ious action among carriers and in the way generally recognized in other countries, namely, by pooling-whenever our railroads find such expedient advisable.

Another and an analogous means of securing an equitable adjustment of traffic, is the differential rate. This, as already explained, is an arbitrary concession (applicable to either freight or passengers) allowed a transportation company by its competitors, on business between given points of territory. Such concessions are granted because of some disability, or lack of facilities which makes it impossible for all the transportation companies interested to enter into full and equal competition. Thus, a line comprising both rail and water transportation or one having a more circuitous route or heavier grades, or inferior equipment, or in any way operating under conditions that place it at a manifest disadvantage, is considered a differential line. The arrangement applies particularly to competition between common points. Differential rates are also allowed when necessary in connection with competitive export and import business-the inland line, having the shorter haul, being permitted to make a lower rate to equalize the higher rate that the water line having longer route, charges.

Differential rates are a protection to both the carrier and the public in this that they remove from the weaker company the temptation to make ruinous reductions in order to secure business; and in so far as differentials do this, they ensure stability and uniformity of rates along economic lines.

CHAPTER VIII.

RAILWAY RATES AND GOVERNMENT CONTROL-RATES MAY BE TOO LOW. THEY CAN NOT BE TOO HIGHRAILWAY ENTERPRISE - UNNECESSARY RAILROADS: EFFECT THEREOF -PROPER SCOPE OF

GOVERNMENTAL SUPERVISION.

The sudden and vast growth of our railway system has had the effect to bewilder the public mind, to prevent its problems being rightly understood. The subject, in all its details, is too vast to be comprehended readily. Time is required for the acquisition of this knowledge and the assimilation of the new industry with surrounding enterprises. The liberal commercial spirit that animates railways has not been understood, and, because of this, public sympathy has been denied them.

The baneful effect that attends warfare on private interests is generally recognized, but because of the magnitude of railway enterprise and its impersonal character, it has been thought to be an exception, rendering it not only practicable but politic to deny its owners the right to manage their property in their own way, but to hold up their acts to public reprobation. The sooner this impression is dissipated, the better it will be for the country. The sooner the people learn that to deprive carriers of any portion of their just earnings, to injure their

credit or the good repute of those who own or manage them, is to injure the country, the better it will be for all concerned.

The enormous wealth and power of the railway companies excite apprehension and jealousy, and the subtleties and apparent inconsistencies that characterize their operations, the result of environment, have bred a disposition to surround them with hasty and ill-advised acts of legislation. The railway system of the United States is inherently and grossly artificial, and the efforts of owners to adjust their affairs to these conditions and the necessities and the comities of business, have subjected them to many unjust charges. These accusations have their origin in ignorance, and will continue to find expression so long as the conditions that engender them exist and the public mind remains uninformed.

The questions of public interest surrounding the railway system are too great to be fully considered within the space of a single volume. Only the more important peculiarities of its growth and operation can be noticed. The situation in the United States is anomalous. Nowhere else is free construction known. Its effect has not been what was expected. Its benefits far outstrip its disadvantages. However, while the community thought that the multiplication of railways under all circumstances would prove a public blessing, their construction, under certain conditions, is found to be a public calamity; overproduction, here as elsewhere, entails disaster proportionate to the cause.

Free railway construction stimulates the ambition of railroad owners and managers to the utmost. It leads them to build and operate economically; to construct according to the work to be done, and to eagerly adopt every device that will improve the service, or lessen its cost.

Some of the mistakes that we have made in regard to railroads are quite apparent to us now. We know that, where free railway construction is permitted, monopoly is impossible. I think it may also be assumed, that while railroads are thought to disregard the interests of the community, they are exceptionally sensitive to their obligations in this direction; that while legislatures claim the right to fix rates, the anomalous conditions under which the railway system has grown up and its chaotic nature render the exercise of such power fraught with the greatest danger to the community; that while it is assumed by many that rates may be fixed arbitrarily, they are, on the contrary, the result of natural causes.

The vast territory of the United States renders railroads especially valuable in its development. Without them centuries would have been required to accomplish what they have made possible in a decade. They have everywhere vitalized business, opened new and productive sources of supply, built up industries that would not have been possible under other conditions. They have brought the centers of commerce, separated by vast distances, into active and continuous competition, and, under their benign influence, districts remote from water

courses enjoy the same facilities, and in many cases the same prices, that the most favored possess. They have made the impossibilities of yesterday the possibilities of to-day. Upon their beaten tracks the poorest citizen travels in greater splendor than the monarch of olden times. Distance is no longer an element. The traveler that leaves us at dusk today, after the lapse of twenty-four hours, we discover pursuing his journey a thousand miles away, carefully watched over, warmly housed, comfortably fed, serene, and happy. Such is the railway system. It affects more nearly and vitally the prosperity and comfort of a community than any other interest, than indeed the government itself. Superseding other forms of inland conveyance, it determines the location of business centers and vitalizes by its presence or blasts by its absence. Upon the care and skill exercised in maintaining and operating it depend the safety and comfort of those who travel. If extravagantly or unwisely managed, the waste is lost to the community. If injudicious economy is exercised, the same community suffers through the disasters that follow or the lack of necessary and proper facilities. In order to compass the results expected of them, the income of these gigantic highways should be sufficient to afford the peculiar labor and abundant supplies required in their operation and maintenance. This income should also be sufficient to meet the interest on the capital expended in construction. If deficient in either respect, the community suffers, not only in the common conveniences of transportation, but in