CHAPTER VII
LOCAL DISCRIMINATION
Concrete instances, [215].—Hadley's oyster case not conclusive, [217].—Two variants: lower long-haul rates by the roundabout route, as in the Hillsdale, Youngstown, and some Southern cases, 221; or by the direct route, as in the Nashville-Chattanooga and other southern cases, [225].—Complicating influence of water transportation, [232].—Market competition from various regions, a different case, [234].—The basing point (southern) and basing line (Missouri river) systems, [238].—Their inevitable instability and probable ultimate abandonment, [242].—Postage-stamp rates, illustrated by transcontinental tariffs, [245].—Which line makes the rate? [255].—Cost not distance, determines, [256].—Fixed charges v. operating expenses, [257].—Proportion of local business, [259].—Volume and stability of traffic important, [261].—Generally the short line rules, but many exceptions occur, [263].
Any unreasonable departure from a tariff graded in some proportion according to distance is known as local discrimination. It constitutes one of the most difficult and perplexing problems in transportation. Personal discrimination now happily having been practically eliminated since the enactment of the Elkins Amendments to the Act to Regulate Commerce, this issue of local discrimination under the rehabilitated long and short haul clause, has recently assumed an added significance.
A merchant of Wilkesbarre, Pennsylvania, purchased a carload of potatoes at Rochester, New York, and had the freight bill made for a delivery to Philadelphia, because the freight to Philadelphia was less than it was to Wilkesbarre, which is 143 miles nearer. He stopped the potatoes at Wilkesbarre, unloaded them, and paid the freight. A few days later he received a bill from the Lehigh Valley Company for twelve dollars additional freight. If the potatoes had gone to Philadelphia, he would have paid forty-eight dollars freightage. As they stopped at Wilkesbarre, he had to pay sixty dollars; that is, twelve dollars for not hauling the carload 143 miles.[200]
A merchant in Montgomery, Alabama, shipped two carloads of fruit jars from Crawfordsville, Indiana, to Montgomery. He shipped them to Mobile and then paid the local rate from Mobile back, those fruit jars going through Montgomery on the way out. By having them hauled 350 miles farther, he saved seventy-five dollars on the two carloads.
On first-class goods, at one time, the rate from Louisville to Montgomery, was $1.26 per hundredweight. On to Mobile, 180 miles further south, it was only ninety cents. In the same territory the rate on kerosene oil from Cincinnati at times has been three times as much to interior points as to New Orleans, three times as far. West of the Missouri river and in the Rocky mountain area similar complaints are common. Denver, Colorado, pays $1.79 per hundredweight on cotton piece goods, in small lots, hauled 2,000 miles from Boston; while the rate to San Francisco, 1,400 miles further away, on the same line, is only $1.50. This discrepancy is even greater in wholesale rates. No carload rating is given to Denver; while for similar shipments to the coast the rate is only one dollar per hundredweight. In the opposite direction, sugar is carried from San Francisco through Denver to Kansas City for sixty-five cents per hundredweight, as compared with a rate of one dollar if the sugar is stopped at Denver. Smaller places in the West afford equally striking instances. The rate on rope from San Francisco to Independence, Kansas, is seventy-five cents; while the same goods are hauled on through Independence, Kansas, much farther, to Missouri river points for sixty cents per hundred pounds. Wichita, Kansas, complains that cotton piece goods from New York by way of Galveston are rated at $1.36; while by the same route Kansas City, 225 miles longer haul by that route, the charge is only ninety-three cents. The Southwestern Lumberman's Association complains,—
"that a train of cars of lumber starts from Camden or other common point in Texas via Atchison, Topeka and Santa Fe Railway, and one car is dropped off in Oklahoma at 27½ cents per 100 pounds; one each also at Wichita and Emporia, Kansas, at 27½ cents per 100 pounds; one at Kansas City at 23 cents, and two cars also set off this same train at Kansas City, destined for Omaha and Lincoln, Nebraska, at 23 and 24 cents per 100 pounds, respectively. The balance of this train, now at Kansas City, runs on to Chicago, and 24 cents per 100 pounds is the charge then for most of the train which is left there.... Why should builders of homes in Wichita and Emporia, Kansas, pay higher freight than builders in Kansas City, Omaha, and Chicago when using yellow pine from Texas?"[201]
Such instances as these might be multiplied indefinitely. They are often striking in character. The first impression is of intolerable abuse. The simplest tenets of justice and fair dealing appear to be violated. Careful analysis should, however, always be made before drawing such conclusions. Railroad practice seldom departs so flagrantly from the fundamental consideration of cost of service without very substantial economic justification.