Portland [Me.] Chamber of Commerce, Haverhill [Mass.] Chamber of Commerce, Haverhill [Mass.] Shoe Manufacturers Association, Worcester [Mass.] Chamber of Commerce, There was no disagreement among these organizations as to the situation or in regard to the changes which ought to be made in the public interest, and we have every reason to believe that this memorial would receive the unanimous endorsement of the industries and people of New England. Respectfully submitted, PUBLIC UTILITIES COMMISSION OF CONNECTICUT. RICHARD T. HIGGINS, Chairman. CHARLES C. ELWELL. JOSEPH W. ALSOP. PUBLIC UTILITIES COMMISSION OF MAINE. BENJAMIN F. CLEAVES, Chairman. JOHN E. BUNKER. PUBLIC SERVICE COMMISSION OF MASSACHUSETTS. FREDERICK J. MACLEOD, Chairman. JOSEPH B. EASTMAN. PUBLIC SERVICE COMMISSION OF NEW HAMPSHIRE. WILLIAM T. GUNNISON. PUBLIC UTILITIES COMMISSION OF RHODE ISLAND. SAMUEL E. HUDSON. ROBERT F. RODMAN. PUBLIC SERVICE COMMISSION OF VERMONT. ROBERT C. BACON, Chairman. WILLIAM R. WARNER. WALTER A. DUTTON. EXTRACTS FROM THE ANNUAL REPORT OF THE MASSACHUSETTS BOARD OF RAILROAD COMMISSIONERS IN 1879, SHOWING ORIGIN OF THE CANADIAN DIFFERENTIALS. The Trunk-line pool originally included only the Baltimore and Ohio, the Pennsylvania, the Erie, and the New York Central and Hudson River roads. It did not include the Grand Trunk; and, so far as the business of Massachusetts was concerned, an active competition had always existed between that road and the Boston and Albany. As between Boston and Chicago the route of the Grand Trunk was some 13 per cent the longer of the two, and it was also operated under great disadvantages of climate and of resources. Naturally, therefore, it could not do the through business so cheaply as its more direct competitor; but nevertheless it could destroy the value of that business, unless it was allowed a share of it satisfactory to itself. To induce business to seek its line, notwithstanding it was the least direct and expeditious, some inducement must be offered. Lower rates were the only inducement which could be offered. It, therefore, for years had claimed that on through business it should, because of its greater distance, be allowed to charge less for the same service than the Boston and Albany, and that such lower charge should not be treated as a "cut." The Boston and Albany declined to accede to this arrangement. It argued, that, upon every principle of correct railroad management, the shorter line made the rate, and the longer one accepted it; while to yield this principle involved the absurd concession, that, when it came to a trial of strength, the shorter route could not afford to work as cheaply as the longer. Accordingly, for years an intermittent struggle had been kept up between the two lines. As a matter of fact, the Grand Trunk was in the custom of making regular reductions on the Boston and Albany's current rates; but, so long as these reductions were moderate and carefully adjusted, so as not to influence an undue amount of business, they were ignored by the Boston and Albany, and rates were fully sustained. From time to time, however, and, indeed, so frequently as to cause great disturbance in many branches of trade, active hostilities broke out; and then rates from Boston would be reduced until the current of business at all the seaboard points was affected. (Pages 50, 51.) The necessary pressure was accordingly brought to bear. In January, 1878, there was an active competition for the westbound Boston business; and again the current of trade was sensibly affected, and began to flow from New York eastward to seek an outlet to the West. The New York combination then exerted itself to bring about an adjustment; as a result of which, the whole matter was by consent left to the commissioner of that combination as arbitrator. The principle was then at last formally accepted, that in cases of competition for through business between two rail routes, one of which is longer than the other, a concession must be made by the more favored to the less favored route as an inducement to it to sustain rates. Not to do this, it was argued, was to insist upon the less favored line either abandoning all claim on the competitive business, or, through competition, destroying its value to both lines. To ask or expect it voluntarily to abandon the business to its more favored rival, was clearly unreasonable; and, whether unreasonable or not, the request was one which would not be complied with, and which could not be enforced. The alternative was consequently a simple one: it lay between the voluntary concession of a part of the business, or the practical destruction of the value of all of it. The arbitrator accordingly fixed a temporary allowance of ten per cent of the entire rate charged, to be allowed in favor of the Grand Trunk, in consideration of which the latter was to sustain rates. (Page 53.) APPENDIX B. EXTRACTS FROM DECISIONS OF THE INTERSTATE COMMERCE COMMISSION IN REGARD TO ATLANTIC PORT DIFFERENTIALS. From Boston Chamber of Commerce v. L. S. & M. S. et al., 1 I. C. C. 436. The element of cost of service which may at one period have been recognized as controlling in fixing rates has long ceased to be regarded as the sole or the most important factor for that purpose. The value of the service with respect to the articles carried, the volume of business, and the conditions and force of competition are justly considered to have controlling weight in determining the charges for transportation. (Page 454.) From New York Produce Exchange v. B. & O. R.R. et al., 7 I. C. C. 612. In the light of these cases it is difficult to see why it is not perfectly legitimate for carriers to make differentials like those in question. The Baltimore and Ohio Railroad extends from Chicago to Baltimore. It comes into competition with the lines running to New York for this export grain traffic. There are many kinds of traffic in which other facilities, like expedition, are of more importance than the mere question of rates, but in the case of this traffic, where a change of one-eighth cent a bushel in the cost determines through which port it shall be exported, the rate is practically the only medium of competition, and the only way by which the Baltimore and Ohio company can secure a share of this traffic is by making a rate in competition with the rate to New York which will secure it. If a lower rate is necessary it may make that lower rate, and it might make it even though the distance from Chicago to Baltimore was greater than the distance from Chicago to New York, and even though the cost of transporting that grain to Baltimore was greater than the cost of transporting it to New York. (Page 660.) From "In the Matter of Differential Rates," 11 I. C. C. 13. If it can be properly done, these ports should all be kept open for the transaction of this export business upon such terms that each one may fairly compete for it. No marked advantage should be given, certainly not by the creation of artificial conditions, to any one port over the other. The ideal condition would be the establishment of such rates that enterprise at either port in the way of improvement in service or facilities might be rewarded by increased business and that there might exist that healthy struggle of locality against locality which is the best security for proper commercial development. This is justly demanded by the interests of the communities involved. In disposing of this question the interests of the carriers which serve these communities should be none the less kept in view. If, again, it can be properly done, these rates should be so adjusted that this competitive traffic will be fairly distributed between the different lines of railway which serve these ports. Each one of these four cities is reached by two or more great railway systems. The prosperity of these cities and systems cannot be separated. The ability of a railroad to adequately discharge its duty for a reasonable charge depends upon the business which it can obtain, and no one of these systems should be deprived of its fair portion of this enormous export traffic. The purpose of these differentials, from the first, has been to distribute this business between the different carriers, and we said in our former report that this was not improper unless the means used were improper. (Pages 62, 63.) The purpose is to permit these carriers and the ports which they serve to compete for this traffic. The rates are to be so adjusted that there can be fair competition for this business via all the ports, so that no one shall possess a distinct advantage over the other. (Page 66.) In view of the fact that Baltimore and Philadelphia have natural advantages in location, that Boston and New York have certain natural advantages in the way of ocean facilities, that it. is impossible to make and maintain the same rate through all the ports, we think the true inquiry in adjusting this differential is, what will equalize the advantages of transportation through these various ports? What part of the advantage which Baltimore and Philadelphia enjoy on the score of the inland haul shall they be allowed to retain to compensate them for their disadvantage in the water haul? (Page 69.) |