CHAPTER XI
SPECIAL RATE PROBLEMS: THE SOUTHERN BASING POINT SYSTEM; TRANSCONTINENTAL RATES; PORT DIFFERENTIALS, ETC.
Contrast between the basing point and trunk line systems, [380].—Natural causes in southern territory, [381].—Economic dependence, [381].—Wide-spread water competition, [382].—High level of rates, [382].—The basing point system described, [383].—Its economic defences, [384].—Early trade centres, [384].—Water competition once more, [385].—Three types of basing point, [387].—Purely artificial ones exemplified, [388].—Different practice among railroads, [390].—Attempts at reform, [391].—Western v. eastern cities, [391].—Effect of recent industrial revival, [392].—The Texas group system, [393].—An outcome of commercial rivalry, [394].—Local competition of trade centres, [395].—Possibly artificial and unstable, [395].—The transcontinental rate system, [395].—High level of charges, [396].—Water competition, [396].—Carload ratings and graded charges, [398].—Competition of jobbing centres, [398].—Canadian differentials, [400].—"Milling-in-transit" and similar practices, [401].—"Floating Cotton," [402].—"Substitution of tonnage," [403].—Seaboard differentials, [403].—Historically considered, [403].—The latest decision, [403].—Import and export rates, [404]-409.
The rate system in the southern states contrasts sharply with that of trunk line territory.[436] Its most unsatisfactory feature is its complete violation of the distance principle. Public dissatisfaction was long voiced by a large number of complaints before the Interstate Commerce Commission in the early days,—a cessation of these complaints since 1900, however, was the result of the nullification of the law by judicial interpretation, rather than an indication of any acquiescence of the public in the scheme. Next to settlement of the problem of transcontinental rates, a reasonable adjustment of the southern situation is one of the important tasks confronting the Federal authorities.
Certain natural features of southern territory are connected with its peculiar rate system. The first of these is its scattered and relatively thin settlement. Density of population varies between one-third and one-fourth of that in the northern states. This greatly limits the volume of local business. In the second place, the largely agricultural character of the country, yielding a traffic predominantly of low grade, has had a great effect. Much attention being devoted to cotton, there is little local interchange of freight. The business, moreover, is largely seasonal in character. In the early days, at least, practically all of the profits of the carriers had to be made between September and January. This concentration of interest in the movement of the cotton crop is now rapidly being supplanted by a much more general movement of traffic; but the rate system in force is an outgrowth of the conditions prevalent in the early days.
The entire dependence of this territory for manufactured goods upon the northeastern states, and for foodstuffs upon the West, has had a profound effect, we have seen, upon its railway development.[437] The predominant direction of traffic is rendered quite peculiar by contrast with trunk line territory. In the North, the principal railroads lie parallel, east and west; in the South, they are radially distributed outward from Atlanta like the spokes of a wheel. Imagine a triangle with its apex at this city,—the focus of all transportation interests in the South,—and with its other two angles lying at New York and Chicago respectively. The hollow centre of this triangle, as appears by the accompanying map, is occupied by the Allegheny mountain chain. The movement of traffic historically along the western side of this triangle has been overwhelmingly southward; at one time the disproportion southbound from western territory being as thirteen to one.[438] Along the eastern side of this triangle,—that is to say parallel with the Atlantic seaboard,—the preponderance of tonnage, by bulk and probably by value as well, has been toward the north. In this direction cotton in the early days, and latterly lumber, have moved from southern fields and forests to northeastern markets. In Virginia-Carolina territory, today, about three-fifths of the loaded mileage is north bound. The uneven distribution of traffic is still further complicated by the excess of tonnage eastbound in trunk line territory along the northern side of our triangle, above mentioned. This general description explains many of the abnormalities in freight rates throughout this territory. Bulky staples moving one way, while manufactured goods, high in value but more concentrated in weight, go the other, greatly complicate the problem of economical operation.
Another omnipresent complication in the southern states is the widespread existence of water competition. The situation in the South in this regard is not unlike that of England. Its entire territory is threaded with a series of more or less navigable watercourses which penetrate from the seaboard or the Mississippi river, far into the interior. Here again is a physical peculiarity of the southern territory, which historically explains, even if it does not fully justify, as we shall see, certain peculiarities of its freight rate system.
MAP SHOWING PRINCIPAL RAILROAD SYSTEMS IN THE SOUTHERN STATES