Apkii, 12, 1907] 



SCIENCE 



575 



The difficulties in this matter seem to be 

 the unwarranted assumptions, the legal fic- 

 tions, as it were, within which there might 

 be such a variation as to cause rates 

 (single or as a schedule) to be unreason- 

 ably low on the one hand or extortionate 

 on the other. 



The assumptions heretofore made may 

 or may not be true. Until proved correct, 

 we can not hope to ascertain to a mathe- 

 matical certainty the cost of transporta- 

 tion to the carrier by any of the methods 

 considered or one hereafter to be devised. 



Competition versus Comhination of Bail- 

 roads as affecting the Basis of Rate- 

 making: H. G. Beown, Tale University. 

 The fact that railroads are operated 

 under the law of increasing returns lies at 

 the basis of the systems of rate making. 

 Increased traffic is carried at proportion- 

 ately less cost and yields proportionately 

 greater profit. It therefore becomes worth 

 while for a railroad company to get this 

 increased traffic even if somewhat lower 

 rates must be conceded. But lower rates 

 will not be conceded unless there is a com- 

 pensating increase of business. Reduc- 

 tions will be made where traffic is re- 

 sponsive and only where it is responsive. 



Discrimination between different cities is 

 largely due to railroad competition. When 

 two railroads connect a couple of cities by 

 different routes, each has a monopoly of the 

 traffic between intermediate points on its 

 own line. Hence there is discrimination 

 in favor of the through traffic, which is 

 most responsive. The reductions take 

 place on the through traffic not because it 

 is absolutely responsive, not, that is, be- 

 cause by such reductions traffic as a whole 

 can be increased, but only because it is 

 relatively responsive, because traffic is so 

 gained by one toad at the expense of 

 another. If in the absence of competition 

 reductions are made in favor of traffic be- 



tween any two places, it will only be when 

 such traffic is absolutely responsive, when 

 the total traffic of the district served is 

 thus increased. 



The discriminations among different 

 shippers, which have been so common with 

 competing railroad companies, are similarly 

 explainable. The concessions to large cor- 

 porations forced by the threat to transfer 

 patronage to another railroad are conces- 

 sions made where considerable traffic is in 

 question, where, therefore, traffic is respon- 

 sive and where it is relatively responsive. 

 It is not so much that these discriminating 

 reductions increase traffic as a whole as 

 that they increase the traffic of one com- 

 pany at the expense of another. 



The tendencies of competition and of 

 combination to affect diversely the basis 

 of rate charges, whether among different 

 cities, among different corporations, or 

 among different commodities, have been re- 

 duced to the generalization that rate re- 

 ductions will take place where traffic is 

 sufficiently responsive to such reductions 

 and only where it is sufficiently responsive. 

 With competing roads it is chiefly relative 

 responsiveness and with non-competing 

 roads it is absolute responsiveness only that 

 determines a lowering of rate. 



Psychic Factors in the Fluctuation of 

 Prices: Richard T. Colburn, New York 

 City. 



The fii'st decade of the tw^entieth century 

 has many surprises for America and for 

 Europe, political, social and financial; and 

 in none more remarkable than the expan- 

 sion of commerce and credits. These are 

 not accurately reflected by the visible bal- 

 ance of trade figures, but by an invisible 

 ledger balance of credit. This is born of 

 confidence— a state of mind— our credit is 

 good, perhaps too good. We are the good 

 customer of tradition, suggestive of the 

 spendthrift. 



