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.