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]]