MILLING IN TRANSIT. 131 town from which the regular local rates are charged to points in adjacent territory, upon similar consignments, forwarded under similar circumstances. The charges for the two shipments would generally, of course, aggregate considerably more than the charge for the single through shipment. The "milling in transit" system which prevails largely in the northwest, and to some extent elsewhere, involves the same principle, and confers a similar advantage. This consists in allowing to milling establishments located on the line of a road between the grain-producing regions and the flour-markets, the privilege of bringing their wheat to the mills, converting it into flour, and forwarding the flour to market, at the same rate or nearly the same -as is charged for carrying the wheat direct from place of production to place of consumption. While the same right is granted to all milling towns, and all establishments along the line, this practice is perhaps not objectionable. But where the privilege is allowed to some places or persons, to the exclusion of others, it constitutes an unjustifiable and ruinous discrimination. CHAPTER VI. Personal Discriminations-Resulting from Excessive Competition; from Supposed Advantages to Accrue to the Railroads Therefrom; from Mere Favoritism-Never FustifiableDistinguished from Local Discriminations-Difficulty of Detection-The Pooling System-Differential Rates-Unnecessary Railroad Building-Division of Territory-Consolidations-Discrimination between Different Kinds of Traffic, or Classification of Freight-Value and Risk, and Not Cost of Service, the Basis of Classification—Necessity to the Public Welfare of the Adoption of this Basis--Abuses. ANOTHER evil that gradually grew and became incorporated into the operation of railroads, is that of discrimination between individuals in the prices charged for transportation, and in facilities afforded. These personal discriminations, though not wholly confined to competitive points, were largely developed by the struggle between railroads for competitive business. In many cases, however, they appear to be entirely arbitrary. For instance, it was proven before the Hepburn Committee, that the New York Central Railroad gave to one shipper a rate of ten cents a hundred from New York to Syracuse, while other shippers were charged rates varying from sixteen to thirty cents a hundred for the same service. Discrimina tions of this sort are usually effected by means of rebates or drawbacks on the regular (or open) rates, and at competing points are (or were) almost universally practised by railroad companies in favor of large shippers. ness. The great corporations, in order to secure the business, vie with one another in giving these rebates (which, as a rule, is secretly done), until finally the evil culminates in an open and furious war of rates over competitive busi"Before the Southwestern Railroad Association was formed, the several roads extending from Chicago and St. Louis, and other Mississippi River points to Kansas City, Leavenworth, Atchison, and St. Joseph, indulged in frequent struggles for the competitive traffic, the inevitable result of which was that the published tariff was disregarded, and special or contract rates became the rule. Thus, while the tariff from Chicago to Kansas City, on the first four classes (of freight) was 90, 70, 50, and 30 cents per hundred pounds respectively, large shippers had contracts at one half the rates above-named, while a few secured contracts at even less than the rates last described. For example, a merchant might think he has done well to secure a first-class rate of 45 cents a hundred from Chicago to Kansas City, and 30 cents from St. Louis, until he learned incidentally that his rival in the same trade had obtained rates 10 cents per hundred weight lower. Under such circumstances, none but the unwary paid tariff rates. The alert shippers-and the large ones come under that head-were shrewd enough to work one road against another, exciting their jealousies and suspicions, until those having freight to forward were able to name the price at which it should be carried." In the graphic language of Mr. Haines, a prominent southern railroad manager: "This system went on from bad to worse, centering the business of competitive points in fewer hands, drawing the business of neighboring stations to competitive points, and rendering it impracticable for a man with small capital to establish himself in business under such disadvantages. The railroad managers no longer controlled their own business. Under the threat of losing business they were forced to make concessions which they knew were wrong. They were anere' noyed by applications which it was impolitic to refuse, and met with suspicion and treachery from the very men who were being made rich by rebates, and yet feared that some one else might be getting better rates.' The situation resulting from competition between railroads has been described by Mr. Adams, whose experience formerly as head of the Massachusetts Railroad Commission, and now as head of the Union Pacific Railroad Company, entitles his utterances to great respect, as follows: "Besides all this, however, competition led to favoritism of the grossest character. Men or business firms whose shipments by rail were large could command their own terms, as compared to those whose business was small. The most 1 J. W. Midgley in Appendix to Rept. of Cullom Com., p. 226. Id., p. 132. 992 WARS OF RATES. 135 irritating as well as wrongful inequalities were thus made common all over the land. Every local settlement and every secluded farmer, saw other settlements and other farmers more fortunately placed, whose consequent prosperity seemed to make their own ruin a question of time. Place to place, or man to man, they might compete; but where the weight of the railroad was flung into one scale it was strange, indeed, if the other did not kick the beam."" These wars of rates over competitive business logically result in aggravation of discriminations against local shippers. During a period when rates on the former went down to a point where they failed to pay perhaps even the bare cost of movement, the New York Central Company continued to pay regular dividends on stock. That, it is said, they were enabled to do from the fact that while they were carrying competitive traffic at an absolute loss, they had such complete control of their local traffic that they recouped the losses upon the former by charges upon the latter, which were excessively exorbitant during the same period.' Nor are these personal discriminations always confined to competitive points. For example, during one of the trunk-line railway wars every miller, with one exception, at Black Rock and Niagara, on the New York Central, had to close his mill, being unable to get his flour to New York as cheaply as the millers of Minneapolis, in the far west. The answer given to the 1 "Railroads: Their Origin and Problems," p. 125. |