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It has also been shown that these restraining and regulating forces operate in widely varying degrees; in certain cases compelling companies to carry freights at an absolute loss, or at very low rates, and in other cases exerting an influence so feeble and uncertain as practically to allow the companies an almost unlimited discretionary power in the establishment of both through and local freight tariffs. These vary. ing conditions present to each commercial city and to each railroad company a separate “railroad problem,” the elements of which are specific wants and specific experiences. The determination of the conditions surrounding each city and each transportation-line is a work especially devolving upon those whom interest and duty alike impel to the task. The subject is vast in its extent, and it runs into the consideration of conflicting interests which cannot possibly be treated of in this report.
COMMERCIAL TRAVELERS. A statement in regard to the competitive forces affecting commercial movements between different sections of the country would be incomplete without noticing the results of the system of employing commercial travelers. This comparatively new agency of commerce has not only introduced important changes into the etiquette of trade, but it has been the means of developing new commercial movements and of greatly extending the limits of the commerce of the various cities. Twenty years ago the commercial traveler was regarded as a sort of privateer upon trade, and this repute undoubtedly caused his operations to be lacking in some of the essential characteristios of legitimate busi. ness transactions. But as the avocation has increased in importance it has advanced in dignity, and an almost opprobrious appellation at first applied to those engaging in it, bas been exchanged for one more befit. ting the occupation. This new agency of commerce is now seen to be a natural outgrowth of the facilities afforded by railroads and telegraphs.
The soliciting of orders and selling by sample in the bands of the agents of business houses has become an established method of intercourse between buyer and seller. The old habits of trade have been abandoned and the commercial traveler has of necessity become more closely identified with the interest of the business which he repre. sents. From the force of competition between those of his own vocation he has been obliged to acquire a knowledge of the state of markets in all parts of the country and of other conditions vital to the interests of trade. Almost every conceivable article of merchandise is now sold through this agency, and purchases of raw material are extensively made in the same manner. The economies of this mode of commercial intercourse are obvious. Buyer and seller are thus brought closer together, losses through bad credits are reduced, trade is extended, competition is rendered more active, collections are more promptly made, interest on capital is saved, and the expenses of the great body of retail dealers are reduced.
Every sale made by the commercial traveler tends to promote the prosperity of the city in which his business house is located, and to ex. tend the commercial influence of that city. This creates competition with other coin mercial cities, and forces transportation-lines to provide the requisite facilities to meet the new demands of trade. At the pres. ent time there are very few manufacturing or commercial houses in this country which do not employ one or more commercial travelers, and it is an indisputable fact that the energy, tact, and persistency of these men have much to do in determining the direction of the commercial movements of the day.
Besides, all the railroad companies and freight-lines have in their employ agents at almost every important commercial point, who are actively engaged in soliciting freights. This, also, tends to multiply and to complicate the elements of competition.**
6.-TAE COMPETITIVE FORCES WHICH EXERT A CONTROLLING INFLUENCE OVER THE COMMERCE BETWEEN THE WEST AND THE SEABOARD WITH RESPECT TO THE COMMERCIAL INTERESTS OF BOSTON, NEW YORK, PHILADELPHIA, AND BALTIMORE.
The conditions under which competition exerts a restraining influence over freight-charges may be more clearly understood by considering the forces which exert a controlling influence over commerce between the West and the seaboard.
Soon after the year 1850 the railroads extending toward the West from the several Atlantic sea-ports began to compete with the Erie Canal for the immense and rapidly-increasing commerce of the West. At first the through traffic of the roads was confined to the carriage of provisions, live animals, and general merchandise, but by the year 1873 the railroads had become in the fullest sense highways of commerce for nearly all classes of commodities, even in direct competition with the lakes and the Erie Canal. Coal, iron-ore, and other minerals, chiefly the products of the mines of Pennsylvania, are transported to the West almost exclusively by lake, as return cargoes for vessels engaged in the transportation of grain eastward. These heavy mineral products are generally transported on water-lines wherever such facilities exist.
The transportation of grain is now the most important branch of the through traffic from the West to the East, grain and flour constituting about 50 per cent. of the entire eastward movement of through freights.
The relative importance of the railroads and of the Erie Canal as high ways of commerce for the transportation of grain may be inferred from the following statement showing the receipts of grain at Portland,
* Two or three expressions in the foregoing remarks in regard to commercial travelers have been adopted from an interesting article upon the same subject which recently appeared in the New Orleans Times.
Boston, New York, Philadelphia, and Baltimore during the year ending December 31, 1876:
Bushels. Received at New York by canal....
32, 853, 839 Received at New York by rail..
59,047,953 Received at Portland by rail....
3,999, 181 Received at Boston by rail.
22, 753, 698 Received at Philadelphia by rail...
35, 546, 845 Received at Baltimore by rail..
37,564,536 Total by rail.......
158,912, 213 N. B.-There appears to have been about four, million bushels of grain received in New Yok, coastwise, which does not appear in the above table.
It appears that only 17 per cent of the grain shipped from the West reached the seaboard by the Erie Canal and that 83 per cent. by the competing railroads, or about five times as much by rail as by canal.
It is proposed to consider briefly and in a somewhat general manner the more important features of this diversion of commerce from the Erie Canal, or more properly speaking the development of commerce on railroads, and the questions which have arisen with respect to the interests of the rival trunk roads and the rival seaboard cities. In this connection attention is called to the various lines of transport connecting the West with the seaboard, as delineated on maps 1 to 7, inclusive, at the end of this report. These lines are the Lake and Canadian Canal route to Montreal, the Lake and Erie Canal line to New York City, the Grand Trunk Railway, the New York Central Railroad, the Erie Rail. way, the Pennsylvania Railroad, and the Baltimore and Ohio Railroad.
In considering the competition between the east and west trunk lines it is necessary to observe, first, the distinction betreen local or noncompetitive traffic and through or competitive traffic. The expression “through traffic" is here applied to traffic between the Western States and the Atlantic seaboard. Statistics showing the relative proportion of local and through traffic can only be obtained in regard to the Erie Canal and the Pennsylvania Railroad. The New York Central and the Erie Railroads present only statistics in regard to their total tonnage movement, and the Baltimore and Ohio Railroad Company merely presents facts as to through tonnage and the quantities of grain and flour and of coal and live stock transported.
The local traffic on almost all railroads greatly exceeds in importance the," through traffic" which we are here especially considering. During the year 1875 the through tonnage of the Pennsylvania Railroad amounted to 1,354,203 tons and the local tonnage amounted to 7,761,165 tons, the through tonnage being only 15 per cent. of the total tonnage.
The number of through and local tons carried one mile wereThrough tons carried one mile
484,043, 840 Local tons carried one mile
995, 370, 626
1, 479, 414, 466
It appears from this that the ton-mileage of through freight was 33 per cent. of the total ton-mileage. The through tonnage of the Erie Canal during the year 1875 appears to have been about 50 per cent. of the total tonnage carried. From the very scanty data of this sort which can be procured as to local and through freight tonnage it is estimated that the through traffic passing over all the main lines connecting the West with the East is about 33 per cent. of the total traffic orer the several lines. The proportion of " local” and “through” traffic differs very much on the various lines.
Attention is especially called to the fact that the local traffic is but little affected by the competition between rival trunk lines or by the competition between rival seaboard cities, whereas the through traffic is greatly exposed to such competition.
VARIOUS DEGREES OF COMPETITION IN THE COMMERCE BETWEEN
THE WEST AND THE SEABOARD,
The through traffic between the West and the seaboard is competitire in various degrees, both with respect to the interests of the rival trunk lines and to the interests of the rival commercial cities on the Atlantic seaboard. There are many points to and from which the facil. ities of transport afforded by one route for certain freights are so much superior to the facilities afforded by every other practicable route that in practice the more favorably situated line enjoys a monopoly of the traffic; and there are also many points to and from which there are several lines of transport, all affording such facilities for certain traffic, as to engage with each other in a constant and effective competition.
The field of competition in the great struggle for the traffic between the Western States and the seaboard begins in the State of Ohio and grows stronger and more complicated as we advance toward the west. At Cincinnati, Louisville, Indianapolis, Saint Louis, Chicago, Peoria, and all other important centers of trade, the shipper has not only the option of transport to each one of the Atlantic sea-ports, but he has also the choice of two or more routes to the same port, all offering equal rates in time of agreement, but during the frequently recurring and long enduring railroad wars the agents of each line bidding against all the others and struggling for all traffic which is in any practical sense competitive. The various degrees of competition range from the remote and incidental competition, the existence of which may sometimes be regarded as problematical, to that direct struggle between rivals for the same traffic. This may be illustrated with respect to traffic over the east and west trunk lines as follows:
First. The direct shipment of merchandise from interior points at the West to Europe and the direct shipment of merchandise from Europe to interior points at the West constitute traffic which is in the highest sense competitive, since the rail-lines from such interior points connect directly with ocean-steamer lines to Europe at Boston, New York, Philadelphia, and Baltimore. During the last two or three years very little difference has existed between the prevailing rates from interior points in this country to points in Europe.
Second. The shipment of commodities from points in the West to Atlantic sea-ports for local consumption, for distribution coastwise or to interior points in the United States, or for exportation to foreign coun. tries, constitutes a traffic which is competitive, but not to as great an estent as direct shipments from interior points at the West to points in Europe. In the case of shipments to the sea-port markets, other considerations are involved besides the mere question of transportation. These considerations are the advantages afforded by the several markets, the relative magnitude of the home and foreign demand, and the facilities for storage and for interior, coastwise, or foreign shipinents at each port.
Third. But there is a third and the largest class of traffic which is even less affected by the competition of rival lines and of rival sea-ports, viz, direct shipments from the West for consumption at interior points in the Atlantic States. Such shipments are in many cases confined to one of the trunk lines and therefore form a part of its local traffic. In other cases two or even tbree of the lines may compete for the traffic, but it is excluded from the direct competition of all the trunk lines by certain geographical limitations.
But even where the traffic appears to be confined to one or two lines, the rates of transportation are to some extent controlled through the competition of product with product in the various markets of the country, and thus each one of the transportation-lines exerts a competitire influence over the rates on other roads.
It is important to notice in this connection the fact that the home consumption in the Atlantic States very largely exceeds the foreign demand. Of the entire surplus products of the West, embracing vegetable food, animals and their products, spirituous and malt liquors, and the innumerable commodities transported in greater or less quantities, very much the larger part is shipped to sea-ports or to interior points on the several trunk lines for local consumption. It was found by careful computation that in the year 1872 about 40 per cent. of all the grain shipped into the Atlantic States was exported and about 60 per cent. was consumed in the United States. During the year 1876 also, the demand for such products in the States of the Atlantic seaboard largely exceeded the foreign demand.
In view of the facts thus presented it is evidently necessary in considering the subject of transportation between the West and the seaboard to distinguish carefully between these three degrees of competition with respect to through traffic, viz:
First. Direct shipments from interior points at the West to Europe; Second. Shipments from the West to Atlantic sea-ports; and
Third. Direct shipments from the West to interior points in the States on the Atlantic seaboard.