Temporary

It rebels at unnatural restrictions. obstructions may be put in its way, just as one may dam a stream, but sooner or later, over the dam or through its ruins, the stream will find its natural channel.” *

Extraneous causes influence rates where the competition is wholly between railroads. They also influence competition between water and land carriage. In the latter case, competition is further enhanced in value to the community by the exceptionally cheap facilities of water transportation. Between Chicago and New York, the water routes determine the rate of the railroads for six or seven months of the year, as much as the price of sugar in one store is determined by the price in another store. Nor is the effect of competition confined to the prescribed limits of the particular routes over which it operates. It affects, directly and indirectly, every collateral route and interest. Thus, 66 whenever rates are reduced on account of the opening of navigation from Chicago and the lake ports, the same reduction is made from all interior cities, not only from New York, where the canal runs, but to Boston, Philadelphia, and Baltimore. Although the latter cities have no direct water communication with the West, yet they receive the benefit, as far as low railroad rates are concerned, to the same extent as if a canal were actually running from the lakes direct to those cities, because whenever rates from Chicago to New York are reduced, it becomes absolutely necessary to reduce correspond

*George H. Lewis.

ingly the rates from Chicago to Boston, Philadelphia, and Baltimore; otherwise these cities could do no business, as it would all go to New York. The reduction of the rates from Chicago and St. Louis to New York, Baltimore, etc., reduces the rates from Western points via New York, Baltimore and ocean to the Southern Atlantic points.

The railroads running directly from Chicago and St. Louis, via Louisville, Nashville and Chattanooga, to the same points, are obliged to follow the reductions made via the rail and ocean routes. The same is true in relation to the west-bound traffic."*

In considering the influence of water routes on railway rates, it may be said that shippers will never in any case forward by rail wholly, unless it is to their advantage; unless the benefit is greater than to ship by water. There can be no coercion about it. Herein lies one of the advantages derived from water routes to shippers. It also enables them to secure concessions outside the limit of water area not otherwise attainable. The compulsion is not put on the shipper, but on the carrier. In order to secure a part, he must make concessions on the whole. This is, to the community, the most effective and valuable com petition of all.

Except for competition, mankind would be at the mercy of particular men. Its effect is to better and to cheapen. It is not, however, the life of trade, but its balance wheel. It should be unre

* Letter, Albert Fink, Commissioner, Associated Trunk Lines, to Senator Windom, Chairman, Committee of the United States Senate on Transportation Routes to the Seaboard.

strained, or subject only to such restrictions as the wisdom and moderation of those immediately concerned suggest. In the case of railroads, one of these devices is what is known as pooling; a measure intended to prevent the destructive warfare between corporations growing out of the suspicion and jealousy of those operating them. But while it prevents the undermining and destruction of railroad properties (so detrimental to the welfare of the material interests of a country), it in no sense modifies the general competitive influences under which railroads forming pools must everywhere operate. These influences are world-wide and cover every form of carriage and every kind of market, and are not controlled or even sensibly influenced by the action of local bodies. Competition, except as it may be prevented from assuming a destructive form by the parties immediately concerned, should be free from extraneous influences or restrictions. It is not a matter governments can enforce or control by arbitrary enactments.

The late Mr. George L. Lansing, who gave the subject of railway traffic exhaustive study, said that competition in the case of railroads bore most strongly on those things in which the community had the greatest interest. "The smallest margin of profit over the cost of production is on the necessaries of life; the next smallest on the common comforts, and the largest on the luxuries. This effect is not caused by design. results from the operation of natural laws of trade. The operations of the same laws produce

It

the same effect on the rates of transportation. We find, as a rule, the lowest rates on the products of the farm, coal, wood, petroleum, iron and lumber, etc. The forces of competition, which tend to reduce the rates of transportation, co-operate in producing discrimination in favor of those things which are moved in the largest quantities, and which are, of course, consumed in the largest amounts. The aim of the carrier is to secure the traffic. To do this, he must make low rates on cheap commodities. This results in distributing the charge for transportation where it is most easily borne. Not only do necessaries have low rates, relatively, but necessaries consumed in the largest quantities have lower rates than those consumed in smaller quantities."

These practices are not discretionary with the earrier. They have the binding force of principles. They are necessary conditions of business, of progress. It is not necessary to make them the subject of legislative enactments or other governmental interference. They are inherent. They are, however, subject to these limitations: in carrying out the principles that govern carriers, as well as other traders, equal intelligence will not be exercised in every instance. There will be sagacious traffic managers and dull traffic managers, just as there are shrewd merchants and stupid merchants. But they are all animated by the same idea, by like conscientiousness. What they lack in comprehension is not to be made good by extraneous action. Time will cure the evil in every case. Intelligence will finally govern here, as it does elsewhere.

CHAPTER III.

RAILWAY RATES- -THEIR BASES AND THE INFLU ENCES AFFECTING THEM.

The value of the service to the consumer, its cost, and the competition of carriers and markets, will ever be potent factors in determining the rates carriers of every description charge. The demand for transportation increases each year; so long as it is remunerative, the supply will keep pace therewith. Its character is at once varied and picturesque. We are more concerned, however, in that of railroads. But the water-courses of the world are of supreme importance. "The Almighty has furnished by far the most important avenue of transportation; our navigable rivers furnish it; our artificial canals furnish it. Our water-ways are abundant and varied. We have thousands of miles of rivers that go unvexed, unharassed, untaxed, to the sea. We have lakes which are inland seas, and upon which there are no charges; they roll and shine perpetually— ceaseless, constant, everlasting competitors of every artificial form of transportation. In their quiet way-as quiet and as resistless as the tides-they confront every railroad corporation in the country and say to it: 'In the regulation of your charges, thus far shalt thou go and no farther.'"'* These *Emory A. Storrs before the Committee on Commerce, February,