the carriers will impel to this supervision, and when they become serious may result in wars it is most generally done through some com. of rates between them.. Wars of rates, when mon agency. If it shall be fairly done as be mutual injury is the chief purpose in view, as tween the carriers themselves, it will tend to is sometimes the case, are not only mischievous the protection of the public; and the benefits in their immediate effects upon the parties to will be on the same line with those the Act them, and upon the business community whose undertakes to establish or provide for. calculations and plans must for a time be dis
turbed, but they have a permanently injurious XI. REASONABLE CHARGES.
influence upon the railroad' service because of Of the duties devolved upon the Commis- their effect upon the public mind. When sion by the Act to Regulate Commerce, none is railroad companies determine for themselves more perplexing and difficult than that of what their rates shall be, it is not unnatural for passing upon complaints made of rates as be the public to infer that the lowest rates charged ing unreasonable. The question of the reason at any time are not below what can be afforded ableness of rates involves so many considera- at all times, and that when these are advanced, tions and is affected hy so many circumstances the company is reaching out for extortionate and conditions which may at first blush seem profits. foreign, that it is quite impossible to deal Now, there are few important lines in the with it on purely mathematical principles, or country that have not at some time in their on any principles whatever, without a con- history been carrying freight at prices that if sciousness that no conclusion which may be long continued would cause bankruptcy. But reached can by demonstration be shown to be to a large proportion of the public the fact absolutely correct. Some of the difficulties in that the rates were accepted was proof that the way have been indicated in what has been they were reasonable; and when advanced said on classification; and it has been shown rates are complained of, the complainants, to that to take each class of freight by itself and demonstrate their unreasonableness, go back measure the reasonableness of charges by to the war prices, and cite them as conclusive reference to the cost of transporting that par- proof of what the companies then charging ticular class, though it might seem abstractly them can afford to accept. Many popular just, would neither be practicable for the car. complaints have their origin in the ideas reriers nor consistent with the public interest. garding rates which these wars have engen
The public interest is best served when the dered or fed, and the evils of the controversies rates are so apportioned as to encourage the do not end when the controversies are over, largest practicable exchange of products be. but may continue to disturb the relations of tween different sections of our country and railroad companies with their patrons for many with foreign countries; and this can only be years afterwards. done by making value an important considera. It may be truly said, also, that while railtion, and by placing upon the higher classes road competition is to be protected, wars in of freight some share of the burden that on a railroad rates unrestrained by competitive prinrelatively equal apportionment, if service ciples are disturbers in every direction; if the alone were considered, would fall upon those l community reaps a temporary advantage, it is
one whose benefits are unequally distributed, tion in the city, have gradually extended the and these are likely to be more than counter area from which they would receive and transbalanced by the incidental unsettling of prices port it at the lowest rates, until they may be and interference with safe business calcula- found carrying the article at the same price tions. The public authorities at the same time for 100 miles as for 20. The low rate for the find that the task of regulation has been made long distance has extended the area of producmore troublesome and difficult through the ef- tion and benefited the city; and it is possible fect of war rates upon the public mind. These to conceive of cases in which the opposite are consequences which result so inevitably course, of taking distance into the account in from this species of warfare that it would nat. all rate making, would have kept production urally be expected they would be kept con- so far restricted in territory that producers stantīy in mind by railroad managers. It is near the city could never have been given as inevitable that the probability that any pre low rates as they receive now, when they are scribed rates will be accepted by the public as charged the same as their more distant comjust shall to some extent be affected by the petitors. Where such a case appears, the failfact that at some previous time they have been ure to measure the charges from regard to dislower; perhaps considerably lower.
tance could not dogmatically be pronounced The disproportion between the rate charged unjust, if it appeared that the railroad on the and the distance the property, is carried is also one side and the public on the other was beneimportant in its effect upon the minds of those fited by the course actually adopted. But to who have not the time or perhaps the oppor increase the rates to the nearer producers, or tunity to study the subject and understand the even to keep them at a point which, though
There are grounds on which shortfair in the first place, has in the course of haul traffic may be charged more in proportion events become unreasonably high, in order to to the distance of transportation than long be able to put those at a distance on an equal haul traffic, some of which anyone would footing in the market with such nearer proreadily understand and appreciate. Thus, it ducers, would be manifestly unjust. Not even is seen that a considerable proportion of the on grounds of general public advantage do we carrier's service is the same whether the trans- understand that this would be justified; for portation is for the short or for the long dis- public benefits, when they are to be had at the tance: there must be the same loading and un- cost of individual citizens, cannot rightfully, loading, the same number of papers and en- nor we suppose lawfully, be assessed on one tries on books, and so on. It is also seen that class of the people exclusively. short haul traffic is more often taken up and The great disparity in the charges of differlaid down in small quantities, and that for this ent roads for the transportation of the same reason the proportionate train service is much kind of property is a prolific cause of comgreater.
plaint, sometimes justly founded and some But when all these considerations are taken times not. It is apparent sometimes, in the into account it will still appear that the long complaints which are made to the Commission, haul traffic is given an advantage in rates that the parties complaining hold the opinion, which must be accounted for on grounds which or at least have an impression, that the cost of are not so readily apparent. When the reasons transporting a particular species of property is are seen it may perhaps appear that there is substantially the same on all roads, and that in fact no wrong either to the shippers who consequently the charges made by one road are apparently discriminated against, or to the may prove with tolerable certainty that the general public.
higher charges made by another road are unIt is not uncommon that in railroad freight just. If the circumstances and conditions unservice the rates for the transportation of a par- der which the traffic is carried by the two roads ticular kind of property, instead of being reg. are substantially the same, the comparison ularly progressive, shall be found arranged on would be legitimate and the argument from it a system of grouping, whereby the charges to of very great force. But when any such comall points within a defined territory shall be the parison is made, there are some circumstances same, though the distances will vary. Thus, having an important bearing upon rates which at the present time the rates which are made cannot be left out of view. Among these may from New York to Chicago are also made be specified: from New York to all points within a territory The length of haul.- A thousand tons of wheat about Chicago, which includes some important can be loaded, transported a thousand miles, towns in western Indiana and western Michi- and delivered, much more cheaply in proporgan. A question might be made by such towns tion to distance than the same quantity can be whether grouping them with Chicago and mak loaded, transported one hundred miles and deing them pay the same rates is just; but the livered. grouping system in general departs so little The quantity hauled.-A train load of coal from the distance proportions that it is seldom can be transported more cheaply in proportion the ground of complaint.
to quantity than a single car load, and a car There are cases, however, in which the dis load more cheaply than a hundred pounds. So tance proportions are purposely disregarded; if the business is large, though it be the transand the doing so is justified by the managers portation of many kinds of property, it can on the negative ground that no one is wronged be done relatively more cheaply than if it were by it, and on the affirmative ground that the small. public is benefited. Cases of the sort may Return freights. If lumber or other properperhaps be found about all our large cities in ty in quantity is to be delivered at points where which the railroads, as to some particular agri- there will be return loads for the same cars, cultural production needed for daily consump-l the delivery can be made much more cheaply than at points where return freights could not cago. Any arrangement by consolidation or be expected.
otherwise that should undertake to eliminato Cost of moving trains.—This is very much less this influence would, if made on a large scale, on some roads than on others by reason of be futile, because it would antagonize laws of lighter grades, cheaper fuel, less liability to ob trade and communication which would be too struction from storms, and other causes which powerful for it; and on a small scale, affecting may disturb the track or delay trains.
particular towns or small districts, it might be These are among the causes which have an illegal from its manifest inequality or injustice. important bearing on relative rates. Beyond Competition.-A study of the Act to Regulate these the relative cost of roads must be al- Commerce has satisfied the members of the lowed force also, if the owners are to be per. Commission that it was intended in its passage mitted to charge such rates as will make their to preserve for the people the benefits of cominvestments remunerative. A complaint that petition as between the several transportation rates are unreasonable may, therefore, require lines of the country. If that shall be done, the for its proper adjudication a careful inquiry not towns which have great natural advantages, or only into the circumstances and conditions of advantages acquired by large expenditures of the road which makes them and of the traffic money in establishing new thoroughfares of upon it, but also into those of other roads whose commerce, will have cheaper rates than can lower rates are supposed by comparison to ordinarily be obtained by towns less favorably show the injustice of the rates complained of. situated. New York with its noble harbor, its
But there are reasons which make it neces- central location, the Hudson River, and the sary, in adjudicating a case of alleged excess. Erie Canal for interior water ways, can not be ive rates, io consider rates on other lines or deprived of the benefits which spring from at other points, even when the complaining these great natural and acquired advantages party makes nbargument or draws no conclu. without altogether eliminating competition as a sion from them. Questions of rates on one force in transportation charges, and by an exline or at one point cannot be considered by ercise of sovereign legislative power establishthemselves exclusively; a change in them may ing arbitrary rates over the whole country. affect the rates in a considerable part of the It might possibly be within the competency country. Rates from the interior to New York of legislative power to prescribe for the several necessarily have close relation to rates from the interstate railroads equal milage rates for the same points to Philadelphia, Boston, and Bal- whole country; but this, if enforced, would timore; rates from the seaboard to Toledo put an end to competition as a factor in makmust have a similar relation to those from the ing rates, and to a very large extent deprive seaboard to Detroit and other towns whose the great business centers of the country of business men compete with those of Toledo in their several patural advantages, and also of a common territory. Just rates are always the benefit of expenditures made by them in relative; the Act itself provides for its being so creating for themselves new channels of trade. when it forbids unjust discrimination as be. It would, in fact, work a revolution in the tween localities. This prohibition may some business of the country, which, though it times give to competition an effect upon rates might be greatly beneficial in some directions, beyond what it would have if the competitive would be fearfully destructive in others. Conforces alone were considered.
gress has not by the existing legislation underThe Commission has had occasion, where a taken to inaugurate such a revolution; nothing railroad company operated lines which run in the Act to Regulate Commerce looks in that parallel to each other, to hold that if the com- direction, unless it be the prohibition to charge pany yielded to competitive forces so far as to more for a shorter than for a longer haul on give the towns on one line very low rates, the the same line in the same direction, the shorter effect of such low rates upon the business of being included in the longer distance. But rival towns on the other line could not be ig. that prohibition is not absolute; and if it were, nored when their rates came under considera- a strict enforcement would necessarily be at tion. The natural influence of just competi- the expense of the competitive centers which tive forces ought to be allowed as it would be have heretofore had the exceptionally low as between two lines owned by different com.rates. The rates have made them centers for panies; and if the rates on one line were made a valuable wholesale trade which they cannot very low because of competition, keeping the expect to retain permanently in its eniirety if others high because the absence of competition they are deprived even in part of the advanenabled it to be done might amount, within tages which they have hitherto had from the the meaning of the Law, to unjust discrimina competition of rival carriers. The benefit tion. Consolidation of rival lines, or the bring. which non competitive points receive must be ing them under the same management, cannot largely at the expense of the competitive. This justify ignoring on one line the effect of com is one of the inevitable consequences of perpetitive forces on the other; those forces al. fecting the reform in the direction of basing ways, when not unnaturally restrained, have rates upon distance more than has been the an influence which reaches beyond the points case hitherto. It is an incidental disadvantage whose business is controlled by it, and by sec- to some which is supposed to be more than ondary effect modifies prices to more distant made up by the more equal apportionment of points. This is well understood in the trans. transportation benefits. portation business; the modifying effect of The competition by water is the most imrates by lake and canal is perceived in the portent factor in forcing rates to a low level at charges on all lines from the Mississippi to the ihe points where the lines of land and water seaboard; the rates to and from Duluth affect transportation intersect. Where there are good all charges in the Northwest to and from Chi-channels of water transportation, the cost of