doubtless save for operation such sections of the line as may be practically operated. The future success of such sections will be dependent in large measure upon the support of the people to be served, especially those who may be entirely dependent upon said sections for transportation. They should realize that they have a duty to perform. The mere desire to have a railroad is not enough. There must exist the will to cooperate in its operation by accepting such reasonable economies in service as may be feasible, and by adequately supporting the line. Resort should not be had, where no necessity exists, to other carriers or to other forms of transportation.

Upon the facts presented we find that the present and future public convenience and necessity permit the abandonment of operation, as to interstate and foreign commerce, of the line of railroad in question. A certificate to that effect will be issued accordingly.

CHAPTER XV

1 RAILROAD TERMINALS

1. RAILWAY SERVICE AND REGULATION IN PORT TERMINALS

2

The regulation of transportation in the United States has been the outgrowth of a theory which has demanded competition among common carriers. Our early railroads were short and disconnected lines and the regulation, if any, was local in character. As these roads lengthened out into systems many difficult problems presented themselves and the relation of common carriers to industries took on a new significance. This was not appreciated for some time and the carriers in this country were left without adequate control for more than half a century. Even at the present time our legislation does not recognize sufficiently the fundamental principles of economics which should be applied to the transportation business. Our theory of railroad control in this country has apparently assumed that carriers and industries belong to the same class. The principles of economics which might apply to certain industries have been carried over into railway regulation, and it has been impossible, therefore, for carriers to render the kind of service which the public has a right to expect. Nor will carriers render the service which they should until legislation forces them to do certain things they will not do under present railway legislation.

In this country as compared with European countries we had little regulation of railway building. For many years railroads were built parallel to each other; in some instances, merely to force the original road to buy out the newcomer in order to prevent rate wars. In France, on the other hand, the regulation of railway building was of such character that railroads were planned by engineers under direction of the French government. Generally speaking, the roads there radiate out from Paris like the spokes in a wheel. The ambitious promoter of railroads did not find a fertile field in France. In this country, in addition to much parallel

1 See Vanderblue and Burgess, pp. 272-281.

2 From C. O. Ruggles, American Economic Review, vol. 11, pp. 438-446 (September, 1921). Reproduced by permission.

building, certain roads secured most of the valuable land suitable for terminal transportation and it has been difficult for late comers in our important terminals to render efficient service to the public.

The lack of regulation of railroad building in America has had some very unfortunate results. It resulted in excess of railroad mileage over needs throughout many portions of the country and it brought monopoly control of terminal facilities. Charles Francis Adams pointed out in 1875 that in this country railroads were built out into sections where nobody lived and from that point on out to where nobody cared to go. The excess of transportation facilities continued until about 1905 and it meant keen competition among roads. Our parallel mileage has meant more discrimination on the part of carriers in favor of or against industries than has been the case in other countries. Moreover, it has meant that terminal facilities over which certain roads have had monopoly control have been used to secure traffic that could not otherwise be obtained. It is evident, therefore, that one of the most vital phases of railway regulation for the future is that of the control of transportation service within our important port terminals and in a proper coördination of rail and ocean transportation.

The difficulties now encountered in rendering efficient transportation service in our port terminals may be attributed to three groups of causes: (1) those which concern railroads primarily; (2) those that result from the practice of certain industries; and (3) those due to the lack of foresight on the part of governing authorities in providing for the coördination of all terminal transportation services and facilities.

The traffic which enters important ports is of two kinds: first, traffic destined for points beyond the port, and, second, that for distribution within the port terminal itself. It will not be possible to prevent the clogging of our transportation machinery and the necessity for embargoes upon freight when traffic becomes heavy, so long as all the carriers within our port terminals are permitted to handle traffic in the interest of the individual systems concerned. Railroad control of strategic terminal facilities in our ports has been the natural outcome of competition among our railroads, but it has had some very unfortunate results.

In the first place, government control over railroad rates has intensified railroad competition in terminals; railroads have vied with each other in offering ample terminal facilities and this practice has resulted in duplication of expensive terminals without

adequate provision for their physical coördination. Such a policy has meant the purchasing of much terminal land or water frontage by the railroads in anticipation of their needs. Thus we have railroad domination of the New Jersey side of New York Harbor. Some of the unfortunate results of this situation were indicated in the evidence presented to the Interstate Commerce Commission in the notable New York Harbor case.1 It was pointed out in the decision in this case that railroad rivalry had prevented the establishment of reciprocal switching arrangements and a joint terminal operation of railway facilities on the New Jersey Shore. In other words, the lack of a program of unification of facilities has caused carriers to invest large sums in new terminals for their individual use instead of uniting in a common effort to solve in a larger way the terminal problems of our ports. At only a few ports in this country have such unsatisfactory conditions been. prevented. New Orleans and San Francisco are conspicuous exceptions to the general rule. Examination of the dockage and wharfage charges at the various ports in this country indicates that in some instances terminal charges are in addition to the line haul and in other cases are absorbed. Ordinarily these charges are absorbed on traffic coming from competitive territory or in cases in which the railroad receives a certain minimum revenue.

The second unsatisfactory result of railroad competition in our terminals and ports has been the rendering of services in terminals for less than cost. This has been done in order to secure the line haul of the traffic. Testimony was given before the Interstate Commerce Commission in 1912 to the effect that lighterage and other terminal services in New York cost the Baltimore and Ohio Railroad more than the allowance it received for those services out of joint rates; that on this account that railroad had a deficit on its terminal services in New York, for the years 1909-1911, of more than one and one quarter million dollars. In the decision of the so-called Five Per Cent case, the Interstate Commerce Commission said there were many special services being rendered by carriers to shippers for which no special charge or a non-compensatory charge was being made. The commission stated that the compilations prepared by it from carriers' answers to its inquiries showed that the practice of individual roads meant the absorption of enormous expenses by carriers for such terminal services as loading and unloading carload freight, allowing for free time for 147 I. C. C. 643 [Below, pp. 344-351].-Ed.

loading and unloading, collecting and delivering freight, storing freight, furnishing and transporting dunnage, furnishing or paying for wharfage and dockage and other special services.

The third unsatisfactory result of competition in furnishing terminal and port facilities by a number of different railroads is lack of coördination both among the railroads and between rail and water carriers. A common provision in terminal tariffs is to the effect that a railroad does not obligate itself to furnish wharfage, storage, or handling of freight which has not been transported or is not intended to be transported over its line; but that it reserves the absolute right to the use of its piers or docks. In response to an inquiry concerning wharfage rates in New York Harbor for the United States Shipping Board the reply was given by a number of railroads that they quoted no wharfage rates on their piers, for to do so would be to give the impression that they were open to public use, which they said was not desired. In actual practice, such theories frequently mean the refusal of one railroad to permit the use of its terminal facilities by other roads unless it receives the line haul of the traffic. From the land end of transportation it is the switching service which must be depended upon to unify the port in the movement of cars from one waterfront to another with the least possible delay. But, as a matter of fact, there is often much delay and sometimes refusal on the part of carriers in rendering switching service for each other. What this means at Boston, for example, may be seen from the Second Annual Report of the Commission on Waterways and Public Lands, in which it is stated that the time limits are marked by the "number of days involved rather than hours," and where "charges are several times as large as those made under better organized conditions." The President of the Port of Seattle, before the American Association of Port Authorities in 1917, pointed out that at the time, the Northern Pacific switching tracks on Seattle's marginal streets were divided into "thirteen districts or zones each having a switching rate ranging from $1.50 to $12."

The refusal of a railroad to do switching when import or export freight is involved means inefficiency of both rail and water transportation. For example, if railroad A refuses to accept freight in switch movement from railroad B when it is to be exported from the piers of railroad A, this means that railroad B is compelled to lighter the cargo to the vessel at the pier of railroad A or the vessel must shift to the piers of railroad B after taking