But the same privileges should be extended to shippers. Their rights and their welfare should be guarded as sacredly as those of the railroad companies. They should have the same opportunity to examine a proposed schedule before its promulgation and protest against any feature of it which they may regard prejudicial to their interests, and their statements should receive the same consideration as is accorded to those of representatives of the railroad companies. So, likewise, when shippers prove to the satisfaction of the commission that a rate has outlived its reasonableness, their complaints should at once be investigated, and if their cause is found to be a just one, the tariff should be so amended as to give them relief.
The labors of a board of railroad commissioners are onerous, and their responsibility is great. No uniform rule can be laid down for their guidance in the fixing of rates, yet there are a few fundamental principles which should always be adhered to. The cost of service should invariably be an important factor of a rate. Railroads should not be compelled to carry any commodity for less than the actual cost of moving it, nor should rates be fixed greatly in excess of such cost of service. The carload should be the unit of wholesale shipments. Since it costs the railroad company as much to move ten carloads of freight which belong to one shipper as it costs to move ten carloads belonging to ten shippers, no advantage beyond the general carload rate should be given to the large shipper. The difference in the rates between shipments in less than carload lots ought to be determined solely by the difference in the cost of carriage and handling. Where shipments are made in carload lots, the loading and unloading is usually done by the shipper and consignee, cars are loaded to their full capacity, and no loading or unloading of shipments at intermediate points is necessary. It is therefore but just that the consignor and consignee should have the benefit of the reduced cost of such shipments. Raw materials, and especially coal and lumber and kindred articles, the transportation of which requires neither an expensive rolling stock nor warehouse accommodations nor speedy movement, and in which the risk of loss or damage is insignificant, should be carried at the lowest rate possible. Such a policy will tend to foster other interests, which will develop business for the road and will build up remote sections of the country, and will often enable railroads to carry large quantities of these commodities at times when they would otherwise be nearly idle. There should be a uniform classification throughout the country, based upon considerations of justice and equity instead of railroad tradition. Such articles should be classed together as resemble each other as concerns bulk, weight and risk, or what is virtually the same, cost of carrying and handling. It may be safely assumed that a rate which has been made and used by railroad companies is remunerative. If it is claimed by railroad men that it is not, the burden of proof should rest upon them. A rate may also be considered remunerative to a road if other lines similarly situated have voluntarily adopted it. A schedule finally must be considered reasonable if it enables the company for which it is prescribed to earn under efficient and economical management sufficient to maintain its road in proper condition and a fair rate of interest upon a fair valuation of its road. Property is never worth more than what it can be duplicated for, and railroad property is no exception to the rule. If there has been a depreciation in the property of a company, it should not demand dividends upon values which no longer exist. Nor can the same returns be conceded to railroad property as to private capital. Its investment is permanent and well secured, if it is honestly and intelligently made; and its dividends are net returns after the payment of all expenses, including taxes, cost of management and maintenance. The three per cent. bonds of the United States Government find a ready sale at prices above par. Were there less speculation and more honesty and stability in railroad management, railroad securities yielding a revenue of from 2-1/2 to 4 per cent. on the actual investment would be eagerly sought after by conservative capitalists.
Rate-making requires honesty of purpose, intelligence and discretion, qualities as likely to be found among the servants of the people as among those of corporations. A commission may err, but its errors are not likely to prove as detrimental to the railroad companies as the extortionate and discriminating rates imposed by railroad managers have proved to the interests of the public. Railroad managers acknowledge no obligation except that of earning dividends for their companies, while the members of a railroad commission, on the contrary, are responsible for their acts to the people, with us the source of all government and all power. To question the justice and sincerity of the people, or to deny the efficacy of such a control, is to deny the wisdom of popular government.
Railroads might be permitted to reduce their rates below the official tariff, but they should be required to give at least thirty days' notice of such a change, to enable shippers to prepare for it. The companies should not be permitted, however, to raise rates again without obtaining the commissioners' consent and giving at least two months' notice of the proposed advance. Sudden fluctuations in rates are a fruitful source of disaster in those branches of business in which the cost of transportation forms an important factor in the price of commodities, and are as unjust and unwarrantable as would be fluctuations in import duties. As long as they are tolerated there can be no reliable basis for business calculations or contracts. There is little doubt that, were such regulations enforced, railroad wars, so demoralizing to the business of the country, would soon belong to the things of the past, and a far-reaching assurance of future welfare would be given to the commercial, manufacturing and all other legitimate interests of the country. It should always be kept in view by the rate-making power that the railroad company, like the gas company, the water company and the street car company, is acting in the capacity of a public agent, and the rate of compensation should be fixed by public authority.
CHAPTER XIV.
REMEDIES.
The railroad in America is still in its infancy, both as regards extent of mileage and methods of operation. In 1860 the United States had in round numbers 30,000 miles of road; in 1870 this number had increased to 53,000; in 1880 to 93,000, and in 1890 to 167,000. It will thus be seen that the average increase during each of those three decades was nearly 80 per cent. Should this rate of increase continue during the next three decades there would be in the present territory of the United States a little over three hundred thousand miles in 1900, 550,000 miles in 1910 and close to one million miles in 1920, or about one mile of road for every three miles of territory. It is not likely that the rate of increase of the past will continue in the future; but even if this should be reduced from 80 to 40 per cent. it would be less than fifty-five years when the railroad mileage of the United States would reach the million point.
Even this might seem an extravagant estimate, but it must be remembered that there are already a number of States in the Union with a railroad mileage closely approaching this proportion. The District of Columbia has one mile of road for every 3.39 square miles of territory, New Jersey for every 3.79, Massachusetts for every 3.96, and Connecticut for every 4.96 square miles. Ohio, Pennsylvania, Rhode Island and Illinois follow with one mile of railroad for every 5.14, 5.20, 5.57 and 5.59 square miles of territory, respectively, and Indiana, New York, Delaware and Iowa are not far behind them.