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the Interstate Commerce Law requires that the carrier making such a concession shall so adjust all its rates that not only intermediate rates upon similar traffic shall not be in excess of those between more distant points, but that the entire body of rates shall be relatively reasonable and just. Thus along the line of one carrier an initial concession to a single shipper requires a multitude of similar concessions to other shippers and at other points. This, however, is not all. Shippers located on other lines, and often at an equal or greater distance in other directions from the common market, find themselves at a disadvantage on account of the reductions already granted, and appeals are at once made for reductions by other lines sufficient to restore the original status. These must be made, or the inevitable penalties of loss of traffic and depleted revenue fall upon the obstinate carrier. Railways are also forced in a large measure to compete for traffic with carriers upon water routes, the Great Lakes, navigable rivers, and canals, as well as among themselves, the combat in the latter case often assuming Titanic proportions, particularly when one or more of the competing railways is by its own bankruptcy relieved from the necessity of earning interest upon its funded debt. Thus the action and interaction of forces, as far beyond legislative restraint as they are beyond the control of a single carrier, unceasingly operate to reduce the charges for railway transportation while the greater economy in operation and management enforced and made possible by lower rates and increased traffic in turn permits further reductions.

Viewed from the standpoint of the investor in railway properties, who may be supposed for the time being merely selfishly interested to secure the largest possible net return upon his capital, it can scarcely be said that the present body of railway rates, considered as a whole, is satisfactory, nor has there ever been a period, except perhaps during the unrestrained. competition incident to a war of rates, when it was less so. The interest of the investor in railway

properties in the rates charged is twofold; first, that they shall produce sufficient revenue above necessary operating expenses to yield an adequate return upon the capital represented by the securities he holds, and, second, that they shall permit and encourage the development of the territory contiguous to the railway in order that the future value of its property and franchises may be assured. In order to accomplish the latter result it is obviously necessary that rates should be neither unreasonably high nor unjustly discriminating between persons, localities or classes of traffic.

The following statement, arranged from data contained in the report of the Statistician of the Interstate Commerce Commission, shows an income account for all the railways in the United States, covering the year ending June 30, 1893, and also the same data for each group* according to the system of territorial distribution of statistics adopted by the Commission.

The division of the country into groups for the purpose of localizing railway statistics may be roughly defined as follows:

Group I. This group embraces the States of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and Connecticut.

Group II. This group embraces the State of New York, Pennsylvania, New Jersey, Delaware and Maryland, exclusive of that portion of New York and Pennsylvania lying west of a line drawn from Buffalo to Pittsburgh via Salamanca, and inclusive of that portion of West Virginia lying north of a line drawn from Parkersburg east to the boundary of Maryland.

Group III. This group embraces the States of Ohio, Indiana, and the southern peninsula of Michigan; also that portion of the States of New York and Pennsylvania lying west of a line drawn from Buffalo to Pittsburgh via Salamanca.

Group IV. This group embraces the States of Virginia, North Carolina, South Carolina, and that portion of the State of West Virginia lying south of a line drawn east from Parkersburg to the boundary of Maryland,

Group V. This group embraces the States of Kentucky, Tennessee, Mississippi, Alabama, Georgia, Florida, and that portion of Louisiana east of the Mississippi River.

Group VI. This group embraces the States of Illinois, Wisconsin, Iowa, Minnesota, the northern peninsula of the State of Michigan, and that portion of the States of North Dakota and South Dakota and Missouri lying east of the Missouri River.

Group VII. This group embraces the States of Montana, Wyoming, Nebraska, that portion of North Dakota and South Dakota lying west of the Missouri River, and that portion of the State of Colorado lying north of a line drawn east and west through Denver.

Group VIII. This group embraces the States of Kansas, Arkansas, that portion of the State of Missouri lying south of the Missouri River, that portion of the

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State of Colorado lying south of a line drawn east and west through Denver, and the Territories of Oklahoma, Indian Territory, and the portion of New Mexico lying northeast of Santa Fé.

Group IX. This group embraces the State of Louisiana, exclusive of the portion lying east of the Mississippi River, the State of Texas, exclusive of that portion lying west of Oklahoma, and the portion of New Mexico lying southeast of Santa Fé.

Group X. This group embraces the States of California, Nevada, Oregon, Idaho, Washington, and the Territories of Utah, Arizona, and that portion of the Territory of New Mexico lying southwest of Santa Fé.

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ENDING JUNE 30, 1893.

Group IV.

AMOUNT FOR EACH GRoup.

Group V. Group VI. Group VII. Group VIII Group IX. Group X.

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$12,979,489 $22,862,255 $67,314,381 $12,584,858 $26,329,329 $10,273,837 $23,058,071

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$47,613,465 $90,151,250 $266,663,132 $52,805,463 $113,937,545 $47,096,307 $85,411,613

$30,425,792 $58,321,252 $159,106,507 $30,609,057 $73,395,124 $31,786,526 $42,730,955

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$17,766,691 $31,178,350 $74,535,564 $21,745,358 $36,669,636 $16,915,417 $43,942,594

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$47,613,465 $90,151,250 $266,663,132 $52,805,463 $113,937,545 $47,096,307 $85,411,613

The foregoing statement casts a vivid light upon the revenue-producing power of the present body of railway rates as well as upon the familiar charge that railway earnings are grossly excessive and extortionate. It shows that sixty per cent of the aggregate revenue is required to pay the cost of operation, which includes wages of employes, repairs of road-bed and equipment, etc.; three per cent is

paid to the various State and municipal governments for taxes, eight per cent for rents, two per cent for miscellaneous purposes, which includes expenses of associations, etc., making a total of seventy-three per cent of the aggregate revenue that is absolutely required for expenses which must precede the right of the bondholder to require payment of interest or of the stockholder to demand dividends. The remaining twenty-seven per cent is distributed among those who furnish capital, or retained by the corporation in the form of permanent improvements, or surplus to provide against future contingencies. The proportions devoted to each of these purposes is shown below for the year ending June 30, 1893 :

PAYMENTS TO OR FOR THE BENEFIT OF RAILWAY CAPITAL.

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Probably the wildest advocate of anti-railroad legislation would not describe as unnecessary any of the expenditures shown except those included in the slightly more than onequarter of the aggregate which accrues in one form or another to the benefit of invested capital, and it is therefore only necessary to assert, what will not be denied, that the items which constitute the first seventy-three per cent of the total are legitimate and unavoidable expenses that must be provided for out of the revenues produced by the charges exacted for transportation. Neither will it be seriously contended that the capital invested in railways is entitled to no

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