perhaps see a plan devised which without strangling competition will enable the roads to protect themselves against themselves, in so far as to prevent the recurrence of those destructive wars which are in the face of all the economies, and which are simply the result of an aban donment of all method in their dealings with each other.

The difficulties attending the formation of agreements between railroad managers as to competitive traffic are thus described by Mr. Fink:

In case the interested parties come together, a day or two only is generally set aside to transact business which is often of a very conflicting nature, arising from the direct conflict of so many interests. For want of time the work is often imperfectly done, if done at all. In case of disagreement there is no one to decide between the parties. The majority cannot and ought not to dictate to the minority. The result, in many cases, is that the questions at issue remain unsettled and no agreement can be made. But assuming that an agreement is at last consummated, the most difficult part of the work remains to be done. How is the agreement to be carried into effect? There is no authority to compel adherence to it; no court in which the violator of it can be held responsible. The agreements hastily formed are often understood differently by the different parties and executed in the various ways in which they are understood. The history of the contests for through traffic which have been waged between the various trunk lines connecting the Western States with the Atlantic seaboard is but the story of competition outrunning combination. Agreement after agreement has been made between these lines and their western connections but each agreement has gradually passed out of existence through successive lapses of good faith or through conflicting views with regard to innumerable traffic interests. The end reached in each case has been the inevitable railroad war. After many unsuccessful efforts the conclusion was finally reached by the managers of the great trunk lines between the East and the West that the failure of their efforts at combination was due to the fact that the combinations did not include the more important lateral and connecting roads throughout the West. In order, therefore, to unite in one agreement all the supposed competing interests, a convention of railroad managers was held in the month of August, 1874, and there was formed what is generally known as the "Saratoga compact." This attempted combination utterly failed of its object. The managers of the great trunk lines, viz, the Grand Trunk Railway and the Baltimore and Ohio Railroad, refused to give in their adherence to the proposed union, apprehending that the operations of the compact would be unfavorable to their interests.

At a subsequent meeting of railroad managers the astute president of the Baltimore and Ohio Railroad, looking beyond the mere question as to the differences existing between the companies, in expressing his dissent, said that "if the four great trunk lines should join in that organization, with the power which they could exercise over connecting lines, it would be regarded by the people as a combination against their interests; and as the result there would be a combination of the people against the ailways of the country; and through the courts, which are the exponents

of the conscience and interests of the public; and through the representatives of the people, in legislatures and in Congress, hostile action would be induced, which would more than counterbalance the advantages which would flow from the increased rates which would be commanded through so powerful an organization." The late president of the New York Central Railroad is said to have expressed the opinion "that there was much force in this view."

The Saratoga compact was signed by the officers of a large number of railroads in the Western States, and two boards of commissioners were appointed, one at the East and another at the West, charged with the duty of determining rates in each direction.

But the two boards were impotent from the very beginning. No edict of theirs was ever regarded as of the least authority, and in the course of a few weeks the compact quietly passed out of existence. Since that time the great trunk lines have been in a state of almost constant warfare in regard to competitive traffic.

For nearly eight months of the year 1876 the fiercest, the most determined, and perhaps the most wasteful contest ever known in the history of railroad management was waged between the trunk lines connecting the West with the seaboard. This contest resulted from a demand made by the president of the New York Central Railroad about the 1st of May that equal rates should be maintained between the chief commercial centers of trade at the West and the several Atlantic sea-ports. The managers of the New York Central Railroad maintained that this was the only practicable basis upon which the commercial interests of New York City and of the transportation-interests of the lines centering at New York could be protected. It was held that the greater distance to New York than to Baltimore was counterbalanced on the New York Central Railroad by easier grades, superior facilities of roadway and equipment, and the cheapness of transportation in consequence of an enormous traffic, both through and local.

The managers of the Baltimore and Ohio Railroad maintained, on the other hand, that the assumed disadvantages of their line, in consequence of being obliged to overcome the heavy grades of the Alleghany Mountains, were counterbalanced by the advantages of a shorter line and cheaper fuel. The position taken by the management of the New York Central Railroad in this matter was perhaps a rough mode of striking a general average as a settlement of many perplexing difficulties which had vexed the adjustment of through rates for more than ten years.

The equality of the Atlantic seaboard centers, with respect to the vast and varied commerce of the United States, is perhaps as much of a problem as is "the railroad problem" itself. A rule establishing equality among the four principal Atlantic sea-ports with respect to a point in Ohio might work great inequality with respect to a point in Michigan or to a point in Missouri. A rule establishing equality with respect to wheat might work great inequality with respect to

corn, and the rule of equality in regard to neither corn nor wheat might apply to cotton, to provisions, to tobacco, to live animals, or to any other of the staple products of the West. A rule allowing equal rates of profits to each one of the trunk lines would cause each one to charge a different rate based upon the actual cost of transportation per ton per mile. This would tend to throw all or nearly all the competitive traffic upon the road which could carry freights at lower rates than any one of the others, and in the course of time that road might be able to break down competing lines and to become practically a monopoly. Equality of rates, in so far as relates to the interests of the roads, might work very great and damaging inequality in regard to the interests of the various seaboard cities, and, on the other hand, a rule establishing equality of rates with respect to the interests of the cities might have the effect of bankrupting certain of the roads and of building up the traffic of other roads, and thus the principle of equality might in the end seriously injure the commerce of certain cities in so far as they are dependent upon trade between the West and the seaboard. Boston has western trade for which Baltimore cannot compete and Baltimore has western trade for which Boston cannot compete, and between the limits of the commercial activities of these two cities there is a broad field for competition, every point within which presents different commercial bearings with respect to the different centers of trade. Perhaps a general, although somewhat indefinite, expression of the rights of the several Atlantic sea-ports with respect to trade might be formu. lated thus: Equality where conditions are equal, and preference where special advantages exist.

Each city has certain advantages over all other cities with respect to trade, and each railroad has certain advantages over all other railroads with respect to transportation. The enforcement of any rule of equal rates, from all points within an extensive section of the country to the seaboard, on all classes of traffic, without regard to destination, would be in the face of established commercial principles.

It is impossible to lay down any general rule for securing the ends of equal and exact justice with respect to the operations of each trunk line, and the interests of each one of the Atlantic sea-ports, since the circumstances surrounding each road and each city differ so widely. The subject presents a very broad field for inquiry and discussion, and emphasizes the importance of establishing commissions or other agencies through which each State and each city may enter upon the study of its commercial interests.

Remedies of various kinds have been proposed for the purpose of meeting difficulties in particular cases. The following plan of action is suggested by the board of railroad commissioners of Massachusetts: The business community of Boston should combine to offset the combination of the railroads. They should deal with that line which offers them equality, and thus compel others to do the same. Should they take this course, throwing their business unitedly through the action of their boards of trade and exchanges in favor of one line

as against another, recent experience shows clearly enough that the desired result would soon be accomplished. In this respect the legislature can do little; the business community, if it really chooses to organize and help itself, can do much.*

This is a legitimate mode of protecting the commercial interests of a city, sound in ethics and proper where practicable. Whether it be the wisest and most practicable line of action or not, it is certain that the merchants of Boston can do much by the power of associated effort, and very much by the force of capital and individual enterprise and by a proper use of all the means placed within their power, and the history of that city leaves no ground to apprehend any failure in this regard.

The measures which should be adopted for protecting and promoting the commercial interests of each one of the Atlantic sea-ports must be determined mainly by its merchants. At this time, when the equipoise of commercial movements is so delicate, it behooves those whose interests are allied to the commercial interests of each city to realize the fact that vigilance is alike the price of safety and of success.

Since the failure in practice of the efforts which have been put forth by the railroad companies to maintain rates, freight charges have gradually fallen, and cheap transportation has been attained through the unrestrained action of competitive forces.

The fact of the general reduction of freight-charges on the great trunk railroads during the last ten years, and the practical attainment of what even four years ago would have been regarded as meeting the demands for cheap transportation, has not settled all the difficulties connected with our railroad system. The railroad companies exercise a certain range of discretionary power within the limitations already referred to, and it is possible for them so to adjust both "through" and "local" rates as to depress the interests of one city and to advance the interests of another.

Discriminations may also be made against the interests of States and of the whole country. The influence of discriminations may be appreciated from the fact that oftentimes a difference of one or two cents per hundred pounds turns traffic in one direction or another. Discriminations as they apply to cities and States call for special investigations and for special remedies.

In the struggle for a high place or for supremacy, each commercial city stands alone from the very exigencies of its geographical position, its transportation-lines, and its general interests. Every avenue of transport upon the land and upon the sea is its servant and the field of its commercial activities is the world. It has been aptly said that "commerce has no cousins, and that it always moves toward profits. Ev idently no two cities can be very closely allied in their commercial interests. Those interests may in many cases be correlative but they

* Report of Massachusetts Railroad Commissioners for 1876, page 70.

can never be in the nature of a partnership, for to a certain extent each commercial city is the rival of every other commercial city; but this rivalry is the soul of enterprise, and it is compatible with the fullest, the freest, and the most generous competition.

Many of the difficulties which environ the railroad problem, in so far as relates to the conflicts between the rival trunk lines, are due to the fact that the managers of those lines have not adopted measures for arriving at a common understanding as to the cost of transportation under the different conditions hereinbefore alluded to, the circumstances which mark distinctions between "local" and "through" traffic, the competitive character of different commodities and classes of commodities, the sources and destination of traffic, and the relations which in the nature of things exist between railroads and the commercial cities whose interests they chiefly subserve.

Railroad managers have, for the purpose of marking the distinctions between different classes of traffic and rates, adopted certain terms, such as "local traffic," "through traffic," "arbitrary rates," "joint rates,” "competitive rates," "non-competitive rates," &c. But in practice wide differences of opinion exist as to the application of these terms. Traffic which one railroad might consider "local," and therefore be inclined to give to it an "arbitrary rate," may be considered by another road to be "competitive traffic," and a demand be made for a "joint rate," or that the rate on the former road shall be in some respects conformed to the rate charged by the latter.

It will never be practicable for the railroads to reach an adjustment of all points touching their conflicting interests, and the interests. of rival markets, with the precision of a mathematical demonstration, but it is believed that very many differences which produce disastrous results to the railroads without benefiting the public might be determined upon general principles as clearly as are the conflicting interests of individuals in their social and commercial relations, through distinctions intrenched in the fundamental principles of law and administered by the courts of justice. The railroad companies possess the means of supplying much of the information necessary to the attainment of this end, and it is a matter of the highest importance that they should collect the data requisite for a proper elucidation of the whole subject of the economy of transport by rail. Interest and duty here seem to point in the same direction.

An attempt has thus been made to elucidate and to emphasize the fact that the discretionary power exercised by the managers of railroads with respect to freight-tariffs is confined within certain limits imposed by forces of transportation and of trade beyond their control; that these restraints upon freight-charges apply especially to "through" or "competitive" traffic, and that railroad companies are also to a certain extent limited as to their "local" or "non-competitive" traffic by the same causes, acting, however, more remotely and less effectively.