revenues; to the keeping up of their properties; to enable them to furnish needed facilities, to pay their employes living wages. "It can not possibly be for the interest of any country, that so large a portion of the invested capital should be wasted or unremunerative. . What the country needs is that they shall be made useful; not that they shall be crippled or bankrupted."* August Schoonmaker, for many years a member of the Interstate Commerce Commission of the United States, suggests that the making of rates should be entrusted to a federation of railway officials, the government exercising a supervisory power: "Federation for common purposes and to promote the common good, is a plan approved by the experience of mankind for centuries. It is especially the mode among races endowed, like the Anglo-Saxon, with a genius for government by lawful and peaceful means, and is illustrated in its grandest form in the structure of our own national government."

Federation is nothing more or less than pooling; concerted action where it is necessary, independent action where it is not, Federation, while it might cover all traffic, would practically be enforced only in regard to competitive rates. Carriers would, in all other cases, make such rates as they pleased. Indeed the carrier practically makes such rates as the business requires where pooling exists. But the pool deprives him of the ability to take unfair advantage of his competitors. Thus their suspicions and jealousies are allayed and rate wars avoided.†

*Judge T. M. Cooley, Chairman Interstate Commerce Commission, Railway Review, January 8, 1887.

Aldace F. Walker, formerly an Interstate Commerce Com

Railways are constructed to make money. In order to make money, they must do business. In order to do business, they must meet the wants of the community; must harmonize their interests with those they serve. This they do. This natural sequence of events, however, is only understood by the few. It is doubted by the many. These last are simply ignorant. They view with suspicion everything that emanates from railroads, their measures and policies-among other things pooling. They think they see in it a means of undue exaction, a combination to oppress the public. They therefore favor its prohibition. A law prohibiting water from seeking its level would, however, be just as sensible, just as effective. Wherever carriers are prohibited from pooling, they will find a substitute therefor, or, failing in this, will consolidate their properties. Rate wars, it should be understood, do not arise from any improper motive, are not dishonest. They are the outgrowth of instincts inherent in every trader-acquisitiveness, suspicion, craft; a desire to over-reach his competitor; an unwarranted belief in his own superior resources. "The greatest difficulty encountered in the attempt to solve the railroad problem is the enforcement of the tariffs after they have been mutually agreed upon. It is owing to the spirit of competition that exists between railroads; each company endeavoring to secure the largest amount of business; to increase its tonnage by taking the business from some other road."* The business interests of a country require that this disturbing influence should be eliminated so far as it can by harmon

*Albert Fink, argument before Committee of Commerce, Feb

ious action among carriers and in the way generally recognized in other countries, namely, by pooling-whenever our railroads find such expedient advisable.

Another and an analogous means of securing an equitable adjustment of traffic, is the differential rate. This, as already explained, is an arbitrary concession (applicable to either freight or passengers) allowed a transportation company by its competitors, on business between given points of territory. Such concessions are granted because of some disability, or lack of facilities which makes it impossible for all the transportation companies interested to enter into full and equal competition. Thus, a line comprising both rail and water transportation or one having a more circuitous route or heavier grades, or inferior equipment, or in any way operating under conditions that place it at a manifest disadvantage, is considered a differential line. The arrangement applies particularly to competition between common points. Differential rates are also allowed when necessary in connection with competitive export and import business-the inland line, having the shorter haul, being permitted to make a lower rate to equalize the higher rate that the water line having longer route, charges.

Differential rates are a protection to both the carrier and the public in this that they remove from the weaker company the temptation to make ruinous reductions in order to secure business; and in so far as differentials do this, they ensure stability and uniformity of rates along

CHAPTER VIII.

RAILWAY RATES AND GOVERNMENT CONTROL-RATES MAY BE TOO LOW. THEY CAN NOT BE TOO HIGHRAILWAY ENTERPRISE UNNECESSARY RAILROADS: EFFECT THEREOF-PROPER SCOPE OF

GOVERNMENTAL SUPERVISION.

The sudden and vast growth of our railway system has had the effect to bewilder the public mind, to prevent its problems being rightly understood. The subject, in all its details, is too vast to be comprehended readily. Time is required for the acquisition of this knowledge and the assimilation of the new industry with surrounding enterprises. The liberal commercial spirit that animates railways has not been understood, and, because of this, public sympathy has been denied them.

The baneful effect that attends warfare on private interests is generally recognized, but because of the magnitude of railway enterprise and its impersonal character, it has been thought to be an exception, rendering it not only practicable but politic to deny its owners the right to manage their property in their own way, but to hold up their acts to public reprobation. The sooner this impression is dissipated, the better it will be for the country. The sooner the people learn that to deprive carriers of any portion of their just earnings, to injure their

credit or the good repute of those who own or manage them, is to injure the country, the better it will be for all concerned.

The enormous wealth and power of the railway companies excite apprehension and jealousy, and the subtleties and apparent inconsistencies that characterize their operations, the result of environment, have bred a disposition to surround them with hasty and ill-advised acts of legislation. The railway system of the United States is inherently and grossly artificial, and the efforts of owners to adjust their affairs to these conditions and the necessities and the comities of business, have subjected them to many unjust charges. These accusations have their origin in ignorance, and will continue to find expression so long as the conditions that engender them exist and the public mind remains uninformed.

The questions of public interest surrounding the railway system are too great to be fully considered within the space of a single volume. Only the more important peculiarities of its growth and operation can be noticed. The situation in the United States is anomalous. Nowhere else is free construction known. Its effect has not been what was expected. Its benefits far outstrip its disadvantages. However, while the community thought that the multiplication of railways under all circumstances would prove a public blessing, their construction, under certain conditions, is found to be a public calamity; overproduction, here as elsewhere, entails disaster