Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1882-07-29
A REJOINDER.
FREIGHT MANAGER j. sTUBBs RE-
PLIES TO THE LEX MINER"
Freight oharges-The Contract System
The Railroad Question.

-
the San Francisco ErGmner on the railroad
freight question. 1t reads as follows:
OFFICE OF FREIGHT TRAFFIC MANAGER,
q. p. r. r.,
San Francisco, July %, 1882.
To the Editor of the E.camincr-Sir: OF
late the writer has frequently been asked
why does the railroad company allow the
misstatements which are being circulated re-
specting the matter of contracts for through
West-bound freight to go uncontradicted ?"
The answer is, that the animus of the attacks
upon the railroad company is obvious to all
who read. With respect to the contract
plan,' which has been particulariZsd as espe-
cially obnoxious to the merchant and hurtful
to trade those concerned are as familiar with
it as are the railroad agents. The knowledge
of the merchant is q sufficient defense, before
his Judgment and conscience, against the pub
locations Of those who find pleasure or profit
in incorporating the railroad companies.
It has been urged, however, and by promi-
neut merchant, too that it is due to the mer-
chant, who is charged with being party to
a scandalous abomination that Is 'sapping
the foundations of the city's prosperity" and
to the railroad companies, the other parties
thereto, that fair statement of the facts be
made; otherwise the mass of the people,
who ara not in trade would accept these false
reports as true. For the purpose of making
s1ch statement. l respectfully ask the
courtesy of your columns.
I presume all will admit that the legitimate
functions of railroad companies are those of
carriers for profit Pursuing the exercise of
these functions, the several companies whose
railroads connect the Atlantic and Pacific
States have sought the carrying trade between
those States, the object being one common to
all capable, enterprising business men. TO Sc
cure the maximum trade at the maximum
price. They possessed ne monopoly, else
there would have been no incitement to effort,
no necessity TO plan and labor to enlarge the
traffic overland. On the contrary, they had
encountered competition the most difficult to
overcome-competitors as numerous as the
ships engaged in the came trade. They were
subjected to that universal law that a service
or a thing is worth no more and no less than
what others can and will perform or produce
il fortune aud place being factors in the
cost of prOduction-and were obliged to
conform their methods to the peculiar nature
Of their competition.
The shorter time ard lesser risk Of trans
portation overland, as against the sea route,
would secure to the former 8 share of the
trade at a greater price than any they have
eyer asked but for the larger portion, the
total cost Of shipment by sea would necessa-
rily measure the freighting charge by rail.
Numerous experiments and careful study
proved, however, that the value to the ship
per of the service by rail, as compared with
the service by ship, was difficult, if not i'm
possible, to determine, except by an average
for given time.
On most commodities-except those of
greatest value, on which the ordinary insur-
ance would exceed the highest rate asked By
the rail carriers, which, by reason of
Oh bia ar cp1ld ok
voyage "A portion, for temporary needs.
would seek the rail line, while the bulk would
! go by sea. The average rate made by COM
| putting freight and all the charges incident to
transportation by both rates. of course repre-
scented what the railroad carriers might fairly
| ask for carrying the whole; yet this average
would be greater than the actual cost by sea !;
| hence, if published ss the rail rate, while iG
| would doubtless increase the tonnage by rail,
would scarcely increase the earnings. 1t was
| evident shat the shipper must be placed under
some obligation, in consideration of the re-
duced rate overlsnd, to ship his goods by that
route. AL shippers protested preference
for the ail-rail route at the same gross cost
! The rail carriers desired to indulge that pref
erence, if it could be done with profit.
TIE simplest plan, and the one which was
| most frequently suggested by Cape Horn
! shippers, was tariff based upon guaranty
of tonnage e. g., the merchant would agree
| to ship definite quantity of goods within
| given time, in consideration of a certain rate
of freight. The suggestion was natural, be-
| ing in harmony with weli.settled and uni.
versally-practiced principle Of trade. 1t was
| preferable alike to carriers and the chief
! patrons of the sea routes. 1t involved, how.
ever, the principle Of discriminative or differ
entail rates-for interest and credit. The
ability to carry six months stock on the sea,
en- route, and six months stock 10 store, are
the chief factors determining the availability
of the sea route to q shipper. The lowest
rates could only be obtained by the largest
shipper. This plan, while agreeable to the
large importers, and urged by them as the
only reasonable and just one would be OBJ
uoxious to the smaller shipper and would be
opposed to the sentiment that there must be
no discrimination between persons in the
charge for freighting service. II was then
decided to offer special inducements to ana
and all who would agree to give to the rail-
lines all of their business for one year, re-
qGrdless Of its rolame. 1t perhaps needs no
argument to support the statement that a
man, mill or factory can, with profit,
afford to work at lower rate per unit of
service or product, under guaranty of con.
slant employment, than without such guar
anty, being forced to take the chances of the
open market. II is mona the less true con.
corning carriers
On the other hand stability of rates is, OF
itself, of great Importance to the shipper, and
the guaranty of definite rate of freight for
one year is of value to all except the speeu-
lators. So far the proposition seemed to rest
upon sound and generally recognized business
principles. 1t presented, also, this feature
that it asked not shipper to do an impossible
lty. 10 ask one man TO guarantee five hun.
dred or q thousand tons OF freight in one
year, in consideration of certain rate of
freight, might be reasonable. His neighbor.
however, could net comply with this condi-
tion, hence could not get the lower rate, and
would be unable to compete for the trade
but TO give sll his tonnage was a reasonable
condition, easily performed by every shipper,
and placed all upon q common footing, so far
as their obligations to the carrier and the con-
alterations received therefor were concerned
The foregoing presents the salient points
ID the history of the occasion. spirit and pur-
pose of the method of handling west bound
through freight under what is known as the
contract plan. 1t will be observed that in
the adoption Of the method il use the car
riers endeagored not only TO avoid unjust
discrimination but also discrimination which
may be termed the common law OF trade
that which discounts in favor of the large
buyer-in order that no man might Justly
COUDlhin LnAb tne result OF tnelT policy was
to make the poor man poorer and the rich
man richer" In doing so they antagonized,
to some extent, the desire of the heavy im.
porters (ehose trade was that which the rail.
road companies were seeking) for lower rates
than the ordinary shipper enjoyed, and GER
tainIy involved themselves ia a more cumbsr.
some and expensive undertaking than it
would have been uRder the plan Of scaling
the rates in proportion TO the tonnage hon
died-a plan which would have pleased all
the large houses, but which would have been
very Objectionable to the smaller ones.
It is well known that the rates provided 10
these contracts are based upon the value of
the rail service ss compared with the service
by ships. They have in all cases been de.
rived from information and advice received
from the largest shippers, the question to
shippers being What will you psy?'
So that. while many of the contract rates are
the result of compromise of views between
the shipper aud the freight agent, yet upon
the whole, it may be said that the merchant.
and not the railroad companies, hss made the
rate.
It may be well TO note, just here that DO