TRANSPORTATION 91 



reader's attention to the great transformations of social life, to sub- 

 jection of the local markets under the influence of great central 

 markets, to the invasion of European agriculture by transatlantic 

 production, to the extension of capitalistic organization of produc- 

 tion under the dominion of European and North American capital, 

 but only to certain phases in this great process of development 

 which have become important for scientific treatment of national 

 economy. The institutions of transportation have created, in the 

 province of pure theory, the law of price. It is a fact that increased 

 communication, within a certain maximum of intensity, does not 

 increase the expenses, and that the expenses of transportation do 

 not grow with the distance over which transportation is operated. 

 Therefore it is to the interest of the undertaker of transportation 

 to invite, by proper rates, the strongest possible use of the means of 

 transportation; hence to set the prices low and uniformly. This 

 principle was followed first with postage (Rowland Hill's penny 

 postage; uniform world's postage); great consequences resulted 

 from it, and finally it was recognized as a special case of a general 

 law of the operation by monopolies. 1 To the theory of formation of 

 capital another most important contribution was made, especially 

 by the railroads. It is often asked whence the monstrous capital 

 has come by means of which in about sixty years the railroads of 

 the earth were built; the expenses of the railroads in Europe which 

 were operated at the end of 1901 amounted to 21.262 millions of 

 dollars; those of all the railroads of the earth, which were certainly 

 all built with European or North American capital, were 40.574 

 million dollars. English, French, and German authors have de- 

 clared that this costly means of transportation has, in a certain sense, 

 built itself, inasmuch as the savings from expenses for production, 

 besides the powerful effect upon the increase of production, were 

 more than enough to make the capital free which was needed for 

 the construction. 2 There is scarcely any more striking example to 

 refute the socialistic theory of the amassment of capital from " de- 

 predation of labor." Our knowledge of the form of organization of 

 human society has also been enlarged by the railways. The railways 

 are the first great operations of capitalism. The amount of the 

 amassed capital, the number of working forces, and, above all, the 

 undertaker's uniform authority over a far-stretching operation of 

 railroads with the various branch institutions, are something new 

 as to their great and careful division and to their inner organization. 

 The railroads have been first to introduce the modern form of asso- 

 ciation of capital, that of stock companies, into wider circles of 

 population, and to create the modern type of operation by large 



Huber, Die geschichtlitche Entivicklung der modernen Verkehrs, 1893, S. 128. 

 2 Emery R. Johnson, American Railway Transportation, 1903, S. 228. 



