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customs revenue of the United States Government during that year. It should be remembered that these reductions were effected within a comparatively short period, and one during which sixty per cent of all railway stock capital received no dividends.

An exhaustive study of changes in railway freight rates since 1852 was recently made under the direction of the Committee on Finance of the United States Senate, the results of which, published as a Senate document,* constitute an exceedingly important contribution to the available information regarding railways. The importance of this investigation, the only one of the kind ever undertaken, led to its being placed in charge of Mr. C. C. McCain, now auditor of the Interstate Commerce Commission, a gentleman of wide experience and thorough knowledge of railway affairs, whose name is sufficient testimony to its accuracy. Mr. McCain briefly summarizes the results of this investigation as follows:

"From all the forms of comparison presented it is clearly demonstrated that there has been a constant downward tendency in freight charges in all sections of the country."

Data contained in this report fairly illustrate the reductions that have taken place during the period investigated. The references in this paper cover an exceedingly small fraction of the matter included and the report itself should be carefully studied by any one desiring to be fully informed concerning the history of railway freight charges in the United States.

In many respects the most satisfactory presentation of the downward tendency in railway freight charges is afforded by a comparison of average rates per ton per mile charged during successive periods. Aside from the manifest advantage of clearness this method may be preferred, because it excludes no portion of the aggregate traffic and presents the

* "Wholesale Prices and Wages." Report of Finance Committee, United States Senate. Report No. 1394. Second session Fifty-second Congress, Part I, pp. 401658.

actual net result of all changes whether advances or reductions. A disadvantage, perhaps not quite so apparent, arises from the fact that with the growth of interstate and foreign commerce and the rapid development of our railway system there has been an immense increase of long-distance traffic, which, naturally carried at lower rates per ton per mile than shorter-distance traffic, effects a reduction in the average, although rates may not be absolutely lower for similar service. The error thus caused, cannot, however, be of much importance. That such a comparison will show lower charges at the present than at any former time is generally admitted, but the extent of the reductions may not be so widely understood. The following instances are selected from Mr. McCain's report. The average rate charged by the Pennsylvania Railroad for transporting one ton of freight one mile during 1852 was 5.42 cents; in 1862 it was 2.04 cents; in 1872, 1.46 cents; in 1882, .87 cent; in 1892 only .65 cent. In other words during 1892 sixty-five cents would pay for as much transportation of freight over the Pennsylvania Railroad as $5.42 would thirty years earlier. Similar reductions have occurred on all other lines. In New England, the average charge of the New York, New Haven & Hartford Railroad has declined from 6.23 cents in 1870 to 1.76 cents in 1892. From Buffalo to Chicago one of the principal routes is that via the Lake Shore & Michigan Southern Railway. The average charge of this company during 1854 was 3.51 cents; during 1864, 2.83 cents; during 1874, 1.18 cents; during 1884, .65 cent, and during 1892, .60 cent. The Chicago, Milwaukee & Saint Paul Railway operates a greater mileage than any other company in the same territory. It received an average of 1.06 cents for each ton carried one mile during 1892, being a reduction from 1.28 cents in 1882, 2.49 cents in 1872 and 2.68 cents in 1863. Beginning with an average of 6.14 cents during 1872 that of the Denver & Rio Grande Railroad had declined to 1.86 * Pp. 615-617.

cents in 1892, while during the same period the Union. Pacific Railway had reduced its charges from an average of 2.34 cents to 1.08 cents. When it is added that an increase of one mill per ton per mile in the average charges for the traffic carried during one year would produce additional revenue equal to ninety per cent of all dividends now paid, the importance of these reductions will be appreciated.

No single rate is of greater constant importance than that upon grain via the all-rail lines from Chicago to New York. It is not merely the rate at which grain is carried between the greatest grain market in the world and the principal grain exporting port, but is also the basis of rates from all western points to all of the cities and towns located on or adjacent to the Atlantic seaboard. Any change in this rate, therefore, effects a corresponding change in the rate upon nearly every bushel of grain produced in the United States and not consumed at or near the point of production.

The following statement shows the rate charged for the transportation of grain via all-rail lines from Chicago to New York on the dates named:

RATES IN CENTS PER 100 POUNDS.

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The rates charged for the transportation of both anthracite and bituminous coal have been greatly reduced during the last twenty years. For example, while the average rate per ton of 2000 pounds from collieries in the Clearfield region of Pennsylvania to Jersey City was $4.05 during 1873, a ton of 2240 pounds was transported between the same points in 1892 at an average rate of $2.25. Cotton compressed in

*Corn, 20 cents.

bales was carried from Memphis to New York during 1893 at a constant rate of 50% cents per 100 pounds, which was a reduction from 74 cents which prevailed during 1881.

Local rates have declined even more than has, in many instances, been the case with competitive rates.* For example, common starch as late as 1874 was charged 38 cents per 100 pounds from Boston to North Adams, Mass., via the Boston & Albany Railroad. The same transportation is now performed for 15 cents.

Examples of reductions equal in extent to the foregoing, including all sections of the country and every article of commercial importance commonly offered for shipment by rail, might be multiplied almost indefinitely, but sufficient have been adduced to illustrate the constant tendency toward lower charges, which has been such a prominent characteristic of the development of railway transportation in the United States.

Having established the existence of this tendency, the question naturally arises whether it is the result of concessions grudgingly yielded by reluctant carriers who have succeeded in retaining rates sufficiently high to yield extortionate and unreasonable returns upon the capital invested, or has it so fully kept pace with the institution of more provident methods of administration and the economies permitted by increased density of traffic that the larger proportion, if not the entire aggregate of the benefits derived therefrom, has accrued to the shipping and traveling public instead of to the owners of railway stocks and bonds.

It may be confidently asserted that except in extremely rare instances it is practically impossible to maintain, for any considerable period, railway rates which are excessive. The interests of the railways and their patrons unite in the creation of conditions against which it is vain for any railway official to contend for extremely high rates. From the standpoint of the railways, it is evident that excessive rates *See Fourth Annual Report of Interstate Commerce Commission, pp. 225-229.

constitute a limitation upon the quantity of traffic, which, if carried far enough, may became prohibitive. The expenses of railway transportation are roughly divided into those arising from operation and fixed charges in the proportion of about sixty-nine per cent and thirty-one per cent respectively. The latter are entirely independent of the volume of traffic, while a large portion of the former are so far unaffected thereby that a considerable increase in traffic would result in a relatively much smaller increase in the expense of operation. It, therefore, necessarily follows that a large traffic at low rates is often more profitable than a smaller traffic at higher rates, a fact which few railway managers have failed to appreciate. Aside from the mere present increase in net revenue possible on account of reductions from high to more equitable rates, it is incontestable that low rates tend to develop the territory contiguous to the line over which they are available, and consequently to promote the final and permanent prosperity of such lines. An enlightened consciousness of these facts has caused the great majority of railway officials having authority to make rates to concede to their patrons the lowest which could be made without increasing operating expenses faster than gross

revenue.

Shippers are constantly appealing for lower rates, and the pressure thus brought has been too great for continued successful resistance. The manufacturer or producer sees in a concession of a few cents, or even a fraction of a cent, from current rates an opportunity to put the commodity he ships into more distant markets or to successfully underbid his competitors in those already reached. Commercial conditions and the importunity of rival shippers as well as the provisions of the Interstate Commerce Law, which in this respect is believed to be merely declaratory of the common law, require that if any concession is made it shall be open to all shippers of the same or similar commodities between the same localities in the same direction. Further than this,

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