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The account would then run thus:
DIVISION OF EARNINGS. Blossom Creek to New York, 5 cars corn, 40,000 each, 200,000 lbs., @ 30c. per 100 lbs...
$600 00 Less lighterage, etc., New York.
$540 00 Share of Grand Junction & B. C. Ry., 25 per cent.
135 00 Share of railways, Grand Junction to New York,
$405 00 $405.00 for division on mileage basis.
The proportion of the roads from Grand Junction to New York is $93 per car, or 23+ cents per 100 pounds.
If a shipper at Grand Junction should offer five car-loads of corn for New York, or a shipper from Blossom Creek should offer to haul it by wagons and put on the cars at Grand Junction five car-loads of corn for New York, and ask for a rate, the charge to him would be 30 cents per 100 pounds ($120 per car), in face of the fact that a like and contemporaneous service is being performed for the Blossom Creek road at 234 cents per 100 pounds ($93 per car), making the rate 64 cents per 100 pounds, or $27 per car less for a like and contemporaneous service.
The question naturally arises here : Why not let Blossom Creek prorate with an extra charge to be collected as back charges, or in some other way, sufficient to make up the 64 cents per 100 pounds; or, in other words, why not increase the rate from Blossom Creek to that extent? The answer is clear, the traffic will not bear the rate; the traffic would not move under it, and to increase the rate to that extent, would, in effect, be to prohibit shipment.
Then querie: if Blossom Creek is so situated that its products cannot be moved without discriminating against other points more favorably situated, does not justice to the favored ones require that it should not longer be a burden upon them, but should be cut loose from and left to its fate to drop out of the business?
A superficial view of the case would indicate the correctness of such a course, but a careful analysis will demonstrate that it would not only be unjust, but alike destructive to the interests of all. Blossom Creek is not a burden instrumental in keeping up the rates at this junction, but is one of a multitude of forces that keeps them down.
The market for the surplus bushel determines the price of the whole crop; the pig that eats that surplus bushel is kept in the rate districts of Liverpool, and if the corn to fatten him can be had one mill less from Egypt, India or the Danube, than from Grand Junction, he will not be fed on Junction corn.
Anything that will cause an increase of rate from Grand Junction, handicaps that place in the market. The decrease of the rate on Blossom Creek corn, does not increase the rate on Grand Junction corn ; shut out Blossom Creek, shut out all the Blossom Creeks, and you have stopped up the numberless rivulets that furnish fully one-fourth to one-third of the volume of that class of trafflc.
Having reduced the volume, the rate must necessarily be increased, and in this case it probably would be to such an extent as to prevent Grand Junction from offering corn to fatten the Liverpool pig.
Equitably, the question is not whether Blossom Creek pays too little, but does Grand Junction pay too much? Blossom Creek pays in proportion to its ability to what it gets, it is taxed on what it is worth.
Let me illustrate by figures only approximately correct, but near enough for our purpose. Bear in mind that rate must vibrate with volume. Assume that the duplicate roads referred to each have one thousand miles of road, with two passenger trains and five freight trains each way daily ; that the rate on each averages three cents per mile per passenger, and one and one-half cents per ton, per mile, on freight; the gross earnings of each, $500,000 per month, one fourth of which is from passenger and three-fourths from freight traffic, and that the fixed charges and operating expenses are $500,000 per month each-that, in a word, both roads are just at par.
If the rates on one road are reduced one-half without an increase of the volume, the road on which the reduction is made will of course show a monthly deficit of $250,000. If there is a similar reduction of rates, that is, from three cents to one and one-half cents per mile per passenger, and from one and one-half cents to three-fourth of one cent per ton, per mile, for freight, with this increase of five times the volume, the gross earnings on the reduced rates would be $1,250,000 per month. There would not, however, be a proportional increase in the expenses; on the contrary, the increased expenses would not be above $825,000, which would leave the road running at a net profit of $425,000 per month, while the duplicate was suffering a loss of $250,000 per month.
Increased traffic within the capacity of a road involves practically little more than the expenses of moving the extra trains required to carry it, hence the result.
To find these roads, look at the map: you will find the prototype of one in any of the trunk lines, and that of the other in any of the granger roads.
The roads of the west and northwest converge and pour their accumulated traffic on the few "Trunk Lines," massing the volume of a multitude of roads on
The returning heavy masses of west-bound traffic is divided up at the trunk line termini, and at every junction point divided and sub-divided, until it is a small per cent. on the earning sheet of the far-west roads.
It can readily be seen why the trunk roads and heavy traffic lines have been enriched, and the granger roads and light lines impoverished, and the cause of the tendency to consolidation, or the absorption of the weaker by the stronger roads, with the apparent ultimate result of bringing all the roads of the country under the control of probably three, certainly not more than five corporations, which would almost of necessity be followed by direct government control of all the roads, probably resulting in a change of our form of government.
It was manifestly the purpose in carrying out the theory of the long and short haul, that all rates should be estimated in proportion to the distance, and that through rates should make the sum of the several local rates, but that is not in conformity with the practice; on the contrary, the sharp competition for through business has reduced the through rates much below the total sum of the several locals.
To illustrate, the rate may be, St. Louis to New York, twenty-nine cents, to be divided among the roads: St. Louis to Toledo..
$0 10 Toledo to New York..
While the local rates may be:
$0 34 The class of freight and time of shipment being identical in both cases.
So long as there is concurrent State and Federal control or restriction of the carrier, it seems to me difficult, if not impossible, to establish and maintain uniform rates, especially so, when it is required that the rate shall bear uniform relation to the distance of the haul under the long and short haul clause of the law. The existence of most, if not all, interior jobbing and manufacturing interests, depends upon a special rate or advantage in rates, and the struggles of these interests to maintain themselves will prevent the securing of harmonious action, so long as there is dual power of control. If it should be determined that the policy shall not be what is the natural result of the enforcement of this provision of the law in this respect, then the spirit and purpose that preverted the application of an efficient remedy before the enactment of this law, will continue to prevent equitable uniform action under it, or any law that may be passed by Congress.
It will, I think, be seen at a glance by the members of the legal profession, that the power exists in any State Legislature, or the railway commission of any State, to practically nullify any act that may be passed by Congress.
The State exercises the power to fix rates in dollars and cents,-in other words, to define and limit receipts, and under the police power to direct disbursements, such as the erection of crossings, bridges, etc., for what is, or what is claimed to be, for the public safety. These powers for requiring expenditures, are, to a considerable extent, delegated to the local municipal authorities, which, if too freely exercised by them or the State authorities, or worse, by both at the same time, the income of the road being restricted by the rates of the commissioners, or by sharp competition, financial ruin is likely to be the result. These State powers, the power to destroy, carries with it a power to control.
It will at once be said that the power of the State to fix rates, is limited to strictly State traffic. This is true, but with a lower State rate substantially all the traffic in, or passing through a State, will at once become State traffic. For instance, if the portion of an Inter-State rate was $25 per car to Chicago, and the Illinois Commissioners for any reason should establish a rate of $12.50 per car to Chicago, in a single day all foreign shipments would cease, and the destination of every car would be Chicago. The owner, after getting it there, and saving $12.50 in freight on it, would then change his mind, and the final destination of the freight, or the ownership, could be changed with a profit of $12.50 to the original owner.
The question will be raised, would any commissioners resort to any such practice to get an undue advantage for their people over those of other States? The answer is, look at what has been done in Iowa, where the operation of the spirit and purpose of Inter-State law is being defeated, and rates put into effect giving their people an undue advantage over others, that if enforced everywhere, would amount to a confiscation of the property of the roads.
No matter how low the through rates, the commissioners, seeking the advantage, would make enough lower rates for their State to secure the control of the business.
Theoretically, all communities, and all shippers are in favor of equal laws and equal rates, but practically many, yes, most of them, will have a mental reservation of a liberal rebate in some form exclusively for themselves.
This craving appetite of the crafty, sharp operator was satisfied before the enactment of the law by fixing the rate, say thirty per cent. above where it was intended to be maintained, and privately giving to each of them a rebate of thirty per cent. Each labored under the fond delusion that he was one of the priviledged and favored few and was happy. The law at once destroyed this delusion, and protected the rights of the uccasional and small shipper, in securing for him service for the same price that it was rendered to others, and save alone in what is known as commissions on passenger traffic, which are sometimes used for that purpose. Such a thing as a rebate or draw back in any form is now practically unknown. The same may be said of Inter-State passes and passes to shippers to influence business, which would in effect be the cutting of freight rates, and would create an unlawful discrimination, for the doing of which the amendment to the law prescribes a most potent reason for a strict observance of the rule, viz: a penalty in addition to the ordinary fine of not to exceed five thousand dollars prescribed for any violation of the law,
and “imprisonment in the penitentiary for a term not exceeding two years, or both such fine and imprisonment in the discretion of the court."
It was a singular omission on the part of Congress that there should be no provision for the punishment of the man who received the benefits of the violation of the law-say the man who rode upon the pass-when it was so amended as to provide for imprisoning in the penitentiary the man whose only benefit was the doing of a favor or giving pleasure to another—the man who gave the pass.
This same amendment provided that: “Any common carrier or officer or agent thereof, or any person acting for or employed by such corporation, who, by means of false billing, false classification, false weighing, or false report of weight, or by any other device or means, shall knowingly and wilfully assist, or shall willingly suffer or permit any person or persons to obtain transportation for property at less than the regular rates then established and enforced on the line of transportation of such common carrier, shall be deemed guilty of a misdemeanor, and shall
be subject to a fine of five thousand dollars, or imprisonment in the penitentiary for a term not exceeding two years or both, at the discretion of the court," and provides a like penalty for “any person
who shall deliver property for transportation for whom as consignor or consignee any such carrier shall transport property who shall knowingly and wilfully by false billing, false classifications, false weighing, false representation of the contents of the package or false report of weight, or by any other dívice or means whether with or without the consent of the carrier, its agent or agents, obtain transportation for such property at less than the regular rates."
These salutary provisions have produced a very marked effect, and in course of time when the machinery of the law gets in full operation, when it is known that aft:r discovery will come prompt conviction, this class of abuses, heretofore quite common, now seldom seen, will, owing to the facility of detection, be no longer known.
The provision against pooling, has I think, fully accomplished the purpose intended by it. While it has obliterated one of the most obnoxious features of the
old methods by which unjust discrimination and extortion were often perpetrated upon individuals and communities, it has, too, carried away a harmonizing power necessary for the protection alike of the interests of the roads and of the shippers, for which some provision, that will accomplish the purpose, must be substituted.
Considering the law solely with reference to the past, from a business standpoint, and without reference to it as an experiment, its existence may be said to have been detrimental, except to the few favored interests to which it has been profitable.
But take it as a whole, considering that it proclaimed a new era in which individuals and communities were to be protected from oppression and encroachment upon their common law rights, by giving them an adequate remedy in every case, and no longer compelling them to depend upon so-called remedies that, if resorted to even successfully, would be more destructive to their interest than the original wrong done them; and assuming, as I doubt not we may, that it will be amended from time to time, that the defects made manifest by its practical workings may be cured-and speedily, too, when ascertained—a great and permanent good has been done.
The railways, the highways of the nation, must be permanently controlled by law, as such highways.
It is to be deplored that the power of the general government was not earlier invoked and exercised, not only with reference to the operation, but regulating the construction of roads.
The law, it seems to me, must be so amended as to provide for Inter-State carriers engaged exclusively in Inter-State traffic controlled solely by Federal law, or all carriers engaged in Inter-State traffic must be so governed.
“No man can serve two masters,” and no carrier can obey State and Federal power in the irreconcilable conflict of interests that daily arise.
All roads connect with each other and, like all rivers, end at the ocean, but, unlike the rivers, are open to commerce from their source to the sea; they are the substitute of modern civilization for navigable streams, and wherever the mail car, the craft of the government, goes, there should the exclusive jurisdiction of the general government be maintained. To regulate commerce, the power cannot be exercised upon the thing moved—the subject of commerce, upon the box of merchandise or passenger, with one rule governing the movement of the box or passenger destined to a point within the limits of the State, and another and conflicting rule for the box and passenger, passing over the State line. It must regulate the carrier with one rule, alike for the movement of all boxes and all passengers, irrespective of their point of origin or destination. Not only should this exclusive power be exercised over all railroads, but it should govern alike all common carriers of every description, engaged in Inter-State and Inter-National commerce.
It is provided that: “The Congress shall have power to regulate commerce with foreign nations and among the several states.” The subject, Commerce, is so related in all its various parts, Inter-State and Inter-National, by water and by rail, any attempt to regulate part without regulating the whole will result in the establishment of greater evils than those sought to be remedied. Where there is legal restriction, right and justice demand that there should be legal protection. Where a combatant is disarmed, he must be protected from the assaults of his adversary. If, in the competition between rail and water, the railway carrier is restricted and made to give to large waterless districts of country all the benefits of water