The performance of the transportation services necessitates the
co-operation of carriers. When the government owns and operates the
railroads of a country they are managed by a single authority, and the
different parts of the railway system are fully co-ordinated; but when
the railroads are operated by a large number of independent
corporations, co-operation can be secured only by means of traffic
associations composed of representatives of the railway companies, and
intrusted with the power of making arrangements affecting joint
traffic, and settling questions involving the interests of two or more
companies.
Two distinct causes brought about the establishment of railway traffic
associations. The first cause was the necessity of co-operation to
facilitate the joint business of connecting lines. Through tickets,
joint fares and rates, through bills of lading, the interchange of
cars between connecting roads, and the settlement of joint accounts
led to the establishment of co-operative freight lines, car-service
associations, claim associations, and various other general and local
organisations for the promotion of the joint transportation business.
The other cause of co-operation among the railways was the necessity
of regulating competition. This cause first became potent after the
process of consolidation had brought about the formation of numerous
large railway systems, and had inaugurated the violent competition
which led to discriminations in transportation charges, rate wars, and
the other evils which have combined to produce "the railway question."
The competitive struggles of rival railway systems began to be violent
shortly after 1867, and soon led to the formation of railway traffic
associations, with enlarged powers. The classification of freight, the
determination of rates on competitive traffic, and the apportionment
of that traffic, or of the earnings from it, among the competitors
became functions of the associations.