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Conservative.
lar paid for personal transportation a
few decades ago , even though the dis
tance traversed be but little greater at
present. The public has preferred to
have improved accommodations and
better service rather than very much
lower charges , and , as usual in America ,
has had its way. The same rise in the
standard of living that has given the
American farmer his top buggy , his
piano in the parlor , his Sunday suit and
Brussels carpet has given him the luxur
ious coaches and well-ballasted roadbeds ,
the safety and the speed of modern pas
senger service.
But has the competition of rival routes
produced these reductions in rates and
improvements in the quality of service ?
I think not.
Such competition has caused numer
ous extravagant expenses ; it has made
railway business unnecessarily costly ,
and some one must have paid the bills.
Let us examine some of these expenses ,
though it is not easy to secure authentic
statistics , and those available serve to
suggest , only , the possible aggregates.
The Interstate-Commerce Commission
has reported that nine roads paid out an
aggregate sum of more than one million
dollars in a single year as commissions
for securing competitive passenger busi
ness , and it is known that as much as
$20.70 has been paid to secure a single
second-class passenger from this city to
San Francisco. The multitude of out
side agencies and traveling agents main
tained solely for the purpose of securing
business for their respective lines that
might otherwise traverse those of their
competitors involves an expenditure so
great , even during periods of compara
tive harmony , that it has been deemed
necessary to restrict their immber by
contract. An agreement in force for a
considerable time limited to eight the
number of agencies that might be main
tained in New York city by eacli of the
nine roads competing for westward-
bound traffic from that city. As it is a
fact of ordinary observation that such
agencies always cluster in particular
regions and around particular corners ,
it is obvious that a system of joint
agencies would afford the public equal
accommodation at lower cost.
During the periods of unbridled com
petition , popularly known as 'rate
wars , ' each participating carrier sends
its freight and passenger agents to every
important city in the country at a total
expense for rents , clerk hire , advertis
ing , etc. , that must be enormous. Four
roads operating westward from Chicago
are known to have expended $1,288,585
for outside agencies and advertising in a
single year , during which rates were
fairly maintained , while during an equal
period one road terminating at New
York city expended $871,291 for similar
purposes.
, , ' The competition of long , circuitous
s . --/and commercially illegitimate routes for
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traffic that would5naturally traverse
cheaper and more direct lines is another
gross extravagance too frequently
observed. The president of an import
ant line lias said :
"Illegitimate business is always the
pride of the average traffic manager.
To secure a share of some competitive
business not naturally or fairly belong
ing to a carrying line always appears to
inspire heroic efforts and to be regarded
as meriting special commendation. "
Illustrations are numerous. Between
Chicago and St. Paul traffic is regularly
forwarded over a route practically
double the length of the shortest. From
this city to New York there are 21
routes , varying from 912 to 1,370 miles
in length ; from New York to New
Orleans , beside many water carriers ,
there are more than ninety all-rail
routes , one of which involves carrying
the freight nearly to this city. As an
example of the. waste of competitive
train service , it is not necessary to add
to the bare statement that forty-four
trains leave this city every day for New
York , and that practically similar dupli
cation of service exists wherever the
same cities are connected by competing
railways.
The construction of unnecessary
lines is another gross extravagance in
volving an expenditure from the store of
energy available for the satisfaction of
human wants that produces no good
result. The West Shore , the Nickel
Plate , and many other wholly super
fluous routes will occur readily to any
one as illustrations.
If competition , while involving these
wastes , has still reduced railway charges ,
these extravagant expenditures must
have been met by investors in railway
property. If this were the case would it
have been possible to secure the capital
necessary for the rapid development of
the American railway system , for the
new construction that has gone on dur
ing the years subsequent to 1870 ?
"But the arguments are by no means
all of a negative character. The decline
in rates has affected those from and to
points served by single carriers , as well
as those served by one or more. There
is no important point and no article of
traffic that moves in considerable vol
ume that has not felt the effects of
reduced charges. A little thought will
suggest a cause that may have produced
the decline , in ppite of , though some
what hindered by , the wastes just dis
cussed.
For lack of a better phrase this cause
may be designated as the competition
among producers for the privilege of
selling in the dearest markets , and that
of consumers for the privilege of pur
chasing in the cheapest markets. This
needs to be qualified by the suggestion
that railways must be considered as
producers for the reason that the pro
ductive process cannot be regarded as
complete in connection with a particular
article until that article is available for
consumption. In more technical words ,
that are , however , perfectly clear in
their meaning , production consists of
the creation of utilities of place as well
as of utilities of form.
Railways , therefore , are partners in
the production of the commodities that
they carry. Partners with whom ? The
answer is with every separate productive
establishment , farm or factory , work
shop or mine that exists along their lines
and furnishes traffic for their trains.
Each railway forms in effect a separate
combination ( the word combination is
here used in a clearly innocuous sense )
with each separate productive establish
ment , and , as either place or form
utilities might bo useless without the
other , these combinations are essential
to the completion of the productive
process. Obviously , any railway may
participate in many such combinations
which produce the same article. These
combinations may compote among
themselves , and as most producers of
form utilities have a definite cost of
production per unit of product , while
most of the costs of producing transpor
tation cannot be assigned to particular
services , it is not difficult to force rail
ways to assume the greater share in the
sacrifices which such competition in
volves. There is no other possible ex
planation of the decline in rates that
will account for the fact that while rail
way mileage is now three times as great
as in 1871 , the aggregate amount of
dividends paid on railway stock has
been lower during every year of the
present decade than it was in that
year.
The student who will carefully and
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impartially investigate the circum
stances attending the decline in railway
charges , its relation to prices and cost of
production , its effect on the comp ° tition
among the producers of form utilities ,
and its consequences as expressed in
rates of interest and dividends , will
find convincing evidence that compe
tition of railways as partners in the
business of production is always power
ful enough to force railway rates to the
lowest point at which the revenue
derived from them will pay operating
expenses , under whatever methods of
operation are for the time being in force ,
and afford the lowest return to the
capital invested which in a developing
country will induce capitalists to pro
vide the additional facilities from time
to time required , and to maintain those
existing in a state of satisfactory effi
ciency.
The foregoing analysis shows that
the substitution of effective agreements
in regard to rates for the competition of
rival routes prevents unjust discrimi
nations in charges , and permits econo
mies in operation which inevitably
accrue in the form of reduced rates to
the benefit of shippers and travelers.
I say 'effective agreements' for ex
perience has shown that such arrange-
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