Railroads: Rates and Regulations

"Section 4. That it shall be unlawful for any common carrier subject to the provisions of this act to charge or receive any greater compensation in the aggregate for the transportation of passengers, or of like kind of property, for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included within the longer distance, or to charge any greater compensation as a through route than the aggregate of the intermediate rates subject to the provisions of this act; but this shall not be construed as authorizing any common carrier within the terms of this act to charge or receive as great compensation for a shorter as for a longer distance: Provided, however That upon application to the Interstate Commerce Commission such common carrier may in special cases, after investigation, be authorized by the Commission to charge less for longer than for shorter distances for the transportation of passengers or property; and the Commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this section: Provided, further, That no rates or charges lawfully existing at the time of the passage of this amendatory act shall be required to be changed by reason of the provisions of this section prior to the expiration of six months after the passage of this act, nor in any case where application shall have been filed before the Commission, in accordance with the provisions of this section, until a determination of such application by the Commission.

Whenever a carrier by the railroad shall in competition with a water route or routes reduce the rates on the carriage of any species of freight to or from competitive points, it shall not be permitted to increase such rates unless after hearing by the Interstate Commerce Commission it shall be found that such proposed increase rests upon changed conditions other than the elimination of water competition."

"The Southern Pacific built two fine steamers to run between San Francisco and Sacramento, Cal. They gave a daily service, each boat running up one day, and down the next, and the passenger fare was $2. A private individual thought he saw his way to compete with advantage, and bought a smaller boat, which only gave a service every other day, but, on the other hand, only charged $1 for this service.

"The Southern Pacific began to lose money, and when Mr. Huntington next came to California the position was put before him. 'Would you like to leave me to run this fight?' said he to the local manager. 'Certainly, sir,' was the reply. 'Is there an old boat you can buy that could give a service?' Being told that there was, Mr. Huntington bought it, ordered the two first-class boats to be laid up, and announced that the new purchase would run alongside the rival boat at a fare of 50 cents. 'Why, sir,' said the local manager. '50 cents won't pay for the coal.' 'No, I do not suppose it will,' was the answer, 'but when you go to war you have got to fight!"

"Before long the owner of the rival boat came to Mr. Huntington and asked him what he was prepared to do about it. Mr. Huntington replied that he would buy his boat for $10,000—I think the sum was. 'But, Mr. Huntington, the boat cost me $20,000, and she is worth it.' 'Very likely, but I am only going to give you $10,000.' So the fight went on for a while longer. When the spring came Mr. Huntington was on the point of returning to New York. He sent word to his rival that he was leaving California the following week, and that if the matter was not settled before he left, his 50-cent boat would continue to run till his return the following winter. Whereupon his competitor at once threw up the sponge and then sold his boat for $10,000. 'Since then,' concluded Mr. Huntington, 'there has been no competition with the Southern Pacific on the Sacramento river.'"