Omaha daily bee., 1889-06-05
THE RAILROAD OUTLOOK.

Inere are threatening signs IN tne
railroad situation. We recently re-
ferred to the attitude of the Chicago &
Alton company, regarding the prop0sed
reduction OF lumber rates between Chi
cago and Missouri river points, as
likely, il adhered to, to bring about n
general rate war that would seriously
menace the continuance OF the inter-
state commerce railway association.
That corporation has not yet taken any
action, and it may have concluded not
to do so. Another source Of complica-
tion is the reduction made by the Bur-
lington g. Northern in order to
meet the rates OF the Canadian Pa
cific, and which may eventuate in
compelling other roads to like
course. But the most serious matter is
the withdrawal OF the Southern Pacific
from the transcontinental association,
and its reported determination to make
Independent rates. AS this company
has been the mainstay OF the association
it is easy to understand what the effect
of its withdrawal must be. The associa-
tion will doubtless go to the wall,
and all the transcontinental lines
will be compelled to reduce
rates on through business. The
Chicago Tribune says of the probable
consequences of this action that first
the Santa Fe road will have to come
down in its high charges or it will get
no Pacific through business. Then the
,,nl mi Ep tutl
do the same thing or they will get
nothing but local business. Finally the
Northern Pacific, however reluctant it
may be, will have to follow suit. The
reduction of through rates will neces-
sarily require that local rates be re-
duced, so that apparently we are on tho
eve of general cutting down of freight
rates on the transcontinental lines.
This situation of affairs intensifies in
terest in the Canadian competition
which is responsible for it, and to the
Investigation of which a senate commit
tee is now addressing its attention. The
obvious fact is that this competition is
proving to be serious matter for the
American roads, but on the other hand
it is assumed to be beneficial to ship
pers and to the people. How extensive
the inroads of the Canadian Pacific on
American commerce have been is
shown by the fact that, in the
transportation of the single article
OF tea, the foreign corporation last year
increased its business thirty-seven per
cent over the previous year. while the
loss of the American roads in this one
commodity was twenty-nine per cent.
The Canadian Pacific also very ma
terlally increased its business in the
transportation of wool, while there was
large growth in it's west-bound traffic.
1t is leckoned that eighty per cent of
the total exports Of cotton goods from
the United States to China wall go over
the foreign line this year.
The business thus gained the
Canadian Pacific will not allow
to pass out of its hands with
out a struggle, and if it finds it neces-
sary to make still lower rates than it
has done, in order to retain the traffic,
it will undoubtedly do so. One of its
gard to the proposed action of the
American roads: "They threaten all
manner Of things in the way of reduced
rates, but they forget that we will meet
their rates, or those OF anyone else.
We haven't worked up our per cent of
business for the purpose of giving it
away" The Canadian road enjoys GER
tain advantages which enable it to
carry on a competition of this
character without suffering the loss
that American roads would incur. 1t
is quite as much public as private
corporation, having been practically
built by the Dominion government and
designed as we'll for military as COM
mercial highway. Its receipts by way
of gifts of money, land and credit are
unexampled in railroad history. 1t is
exempt from federal and provincial
taxation for all time, and in one way
and another enjoys SO many advantages
that Its fixed charges per mile
are said to be less than one-half
of the average fixed charges of the
American transcontinental roads for in
terest on their bonded debt alone.
This formidable competitor is now
seeking TO enlarge it's opportunities for
commanding traffic by applying for the
privilege Of carrying merchandise in
bond between ports of entry or delivery
in the United States, or through Cana
dian territory, the application awaiting
the decision of the secretary OF the
treasury. If granted, it will add materi-
ally to the advantage of the for
eign corporation and correspond
ingly draw from the traffic OF
American roads. This matter of Cana.
dian competition presents a problem in
the railroad situation which has become
decidedly serious and may ,rove trouble
some.