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quota of cars, based upon the amount of traffic, the length of the road, the time required to load and unload, and the time required to attend to the traffic, and each road receives its due proportion of the gross receipts upon the basis of mileage.
The following extract from a statement made by Mr. J. D. Hayes in his report to this Department affords an idea of the magnitude of the through freight-lines and the nature of the competition between them: Over the New York Central Railroad there are several lines, nearly all co-operative :
Cars. Red line, about...
4,000 White line, about
3,000 Blue line, about..
4,000 Merchants' Dispatch, about
2,700 Detroit and Milwaukee, about.
800 Saginaw Valley, about....
400 International, about....
2,000 Hoosac Tunnel, recently formed Canada Southern, recently formed
2,000 There are several oil-lines and other lines of minor importance on the Erie Road, viz: the Erie and North Shore, Commercial Express, Great Western Express, Diamond, and several minor lines. The Grand Trunk has the National line and their own through line from Detroit to Portland and Montreal, employing probably about 8,000 or 9,000 cars.
Then there are the Globe, Empire, Star, Union, and others that I do not now call to mind, employing in the aggregate in transporting property to the seaboard not less than 60,000 cars. Allowing twenty days to the round trip from Chicago to the seaboard and back, with 10 tons to the car, would be equal to a carrying capacity of 30,000 tons per day. They traverse all parts of the West and East wherever they can do business, frequently making special rates over competing lines in the West, and placing the trunk lines in the position of accepting rates made against other lines ranving over their roads, thus in reality competing against themselves for the same business, while they pay their proportion of the expenses of the competing agents who bid against each other for business.
The manner of prorating the traffic of the co-operative lines is described by Mr. Hayes in his statement to this Department. (Appendix, page 49.)
The various forms of through-freight lines occupy a very important place in the commercial movements of the present day. The sphere of their operations is continental in extent and their influence pervades the entire internal commerce of the country. They also exert a very important influence upon our foreign commerce.
It is impossible within the limits of the present report to enter upon a particular description of all the through-freight lines of the country, and even if presented, such description would perhaps afford no clearer general idea of their operation than would a description of one of the principal lines accompanied by statements pointing to the peculiarities of the various lines. These lines differ in matters of detail as to the classes of commodities carried, the vehicles employed, and the modes of transacting business. It is found that the success of commerce at the present day depends largely upon lines of adaptation, embracing route
vehicle, commodity, speed, terminal facilities, and various other requirements of transport and of trade. The chief economy in the carriage of certain commodities which are moved in large quantities consists in the use of cars especially adapted to the required purpose. Cars of peculiar construction are required for the transportation of sheep and hogs, of fresh meats, of grain, of the more expensive articles of merchandise, of commodities required to be carried with great care, of mineral oil, and of lumber, timber, stope, brick, coal, &c.
A "through-freight line" must have clearly defined limits and an established line of policy. There must also be a general relevancy of routes to the nature of the business done and to the circumstances which shape the cbaracter and direction of its traffic. The following state. ment in regard to the Empire Transportation Company is presented for the purpose of illustrating the general features of the system of throughfreight lines. This line has been selected from the fact that the necessary information has been derived from published documents and through the courtesy of its president, Col. Joseph D. Potts, of Philadelphia, Pa., in reply to a request from this office.
The Empire Transportation Company. The Empire Transportation Company is one of the most extensive freight-lines in the United States. It appears to have escaped the prejudices which formerly attached to private fast-freight lines.
The investigating cominittee of the Pennsylvania Railroad Company, in sustaining the policy of employing such lines for special classes of traffic, in their report, say that
The work of the Empire Transportation Company is of that peculiar and special character that it cannot at this time be replaced by any organization your company conld form, to do the work so promptly, so economically, and with such satisfaction to shippers and such ultimate profit to the Philadelphia and Erie Railroad Company and to the Pennsylvania Railroad Company.
The Empire Transportation Company owns 4,500 cars. It has contracts with 5,793 miles of railroad for furnishing cars and engaging in transportation of freight. An arrangement is also made by means of which the cars of this company are allowed to run over 18,575 miles of roads with which there is no special contract, so that the total mileage of roads over which the cars of this company are run amounts to 24,367 miles, or nearly the circumference of the globe.
The total railroad mileage of the United States being about 74,600 miles, it appears that this company runs its cars over about 33 per cent. of all the railroads of the country. The cars of other through freight lines, co-operative and non-co-operative, are also employed on many of the same roads, on some roads the cars of eight or ten such lines being operated.
The Empire Transportation Company owns and employs eighteen large steamers and sailing-vessels on the lakes, plying between Erie, Pa., and western ports. At Erie it has two large grain-elevators and exten. sive docks. In the city of New York and in Philadelphia it bas ample accommodations for receiving and distributing freight. It is also largely engaged in the transportation of mineral oil in bulk, and, in order to manage this traffic, the company has laid about 400 miles of iron pipe, traversing the whole oil-region of Pennsylvania and connecting the various oil-wells with tanks at the depots of the company.
During the year 1873 the Empire Transportation Company moved east and west 952,737 tons of freight. The company is directly responsible to the public as a common carrier for all losses sustained by shippers, and the various roads over which its cars are run are responsible to it for the safe and expeditious movement of cars and freights under the terms of the several contracts with such roads.
All roads with which the Empire line was no special contract receive the usual freight-rates on all commodities transported and allow the customary mileage for the use of the Empire cars at the rate of one cent per mile, an arrangement similar to that which obtaius with regard to co-operative or railroad partnership lines.
The cars of the Empire Company pass over many lines at the West, but they are confined to one line, viz, the Philadelphia and Erie branch of the Pennsylvania Railroad, in forming a connection with the seaboard. This, as already stated, is a characteristic of all the trunk lines engaged in through business between the West and the seaboard.
Purposes for which through freight lines have been formed. The through-freight lines have been formed mainly for the purpose of obtaining for the eastern trank lines traffic in all parts of the Western States. Each one of the eastern trunk roads still has its own throughfreight lines, no one of which is allowed to run over any other trunk line to the seaboard. At the western terminus of the eastern trunk lines, however, the freight-lines intermingle, two or more of them being employed or allowed to run on almost every important railroad at the West. Some of the western roads are copartners in several of the co-operative lines, and, besides, allow the cars of every other freightline to run over their roads upon payment of an agreed proportion of the through rate, the line owning the cars usually receiving one cent per car per mile run.
When the fact is taken into consideration that the routes of all these various lines, co-operative and private, overlap and cross each other at innumerable points throughout the Western and Northwestern States, an idea may be formed of the exceedingly complex results which arise in the competition for through business. Each one of the freight-lines exercises through its general operations and the efforts of its agents in all parts of the country a constant and potential influence over the commerce and over the transportation lines of the country.
Besides the private fast-freight lines owned and operated by compa. nies or individuals not connected with the management of roads, and the co-operative freight-lines managed by independent organizations established by the railroads entering into the arrangement, there is another form of combination by means of which the advantage s of direct transportation are also secured. This consists simply in setting apart certain cars for through traffic, which are distinguished by distinctive marks or colors. Each company, however, retains the entire control of the traffic over its own road. The use of cars is paid for at an agreed rate, the various companies employ their own soliciting agents at such points as they may deem proper, and settlements as to receipts, losses, and car-service are adjusted by the managers of the various roa ds.
The roads west of Chicago and Saint Louis have not found it to their interest to enter into co-operative freight-line combinations with the eastern trunk roads, but they generally establish rates over their own lines, leaving the trunk roads to determine among themselves as to the rates which shall prevail from the western centers 'of traffic to the seaboard. By this means the western roads avoid becoming parties to the fierce struggles between the great trunk lines connecting the West and the East. Differences in the nature of the car-service on the roads east of Chicago and Saint Louis and on the roads west of these cities also render the formation of through freight lines over these two classes of roads unadvisable at the present time.
CONSOLIDATION OF RAILROAD LINES.
The New York Central Railroad, the Erie Railway, the Pennsylvania Railroad, and the Baltimore and Ohio Railroad had few interests in common prior to the time when they formed connections with the system of roads in the Western States and became competitors for that enormous commerce between those States and the States of the Atlantic seaboard. Until then the geographical limits of the traffic of each road was separated by well-defined territorial limits, and competition as to through traffic did not exist. This was the relative situation of these great trunk lines until about the year 1853. But in the course of a few years a net-work of railroads was constructed throughout the Western States, and connections were formed between all those roads and the four trunk lines of the Atlantic seaboard. The Grand Trunk Railway of Canada has also formed similar connections.
The rapid development of commerce which followed the formation of through-freight lines led certain of the trunk lines to adopt the more ambitious policy of extension by leasing or purchasing connecting lines. It was supposed by the managers of the trunk roads that such connections would afford them a very extensive control over the internal commerce of the country and enable them to direct the course of traffic. These expectations have not, however, been realized. Experience has proved that the course of trade and the charges which can be imposed for transportation of through freights are to a great extent governed by competitive forces beyond the control even of these powerful trunk lines. Mr. J. D. Hayes, of Detroit, Mich., has expressed the following opinion upon this subject :
There was a time when the tendency of our railway system was toward the consolidation of connecting lines ; but I think that time is past. Main lines have become so loaded down with wings or side lines that they do not want many more such dead weights attached to them. Tbe time has gone by when managers of trunk lines can float side-line securities at a profit. Therefore the connection must be upon business given and taken from them.
The managers of many trunk lines have adbered to the conservative policy of relying upon through-freight-line connections with other roads in the belief that greater advantages are to be secured by offering to connecting roads favorable terms as to through traffic than by attempting to secure the control of lines which they might afterwards be obliged to favor as against other lines not under their control.
Railroad managers differ widely in their views in regard to the policy of extension. In practice the question is determined mainly by geo. graphical and commercial considerations and by the disposition and general views of policy entertained by the managers of each particular line. The Pennsylvania Railroad Company and the Baltimore and Ohio Railroad Company have thus far outstripped all the other trunk lines in carrying out the policy of railroad extension. The New York Central Railroad Company, on the other hand, has not yet secured under its own control any through line to Chicago, Cincinnati, or Saint Louis. It is, however, closely allied in interest with the Lake Shore and Michigan Southern Railroad and the Canada Southern Railroad, and it has for several years bad through-freight-line connections throughout the Western States. In view of the financial strength of the New York Central Railroad and the ability of its management it appears that the company has refrained from embarking in the extension of its own lines from views which have prevailed in regard to its financial interests.
There is a vitally important consideration which limits railway extensions under one management, viz, the limit fixed by the difficulties and dangers attending the administration of an overgrown enterprise. An appreciation of this fact led the investigating committee of the Pennsylvania Railroad "to congratulate the stockholders upon the happy escape from the injuries in which the spirit of expansion and undue extension of railroads seemed likely to involve the main lines of railroad, a continuance of which for a few years longer would certainly bave made bankrupt every trunk line in the country which indulged in this policy." (Report of committee, page 42.)
A great railroad organization may be successful so long as its interests are intrusted to a board of directors and a chief executive officer possessed of the requisite ability to comprehend all the economic and commercial questions involved in its management, and so long as barmony prevails among its managers. There are few men, however, who possess the power and breadth of view necessary to the discharge of such important duties.