THE DIFFICULTIES OF RAILROAD REGULATION. 5 



and means ruin to the investor, followed by consolidation. If it acts 

 at some points and not at others, those points which have the benefit 

 of competition have rates based on operating expenses, while the less 

 fortunate points pay the fixed charges. Then we have discrimination 

 in a dangerous form. 



As long as competition exists, there is no escape from this alterna- 

 tive. If it exists at all points, it means ruin ; if it exists at some 

 points, it means discrimination. The efforts to prevent these results 

 by law while retaining the principle of competition, only show how 

 powerless we really are in this matter. Let us look at them in order. 



The first legislators tried to treat the railroad as a public highway, 

 over which any man should be at liberty to run cars, as he can run 

 boats over a canal or wagons over a turnpike. This idea was incor- 

 porated in the railroad charters of England and Prussia. It has never 

 been quite abandoned by theorists ; but practically it has proved a 

 failure wherever tried. Physically it is impossible, on account of the 

 danger of collision ; industrially it is impossible, on account of the 

 added expense. Nobody would build a railroad on such terms unless 

 the mere tolls for the use of the track were to be made higher than 

 the whole transportation charge now is. 



A second plan for making competition a public benefit has been 

 that of state ownership of part of the competing lines. It has been 

 tried on a large scale in Belgium and Prussia, and on a smaller scale in 

 most other countries, the United States not excepted. It was thought 

 by the advocates of the system that the government would thus obtain 

 a controlling influence over the railroads with which it came in contact, 

 and be able to regulate their policy by its example. These hopes have 

 been disappointed. The private railroads under such circumstances 

 regulate those of the government far more than the government regu- 

 lates the private railroads. There is no chance to carry out any schemes 

 of far-sighted policy. If the private roads are run to make money, the 

 government roads must be managed with the same end in view. The 

 tax-payers will not let the government lines show a deficit while com- 

 peting private lines pay dividends. No administration would dare to 

 allow such a thing, however important the end to be attained. As a 

 matter of fact the government roads of Belgium and Germany were 

 as ready to give rebates as the private lines with which they came 

 into competition. In Belgium they went so far as to grant special 

 rates to those persons who would agree not to ship by canal under any 

 circumstances. The same thing has been done in New York State ; 

 but in Belgium the peculiar thing was that the canals and railroads 

 both belonged to the government, and yet were fighting one another 

 in this way. The system of partial state ownership was hardly distin- 

 guishable in its effects from simple private ownership. This fact has 

 been clearly recognized within the last twelve years. Within this 

 period, Belgium, Prussia, and Italy have abandoned the "mixed sys- 



