Discriminations between localities, though less pronounced in this period than in the first, were nevertheless multitudinous and vital.
In 1896 the railroads carried Minneapolis flour to New York for 10 cents a hundred, while charging New York State millers 18 cents a hundred to New York City.
President Stickney of the Chicago and Great Western Railroad, in a discussion the same year with the representatives of other western roads before the I. C. C., said: “You charge the Kansas and Nebraska farmer 13 cents to haul his grain 200 miles while you charge the grain dealer 6 cents to haul that same grain twice as far to Chicago.... I have been acquainted with this northwestern country for thirty-five years. In all that time there has never been a year that the corn crop was moved until after the corn was in the hands of dealers who had the rate. Once the farmer is compelled to sell his grain, then you fellows cut the rate for the dealer.” That is, the railroads charge the farmer shipping to the Missouri River a mileage rate 4 times as high as the rate to the dealers shipping to Chicago, and freeze out the small dealers from shipping to Chicago by making secret rates in favor of the big dealers.
Coal was shipped from Chicago to Omaha and then reshipped to Grinnell, Ia., 225 miles back toward Chicago, more cheaply than it could be got direct from Chicago.
“A large manufacturing establishment located in the latter town, making agricultural implements which were sold principally on the Pacific Coast, found it advantageous to abandon its plant and transfer its machinery and employees to Chicago on account of the unfavorable rates.
“A large factory for making barbed wire, located in the city of Des Moines, in like manner abandoned its buildings and transferred its establishment to Chicago, finding that it saved a large sum on every carload of wire it shipped, although the wire was mainly carried directly by or through its old location, 300 miles nearer the Pacific Coast than Chicago.”[117]
To certain towns in Nebraska and other States the railways have extended the same rates that apply to Missouri River points, where the rates to Chicago are very low, while other towns in the same region have to pay the Missouri River rates to and from Chicago, plus the local rate from the river point.[118]
The extent to which railroads sometimes go in place discriminations is shown by cases cited in Cator and Lewis. One of the towns on the route of the Northern Pacific in Montana incurred the displeasure of the railway authorities, and they determined to ruin it and build up a new town. So they refused to stop their trains in the town or have a depot there. The railroad built a new depot on lands of its own, 3 miles beyond, and ran its trains through the old town to the new site, thereby feeding its revenge and enhancing the value of its own land at the same time, at the cost of ruining the town already established. The courts sustained the railroad’s claim that it had a right to run through to the new depot, though some of the judges dissented, regarding such favor as despotic and destructive of public rights.[119]
“A town in the State of Iowa, which had thriven under reasonable railroad facilities, was almost depopulated by a change of ownership of the railroad line upon which it depended.
“As the result of discrimination forty American families were driven out of this small town in a single year. Their property was rendered almost worthless, and with great pecuniary loss from no fault of their own they were obliged to abandon their homes and seek new habitations and new avocations. Cases like this were abundant throughout the West. This merely illustrates what was going on in a dozen great States where cities, towns, and villages were being depopulated or their business establishments placed at great disadvantage by reason of iniquitous discriminations.”[120]
Peopled flocked into the towns and cities favored with the low rates, and when the competitive rates were removed, as they have been in many cases, the boom towns collapsed, and the inflated building and business interests shrunk to skin and bone.
Better accommodations are frequently accorded to places in which the railway or its officers are interested than to other places. When a new road is projected there are usually town-lot and land companies along the lines, in which prominent officials of the road may be directly or indirectly interested. Their knowledge of the future location of the road is utilized in purchasing tracts of land at low values to be used for town sites and sold at high prices after the railway is built.
“Sometimes the entire road becomes a land-grabbing scheme with a town-lot speculation attachment. The western half of one of the principal roads in Iowa was built mainly on this plan. Its natural route was along one of the old stage roads running through the county seats of the counties through which it must pass. About these towns was a well-settled country, with rich farms well improved for that early day. The towns were moderate in size, but had been established as trading points for many years, and stores, schools, and churches had grown up.
“But there was a belt of government land lying between the two belts of settlement about the respective county seats, which the road coveted, and if the line passed through the old towns there would be little chance for the speculative directors to profit by laying out town sites. So the road was laid out and built through the unsettled lands, avoiding every old town on its route.”[121]
Sometimes discriminations are made by the use of different classifications for local and through traffic.[122] The rate on sugar from San Francisco to Kearney, Neb., was 77 cents per hundred lbs., against 50 cents, clear through to Omaha.[123] The rate on lumber from Wilmington to Philadelphia and Boston was higher than the local rate from Wilmington to Portsmouth or Norfolk plus the rate from Portsmouth or Norfolk to Philadelphia or Boston.[124]
The rates from the East to St. Cloud, Minn., were higher than to St. Paul and other more distant points. The difference against St. Cloud was 7 cents per hundred on flour and 75 to 85 per ton on coal. This difference was two or three times the profit made by the miller, so that the price of wheat in St. Cloud was 6 cents below the price in Minneapolis or Princeton or Elk River, and the value of land about St. Cloud was thereby greatly lessened.[125]
A canning factory in Emporia, Kansas, had good natural advantages and an excellent trade in Kansas, Colorado, Texas, etc., when in 1891 the freight rates were changed on the basis of water and rail competition via Galveston so that canned goods could be shipped into this territory from New York at rates that drove the Emporia factory out of business with a loss of $50,000 and the ruin of the owner who had been the heaviest tax payer in the county.
The Emporia furniture factory, and the Emporia stockyards have also been ruined, it is said, by freight discriminations. In the Spokane case the rate to Portland, 2056 miles from the East, was $30 a ton, while the rate to Spokane, only 1512 miles, was $52 per ton. The Commission said this was unreasonable. “If a rate of 1½ cents per ton-mile yielded a desirable margin over the cost, a rate of 3½ cents pays an unwarranted return.” In a Georgia case it appeared that the rate from Cincinnati to a non-competitive town, Marietta, was 6 times as much per ton-mile as the rate to Atlanta. The business men of Spokane paid 2 or 3 times as much for haulage as the men of Portland, and the business men of Marietta paid 6 times as much in proportion as those in Atlanta.
The Spokane merchants combined and put their freight business in the hands of one agent, who could swing every pound of freight to the Northern Pacific or to the Oregon Navigation Co., or to the Great Northern, etc. Then the railways pooled against the merchants. The latter adopted the policy of tendering a reasonable sum for freight, and if the railways wouldn’t take it, the merchants replevied the goods and left the companies to sue for the freight. The companies got tired of that and made some concessions. But Spokane still suffers from severe discrimination, as we shall see hereafter. Coal hauled fifty miles to Leadville sold there for $7 a ton, while in Denver, after an additional haul of 150 miles, the same coal was sold for $5.50 a ton. The Michigan Central and other roads charged higher rates on carriages and buggies to San Bernardino than to Los Angeles, some distance further on.[126]
From Pittsburg to Colorado the rate on rails was $1.60, while the rate all the way through to San Francisco was only 66 cents. From Pueblo to San Francisco, 1,559 miles, the rate on bar iron and on rails was $1.60 per hundred, while from Chicago to San Francisco, 2,418 miles, the rates were 50 cents on bar iron and 60 cents on rails; and even from New York to San Francisco the same rate of 60 cents was made for rails.[127]
Sometimes the charge is much greater going one way between two given points than it is going the other way between the same points. For instance, “Gloves from San Francisco to Denver pay $2 a hundred. You ship the same packages back from Denver, which has 5,000 feet of elevation, to San Francisco at the sea level, downhill, like a toboggan slide, and it is $3 a hundred downhill to $2 up.”[128] The discriminations against Denver are severe both from Eastern and Western points. Sugar is carried from San Francisco to Denver at 75 cents; to Loveland it is 93 cents; but hundreds of miles further on, to Omaha, it is only 50 cents.[129] “Mr. Kindel has been driven out of the manufacture of upholstering goods and of spring beds in Denver because of similar differences. He wished to manufacture albums in Denver, but was forced to locate in Chicago because the freight rate on books from Chicago to San Francisco was $1.75 per hundred and from Denver to San Francisco $3, while the Denver manufacturer had to pay 97 cents freight on his raw material (paper, etc.) from Chicago to Denver, $3.97 against $1.75. So too, the freight rate on books from Chicago to New York is 75 cents, from Denver to New York $2.72.”[130]
“The difference in rates on coal oil has been so great that oil has sometimes been shipped from Chicago to San Francisco and back again to Denver.”
“Boots and shoes are carried from Chicago to Colorado common points at $2.05 per hundred, from Chicago to California at $1.50 per hundred. If a jobber in Colorado wishes to ship boots and shoes to California he must pay $3, making a total freight rate of $5.05 from Chicago to California in this way. Cotton-piece goods under commodity rates are shipped from Boston to the Missouri River for 52 cents per hundred, while the rate from the Missouri River to Denver is $1.25 for a haul of one-third the distance. The rate from the Missouri River through Denver to California is only $1.”[131]
No wonder a Denver manufacturer said to the Industrial Commission: “My city, Denver, and State, Colorado, and all the territory embraced in the one hundred and fifth meridian section, are violently discriminated against by the railroads and express company. We are denied commercial equality, which forbids the development of our resources. Our freight rates are anywhere from 100 to 300 percent higher per ton per mile than those of our Eastern and Western competitors.”[132]
Such conditions tend to force dealers to points on the Missouri River or east of it. The shipper at St. Joseph on the Missouri River, for example, can get goods from Chicago at 80 cents and reship to San Francisco for $1.50, while the Denver shipper must pay $2 from Chicago to Denver and $3 from Denver to San Francisco,—$5 for the Denver shipper against $2.30 for the St. Joseph man.[133]