DISCRIMINATION IN RAILWAY RATES. 587 



If the competition is between railroads alone, the conditions of their 

 sei'vice being approximately equal as to cost, agreements are made to 

 abide by established tariffs, and such tariffs may be but little lower 

 than to non-competitive points. There is, then, but little discrimina- 

 tion. But sooner or later the struggle for the traific leads one road 

 to cut the tariff rates ; the other retaliates by a greater cut, and this 

 often ends in a reckless war of rates. After the excitement of such 

 a contest has somewhat passed away, the injuries inflicted become 

 more felt, till at length reason leads to a restoration of the tariffs. 

 During such a contest there is an unreasonable discrimination, as the 

 rates are frequently less than the cost of the service. The only solu- 

 tion of the problem which has yet been found is to remove the incen- 

 tive to cut the rates by fairly dividing the traffic betv/een the compet- 

 ing lines. The common method of accomplishing this is to pool the 

 receipts and to redistribute them on percentages based upon experi- 

 ence and decided by an arbitrator. This is the only instance, so far 

 as I am informed, in which the natural principles regulating the rates 

 of transportation lead to an unjust discrimination ; and in this case 

 the loss to the railroads, by carrying the traffic for less than cost, is 

 perhaps greater than the injury to the community by the disturbance 

 of values and oversupply which accomj^anies such contests. 



So far, then, as the competition at a given place between railroads 

 alone is concerned, the discrimination is regulated to a great extent 

 by the harmonious working of the roads themselves. In competition 

 with water-routes, however, on account of the inequality of their cir- 

 cumstances as to the cost of the service and the ease of adding new 

 competitive boats, a discrimination must always exist. It is beyond 

 the power of the railroad or any person or other body to prevent it, 

 except by the heroic remedy of interdicting the traffic by rail. The 

 water-route is free to all, its highway is furnished by nature, and the 

 carriage is the only item of cost which must be borne by the traflSc. 

 The railroad companj'^, on the other hand, has two existences : it is the 

 owner of a public highway, and is a common carrier. The rate of 

 transportation is thus composed of the toll for the use of the high- 

 way, and the charge for the service of carriage. This is a distinction 

 which is not made in the popular mind, though it is always recognized 

 by the law, and is important to bear in mind in the present instance ; 

 for it affords a justification of the discrimination made in favor of 

 places having water competition, besides that contained in the neces- 

 sity of the discrimination to secure the traffic. 



"We may take first the simple case of those places having no un- 

 usual amount of traffic, and located anywhere on the line of road, 

 either local stations or through points ; the only peculiarity about 

 them being that they are on a competitive water-route. In those 

 other cases where the favored places are great markets as well as 

 competitive points, the problem becomes more complicated and will 



