DISCRIMINATION IN RAILWAY RATES. 



503 



service below cost. This charge is so frequently made, and the facts 

 are so commonly misunderstood, that the subject deserves to be fol- 

 lowed further. 



We are for the present considering only the discrimination between 

 things as determining the rate of their transportation. Discriminations 

 from other causes do not change this result. Competition by other 

 lines between the same points, or to the same market, produces a gen- 

 eral reduction in rates, but there remains the same inequality in the 

 particular things shipped. The lowest rates will be given on the 

 staple products of the country which are moved in the largest quan- 

 tities and higher rates on merchandise shipped in smaller consignments. 

 For instance, the chief products of the West — grain, provisions, and 

 flour — are shipped to the seaboard for about one half the rate charged 

 on miscellaneous merchandise. And this is the same, whether the 

 route be by lake, canal, or any of the various lines of rail. 



One of the natural principles of regulating rates which has been 

 mentioned is the power possessed by the railroad of increasing its net 

 income by increasing its traffic at lower rates. This follows from the 

 fact that a large portion of the expenses are fixed — are not changed by 

 the increase or decrease of traffic ; so that an augmented traffic adds to 

 but a portion of the expenses of the roads — to those not fixed. The 

 average rate of cost per ton per mile thus decreases, other things equal, 

 as the traffic increases. This result will appear more definite by the use 

 of figures. The census for 1880 * shows that the annual interest, main- 

 tenance, and operation charges paid at that time by the railroads of 

 the United States, amounted to about the sum of $542,000,000, classi- 

 fied as follows : 



It appears from these figures that the fixed expenses of the average 

 railroad in the United States, which are a necessary charge on what- 

 ever traffic is carried, are : 



1. Interest 34-6 per cent. 



2. General expenses, taxes, etc 11-0 " " 



8. Maintenance of way 15'8 " " 



4. A portion of the maintenance of rolling-stock, which, if we as- 

 sume to be one half, will be 5'05 " " 



Making a total of 66.45 " " 



* Vol. lY, " Transportation.' 



\ By adding dividends paid, the item of interest would be considerably increased, giv- 

 ing a larger percentage to the fixed expenses and a smaller to be affected by trafiBc ; but, 



