Page:Popular Science Monthly Volume 28.djvu/518

 On the other hand, we have the remaining items which are directly affected by and vary with the particular kind or quantity of the traffic, namely:

We may say in very general terms, but which are sufficiently accurate to illustrate the principle, that 60·45, or say two thirds, of the expenses of the railroad are unaffected, or affected in a slight degree, by the quantity of the traffic. With one train or ten trains a day two thirds of the expenses would remain without great change. By the increase of traffic the remaining one third of the expenses would be increased, though still not in proportion to the increase of traffic—as it costs no more for the wages of train-men, for instance, whether the cars are half-empty or all loaded to their full capacity.

An established traffic, then, which at the rate of one cent per ton per mile would pay all expenses, including interest on the investment, might be increased in volume with an increased cost of but one third of one cent per ton per mile. All in excess of that sum would be a profit to the company. So a lower class of freight at a rate of one half a cent, instead of being carried at a loss, or at the expense of the originally established traffic, would not only pay the additional expense incurred in its transportation of one third of a cent, but a profit also of one sixth of a cent per ton per mile. This small rate of profit multiplied by many tons may become a greater sum than the higher rate applied to its smaller tonnage. So it comes to pay a great part of the fixed expenses, and by relieving the higher-rate traffic of a portion of that burden allows reductions in the rates charged on that traffic which theretofore were not possible. The process continues indefinitely. Traffic formerly at higher rates is then stimulated by lower rates, with the hope of increasing its volume, and so of the net amount of profit in its carriage. New industries become possible where the former cost of the service on the movement of their products precluded their transportation. The principle which in the commencement led to a discrimination in favor of certain staple commodities, in the end results in reducing the rates on nearly or quite all articles composing the traffic.

The proposition, therefore, that the transportation of things at lower rates is carried at the expense of things at higher rates, though fair in sound, is false in fact. The error is in the assumption that all traffic is alike, that it is the same kind, quantity, and value. Remove these elements, and the proposition becomes a truism. Remove them, too, and the discrimination disappears. Or, if not, there being no