THE LONG-HAUL ANOMALY.
The long and short haul clause is still broken by the railroads as well
as by the Supreme Court, especially in the West and in the South, where
the basing-point system causes such grievous discriminations. For
example, with a rate of 48 cents from New York to Atlanta and a local
rate of 38 cents from Atlanta to Suwanee, the rate from New York to
Suwanee is 86 cents, although Suwanee is 31 miles nearer New York than
Atlanta. This system is not confined to places that have water
competition. A considerable number of towns on the Southern Railway and
on the Louisville and Nashville have been made basing-points, though
they have no water competition.[301]
Jacksonville is the main basing-point in Florida, and rates to other
destinations are the rate of Jacksonville plus the local rate from
Jacksonville to destination, even though the destination is nearer the
point of shipment than Jacksonville.[302]
From New Orleans to the “Virginia Cities,” Richmond, Lynchburg, and
Norfolk, is about 800 miles. Charlotte, at the southern border of North
Carolina, is about half way. Yet the rates to Charlotte on a number of
articles are double the rates to the Virginia cities, twice the
distance. The Southern Railway and the Seaboard Air Line reach the city,
but there is no competition. Water competition must be met in Virginia,
but if the Virginia ton-mile rate will pay a profit, is not the fourfold
ton-mile rate to Charlotte an exorbitant charge?[303]
Danville is an excellent example of the evils of place discrimination.
Prior to 1886 Danville enjoyed equal freight rates with Lynchburg and
Richmond through the competition of the Virginia Midland Railroad and
the Southern Railway, but in that year the Southern road (then known as
the Richmond and Danville) bought the Virginia Midland and deprived
Danville of its equal rates. In 1890 Danville subscribed $100,000
towards the construction of another competing road, which was built, but
after a few years it too was purchased by the Southern Railway, and the
rates were made strongly adverse to Danville. The matter went to the
Commission and the courts, but the city has not been able to carry on
the litigation with the roads.[304]
The Southern Railway carried bananas in 1902–1903 from Charleston to
Lynchburg for 20 cents a hundred lbs., but if the fruit stopped at
Danville, part way on the road to Lynchburg, the rate was 43 cents a
hundred. The road said it had to make low rates at Lynchburg to meet
competing bananas coming in by way of Baltimore. The Commission found,
however, that the Lynchburg rate was 13 cents lower than the rate
justified by competition from Baltimore or elsewhere.[305] It is claimed
that railroad discrimination has decreased the taxable values of
Danville several hundred thousand dollars from 1900 to 1904. The
Danville representative said, “I have heard a great deal about
confiscatory rates, fixed by a Commission authorized to fix rates, but I
have not heard anything about confiscatory rates fixed by the railroads,
whereby the property of the public and of municipalities and taxable
values are destroyed; but those facts exist. They exist in my town, and
these facts exist in spite of the fact that the city of Danville
contributed $100,000 to the building of the Lynchburg and Danville
Railroad.”[306]
The rate on canned goods from Hoopeston, Ill., to Nashville, Tenn., is
27 cents per hundred. From Hoopeston to Memphis, several hundred miles
further, the rate is 19 cents. From Greenwood, Ind., to Nashville the
rate is 25 cents, to New Orleans 21 cents, to Mobile 20 cents, and to
Memphis 19 cents.[307] The Chesapeake and Ohio Railway, the Norfolk and
Western, and the Baltimore and Ohio, all carry lumber from the Blue
Ridge Mountains. The rate from the Shenandoah Valley to Philadelphia is
16 cents per hundred, while from points in the region a hundred miles or
so further west the rate is only 14 cents. “The man who is producing
lumber to-day on the eastern slope of the Blue Ridge Mountains, almost
within sight of us, must pay 2 cents per hundred lbs. more to get lumber
to Philadelphia than the man 50 or 75 miles further west, who gets his
lumber transported for 14 cents. Now, 2 cents a hundred lbs. is 40 cents
a ton. That is $12 a carload of 30,000 lbs., and that is probably about
all the margin of profit there is in lumber of that kind.” All three of
the railroads are controlled by one great railroad system, yet they
claim that competition among them justifies the lower rate in the region
where they cross.[308]
The rate on lumber from Chattanooga to Buffalo via Cincinnati is 20
cents, while from Chattanooga to Cleveland, a shorter haul over the same
road, it is 23 cents.[309]
Corn rates now (1905) are 13 cents per hundred from Omaha, 1400 miles to
New York, and 25 cents from Boone, Iowa, 1252 miles to New York, 25
cents also from Dennison, Iowa, 1341 miles to New York, etc. Many
similar facts might be named. And such discriminations between
contiguous markets do not violate the Interstate Law. There is no
requirement that one railroad line shall not charge less for a given
distance than another railroad line charges, and even on the same line
the long and short haul clause yields to the necessity of meeting
competition.
When Dubuque wants to buy things from the South it must pay much higher
rates than Milwaukee, Madison, Chicago, Freeport, etc. Manufacturers in
Fort Dodge and Dubuque, Iowa, have to pay higher rates to the Pacific
than manufacturers in Chicago and the East.
Iowa raises corn, cattle, and hogs, and would like to have
packing-houses, but cannot because of the discrimination in favor of
Chicago and Missouri River points.[310] Iowa business men also say that
small poultry and dressed-meat concerns cannot compete with the big
packers, on account of the private-car system and the concessions
granted the car-lines, and they complain vigorously of the
discrimination against them in the rates on shoes, grain, cattle, iron,
steel, etc. The railroads have decreed that Iowa shall not be a
manufacturing State.
“THE CHAIRMAN. Why do you say that the railroads have decreed that Iowa
shall not become a manufacturing State?
“HON. A. B. CUMMINS, Governor of Iowa. I reach that conclusion simply
because all our manufacturers, when they attempt to reach beyond our own
State, meet rates that so discriminate against them that they cannot
compete with manufacturers elsewhere.”
In many cases a shipper at an intermediate point between Minneapolis and
Chicago can send his grain to Minneapolis, rebill it to Chicago, and
have it go back through his own town to destination more cheaply than he
can ship direct to destination.[311]
From Cannon Falls the rate to Chicago is 15 cents a hundred on grain.
The rate from Cannon Falls to Minneapolis is 7 cents, and from
Minneapolis to Chicago 7½ cents. So it costs ½ cent a hundred more to
ship from Cannon Falls direct to Chicago than to ship to Minneapolis and
from there back through Cannon Falls to Chicago. And if he wants to send
his grain to Louisville, Ky., it will cost him 5 cents a hundred more to
ship from Cannon Falls to Louisville, than if he sends his grain to
Minneapolis and bills it from there to Louisville.[312]
Denver still suffers from the sort of discrimination described in the
preceding section.[313] The rate in cotton goods from New England to
Denver is $2.24 per hundred. From New England to San Francisco, 1500
miles further on, the rate is $1 a hundred in carload lots. On a
shipment in relation to which a Denver merchant made complaint, the
Burlington road received $25.95 from Chicago to Denver, whereas if the
same shipment had been intended for Frisco the Burlington would have
received only $4.50.
Salt Lake City also is wrestling with adverse freight rates. On cotton
goods the rate from New York to Frisco is $1, while on the shorter haul
from New York to Salt Lake it is just double, $2 per hundred.[314] The
rate on window-shade cloth from New York to Salt Lake City is $2.30.
Carrying it 800 miles further, New York to California, the railroads
charge only $1, and this affords a slight profit. Is it not clear that
the $2.30 is excessive?[315] “The men who build a city in the interior
cannot expect to get as reasonable a rate as the men who build their
city on the shore of the sea, but the difference should be a reasonable
one.”
It would seem that the men who build in the interior might expect that
they would not be called on to pay railway fixed charges on coast
traffic as well as on their own. It is unfair to give the coast people
the celerity of railway traffic at the cost of water traffic. The
railroad theory that every pound of freight is to be secured that will
pay the cost of hauling or a little more, though a water route or a
shorter rail line might carry the freight at less absolute cost, is not
in accord with sound public policy or the saving of industrial power. It
is an economic absurdity to haul by rail what can go more cheaply and as
safely by water. A co-operative company or a consolidated company of any
honest and sensible variety, owning both the railroads and the steamboat
lines, would divide the traffic in such a way as to secure the maximum
economy and convenience, and would make a reasonable payment for the
extra speed and other advantages of railway transit the main condition
of selecting that method of transportation, with an option in the
company under specified conditions to facilitate the full loading of
trains and boats through the adjustment of rates.
The case of Spokane is a specially aggravated one. The rate on bar iron
from Chicago to Spokane is $2.07 a hundred against $1.25 to Seattle;
iron pipe $1 to Spokane, 50 cents to Seattle; lamps $2.35 to Spokane,
$1.10 to Seattle; belting $3.13 to Spokane, and $1.65 to Seattle;
mining-car wheels $1.26 to Spokane and 85 cents to Seattle; cottons
$1.75 to Spokane, 90 cents to the coast; soap (toilet) $1.23 to Spokane,
75 cents to coast cities; wire and wire goods $2.35 to Spokane, $1.50 to
the coast; sewing machines $2.25 to Spokane, $1.40 to coast; typewriters
$5.96 to Spokane, $3 to the cities of the coast.
In general the rates from the East to Spokane are the through rates to
the coast plus the local rates from the coast back to Spokane.[316]
The preference which Tacoma, Seattle, etc., have over Spokane is about
80 percent. Spokane pays about $1.80 on shipments from Chicago, while
Tacoma and Seattle pay $1.[317] Spokane is a great railroad junction,
but competition has been suppressed by agreement between the lines,
while competition is still active at Tacoma and Seattle, so that under
the decision of the Supreme Court the railroads are free to discriminate
against Spokane. Aside from water competition the railroads want to
build up Seattle. They have invested a great deal of money in docks and
facilities for doing business there. The manufacture of wooden pipe was
flourishing in Spokane. The company was shipping 2 carloads daily and
its pay roll was $3,000 a month. A rival factory in Seattle, backed by
the big lumber firms of the coast, got the railways to make rates that
enabled it to lay down the manufactured pipe in Spokane about 60 percent
cheaper than the Spokane factory could make it. The situation came to
light November, 1903, two months after the rates went into effect, when
the Spokane factory came into competition with the Seattle factory for a
contract at Butte. The bid of the Seattle firm was less than the pipe
could be sold for at Spokane by the factory in that city, and Butte is
384 miles east of Spokane. The rates shut off the Spokane factory from
the East entirely. In about 8 months that flourishing manufacture in
Spokane was wiped out.[318] There was no water competition here to make
an excuse for discrimination, for the cut was made from Seattle east to
Spokane and points still further east.
The paper-box manufacture was forced out of existence in Spokane by
similar discriminations. Eastern factories can lay down the boxes in
Spokane cheaper than the local factories can get the strawboard. So with
other trades. The manufacture of sash would be rapidly developed if it
were not for the grievous discrimination on window glass, $1.38 from
Pittsburg to Spokane, against 90 cents to Portland, Seattle, etc.