CHAPTER III. RAILWAY RATES-THEIR BASES AND THE INFLU ENCES AFFECTING THEM. The value of the service to the consumer, its cost, and the competition of carriers and markets, will ever be potent factors in determining the rates carriers of every description charge. The demand for transportation increases each year; so long as it is remunerative, the supply will keep pace therewith. Its character is at once varied and picturesque. We are more concerned, however, in that of railroads. But the water-courses of the world are of supreme importance. "The Almighty has furnished by far the most important avenue of transportation; our navigable rivers furnish it; our artificial canals furnish it. Our water-ways are abundant and varied. We have thousands of miles of rivers that go unvexed, unharassed, untaxed, to the sea. We have lakes which are inland seas, and upon which there are no charges; they roll and shine perpetuallyceaseless, constant, everlasting competitors of every artificial form of transportation. In their quiet way-as quiet and as resistless as the tides-they confront every railroad corporation in the country and say to it: 'In the regulation of your charges, thus far shalt thou go and no farther.'"* These *Emory A. Storrs before the Committee on Commerce, February, 1892. (49 conditions, while potent factors in the United States, are also noticeable in every other country. The rate-making power of railways is an adaptive one. It must take into account the producer, middleman, and consumer, as well as the carrier. It must conform to the market and the competitive influences of other carriers. It is only in isolated and petty cases that the rate-maker exercises any discretion whatever. It is never greater than that of the merchant who puts a price on his wares. "The commercial and industrial forces of the country are much more potential in determining rates than are all the railroad managers of the country, either when acting separately or in concert. The commercial and industrial forces of the whole country have been brought into instant and intense competition with each other. This struggle imposes restraint upon freight charges which the railroad manager is powerless to withstand."* Not only is this so of our own country, but the commercial and industrial interests of the whole world are so interwoven-compete so actively with each other-that they affect the rates of local carriers quite as powerfully as do local interests and rivalries. Primarily, the cost of a property, and the expense incident to its operation, would, conjointly, it was thought, determine arbitrarily the price that should be charged. Experience has proven that this expectation was not well founded. It has been found that the cost of the property influences the rate only in those cases where monopoly exists, or where govern ments assume to fix the rate. In the latter case, any other basis would be an acknowledgement of the right of the government to confiscate private property. The result is that the rates made by monopolies and governments are frequently prohibitory. The profits of the carrier are unequally distributed. He is the creature of circumstances. "A rule that should measure charges by cost would work an entire revolution in the business of transportation, since it would no longer be practicable to make articles whose value was great in proportion to bulk or weight aid in transportation of articles of a different nature, and the carrier would be compelled to demand, upon the traffic in heavy and bulky articles, such compensation as in many cases the traffic could not possibly bear. Nothing more disastrous to the commerce of a country could possibly happen than to require the rating for railroad transportation to be fixed exclusively by this one rule."* In measuring the elements that enter into cost of constructing and operating railways, the reader can not but be impressed with the scope and magnitude of the subject. He can not but be struck with the multitude of things to be considered, many of them of petty consequence, but in the aggregate of prodigious importance and perplexing uncertainty. He *"Fourth Annual Report, Interstate Commerce Commission," pages 15 and 16. For particulars concerning this phase of railway operations the reader is referred to the accompanying volumes of "The conditions, while potent factors in the United States, are also noticeable in every other country. The rate-making power of railways is an adaptive one. It must take into account the producer, middleman, and consumer, as well as the carrier. It must conform to the market and the competitive influences of other carriers. It is only in isolated and petty cases that the rate-maker exercises any discretion whatever. It is never greater than that of the merchant who puts a price on his wares. "The commercial and industrial forces of the country are much more potential in determining rates than are all the railroad managers of the country, either when acting separately or in concert. The commercial and industrial forces of the whole country have been brought into instant and intense competition with each other. This struggle imposes restraint upon freight charges which the railroad manager is powerless to withstand."* Not only is this so of our own country, but the commercial and industrial interests of the whole world are so interwoven-compete so actively with each other-that they affect the rates of local carriers quite as powerfully as do local interests and rivalries. Primarily, the cost of a property, and the expense incident to its operation, would, conjointly, it was thought, determine arbitrarily the price that should be charged. Experience has proven that this expectation was not well founded. It has been found that the cost of the property influences the rate only in those cases where monopoly exists, or where govern ments assume to fix the rate. In the latter case, any other basis would be an acknowledgement of the right of the government to confiscate private property. The result is that the rates made by monopolies and governments are frequently prohibitory. The profits of the carrier are unequally distributed. He is the creature of circumstances. "A rule that should measure charges by cost would work an entire revolution in the business of transportation, since it would no longer be practicable to make articles whose value was great in proportion to bulk or weight aid in transportation of articles of a different nature, and the carrier would be compelled to demand, upon the traffic in heavy and bulky articles, such compensation as in many cases the traffic could not possibly bear. Nothing more disastrous to the commerce of a country could possibly happen than to require the rating for railroad transportation to be fixed exclusively by this one rule.' In measuring the elements that enter into cost of constructing and operating railways, the reader can not but be impressed with the scope and magnitude of the subject. He can not but be struck with the multitude of things to be considered, many of them of petty consequence, but in the aggregate of prodigious importance and perplexing uncertainty. He *"Fourth Annual Report, Interstate Commerce Commission," pages 15 and 16. For particulars concerning this phase of railway operations the reader is referred to the accompanying volumes of "The |