This ever-changing spread of rates from place to place, as between different commodities and with all possible combinations of the two, may be clearly explained by reference to the diagram at page [108], showing the gradation of charges by distance for different goods. Is it not plain that the spread between commodities at any given place is indicated by taking a vertical cross section of the diagram at that point? We have already seen that the curves, rising with increase of the distance, do so by different degrees. They cross and recross, making an intricate lace work of lines, because of the fact that while cost, in general, may increase more or less proportionately to distance, competition in its ever-varying forms, plays all sorts of pranks with the rates from point to point. The rate at any station is shown by the height of the curve on the vertical line for that place. Even, however, if the curves never crossed, but rose by evenly spraying out from the point of shipment at one end of the line, as in the case of those for the three upper classes, their relative heights would constantly change with distance. But owing to the complexities of competition the onward and upward movement of the curves for particular commodities is usually much more erratic than this. Some goods, like children, "get their growth" early. They soon attain the level of all the charge they can ever bear. Others distribute their development over a much greater distance. Sometimes, as we have observed, the coal curve will be above the wheat curve; sometimes it will be below. In other words, the vagaries of these sloping lines cause the vertical cross sections, indicative of spread, to vary from point to point all along the line. Such a thing as constancy of ratio between classes or particular goods is, in the nature of transportation things, impossible. This is a matter of fundamental importance, especially in its bearing upon the proposition, soon to be considered, of substituting a single uniform classification under government authority for the present threefold system. Moreover, it demonstrates the great commercial disturbance which might ensue from a general advance of freight rates by an indiscriminate transfer of commodities from lower to higher classes, such as was attempted in 1900. Such procedure is altogether illogical, and economically as upsetting to trade as a general "horizontal" increase or reduction of a customs tariff.

Commodity rates as a means for enabling shippers to reach beyond their immediate territory and gain an entrance to new markets, form an entirely distinct variety of charges from those quoted in the classified tariffs. These are special rates made to suit particular contingencies,[351] although, of course, under the law they must be filed with the Interstate Commerce Commission in the same manner. Such commodity rates, however, do not apply to persons but to localities. Although granted to shippers in a particular place to build up an industry, the privilege of shipment under the same conditions is theoretically open, of course, to all others at that point. Such commodity rates naturally apply to three sets of commercial conditions: they either govern large shipments for long distances, as in the case of live stock; or, if for short distances, they are confined to commodities of the very lowest grade, such as lime, sand or paving blocks; or else they are introduced to meet special conditions, such as an irregular market or rapidly fluctuating competitive circumstances, as in the case of goods for import or export. Such special rates are almost invariably granted for carload lots alone. The reason is, naturally, that it would not be worth while to make an exception to the classified schedules for less than that amount. Moreover, it should be observed, special rates of this sort are often introduced in order to meet changeable competition, such as by steamship lines engaged in export or import business. The classified ratings change but little, and oftentimes remain the same for many years. But in all cases where fluctuating conditions have to be met, commodity rates by the carload are likely to appear. This is one reason why the transcontinental tariffs, exposed to competition either by the Cape Horn or Panama water routes, contain so large a proportion of commodity or carload ratings.[352]

Exceptional or commodity rates are also commonly found in a territory like the southern states, where manufactures are struggling to maintain a foothold. If it appear that a new industry can maintain itself in competition with already established industries elsewhere only by a concession in charges, the traffic manager may elect to grant a commodity rate until such time as the industry has been placed firmly upon its feet. The tonnage moving under commodity rates in such circumstances may be much greater than that included under the classified schedules. Attention has already been drawn to this fact, but it merits still further comment. Probably three-fourths of the business of American railways is done under such special rates. This is apparently a higher proportion than rules in foreign countries with the possible exception of England. Yet it is important to notice that the revenue obtained from such traffic is relatively much less than the tonnage, inasmuch as most commodity rates are confined to low-grade goods. Whether such exceptions to the classified tariffs are on the increase or not is open to question. The evidence tends to show that special rates granted in connection with industrial development tend to increase up to a certain point. Commodity rates, for example, are said to be much more important in the West than they were fifteen years ago.[353] But, on the other hand, industrial conditions having once become standardized and assured, the natural disposition of the railways is to substitute regular schedules for a multiplicity of special rates. The dilemma is that such a special rate once allowed, is exceedingly difficult to withdraw. An earnest attempt was made by the trunk lines in 1899 to retire a large number of these commodity rates. It then appeared that the New York Central & Hudson River Railroad had no less than 1,370 on file. Opposition naturally arose to the cancellation of these—an opposition less easily overcome because of the complication that the withdrawal of commodity rates meant practically the abolition of carload ratings. Such action, therefore, looking toward simplification of tariffs, threatened substantially to disturb all the existing commercial adjustments. Nevertheless it is encouraging to note that a distinct reduction in the number of separate and independent rates put into effect is apparent since the recent extensions of Federal authority. The following table, covering the tariffs officially filed at Washington since 1906, is proof positive of great improvement in this regard:

Freight Schedules Filed with the Interstate Commerce Commission

1896131,597
1906193,995
1907187,041
1908161,584
1909129,294
1910109,550
191193,821

A reduction of more than one half within five years is matter for public congratulation.[354]

Special or commodity rates for the maintenance of equilibrium between competing markets fall naturally into several distinct groups.[355] In the first of these, concerning commodity rates on grain and grain products and cotton, production takes place over a vast extent of territory and the products are marketed in places widely remote from one another. The problem under such circumstances is mainly that of securing equalization through different gateways.[356] In the case of wheat it is a question first of concentration at primary markets, such as St. Paul, Kansas City, or Chicago; and thereafter of carriage by competitive routes whether by the way of the Gulf, by any of the various Atlantic seaports or by the St. Lawrence River. Commodity rates are thus determined in this first class of cases mainly with references to competition of routes. On the other hand, when production is spread over a considerable territory, but when transportation is thereafter effected along converging lines to a fairly localized centre of manufacture, the problem of equalizing conditions, competitively, by the resort to commodity rates, has mainly to do with competitive conditions at the place of production. Rates on wool to the highly localized markets of the world afford illustration of this second type of commodity rate problem.[357] Commodity rates upon fruits and vegetables to common markets from such widely separated sources of supply as Florida and California or the equilibration of conditions of production for coal or lumber from the most widely scattered sources of supply, are perhaps the most difficult of all to settle satisfactorily.

The amount of reduction to be allowed on shipments by carload as against consignments in small lots is a nice and most perplexing problem in classification. Attention has already been directed to the great increase in distinct carload ratings which has accompanied the development of trade. As affecting the interests of shippers in different parts of the country, the question came up almost immediately after the passage of the Act to Regulate Commerce. In the so-called New York Board of Trade case,[358] complaint was entered by eastern merchants against a great increase in the number of wholesale ratings in 1888. More than five times as many commodities as before were abruptly given lower rates when shipped out of New York by the carload. Inasmuch as a very large proportion of groceries and other supplies went by box or package, this reduction accorded on carload shipments greatly benefited the jobbers all through the West and South. Under new conditions provincial middlemen could buy in carloads; and then re-distribute from local centres much more advantageously than before. The Commission, called upon to decide as to the relative rights of these two classes of jobbers, attempted to bring about an adjustment which should, in the main, conform to the existing trade conditions; and yet should take into consideration the relative cost of service in the two cases. The competitive struggle between eastern and both southern and western dealers revealed in these early proceedings, has cropped out continually in official proceedings ever since that time. In a modified form the same question came to the front in connection with the general advance of freight rates in 1900.[359] The changes at this time were twofold—not only modifications in the number of carload ratings, but also an altered differential or spread between the charges for the two sorts of shipments. The question is a vital one to all the shipping interests of the country. It is one of the most troublesome elements in the establishment of a uniform classification for the United States as a whole. For inability to standardize reasonable differences between carload and small shipments, under the widely different trade conditions and practices in various sections of the country, is an almost insuperable difficulty in the way of that reform.