Apparently the general situation in 1900 was more satisfactory than at any previous time in the history of railroading in the United States. With few exceptions the published rates were observed. This commendable situation seems to have been due to several causes. Primarily an adequate appreciation by the railroads themselves of the losses of revenue to which they had voluntarily subjected themselves prevailed. An enormous volume of traffic incident to general prosperity, also, almost overtaxed the facilities of the carriers. And, in the third place, the spread of consolidation and the community-of-interest idea undoubtedly contributed to the same end. The determined attitude taken by important roads, notably the Southern Railway, contributed to the maintenance of rates. Even in the Far West and Northwest, rate conditions seemed to be in better shape than at almost any previous time. But it was too good to last; trouble soon broke out again. Grain rates from Kansas to Chicago during the summer dropped from nineteen cents to seven cents. Rates on packing-house products became utterly demoralized. So bad did conditions become that in March of 1902 the Interstate Commerce Commission intervened, seeking injunctions in the Federal courts against any departure from the published tariffs. This immediately bettered conditions; and in February of 1903 the passage of the Elkins law, as we shall see, contributed still further to this end. The enactment of this statute, passed at the solicitation of the carriers themselves and imposing much severer penalties upon departure from published rates, brought about conditions during the spring of 1903 unsurpassed for stability. The only exception was a minor disturbance concerning the carriage of ex-Lake grain from Buffalo to New York. Tariffs seem to have been faithfully maintained throughout the country with one exception, that is to say, concerning traffic to and from Missouri river points.
Since the passage of the Elkins Amendments in 1903, the phenomenal development of export trade through the Gulf Ports, principally New Orleans and Galveston,[518] has been mainly responsible for recurring and often ferocious rate wars, particularly during the years 1903-1906. These rate wars were usually precipitated in the first instance by struggles between the Gulf railroads and the trunk lines for the carriage of export corn. In 1904, for example, after a long period during which little surplus corn was available for export from Iowa, Kansas and Nebraska, much of it being locally consumed for stock feeding, a large surplus was left over. Rates were promptly cut during 1905 by both sets of lines. Thus the rate on export corn from Omaha to New Orleans was reduced from eighteen to eleven cents per hundred pounds. This cut was promptly met by a reduction of rates from Missouri river points to Chicago from twenty-four to thirteen cents. The rate from Omaha to New York dropped to the extraordinarily low figure of thirteen cents per hundred pounds. The Burlington and Missouri Pacific Railroads were particularly active in this contest; together securing over eighty per cent. of the corn traffic, although five other important roads were operating in this territory. All through the winter and spring of 1905 the struggle went on unabated. The Gulf ports during this period increased their exports of corn two and one-half times over. The struggle was not alone confined to the carriage of grain; although export flour being manufactured so far north, seems to have been immune from disturbance. The trouble extended over into the field of packing-house products for export. It was long thought that this could not be shipped over the roundabout southern route, but its practicability was demonstrated at this time. The demand of the Gulf roads for a ten per cent. differential rate in their favor as an offset for the greater time requisite for transit, not being accorded, rates were again cut by one-third, sometimes being as low as twenty cents per hundred pounds.
The rate wars of 1905 in the carriage of export traffic immediately spread into the field of imports. Competition for transcontinental and far western business has always been keen by the Gulf routes. The notable Import Rate case already discussed, offers a good illustration of this fact. The great volume of tonnage moving outward through Galveston and New Orleans necessitated a correspondingly heavy northern and northwestern movement of empty cars. Hence the railroads leading from the Gulf ports, actively bid both against one another and in connection with the steamship lines against the trunk lines. Competition was particularly keen for the carriage of the large volume of sugar to the Middle West, particularly Missouri river points like St. Louis and Omaha. Carriers from every point of the compass were interested in this traffic. The trunk lines brought refined sugar from the seaboard cities where the West Indian product is concentrated. The Gulf lines brought the Louisiana product, partly as a back-load against exported grain. And the transcontinental lines brought the Hawaiian sugar, also as a back-load against a predominance of westbound tonnage. All hands thus directly took part.[519] For three years this sugar war persisted despite all attempts at harmony. Rates were constantly cut by fifty per cent., always of course to the profit of the large sugar refiners. Coffee, also constituting an important part of our import trade, and of course particularly adapted to entry through the Gulf ports, was carried at ruinous rates. Thus on green coffee during 1905, the rate from New Orleans to St. Paul was cut from forty to fifteen cents per hundred pounds, while coincidently the rate on sugar dropped from thirty-two to ten cents. The struggle for import business extended finally to all imports of merchandise from Europe. The Illinois Central, for example, actively bid for the imported plate glass business about this time. At a meeting of parties concerned in 1905, the fact developed that every one of the important lines had entered into contracts for the carriage of this traffic at rates approximately one-half those normally prevalent. The trunk lines of course had to meet this competition or lose the business. The Pennsylvania Railroad cut the rate on crockery from forty to eighteen cents; on imported seeds the rate dropped from fifty to twenty cents and on toys from seventy-five to twenty-five cents per hundred pounds. These rate wars it will be observed differed neither in extent nor degree from those of a generation earlier. One cannot avoid the conclusion that the utter demoralization of rates was ended only by the intervention of the Federal government; first by the sturdy and determined application of the Elkins Law under President Roosevelt's personal direction, and later by extension of the principle of supervision and regulation by the Hepburn Act of 1906.
The principal breach since the sugar wars was a rather persistent and locally interesting disturbance of westbound import rates, precipitated in the spring of 1909 by the Boston & Maine Railroad. Its object was to overcome the disability against the port of Boston in the matter of imports, due to the differentials allowed at Philadelphia and Baltimore.[520] This led to a general trunk line upset lasting about four months, in the course of which rates from Boston to Chicago were reduced from sixty-nine to fifty-eight cents. This obviously left little profit in the business. Yet it was a mild concession as compared with the struggles of earlier years. Two years later, in June, 1911, trouble threatened to break out again. This time it was the Delaware & Hudson and Erie roads which filed reduced rates to the interior. But the solidarity of feeling between the trunk lines was such that an open breach was prevented at the last moment. The prompt intervention of the Federal authorities was a noticeable feature on this occasion. It may somewhat safely be predicated that further serious disturbance in future is unlikely to occur.
FOOTNOTES:
[487] U. S. Industrial Commission, XIX, 1901, pp. 272-290; Annals of the American Academy of Political Science, 1898, pp. 324-352.
[488] Revenue per ton mile in index to the Senate (Elkins) Committee Hearings, 1905, vol. IV.
[489] Compare conclusions as to rebating in 1900; U. S. Industrial Commission, XIX, p. 285. When, as in 1887, a general departure of 50 per cent. from published rates characterized transcontinental traffic, the difference between the theoretical and actual revenue, as measured by the published rates, is very great. 21 I.C.C. Rep., 349.
[490] The movement of average trainloads in connection with ton-mile revenue bears upon this point. Thus in 1905, the increased trainload, accompanied by a lower ton-mile revenue, points specifically to an increase in low-grade traffic.
[491] Senate Finance Committee Report on Prices, 1893, Part I, p. 437.