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592 the local traffic as well" (p. 7). And they conclude their remarks upon the subject as follows: "We venture to say that this average percentage of reduction for the last fifteen consecutive years will be a matter of no little surprise to everybody who does not make the study of freight tariffs a somewhat regular habit. Although we have made no calculation to demonstrate it, we venture to affirm that an equal average reduction in the cost of any kind of service for which the people pay a money consideration can not be found during the past fifteen years" (p. 35).

It will be seen from the foregoing that discriminations affecting places are made by nature. The distribution of land and water on the face of the earth produces a discrimination against inland places and in favor of those located on water-courses or the sea. The accessibility or inaccessibility of these places on the highway furnished by nature is the basis of the discriminations affecting them on the highway supplied by man. The rapid and cheap communication afforded by railroads has introduced a strong competitor to the water-routes, and has to a great degree reduced the inequality established by nature. But with the water-routes the highway is supplied without cost, its use is free; the carriage only is a charge upon the traffic. The cost of transporting by water is thus cheaper than by land, and this must always prevent the local inland rates by rail from being as low as the rates on the free water-routes.

If rates are not to be based on the principles by which, in compliance with the demands of commerce, they have heretofore been determined; if those discriminations only are to be considered fair which are based on the bulk and destructibility of articles; then the single rule remaining to apply to the discrimination of rates is that of distance—the mileage basis.

The advocates of State interference in the regulation of rates seem to be possessed with the conviction that the true basis of charge is the cost of the service, and they labor under the common error that the mileage basis is a practical method of determining this. It will be found, however, that the rates determined by the operation of commercial requirements will coincide more nearly with the cost of the service than can be the case with any artificial system which does not recognize, as elements fairly affecting rates, the value of the service, the volume of the traffic, and the competition of other routes. If the railroad is not allowed to take traffic, which can not afford to pay the standard rate, at whatever rate it can afford, if it charges more for certain traffic than the value of the transportation to the shipper, that traffic is lost. Now, the traffic that can afford to pay but very low rates is composed of things that are of low price; such, as I have already mentioned, are the necessaries of life. These things form a much greater portion of the company's traffic than any other equal number of articles. Grain, for instance, from the fields of production