BAIL WAY CONSOLIDATION. 579 



part of a through route ; and the addition of the through to the for- 

 mer local traffic reduces still further the ratio of the cost of service. 



This reduction in the ratio of the cost to the amount of traffic, 

 which results more or less from all consolidations, secures an increase 

 of profits even with no change in the rates or traffic. Thus far there 

 is an injury to no one, and a benefit to the stockholder. But the ad- 

 vantages of the consolidation do not stop here. It has made possible 

 lower rates with the same profit that formerly was earned with higher 

 rates. Without risk of injury the new company is now able to make 

 greater reductions in the rates on those local products of nature and 

 of man, which will allow them to reach more distant markets, or will 

 stimulate their development by enabling them to sell in their former 

 markets with greater profit. By this means, more than by any other, 

 is the railroad enabled to secure an increase of traffic ; and, as an in- 

 crease of traffic can be carried with only a fraction of the relative 

 increase of cost, the decrease of rates increases the net income. 



The extension of the same policy leads to the highest development, 

 both of the resources of the country and the earning power of the cor- 

 poration. To effect the increase of traffic is the constant study and 

 aim of the railroad manager ; and it is a self-evident fact that the in- 

 crease of traffic can only be secured by furthering the interests of the 

 shippers. It is true that all railroads, both great and small, have the 

 same necessary interest in the prosperity and development of the ter- 

 ritory served by them, and they all alike endeavor to increase their 

 traffic. But the large corporation, supported by the traffic of the va- 

 rious products of many districts, is in a better condition to experiment 

 in the development of new districts and industries. It frequently af- 

 fords thus a rate or service beyond the point warranted by the present 

 traffic, and is able to operate portions of its system at a temporary 

 loss, in the hope of a future gain. With a small road, on the other 

 hand, depending upon the present traffic of a limited area, its rates 

 must be immediately remunerative, and to meet the current expenses 

 there is frequently required the practice of every temporary economy, 

 even at the expense of the future value of the property. The small 

 roads, unless the circumstances are exceptional, maintain the highest 

 rates, and afford the poorest service. The interest of the great com- 

 panies in the development of the districts from which they derive 

 their revenue is in proportion to their size ; while their more eco- 

 nomical management and extended resources free them from the 

 bonds that confine the small local corporations. 



That the advantages accruing from consolidation lead toward the 

 adoption of that policy throughout the world is a conspicuous feature 

 of railroad development ; and the facts overwhelmingly demonstrate 

 that the results as constantly lead to a reduction of the tariffs. 



The Massachusetts Railroad Commissioners, in their report for 

 1873 (page 80), draw the following conclusions, after an examination 



