The plan of payment for car service by the mile run, without reference to time, has the merit of simplicity and long-established usage. It is, however, in reality, crude and unscientific, and has brought with it, in its train, numerous disadvantages.
The owner of a car is entitled, first, to the proper interest in his investment, that is, on the value of the car; second, to a proper amount for wear and tear or for repairs. The life of a freight car may be reasonably estimated at ten years, so that ten per cent. on its value would be a fair interest-charge. The average amount for repairs varies directly as to the distance the car moves, and may be put at one-half cent per mile run.
It will be seen that by the ordinary method of payment the car-owner is compensated for interest at the rate of ¼ of a cent for the time that the car is in motion, but receives nothing for all the time the car is at rest. If cars could be kept in motion for any considerable portion of each twenty-four hours, this would prove ample. But in practice it is found that few roads succeed in getting an average movement of all cars for more than one hour and a half in each twenty-four. This gives about five per cent. interest on the value of the car, only one-half of what is generally conceded to be a fair return. Still further, there is no inducement to the road on which a foreign car is standing to hasten its return home. On the contrary, there is a direct advantage in holding the car idle until a proper load can be found for it, rather than return it home empty. The most serious abuses of the freight business of the country have grown from this state of affairs. It costs nothing but the use of the track to hold freight in cars; consequently freight is held in cars instead of being put in storehouses, frequently for weeks and months at a time.
There is but little earnest attempt made to urge consignees to remove freight; on the contrary, the consignees consider that they can leave their freight as long as they choose, and that the railroad companies are bound to hold it indefinitely.
One special practice has grown up as a result of this condition, that of shippers sending freight to distant points to their own order. This practice is most prolific of detention to cars, and yet is so strongly rooted in the traffic arrangements of the country that it is most difficult to put an end to it. Cars "to order" will frequently stand for weeks before the contents are sold and the consignee is discovered, during which time the cars accumulate, stand in the way, occupy valuable space, and have to be handled repeatedly by the transportation department of the road, all at the direct cost of handling to the road itself, and loss of interest to the owner of the car.
Floating Cars, New York Harbor.
Only two methods have so far been suggested to abate or put an end to the evils which have been but slightly indicated above. The first is a change in the method of payment for car service to a compensation based upon time as well as mileage, which is commonly known as the "per diem plan."
This plan consists in paying for the use of all foreign cars a fixed sum per mile run, based on the supposed cost of repairs of the car, and a price per day based upon what is estimated to be a fair return for the interest on its value. This plan was originally suggested by a convention of car accountants, and was brought up and advocated by Mr. Fink, the Chairman of the Trunk Line Commission, in New York, in the fall of 1887. At his suggestion, and largely through his influence, it was tried by a few of the roads (the Trunk Lines and some of their immediate connections) during the early part of the year 1888; the amounts as then fixed being one-half cent per mile run, and fifteen cents per day. The results of this experiment, while they were quite satisfactory to the friends of the proposed change, yet were not sufficiently conclusive to demonstrate the value of the plan to those who were indifferent or hostile to it.
Floating Cars, New York Harbor.