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(h) Saint Louis to Cincinnati
Cincinnati to Huntington via Ohio River.
340 160 324 532
(1) Saint Louis to New Orleans by river....
New Orleans ria Mobile and Montgomery to Atlanta.
The various routes described in the foregoing schedule are delineated on map No. 12, at the end of this report.
In this case we see twenty lines competing for the traffic between two centers of trade, although those lines differ in length from 526 miles to 1,855 miles. In order that each one of these lines may participate in the traf. fic, it is necessary that they should all carry it at very nearly the same rates. In practice it is found that the longer lines, in order to secure a share of the traffic, are often compelled to reduce their rates below those charged on the shorter lines. In this way it often occurs that the longer lines actually determine the rates. As already shown in another part of this report, the longer line may in many cases be able to carry the traffic at lower rates than the shorter line, in consequence of a preponderance of freights in one direction, magnitude of total traffic, or other considerations of an economic bearing. It appears that, with respect to this particular traffic, boats on the Mississippi River compete with the Baltimore and Ohio Railroad and with ocean-steamers plying between the city of Baltimore and the South Atlantic seaports. While all these lines have a common interest with respect to the traffic between Saint Louis and Atlanta, each one of them has traffic-interests which are not common to all or perhaps to any two of them, and these other interests may be of very much more importance to particular lines than the competitive traffic referred to. Evidently it is impracticable for all these twenty lines to enter into a close combination as to the rates which shall prevail between Saint Louis and Atlanta or to maintain any such agreement if entered into.
The trade between Saint Louis and Atlanta is also greatly affected by the competition of several rival markets, viz: Saint Louis, Chicago, Peoria, Louisville, Cincinnati, Baltimore, and New Orleans. Very little, f any, grain reaches Atlanta by the way of Baltimore or by the way of New Orleans, by direct consignment. Grain which reaches Atlanta by the way of Baltimore is first shipped to the Baltimore market, thence to southern ports by vessels in the coastwise trade, and thence by rail to points of destination. Grain shipped to Atlanta via New Orleans is generally shipped to the New Orleans market, and thence to Atlanta in the ordinary course of traffic on transportation-lines from New Orleans to that city. The forces which control the traffic between Saint Louis and Atlanta are the competition between many transportation. lines and the competition between many centers of trade.
This illustration in regard to the competition for traffic between Saint Louis and Atlanta is by no means an exceptional one. Many similar illustrations might be presented as to traffic between points at the West and points on the Atlantic seaboard, but the one presented will suffice.
The facts in this case indicate the exceedingly complicated nature of the question as to the determination of freight-charges; a question which must be decided in each case upon the experience and judgment of those whose duty it is to make and to adjust freight-tariffs, and who must of necessity be well informed as to the force, in practice, of each one of the conditions herein before mentioned.
(k) A very clear illustration of the extent of competition between common points is presented in map No. 13, showing the transportationlines between the South Atlantic and Gulf States and the cities of Bos. ton, New York, Philadelphia, and Baltimore. The rates by these lines are so nearly equal that oftentimes the difference of one cent per 100 pounds will determine the route and the market to which cotton is sent from any particular point.
(1) Very interesting illustrations of competing lines and competing markets are also presented in maps Nos. 8, 9, 10, and 11, at the end of this report. Especial attention is called to the description of these lines in a statement by Mr. Albert Fink. (Appendix, pages 1 to 48, inclusive.) Mr. Fink, having been engaged for several years as superintendent of the Louisville, Nashville and Great Southern Railroad, and for about a year as general commissioner of the Southern Railroad and Steamship Association, became quite familiar with the competitive struggles of all these lines.
From the foregoing statements as to the circumstances which determine the course and condition of commerce, it is evident that no general combination between the competitive forces of transport and of trade for the regulation of rates between different sections of the country is possible. In the course of the development of the railroad system, many of the fears at first apprehended as to the results of railroad como binations and consolidations have been dispelled. In new and unforeseen ways competition has, in regard to certain very important branches of traffic, become the governing influence.
The new phases under which the internal commerce of tbe country
presents itself, at the present time, are but the outworkings of competitive forces which have been developed by the extension and consolidation of railroads. This is a result which was not anticipated by the projectors of the great trunk lines. Several railroad companies have expended millions of dollars and constructed thousands of miles of railroads in order to gain control over the commerce of this country. But their efforts have been unsuccessful, for the circumstances which surround the railroads of the country are generally stronger than the power which they can bring to bear, either alone or in combination with other lines. Many illustrations upon this point might be adduced. Perbaps this fact has been more fully realized, in practice, by the Pennsylvania Railroad Company than by any other railroad company, it having secured the control of a greater mileage of lines than any other company in the world. The investigating committee of 1874 have expressed this view as follows:
Experience in the West has demonstrated that a railway cannot determine the route or destination of traffic originating on its line, and certainly has no controlling influence over trade at competitive points. Elements independent of the way of carriage first determine the destination of freight. After that, questions as to speed, safety, rates, &c., fix the route. With so many competitive points in the West the railway companies recognize their true interests in furnishing every facility to the shipper of freight, and do not attempt by possible hinderances or unwise charges to defeat his interests, resulting as it could to the injury of the railway companies.
There is reason to believe that the managers of certain of the great railroad organizations of the country, in attempting to carry out their ambitious policy of railroad extension, failed to foresee the fact that they were creating competitive agencies more rapidly than they were gain. ing control over commerce.
IN THE ADJUSTMENT OF COMPETITIVE
Ten years ago the trunk lines connecting the Western States with the Atlantic seaboard exercised very much more influence in the determi. nation of freight-rates than they do to-day, and for the reason that railway extensions and railway combinations of various sorts, in connection with the competition of markets, have introduced an almost innumerable number of conflicting and ever-varying conditions. The great trunk lines are to-day unable to secure such rates for their competitive traffic as they deem to be remunerative. Competition has run wild. A few years ago the freight-agents of the trunk lines were accustomed to meet together and adjust through rates very much to suit their own ideas, but the difficulties of making such compacts have increased year by year, and when entered into it has been found more and more difficult to carry out their provisions.
The spirit of rivalry between the managers of the various lines is the most apparent obstacle to the adjustment of competitive rates, but behind this lie all the difficulties of an economic and commercial nature which have been herein before described. Any proper or equitable adjustment of differences between the managers of several rival lines in. volves the determination of the conditions surrounding each line, and the limits of the competition between rival lines; therefore no agreement can ever be reached except in the spirit of compromise. The principal difficulty in practice arises from the fact that a large part of the power of making rates is intrusted to the discretion of hundreds of freight-agents throughout the country. The result of this is that when a railroad war begins the struggle soon passes beyond the limits of all system and of all order. Rates fall below the actual cost of transportation, and the contest goes on until the law of necessity compels the various railroad managers to resume the functions of their offices, and to take the management of traffic into their own hands through the forms of new agreements as to rates. But the cause of the difficulty still remains, and the contest soon begins again, and runs through the same downward course to the inevitable result-ruinous rates, followed by another agreement.
Railroad managers who once expected to secure a large degree of control over the commerce of this continent, seeing the failure of their attempts at combination, are earnestly endeavoring to devise some general plan by means of which they may be enabled to protect themselves against ruinous freight-rates. Wherever the competition of a cheap water-line exists, (especially the competition of the lakes, the Erie Canal, and the Hudson River, or of the Mississippi River and its navigable tributaries,) the difficulties of effecting railway combinations become almost insuperable with respect to all the lower classes of freight.
In the extreme Western States, and in all thinly populated sections of the country, where there are few competing railroads, freight-rates are more easily maintained, but even there the effect of the competition of rival markets sets limits to certain classes of freight-charges beyond which the railroad manager cannot go.
The greatest sufferers on account of railroad wars are the railroad companies themselves. The public interests are also in some measure prejudicially affected thereby, although individuals may reap large ad. vantages from the very low rates which may at times prevail. Experience has clearly proved, both in this country and in Europe, that sudden changes of rates without notice are prejudicial to the public interests, and accordingly the requirement that due publicity shall be given of any contemplated change of rates has become a well-established feature of the governmental regulations of railroads.
The correction of the evils incident to contests between rival roads has deeply engaged the attention of railroad managers as well as of persons viewing the matter solely in the light of the public interests. When, throngh careful investigations of all the conditions surrounding them, the railroad companies shall have clearly determined their relations to each other and to the commerce of the country, we may