98 TRANSPORTATION 



state Commerce Commission, since its earliest Louisville and Nash- 

 ville interpretation of the Long and Short Haul Clause, doubtless 

 had in view real geographical rights when it consistently refused 

 to recognize the competition of carriers among themselves as justi- 

 fying a neglect of the element of distance in transportation. On the 

 other hand, the Supreme Court has, perhaps, been predominately 

 influenced by facts bearing upon the condition of our second class of 

 cities, which owe their prosperity not to natural, but to purely arti- 

 ficial causes, along which commercial competition is preeminent. 

 Atlanta, Georgia, is purely a railroad town, without historical ante- 

 cedents, without a water course or power, without fertile surround- 

 ings, remote from the sea, and with no natural charms save climate. 

 The location and prosperity of this most important city in the 

 South was undoubtedly due to the preferential treatment of the 

 many carriers who happened to meet or cross at that point. What 

 " rights " has such a place, a creature of the railroads, which 

 railroads are bound to acknowledge; or what rights worthy of 

 respect have any other competing centers which carriers will recog- 

 nize as equal to the railway rights which they themselves confer? 



The waste in cross-freights, competing centers invading each 

 other's territory without regard to distance, is accentuated by the 

 operation of an economic law. Surplus production at low cost is 

 familiar to us in the case of international trade. The United States 

 Steel Corporation or the German Sugar Kartel can profitably sell 

 their surplus product abroad cheaper than at home. Within limits 

 this foreign sale may not injure the domestic consumer, but may 

 help to lower the price of his goods. Precisely the same principle 

 underlies all long and short haul adjustment. It is exemplified in 

 the case of low export and import rates. Given a volume of exist- 

 ing business at remunerative rates, which cover fixed charges, any 

 surplus business which repays direct outlay is worth while. Apply- 

 ing this principle to our case in hand, the farther each center extends 

 its market, the more ruinous becomes its price for the competing 

 city which looks to that trade, not for its infinitesimal surplus profit, 

 but for its staple and basic one. This principle not only influences 

 the merchant in fixing his price, but it also, of course, appeals to 

 the carrier to give lower and lower proportional rates as the distance 

 increases. 



Various industrial influences seem to be at work to prevent a part 

 at least of this fruitless waste in transportation. Certain indus- 

 trial combinations have contributed appreciably by locating their 

 plants with reference to a division of the market and economy 

 of freights. Others attained this end by enforcing scales of prices 

 based on certain distributing-centers. Pittsburg, for example, is 

 made a base for the price of pipe, plates, and other steel products. 



