The morning call., 1892-09-27
THE soUrHEnN PACIFIC MISTAKE

The great mistake of the managers Of the
Southern Pacific Company made in the early
part Of their career was the attempt TO
subordinate the interests of the people to
their own interests. They got the idea into
their heads that the Southern Pacific Com
pany was bigger than the rest of the eoun-
Try. Their steady purpose has been to
make it Improbable to transport freight
between points which their system covered
by any other transportation company. The
Southern Pacific bottled up San Francisco
by giving the Pacific Mail Company fixed
sum each year not 10 compete with the
railroad. Another step in the same move
meBt was tieup Of sailing vessels which
might have brought goods TO San Francisco
by the Cape Horn route. This tieup was
made possible by the fact that San Fran
cisco firms which might receive goods by
the ocean route would also need the services
Of the railroad company. Shippers so sit
uated were made TO understand that it
would be to their interest TO ship all their
goods by railroad. The power of discrimi-
nation the railroad monopoly possessed
was very convincing argument. Having
succeeded so we'll with San Francisco, the
Southern Pacific tried its game on Atlantic
coast manufacturers. Freight rates were
50 arranged that it cost less to ship some
kinds of goods to San Francisco from Euro
pean cities than from Atlantic cities. Goods
were brought from Liverpool 10 New Or
leans for less than pothing. In other words
goods were brought to New Orleans, on
the way to San Francisco, at lower rates
10 the latter city than the same varieties of
goods were brought from New Orleans,
New York or Chicago. The Southern Pa
cifc brings nails from Liverpool to San
Francisco via New Orleans for SO cents the
100 pounds; the rate from Chicago to Cali
fornla points was 81 10 per 100 pounds, and
the rate from San F rancisco to Bakersfield
was 81 20 per 100 pounds. How could San
Francisco expect to do any business in the
way OF distributing goods when California
points were supplied at lower rates from
Chicago than from San Francisco, and what
chance had Chicago against Liverpool with
charge OF SO cents on Liverpool product
and OF 81 10 on Chicago product? These
are examples which might be multiplied in
dehnltely. In marking out this policy, the
southern Pacific Company Disseminated
hrst against San Francisco in competition
with the East. and, second, against the East
In competition wi:h Europe. The idea has
bssn to build up the business of the South
SiH 1 dCiHC eJoteul OF ROADS at whatever
cost to the other industries in the country.
Congress puts duty On foreign-made goods
for the benefit Of American industries. but
the Southern Pacific Company partially null
lines this law of Congress by discriminat-
Ing in freight rates in favor Of foreign pro-
dueers.
IHE CALL has characterized the Southern
racine policy as a mistake. There would
be no mistake If we should characterize 1t
as crime. In fact, 1t partakes somewhat
0ff~lle character Of both. The Southern
Pacific has not found its policy profitable.
1t is true the ominal owners OF. the South
ern Pacific system have drawn large for
tunes from the business, but all they have
taken from the earnings Of the road would
not much more than make up the difference
between the value of the system and the
mortgages fled against it. The Southern
Pacific managers are individually rich. but
they would be fortunate to find purchaser
for The roads at a sum apprOximating TO the
amount OF bonds issued against Southern
Pacific property and secured by mortgages