DISCRIMINATION IN RAILWAY RATES. 589 



charged on any highway. As the railroad was not built for the traffic 

 of such points, which were, before its construction, provided with trans- 

 portation facilities, but was for those places to which the highways of 

 nature did not extend, there seems no injustice in charging the ex- 

 penses of the highway to the places for which it was constructed. 



It is sometimes stated that non-competitive points should have rates 

 as low as are made to competitive points ; and the reason is repeated 

 that the latter rates, which are voluntarily made by the railroad, being 

 presumably fair, it follows that the former rates, being higher, are un- 

 fair. But, if the traffic between all points paid but the cost of car- 

 riage, there would remain no provision for the highway and the neces- 

 sary fixed charges. A rigid rule, then, preventing the discrimination 

 between these places would leave the railroad the alternative of raising 

 the rates at the competitive points, thus losing that traffic altogether ; 

 or reducing to a little more than the cost of carriage the rates at the 

 non-competitive points, and so losing the greater portion of its income. 



II. The competition in markets is a second cause of discrimination 

 between places. A market, to be such, must be accessible from sources 

 of supply. Its facilities for transportation must then be in proportion 

 to its importance. Now, the great market cities of the world were 

 established before the application of steam to transportation by land. 

 It is a familiar fact that the commercial cities of the world are either 

 on rivers or the sea ; so it follows that the markets come in compe- 

 tition with water-routes, and usually also in competition with other 

 railroads. But the competition is more than by parallel routes carry- 

 ing traffic for equal or nearly equal distances. To reach the market at 

 all with an article produced on the line of a railroad, it must be car- 

 ried at a low enough rate to enable it to be sold in competition with 

 the same article produced perhaps much nearer the market. Grain 

 carried five hundred miles can sell for no more than grain carried fifty 

 miles, and, if the conditions of production are the same, the carrier 

 must place them on an equality as to transportation. A long haul has 

 thus to compete with a short haul, or abandon the market. If dis- 

 criminations in favor of markets were not permitted, no grain could go 

 by rail from Chicago and the West to the Atlantic seaboard and to 

 Europe. But the discrimination would be made as it always has been 

 made by the water-routes through the lakes and the St. Lawrence or 

 Erie Canal, or down the Mississippi to New Orleans. The water-routes, 

 however, have not an equal interest in developing the country that the 

 railroads have ; and, without the competition introduced by the latter, 

 the rates by water would be greater than they are, and the countries 

 whose shores they wash would be comparatively undeveloped. The 

 railroad, in developing the resources of the country which it serves, not 

 only secures thereby more traffic, which at the time adds to its net in- 

 come ; it increases as well the value of all its property. The highway 

 being made by the railroad, and representing a large investment, a wise 



