found carrying the article at the same price for 100 miles as for 20. The low rate for the long distance has extended the area of produc tion and benefited the city; and it is possible to conceive of cases in which the opposite course, of taking distance into the account in 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 calculations. The public authorities at the same time find that the task of regulation has been made more troublesome and difficult through the effect of war rates upon the public mind. These are consequences which result so inevitably from this species of warfare that it would nat-all rate making, would have kept production urally be expected they would be kept constantly in mind by railroad managers. It is inevitable that the probability that any prescribed rates will be accepted by the public as just shall to some extent be affected by the fact that at some previous time they have been lower; perhaps considerably lower. The disproportion between the rate charged and the distance the property is carried is also important in its effect upon the minds of those who have not the time or perhaps the oppor tunity to study the subject and understand the reasons. There are grounds on which short haul traffic may be charged more in proportion to the distance of transportation than long haul traffic, some of which anyone would readily understand and appreciate. Thus, it is seen that a considerable proportion of the carrier's service is the same whether the transportation is for the short or for the long dis tance: there must be the same loading and unloading, the same number of papers and entries on books, and so on. It is also seen that short haul traffic is more often taken up and laid down in small quantities, and that for this reason the proportionate train service is much greater. But when all these considerations are taken into account it will still appear that the long haul traffic is given an advantage in rates which must be accounted for on grounds which are not so readily apparent. When the reasons are seen it may perhaps appear that there is in fact no wrong either to the shippers who are apparently discriminated against, or to the general public. so far restricted in territory that producers near the city could never have been given as low rates as they receive now, when they are charged the same as their more distant competitors. Where such a case appears, the failure to measure the charges from regard to dis tance could not dogmatically be pronounced unjust, if it appeared that the railroad on the one side and the public on the other was benefited by the course actually adopted. But to increase the rates to the nearer producers, or even to keep them at a point which, though fair in the first place, has in the course of events become unreasonably high, in order to be able to put those at a distance on an equal footing in the market with such nearer producers, would be manifestly unjust. Not even on grounds of general public advantage do we understand that this would be justified; for public benefits, when they are to be had at the cost of individual citizens, cannot rightfully, nor we suppose lawfully, be assessed on one class of the people exclusively. The great disparity in the charges of differ ent roads for the transportation of the same kind of property is a prolific cause of com plaint, sometimes justly founded and sometimes not. It is apparent sometimes, in the complaints which are made to the Commission, that the parties complaining hold the opinion, or at least have an impression, that the cost of transporting a particular species of property is substantially the same on all roads, and that consequently the charges made by one road may prove with tolerable certainty that the 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 com all 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 about Chicago, which includes some important towns in western Indiana and western Michi gan. A question might be made by such towns whether grouping them with Chicago and making them pay the same rates is just; but the grouping system in general departs so little from the distance proportions that it is seldom the ground of complaint. There are cases, however, in which the dis tance proportions are purposely disregarded; and the doing so is justified by the managers on the negative ground that no one is wronged by it, and on the affirmative ground that the public is benefited. Cases of the sort may perhaps be found about all our large cities in which the railroads, as to some particular agricultural production needed for daily consump The length of haul.-A thousand tons of wheat can be loaded, transported a thousand miles, and delivered, much more cheaply in propor tion to distance than the same quantity can be loaded, transported one hundred miles and delivered. The quantity hauled.-A train load of coal can be transported more cheaply in proportion to quantity than a single car load, and a car load more cheaply than a hundred pounds. So if the business is large, though it be the trans portation of many kinds of property, it can be done relatively more cheaply than if it were small. Return freights.If lumber or other proper ty in quantity is to be delivered at points where there will be return loads for the same cars, the delivery can be made much more cheaply than at points where return freights could not be expected. Cost of moving trains.-This is very much less on some roads than on others by reason of lighter grades, cheaper fuel, less liability to obstruction from storms, and other causes which may disturb the track or delay trains. cago. Any arrangement by consolidation or otherwise that should undertake to eliminate this influence would, if made on a large scale, be futile, because it would antagonize laws of trade and communication which would be too powerful for it; and on a small scale, affecting particular towns or small districts, it might be illegal from its manifest inequality or injustice. Competition.-A study of the Act to Regulate Commerce has satisfied the members of the Commission that it was intended in its passage to preserve for the people the benefits of competition as between the several transportation lines of the country. If that shall be done, the towns which have great natural advantages, or advantages acquired by large expenditures of money in establishing new thoroughfares of commerce, will have cheaper rates than can ordinarily be obtained by towns less favorably situated. New York with its noble harbor, its central location, the Hudson River, and the Erie Canal for interior water ways, can not be deprived of the benefits which spring from these great natural and acquired advantages without altogether eliminating competition as a force in transportation charges, and by an exercise of sovereign legislative power establishing arbitrary rates over the whole country. These are among the causes which have an important bearing on relative rates. Beyond these the relative cost of roads must be allowed force also, if the owners are to be permitted to charge such rates as will make their investments remunerative. A complaint that rates are unreasonable may, therefore, require for its proper adjudication a careful inquiry not only into the circumstances and conditions of the road which makes them and of the traffic upon it, but also into those of other roads whose lower rates are supposed by comparison to show the injustice of the rates complained of. But there are reasons which make it necessary, in adjudicating a case of alleged excessive rates, to consider rates on other lines or at other points, even when the complaining party makes n argument or draws no conclusion from them. Questions of rates on one line or at one point cannot be considered by themselves exclusively; a change in them may 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 must have a similar relation to those from the seaboard to Detroit and other towns whose business men compete with those of Toledo in a common territory. Just rates are always relative; the Act itself provides for its being so when it forbids unjust discrimination as be. tween localities. This prohibition may some times give to competition an effect upon rates beyond what it would have if the competitive forces alone were considered. put an end to competition as a factor in making rates, and to a very large extent deprive the great business centers of the country of their several natural advantages, and also of the benefit of expenditures made by them in creating for themselves new channels of trade. It would, in fact, work a revolution in the business of the country, which, though it might be greatly beneficial in some directions, would be fearfully destructive in others. Congress 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 give the towns on one line very low rates, the effect of such low rates upon the business of rival towns on the other line could not be ignored when their rates came under consideration. The natural influence of just competitive forces ought to be allowed as it would be as between two lines owned by different companies; and if the rates on one line were made very low because of competition, keeping the others high because the absence of competition enabled it to be done might amount, within the meaning of the Law, to unjust discrimina tion. Consolidation of rival lines, or the bringing them under the same management, cannot justify ignoring on one line the effect of competitive forces on the other; those forces always, when not unnaturaily restrained, have an influence which reaches beyond the points whose business is controlled by it, and by secondary effect modifies prices to more distant points. This is well understood in the trans-transportation benefits. portation business; the modifying effect of rates by lake and canal is perceived in the charges on all lines from the Mississippi to the seaboard; the rates to and from Duluth affect all charges in the Northwest to and from Chi more for a shorter than for a longer haul on the same line in the same direction, the shorter being included in the longer distance. But that prohibition is not absolute; and if it were, a strict enforcement would necessarily be at the expense of the competitive centers which have heretofore had the exceptionally low rates. The rates have made them centers for a valuable wholesale trade which they cannot expect to retain permanently in its entirety if they are deprived even in part of the advantages which they have hitherto had from the competition of rival carriers. The benefit which non-competitive points receive must be largely at the expense of the competitive. This is one of the inevitable consequences of perfecting the reform in the direction of basing rates upon distance more than has been the case hitherto. It is an incidental disadvantage to some which is supposed to be more than made up by the more equal apportionment of The competition by water is the most importent factor in forcing rates to a low level at the points where the lines of land and water transportation intersect. Where there are good channels of water transportation, the cost of the States, it has operated directly to increase railroad earnings, especially in the cutting off of free passes on interstate passenger traffic, and in putting an end to rebates, drawbacks, and special rates upon freight business. The results of the Law in these respects are also certainly to all who had not been wont to profit by special or personal advantages. In connection with the abolition of the pass system, there has been some reduction in passenger fares, especially in the charge made for milage tickets in the Northwest, the section of the country where they are perhaps most em ployed. moving traffic upon it is so very greatly below the cost of rail transportation that the railroads would scarcely be able to compete at all if rapidity of transit were not in most cases a matter of such importance that it enables the railroads to demand and obtain higher rates than are made by boat. But even when compensat-eminently satisfactory to the general public, ed for the extra speed, the rates which the roads can obtain in competition with the natural water ways must be extremely low and in some cases leave little if any margin for profit. The experience of the country has demonstrated that the artificial water ways cannot be successful competitors with the railroads on equal terms. If the effort is to make the business upon them pay the cost of their maintenance and a fair return upon the capital invested in them, its futility must soon appear. The railroads long since deprived the great canals of Ohio, Indiana and Illinois of nearly all their importance, and the Erie Canal is only maintained as a great channel of trade by the liberality of the State of New York in making its use free; in this way taking upon itself a large share of the cost of transportation which would be assessed upon the property carried if the canal were owned and held for the profit of operation as the railroads are. Freight traffic for the year has been excep tionally large in volume, and is believed to have been in no small degree stimulated by a growing confidence that the days of rebates and special rates were ended, and that open rates on an equal basis were now offered to all comers. The reflex action of this development of confidence among business men has been highly favorable to the roads. In some localities the passage of the Act was made the occasion on the part of dissatisfied and short sighted railroad managers for new exactions, through a direct raising of rates, by change in classification and otherwise. The manifestation of the spirit which induced such action is now but seldom observed, and the wrongs resulting from it have in general been corrected. The effect of the operation of the fourth section has been specially described above, and the Commission repeats in this have been the results in some cases, the gen eral effect has been beneficial. The changes in classification made since the Act took effect have been in the direction of greater uniformity, and have also in general, it is believed, been concessions to business interests. In their competitive struggles with each other towns can not ignore the effect which the existence of natural water ways must have upon railroad tariffs; the railroad companies cannot ignore it, nor can the Commission ignore it if competition is still to exist and be allowed its force according to natural laws. Neither can the great free Erie Canal be ig-place its opinion that, however serious may nored; it influences the rates to New York more than any other one cause, and indirectly, through its influence upon the rates to New York, it influences those to all other seaboard cities, and indeed to all that section of the country. Other considerations bearing upon the reasonableness of rates might be mentioned, but enough has been said to show the difficulty of the task which the Law has cast upon the Com mission, and the impossibility that that task shall be so performed as to give satisfaction to all complaints. The question of rates, as has already been shown, is often quite as much a question between rival interests and localities as between the railroads and any one or more of such localities or interests; but while each strives to secure such rates as will most benefit itself, the Commission must look beyond the parties complaining and complained of, and make its decisions on a survey of the whole field that, either directly or indirectly, will be affected by them. XII. GENERAL OBSERVATIONS. The Act to Regulate Commerce has now been in operation nearly eight months. One immediate effect was to cause inconvenience in many quarters, and even yet the business of some parts of the country is not fully adjusted to it. Some carriers also are not as yet in their operations conforming in all respects to its spirit and purpose. Nevertheless the Commis sion feels justified in saying that the operation of the Act has in general been beneficial. In some particulars, as we understand has also been the case with similar statutes in some of The tendency of rates has been downward, and they have seldom been permanently ad vanced except when excessive competition had reduced them to points at which they could not well be maintained. No destructive rate wars have occurred, but increased stability in rates has tended in the direction of stability in general business. There is still, however, great mischief resulting from frequent changes in freight rates on the part of some companies; changes that in some cases it is difficult to sug gest excuse for. The general results of the Law have been in important ways favorable to both the roads and the public; while the comparatively few complaints that have been heard of its results are either made with imperfect knowledge of the facts, or spring from the remembrance of practices which the Law was deliberately framed to put an end to. XIII. AMENDMENTS OF THE LAW. The Commission has not seen occasion for recommending any very considerable changes in the Act under which its work is performed.. It has seemed to its members that the Law for the regulation of interstate commerce should be permitted to have a growth, and that it would most surely as well as most safely attain a high degree of efficiency and usefulness in that way. The general features of the Act are grounded in principles that will stand the test of time and experience, and only time and experience can determine whether all the provisions made for their enforcement are safe, sound, and workable. When they prove not to be, experience will be a safe guide in legislation to protect them. Incidentally in this report some need of amendment has been pointed out. Especially ought the Law, as we think, to indicate in J. W. SLAPPEY and G. R. Slappey, compos- v. CENTRAL R. R. CO. OF GEORGIA; Brunswick & Western R. R. of Georgia; Savannah, Florida & Western R. R. Co., and South Florida R. R. Co. (No. 104.) BSTRACT of complaint filed December plain terms whether the express business and 19, 1887, charging unjust discrimination. Petitioners ship from Marshallville, Georgia, to Tampa, Florida, 527 miles, and are charged $1 per 100 pounds by the Central R. R. Co. of Georgia, which connects with the other roads. Rates are made with the first named defend The rate of defendants from Macon, Georgia, to Tampa, a distance of 564 miles, is only fifty-two cents. This constitutes unjust discrimination against complainants. all other transportation by the carriers named Other matters, and particularly whether transportation by water shall be made subject to the Act, are submitted to the wisdom of Congress without recommendation. All which is respectfully submitted. THOMAS M. COOLEY, WALTER L. BRAGG, INTER S. R. T. KNOWLES v. OHIO & MISSISSIPPI R. R. CO. ABSTRACT of complaint filed December Complainant is a manufacturer of cooperage at Dillsboro, Indiana, and ships by defendant's line to Cincinnati, thirty-three miles. Prior to the passage of the Law defendant charged $10 per car. After May 26, 1887, defendant charged complainant $16.80 per car. Afterwards defendant charged $15 per car, which they now charge. These charges are unjust and onerous, and contrary to the Interstate Commerce Law. Prays for investigation and reparation |