EFFECTS OF RAILROAD RATE-MAKING I9I 



ing their rates after such an attack as has been described above. This ap- 

 pears to be a short-sighted argument. If the government could control 

 the making of rates it could prevent a rate war. Government regulation 

 of railway rates means that the low rate which a railroad desires to 

 put in force would have to be approved by the Interstate Commerce Com- 

 mission. How, then, could a railroad built parallel to another with the 

 idea of waging a rate war till it was bought out at a fancy price, injure 

 established dividend-pajdng property? If the government prevented 

 the fixing of a low rate, the railroad banditti would be robbed of one 

 of their most effective weapons. Forbidden to fix their rates at ruinous 

 figures so as to get their business away from the old road, they would not 

 desire to build a competing line for the purpose of selling out. There- 

 fore, the capital which now goes into such worse than useless enterprises 

 would find employment in legitimate fields. 



The United States Industrial Commission recommended in its report 

 in 1902 that the Interstate Commerce Commission be given the power to 

 prevent the paralleling of railroads. It seems clear from the above observa- 

 tions that the power to make rates is all that is needed in order to stop 

 paralleling. This prevention of parallel railroad-building will act as a 

 guarantee to the railroads that they will not be molested by unscrupulous 

 speculators. Therefore, government rate-making, whatever its dangers 

 in other respects, will be very likely to protect the railroads from the 

 depredations of certain marauders to which they are now exposed. 



The effect of freight rates upon the concentration of our population in 

 cities has never been fully pointed out. It is well known that one of our 

 most serious problems is to induce people to remain in the smaller towns 

 or in the rural districts. There are many causes operating to congest 

 population in cities. Among these is the rate fixed by the railroads for 

 carrying commodities. 



A study of the growth of cities in the United States shows that those 

 cities have grown most where there are several railroads. At these 

 points the railroads have found it necessary to fix rates to compete with 

 other roads and in some cases with steamships. Places thus favored by 

 competitive rates are the places where manufacturers and jobbers are 

 most Hkely to locate. When a town has but one railroad, and that 



