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The following statement by Mr. Porter in regard to the discrimina. tions indicated in the foregoing schedule is of interest in this connec. tion:
Discriminations as to distance are the rule and not the exception with most roads. Where there is no competition, the rates by comparison appear to be disproportioned and strikingly high, but the fact should not be lost sight of, that from these local points the amount of business is usually insignificant compared with that to be ob. tained from the chief competing centers in the far West. On the Cumberland Valley Railroad in Pennsylvania, from points distant 125 and 135 miles, respectively, from Baltimore, one-balf of which distance (from Harrisburgh) is over the Northern Central road, (now worked by the Pennsylvania Company,) the rate is 17 cents per 100 pounds, which is but half a cent less than the latter company charges to Baltimore from Chicago, a distance of 900 miles. Again, by the Baltimore and Ohio road from Frederick, distant from Baltimore but 63 miles, 12} cents per 100 pounds is the rate, while from Chicago, 815 miles, the rate is only 5 cents more.
The rates charged by other trunk lines from interior points to Atlantic seaports exhibit similar discriminations with respect to distance. The extension of railroads throughout the country has to a great extent elim. inated the consideration of distance, or at least greatly reduced its value as an element of the cost of transportation.
The following illustration, presented by Mr. J. D. Hayes, of Detroit, Mich., points to another feature of the subject of discrimination. It serves to indicate that unequal rates are oftentimes compelled between competing railroads, in order to prevent a shorter line from securing all of a certain traffic and thus to break down competition, the surest guarantee of cheap transportation :
There are now three competing lines between Lansing, Mich., and the western terminus of the New York Central Railroad. The latter road forms an eastern connection of all these three competing lines, and evidently it must remain neutral with respect to the traffic they bring to it. The distance from Lansing to Boston via the South Shore Road is 927 miles, while via Detroit and the Great Western Railway it is only 818 miles, (109 miles less.) If the same rate per ton per mile were charged on both lines, the longer line would charge 13 per cent, more than the shorter line. In that case the longer line would not be able to secure any part of the traffic. In order to compete for the traffic, the longer line can charge no more for the entire distance from Lansing to Buffalo than the shorter iine. The New York Central can get no more from one line than from the other for the same service from the same point with. out discriminating against the one and in favor of the other. The adjustment of charges west of Buffalo is as follows: The roads from Detroit to Buffalo should receive the same compensation as the Lake Shore Road from Toledo to Buffalo. Circumstances governing the through traffic compel equal charges from Detroit and Toledo to competitive points East. The result is that, in order that the through rate from Lansing to the East may be equal, the shorter line from Lausing to Dstroit must receive the same as the longer line from Lansing to Toledo.
Virtually the line from Lansing to Detroit is allowed for 194 miles, while the actual distance is only 85 miles. At first glance this irregularity may seem to be an unjust discrimination against the line from Lansing to Toledo, but another important fact must here be taken into consideration. The joint or agreed rates of both roads from Lansing to Toledo and Detroit are necessarily the same for all “ local traffic;" i. l., commodities shipped from Lansing to the Toledo and Detroit markets either to be manufactured or sold at these points. In order that these two markets may stand on
an equal footing in the New York and Bostonqarkets, and at common points throughout the Atlantic seaboard, the Lake Shore and Michigan Southern Railroad must carry freight at the same rates to Buffalo as are charged from Detroit to Buffalo, and of course receive much less per ton per mile, the distance from Toledo being greater.
Thus the merchants of Detroit are placed upon an equal footing both with respect to the supply at Lansing and the demand at eastern points.
The foregoing illustration shows that certain discriminations are sometimes necessary, in order to prevent other discriminations which would be destructive of important commercial interests.
The discriminations complained of in the Western States relate chiefly to "local rates," and are the proper subiects of inquiry and of relief by State authorities. Already the question has received the earnest attention of the legislatures, of the courts of justice, of railroad commis. sioners, and of others whose attention has been called to the subject from duty, from interest, or from the force of personal inclination. Many unjust discriminations with respect to freight rates have undoubtedly been made ignorantly by managers of railroads, from the fact that they bad no knowledge of the cost of performing the various classes of service on the roads intrusted to their care. A few able men in this country have investigated the economy of transport by rail, and other important conditions which necessarily exert an influence in determining freightcharges. These men have pursued the subject in a thoroughly scientific manner, and have brought to the task great ability and patient research. It is their opivion that many freight-tariffs have been framed by railroad managers in violation of economic and commercial principles. This was especially the case during the first twenty-five or thirty years of the history of railroads.
The subject of discriminations is perhaps the most complex and diffi. cult one in the entire range of railroad management and regulation. It is essentially a question of details, since each case or class of cases must be determined upon its own merits. The conduct of railroad affairs having become so intimately connected with the social and business interests of the people, discriminations and other abuses must be corrected gradually in the ordinary course of judicial proceedings, by regulations established by the railroad companies themselves, by such legislative action as may be taken as the result of a careful study of the whole subject in all its bearings, and by the establishment of customs commanding popular approval. Perhaps a safe guide in efforts to mark the line of distinction between just and unjust discriminations may be drawn from the following opinion of an English court as to the general rule which should prevail in deciding whether certain restraints upon trade resulting from railway coinbinations are reasonable or unreasonable:
We do not see how a better test can be applied to the question, whether reasonable or not, than by considering whether the restraint is such only as to afford a fair protection to the interests of the party in favor of whom it is given, and not so large as t) interfere with the interests of the public.
This opinion has been re-affirmed in a leading case in this country.
Public sentiment, while ever sensitive of every apparent inroad upon private rights, will undoubtedly sanction the extension to railroad companies of the largest possible immunities and privileges, consonant with sound views of public policy and with those rules of law touching the rights and duties of common carriers, which have become established by the custom of centuries.
A long period elapsed before the people of the Western States turned from an enthusiastic desire for the promotion of railway projects at almost any sacrifice and by means of almost any practicable expedient, and came to regard railroad managers almost as public enemies and the interests of railway stockholders as necessarily antagonistic to their own. But unjust discriminations, exorbitant charges, the misappropriation of the proceeds of land-grants and other aids contributed by the people of the States, the corruption of legislative bodies, and the irritation caused by the reckless and offensive manner in which complaints and protestations were met by railroad officials and servants, produced their natural effect. The outburst of popular indignation finally came, and the promoters and managers of the railroads were brought to realize a fact which had been demonstrated time and again, that a great enterprise, touching the public interests at many vital points, cannot be conducted in disregard of public sentiment. The outbreak was marked by that indignant and tiery zeal with which a free people always resist the encroachment of real or fancied oppression. When public sentiment was on the side of the railroads, the people were too lax in the matter of restraints; and when the time for retribution came, the opposition was, in many cases, wild and unreasonable.
The railroad managers, whose duty and interest it was to furnish the information necessary for arriving at a knowledge of the whole question, were responsible, in a great degree, for the errors committed through ignorance. Perhaps the mistakes committed on both sides were, in the nature of things, unavoidable in the development of a knowledge of the true relations of the railroads to the state.
PROPOSED OR ADOPTED FOR THE
The opinions entertained in regard to the relations which the rail. roads sustain to the state differ very widely. The subject has been much debated between the advocates of the railroad interests and the advocates of the public interests. It has been held on the one hand that a railroad company is endowed with the absolute right to use its franchises and properties without any reference whatever to the public interests, and that its power to regulate freight-charges is one with which the state can in no manner interfere, or, in other words, that a railroad is subject to no other legal restraints than those which apply to the operations of a cotton-factory or to a manufactory of boots and shoes.
On the other hand, the extreme view has been heldThat railroads are public highways; the title rested in the corporations, but vested in trust for the State ; that the companies are merely the agents of the State, for the operation and management of these great bighways; that the money invested by the companies as compensation for lands condemned or right of way purchased, and to build, equip, and operate the road, is regarded as consideration paid to the State for the franchise conferred by the State upon the companies."
These diverse views as to the relations of the railroails to the State bare led to widely different opinions as to the nature and limits of the expedients which should be adopted for the prevention and correction of abuses. The extreme advocates of the railroad interests hold that the erils complained of are inseparable from the system, or that they are of such a nature that they will work out their owu cure, and therefore that the principle of non-interference should mark the policy pur. sued by the Gorernment towards the railroads. The extreme adrocates of the right of the state, on the other hand, go so far as to assert that the state should exercise an almost absolute control over the rail. roads througb executive supervision.
In England several stringent methods of “ regulating the railroads" have been advocated, but never adopted. In some of the countries of Continental Europe, the plan of a rigid executive supervision over the railroads has been practiced alınost from the beginning. This interference embraces a general oversight of roadway, equipment, and traffic.
In two or three of the countries of Europe the government has gone so far as to coustruct or otherwise possess itself of certain of the more important lines, for the purpose of regulating rates on the rest, through competition. The German government has advanced to the extreme policy of adopting measures toward securing the ownership and control of all the railroads in the empire.
The measures which have been proposed or a lopted in the United States for the regulation of the railroads relate both to matters of a police nature and to those of a commercial bearing, such as the prevention of unjust discriminations, exorbitant charges, and combinations, or other internal arrangements supposed to be in opposition to the public interests.
(a) Police regulations.—The power arid the duty of the Government to establish and enforce proper police regulations over railroads are unquestioned, but the extent to which this power is exercised must generally depend upon the degree of care exercised by railroad companies in regard to the protection of life and property, and to matters relating to the comfort and convenience of travelers. Evidently the railroad companies can, through their own agents, oficers, and servants, attend to all these matters much more intelligently and effectively than can the State, through its police officers, its courts of justice, or its railroad commis. sioners especially charged with the enforcement of laws relating to such
*Speech of Hon. Matt. H. Carpenter, at Ripon, Wis., September 16, 1874.
matters. The duty of the State, however, to enact proper laws and to see to it that their provisions are observed, and thus bring to bear in a direct manner the power of public opinion, is none the less imperative.
Widely different views prevail as to the limits of the supervision which should be exercised by the State in regard to matters of police, and also as to the nature of the regulations which should be adopted. The police regulations which would be deemed sufficient in one of the sparsely-settled Western States would be quite unsatisfactory in the densely popu. lated State of Massachusetts. The jurisdiction of the railroad commissioners of the various States, relates chiefly to matter of a police nature.
Police regulations embrace a great variety of subjects, among which may be mentioned suitable fences along the lines of railroads, cleanly and commodious passenger-stations, the safety of bridges, the proper condition of road-bed and superstructures, the adoption of mechanical improvements proved to be of value for the protection of life and property, and the employment of proper persons to attend to duties pertain. ing to the public safety and convenience.
A sense of self-interest on the part of the railroad companies is undoubtedly the most effectual safeguard toward securing the ends of safety and convenience, and it is found that the companies generally adopt precautions in advance of governmental requirements, and to such extent as to obviate the necessity of any actual interference by the State. Almost all the instrumentalities for the protection of life and property on railroads and for securing the comfort and convenience of pas. sengers and of the public generally have been adopted by the railroad companies from a sense of self-interest and without any reference what. ever to requirements of law. A great deal of money has been expended by railroad companies upon experiments having this single object in vier. On all the great trunk roads, and on many of the branch roads, comparatively little has been left to be attended to by the State. The tendency among railroad managers is constantly toward progress in respect to the condition of their road-bed, track, bridges, buildings, cars, and mechanical appliances of every kind, and toward securing the highest possible degree of efficiency and vigilance on the part of their officers and employés.
In addition to the matters above mentioned, all those facilities having in view the speedly transmission of goods, the express traffic, the transportation of freights in cars designed to meet the special requirements of traffic, the conveniences of terminal arrangements, both for passengers and for freight, and that most valuable improvement in travel by rail, the sleeping.car, have been introduced by individual or corporate enterprise, and without any governmental suggestion or interference whatever. The degree of perfection to which the railroads of the United States have attained constitutes them a proper object of national pride.
Some of the measures which bave been proposed or adopted in