14 THE GRANGER MOVEMENT 



too high and that gross discrimination was practised in fixing 

 them. When the Iowa farmer was burning corn for fuel, because 

 at fifteen cents a bushel it was cheaper than coal, while at the 

 same time it was selling for a dollar in the East, he felt that there 

 was something wrong and quite naturally accused the railroads 

 of extortion. 1 Furthermore he looked upon the various dis- 

 criminations in rates, justifiable or otherwise, as evidence of 

 extortion; for if the railroad could afford to make one rate in 

 one instance why could it not in all ? The railroads and their 

 apologists, in answer to this charge of extortionate rates, pointed 

 to the small average dividends which were paid and maintained 

 that the rates were not high enough to give a reasonable return 

 on the investment, 2 but the extensive over-capitalization of 

 railway values weakened the force of this argument. It is 

 probably true, as the railroad men claimed, that the maximum 

 rates were fixed, not by the profit desired but by what the 

 traffic would bear, but it is also true that the existence of a large 

 capitalization and the desire to pay dividends thereon sometimes 

 prevented reductions which would otherwise have been forced 

 by public opinion. 3 



There were many forms of discrimination in railroad rates 

 but those complained of at this time were principally of two 

 sorts: discrimination between places, or charging higher rates 

 at intermediate points than at points where competition in the 

 shape of other roads or water routes prevailed; and discrimina- 

 tion between persons, or giving better terms to certain favored 

 individuals or firms than were enjoyed by the general public. 



1 Illinois State Grange, Proceedings, iv. 102 (1875); W. C. Flagg (President, 

 Illinois State Farmers' Association) , in American Social Science Journal, vi. 109 

 (July, 1874) ; Campaign speech by Senator Sherman at Alliance, Ohio, in Cincinnati 

 Semi-Weekly Gazette, September 26, 1876, p. 5; Martin, Grange Movement, ch. v. 



2 Nation, xxi. i (July i, 1876). 



3 Windom Committee, Report, 72-76; Hepburn Committee (N. Y.), Report, 

 18; Interstate Commerce Commission, Reports, ii. 63; Wisconsin Railroad Commis- 

 sion, Reports, i. 62 (1874); C..F. Adams, Jr., " Railroad Inflation," in North Ameri- 

 can Review, cviii. 130-164 (January, 1869); E. Stan wood, "Farmers and Rail- 

 roads," in Old and New, viii. 335-342 (September, 1873); Larrabee, Railroad 

 Question, 163-188; Cook, Corporation Problem, 11-34; Martin, Grange Movement t 

 ch. iii; Paine, Granger Movement in Illinois, 16. 



