Actual illustrations of this second variant of the oyster case, free still from the complications of competition of markets, are not common, but occasionally arise. Chattanooga, which aspires to be the commercial and industrial centre of eastern Tennessee, is about 150 miles southeast of Nashville, as shown by the accompanying sketch map. Owing to the southwestern trend of the Appalachian Mountain valleys, it is only 846 miles from New York by rail, almost as the crow flies; while Nashville has access to the North principally through Ohio river gateways, over lines, at the best, 1,058 miles in length. By these lines, therefore, the latter is 212 miles further from New York than Chattanooga. But the two competitive places are only 151 miles apart; whence it follows that the shortest possible all-rail line from New York to Nashville, swings around to the south by way of Chattanooga. The situation is complicated by other combined rail and water routes from New York through Norfolk, Savannah, and Charleston. But all these lines also reach Nashville by coming up through Chattanooga. From every point of view, therefore, Chattanooga, on the basis of mileage, is the nearer point to New York—151 miles nearer by the direct line, all rail; equally nearer by all combined rail and water routes: and 212 miles nearer than is Nashville by the roundabout all-rail lines through Louisville or Cincinnati. Its location corresponds to X in our second variation of the oyster case; namely, an intermediate point on the direct line to another more distant point Y, which latter enjoys the competition of more roundabout routes.
The disability against Chattanooga, against which it protested, was substantial.[215] Its first-class rate from New York was $1.14 per hundred pounds, while Nashville paid only ninety-one cents. On various commodities the Chattanooga rates were from twenty-five to seventy-five per cent, above those to Nashville. The effect of such differences upon jobbing business at the places intermediate between Nashville and Chattanooga is shown by the subjoined chart. The two upper sloping lines represent the through rates from New York to each distributing centre, plus the local rates out to way stations. Even at Bolivar, the nearest place to Chattanooga, the Nashville combination is slightly lower than that based upon Chattanooga. This disability steadily increases as Nashville is approached, rates from Chattanooga rising while those from Nashville fall, until at Kimbro the jobber located at Chattanooga—the nearer point to New York on the direct line—must lay down his New York goods at a rate of sixty-three cents a hundred pounds higher than his competitor in Nashville enjoys. This adjustment is partly an historical product. Nashville, by the old river routes from Pittsburg down the Ohio and up the Cumberland, was formerly nearer the Eastern cities than Chattanooga. Then, the trunk lines through Cincinnati with heavy traffic and low rates shortened the distance; and, finally, the Louisville & Nashville Railroad, supplanting the river routes, undertook to build up Nashville as against Cincinnati and Louisville. Historically, on the other hand, Chattanooga was long an unimportant point. It took, as it still does, the same rate from the North as prevailed at some twenty-three other southern cities from Atlanta to Memphis. Here is the crux of the difficulty. The rates at Nashville must be assumed as historically fixed. Whatever remedy may apply must come from a reduction of the rates to Chattanooga, the nearer point. This place has now become an important centre, the meeting point of a number of rail and water lines. The long prevalent grouping of all the southern cities with equal rates from the North must be replaced by a system of differentials, if the discrimination against Chattanooga is ever to be ameliorated.
By this time it will be observed that in the discussion of the Chattanooga case we have drifted far beyond the mere competition of rival routes. Commercial competition, which affords the justification for grouping all these twenty-three important southern cities together, is a topic to be treated elsewhere by itself. The difficulty in many of these cases is to distinguish between the really strongest line and the one which is merely the shortest. Upon this point one's decision of the Chattanooga case might actually depend. The Louisville & Nashville contends that Nashville even today is, from an operating point of view, nearer New York than Chattanooga, although the distance is 212 miles more. All the trunk lines compete at Ohio river points, and bring them relatively much closer to New York. The density of traffic on these lines is far heavier than on the air line to Chattanooga.
It happens that Chattanooga meets this allegation of greater trunk line density and cheapness by proof of the still greater economy of operation by the coastwise steamers to southern ports, traffic coming thence north by rail through Chattanooga. The appearance of water competition in any of these cases always introduces an almost insuperable difficulty in the way of comparison of long and short lines. Shipment by vessel differs from rail carriage, primarily in the relatively high terminal costs, the absence of all maintenance of way costs, and the low cost of actual propulsion. With a cargo once securely stowed, the distance traversed by a vessel is of relatively little importance, much less so than in the case of carriage by rail. A powerful factor in determining water rates, moreover, especially by sea, is the absence of local traffic. Wharves and terminals being expensive to build and maintain, and the method of loading in a ship's hold not being conducive to ease in access or assortment, vessels are confined largely to bulk traffic at a few important points. The expenses of operation must be more uniformly distributed over the cargo than in the case of a trainload. The water line, therefore, is deprived of one advantage in cutting rates. It cannot, so readily as a railroad, recoup itself for losses on competitive business or at competitive points by falling back upon its earnings from way stations.
From all these considerations it not infrequently comes about that, unlike carriage by rail, the longest way round may indeed be the shortest way home. This is clear in the highly involved Wichita, Kansas, cases.[216] Wichita, a commercial centre of southern Kansas, is 200 odd miles southwest of Kansas City. Its all-rail rates from the East are higher than to Kansas City. Yet by the water route from New York to Galveston and thence up by rail, as compared with Kansas City, it is a nearer and intermediate point. The Interstate Commerce Commission well expresses the difficulty:
"It is quite probable that the actual cost of transporting cotton piece goods from New York to Wichita via Galveston does not exceed that of carrying them from New York to Kansas City via the cheapest route. The all-rail haul is to the latter point 1,300 miles and over. The ocean and rail movement involves a rail carriage of from 1,100 to 1,300 miles, depending upon the route selected. If the goods move through some Gulf port, there is a rail carriage of not less than 850 miles. If, therefore, the rate were to be measured by the expense of the service, it is probable that Wichita would today enjoy as low a rate as the Missouri river."
The Wichita complication, moreover, works both ways. Wichita and Kansas City form two angles of a narrow triangle with its apex at the Gulf ports; but the distance from Kansas City is longer than from Wichita. Railroad competition brought it about, however, that the rate on export grain from Wichita via Kansas City to the Gulf came to equal the rate from Kansas City to the Gulf via Wichita. But the former was a much longer and more roundabout haul; and, moreover, was less than the shorter haul rate from Wichita to the Gulf direct. The analogy to the Hillsdale case, above-described, will appear clearly on inspection of the map.
Summarizing the results so far reached, in all that concerns the two sorts of cases considered in the preceding paragraphs, our conclusion is that, when competition by rail at the distant point is alone present, and when the nearer point is on a roundabout route, a railway "is entitled to carry the traffic past X to Y (Philadelphia) for considerably less than nothing"; but, when the nearer point is on a direct line, the case is debatable. Proof that normal competition compels the lower rate at the remoter station must be uncommonly clear and conclusive. In other words, the facts that the rate at Y is not unduly low and also that the rate at X is not unreasonably high must both be firmly established.