Weekly national intelligencer., 1857-10-17


a safe guide to the consequences to the revenue o
any concessions which they may propose to mak
in favor of special interests
know that this will be regarded as a laboriou
method Of doing that which is usually performed il
very quick and off-hand way 1t will be object
ed that by this system the formation of tariff is
work of great labor and requires an intimate know
ledge of the trade to be accommodated the influence
Of rival works. and the effect of the charges upoI
the tonnage of the road and that to carry out th'
plan upon some lines, would require the entire time
of an intelligent officer, who could really do little
else than study the traffic and circumstances of thu
road and its tributaries and rivals, with their never
ceasing changes.
That is quite true But, let me ask in reply
what subject can be presented to board OF rail
road directors of greater importance or more worthy
of labor and study than the preparation Of its tariff
of charges
The expenses of the company are met, or ought
to be met by the revenues derived from Its tariff
The interest due to the bond-holders is obtained
from the tariff The dividends of the stockholders
if earned at ALL must come from the taritf
If the tariff is essentially wrong, charging less
than the cost of conveying some commodities and
taxing others to the limit Of prohibition, the com
panys full, equitable and legitimate success is i'm
possible.
There are railroads in this country on which the
freight annually transported is represented by more
than one hundred millions Of tons conveyed one
mile, and on which an error of one cent per ton
per mile in the tariff might be represented by nearly
million of dollars in the yearly results
Yet one cent per ton per mile is not an uncom-
mon erroy. On the contrary, greater errors than
that are almost universal It cannot be denied
that the whole public, stockholders, customers and
directors, habitualy look to the increasing monthly
gross receipts as evidence of the increasing pros
perty of their road that they habitually confound
the magnitude of company's receipts with the
magnitude of its profits.
Yet there is no fact better susceptible of the
strictest mathematical demonstration than this
that the charges aohich aciU yield the n,arin,un nett
reuenue ON railroads doing a miscellaneous bust
mast be from to too cents per ton per mile
greater than that schich aciU produce the naarimun,
gross revenue. If, then, a company aims to obtain
the greatest possible gross revenue, it can only
succeed by great sacrifice Of dividends.
In fact, the gross receipts of company may be
enormous and yet insufficient to pay the expenses
of transportation.
The success of railroad, after the work has been
properly constructed and placed under vigorous
and economical administration, is still wholly de-
pendent on its tariff of toll Every thing else may
be right; but if the tariff is wrong the stock
holders must suffer. And this tariff, which ought
to be framed from the results of direct and con-
tinued observation and calculation is usually the
resultant of the guesses and partialities of the Off
GERS or the most active members of the board or,
what is vastly worse of external influences brought
to bear on the board or of limitations of the tariffs
of other roads which had been previously adjusted
by the same exterior influences.
Now, it is not proposed to recommend rigid
adherence in every case to the tariff which has
been adjusted with single eye to the procurement
of the maximum profits What advocate is the
construction of such tariff, in the first instance,
necessary guide to the formation of the actual
tariff
The board will be compelled to submit to some
sacrifices. By having such scale before them
they will always have the means Of measuring the
value of the sacrifices which they propose to make
1t will aid their judgment of the magnitude of
these sacrifices to know that while very small de-
parture from the precise charge which would yield
the greatest nett revenue is always admissible, and
small deductions from that charge, almost always
advisable, material departures from it cannot be
ventqred upon without entailing great losses. 1t
is taao general and susceptible of demonstration,
that deviations from the charges which will yield
the greatest nett profit will cause reductions of the
nett revenue proportional the square of those de-
uiations. Hence a variation of only one mill per
ton per mile from the charge which corresponds
with the greatest nett profit might cause an ex-
ceedingly small diminution of the profit; while a
deviation of cent would increase the loss con-
sequent on the deviation one-hundred. .told or one
hundred times as much as the deviation of only one
mill would have caused
The injurious consequences due to ouer-charges
are aloays greater than those due to under-charges.
A charge that is too high reduces both the profits
and the business of the road; and is consequently
adverse both to the interests of the company and
those of the public.
But at the time it is very certain that over
charges much less likely to occur, or, occurring
to continue than under-charges. Every body is
on the watch to protect the public interest. That
side of the question is abundantly guarded by the
strongest influence in this country-an irresistible
public opinion.
But who is there to protect the stockholders'
interests? The president? The president of a
railroad company who can and who dares always to
uphold that interest, and will not bend before a
storm of public opinion, must be formed of the
stuff that heroes used to be made of. Such men
are the Curtiuses of this commercial age.
The method which I propose for the construc-
tion of the toll-sheet will have the effect of drawing
the revenue from those articles which can best
afford to yield it, and precisely in the proportion of
their ability to contribute The commodities which
are near market will be taxed higher, while the
same commodities, when drawn from more remote
points, will be encouraged by lower charges. These
results necessarily spring from the practical app
cation of the system, which will be always per-
feet protection against the two greatest dangers
working for less than cost and overtaxing the dis
tant trade.
| do not, of course, contend that tariff con-
structed as / propose is general panacea for all
the financial ills of the railroad system. 1t cannot
make road which has cost too much for the bust
to be done upon it always remunerative to the
capital expended. But under an administration in
other respects judicious, it win draw from every
road the best results that the line is capable of
afording. If the road is economically managed,
and there the elements of profits in it, this sys-
tenn of charging toll will bring them out