Railroads

3918

Railroads

ducticn in average rates When worked out
properly, it has enablai new centers of indus-
try situated at favorable points to compete
with older centers and thus has contributed
to extending the country's industrial and
agricultural development. Where a railroad
carries goods between two points which are
also connected hy water-transportation lines,
or by rival railroads, freight rates must be so
adjusted as not to drive business 'into the
hands of the competing carriers. High-grade
goods, which might be well able to pay a
high rate, may have to be given a rate yield-
ing little above the expense of moving. In
the earlier days, each carrier, in its zeal to
extend business offered concessions to ship-
pers, which were met by counter-concessions
from the competing routes. While this ten-
dency to reduce rates was checked to some
extent by agreements among the competing
carriers, the through rates between competi-
tive centers are still ordinarily less, in propor-
tion to distance, than the rates from either
center to non-competitive, intermediate
points. Such relationships in favor of the
competitive center tended naturally to build
up the business of such centers at the expense
of the intermediate points, and constituted
one of the chief sources of complaint against
American railroad rate making. This matter
is now in the hands of the Interstate Com-
merce Commission and the charging of lower
rates to a competitive center than to inter-
mediate points en route can be done only
with the Commission's permission and only
in exceptional cases.

In former years, where an individual ship-
per was so situated that he might send his
goods over either of two competing lines, he
may have secured from one of the roads a
rate more favorable than that accorded to
his competitors who enjoyed no such option,
especially if his shipments were large. The
agents of each road were anxious to secure
the business, at scheduled rates if possible;
if this was not possible, at rates slightly
lower. Discriminations of this nature were
exceedingly common in the United States
down to 1905 and were known as rebates.
With more stringent regulation, however,
this practice has long since come to an end.

Under government operation of railroads,
and to a lesser extent under government reg-
ulation, there appears to be more of a dis-
position to fix rates according to a cost basis,
reckoned according to mileage and terminal
costs. Under government ownership, also,

there is a disposition to inject political ob-
jects into railroad policy.

Passenger Traffic and Rates.—The fares
which a railroad may charge for the car-
riage of passengers, like the rates for freight,
are placed by the Interstate Commerce Act
under the jurisdiction of the Interstate Com-
merce Commission. Prior to the Great War
the average fare for ordinary local passenger
journeys was slightly over 2 cents a mile,
though many States had enacted laws limit-
ing fares to 2 cents a mile. During the war,
passenger fares were raised by the Director-
General of Railroads, and in August, 1920,
under the terms of the new Transportation
Act they were again increased 20 per cent,
by the Interstate Commerde Commission.
For local journeys they came to aggregate
about $l/2 cents a mile, (since lowered).

The general level of-passenger fares, like
that of freight rates, is a matter of adjust-
ment brought about through many years of
competition and development. Roads having
longer routes between competitive cities met
the rates of the shorter lines, and in general
there were much rate-cutting and unpleasant-
ness. The disastrous effect of so much com-
petition has led to the formation of agree-
ments and adjustments to cover such mat-
ters, and has resulted in the working out of a
definite structure of passenger fare relation-
ships. New problems have been offered to
the railroads in recent years in consequence
of the loss of business to the automobile. It
has, in general, been found that the greatest
loss in railway passenger business has been
in the local or medium distance travel. Spe-
cial attention has been devoted to attracting
the patronage of the long-distance traveller
through faster schedules, otherwise improved
service or new equipment. The falling off
in local travel has, on the contrary, resulted
in curtailment of service and, in many in-
stances, the substitution of highway buses,
which it has been found can be operated
much more cheaply than steam train service.

Government Regulation.—Public service,
public utility or railroad commissions are
now in existence in every State of the Union,
They vary in size from three to seven mem-
bers, serving from two to ten years; they
are elective in some States and appointive ID
others, and the utilities to which their juris-
diction extends vary widely. In addition to
exercising general powers of investigation
and supervision over the conduct and prac*
tices of railroads, they are authorized to reg-