The Saint Paul globe., 1905-04-30
HILAND EXPLAINS
RATE SITUATION
Saws Rate Making by Interstate
Commission Is Arbitrary
and Destructive


placing the rate making power in the
hands of the interstate commerce COM
mission, are:
1T gives the commission power to limit
the earning capacity of the railways by
investing it with authority to make rates
without providing means that Will prevent
notification of the commissions S order py
relative reductions on the part OF COM
peting railways, thereby maintaining tne
correlation of rates originally complained
of thus compelling reductions in revenue
without resulting in corresponding penehl
to the complafnants.
1T will change the railway geography
and destroy much of the wealth created
by the energy and business activity OF
individuals, firms and communities that
have built up trade and industrial centers,
by destroying the correlation of rates es,
tablished by long years of experience ana
Il do not believe that it is possible for
any commission to establish interstate
rates in all parts of the United states III
an equitable manner without practlcai eX-
perience and knowledge of the condltloilS
in the localities where relief is demand
ed AS a rule the traffic of1cers consider
the commercial and physical condltions,
the density of traffic and the competlllon
of one locality against another; so mat
these considerations further emphasize lne
statement that it would curtall ana nnlt
the earning capacity of the railroads that
have now overcome disabilities as 10 loca-
tion in both commercial and natural geo
graphical conditions. go
IF The commission is invested with
power to make rates it must use mileage
basis in order to maintain consistent de-
fenSe of the rates finally determined upon
AS an illustration of the injustice that
may be done in the making OF rates by
commission appointed with Such arpltrary
power might state an inquiry recently -!
was made of me why it was that a rate
of so cents per 100 pounds was considered
fair and reasonable on lumber from the
Pacific coast to Chicago, a distance OF
o > los hill n n Of
100 pounds was charged on lumber from
Ferguson, S. c., a distance of only lit
tie over 700 miles.
| must confess that I was unable 10
answer to the satisfaction of the inquirer
or myself why there should be such dis
parity in the rates, because did not
have any knowledge IN regard TO me coi1f af
ditions that surrounded the making oi
the rate from the south to chicago.
1t may be, and l have no doubt 1t is,
fact, that there Is market for the luIn-
ber manufactured at Ferguson and nearby
points which yields relatively mucn
greater revenue to. the railway company
than any rate which could De paid on the
long haul to Chicago. Therefore, If they
were obliged to fix the rates from the
Pacific coast or Ferguson to Chicago by
comparison with the service performed the
railways necessarily would be compelled
to sacrifice participation In the ranSpor-
tation of the lumber from either one point
Or the other, and this, in my judgment,
is one of the most convincing arguments
lIldI the rate pOMSl q
full knowledge of all conditions, is the
most destructive measure that can be de-
vsed for eliminating competition.
Another illustration of this arbitrary
and destructive form of rate making Is
the case brought by the chamber OF com
merce of the city of Milwaukee against
the various railroads in the northwest
complaining of unjust rates charged on
wheat and other grain from points OF
shipment in Iowa, Minnesota and South
Dakota to Milwaukee as compared with
rates on like grain to Minneapolis.
This case was really the result of an
adjustment in rates between the Mime
apolis and the Duluth markets. which
previously had been made in line with the
state commerce commission by compro-
mise agreement, which, as l call 1t, was
acceptable to both the interstate com
merce commission and the complainant.
When the Milwaukee Chamber of Com
merce case was presented and a ruling
made by the commission an effort was
made to comply literally with their order,
but there were so many difficulties en-
cOuntered in the adjustment at-TarlouS
points that representative of the
chamber of commerce at Minneapolis and
a representative Of the chamber of COM
megce at Milwaukee were delegated to
confer with the various railway interests
and establish as near as possible, the
rates recommended and decided bv the
commission as proper and reasonable from
the various points OF shipment to the mar
kets in question.
\ compromise was made tndI was dc-
ceptable to the commission and to the
Minneapolis chamber of commerce and. in
many respects also to the Milwaukee
chamber of commerce, but there were some
points where to have complied with the
demands made by the Milwaukee cham
Der of commerce would have resulted in
neutralizing the correlation that had been
established by the decision and COM
promise agreement suggested
This never was satisfactory to the
representative of the Milwaukee cham
Der of commerce and he insisted that we
should continue to follow TO a conclusion
the rates as outlined in the interstate
commerce commissions ruling regardless
of the protests of the lines that had it in
their power to prevent any adjustment of
rates by continuing the correlation orig
inally complained of. When this was fully
explained and the party who insisted on
recognition was asked how it could be
fixed, his answer was that the Chicago
milwaukee st. Paul railway should fight
1t out. and that meant a continued. al
ternate reduction in the rates until there
would be nothing left for transportation
to the one market and only a small
amount to the other Even then relative
conditions would have remained the same
as between the two markets.
The making of rates depends entirely
upon conditions that exist in the locali-
ties where the freight originates and the
destination to which the railway company
is required to carry it. These conditions
vary according to the resources and char
acter OF commodities shipped to and from
various DdFlS OF Ine United states so that
the governing influence in the making of
rates on particular commodities in one
part of the country would not necessarily
govern in another
THE western country, particularly
would suffer because the greater the dis
tance west from the MissSsippi river the
more sparsely settled is the country and
necessarily the more limited the volume
of tonnage.
"Ninety-nine per cent of the complaints
that are made to the traffic officers of
the various railroads are not that the
rates in themselves are unreasona bic or
unjust. but that discrimination and pref-
erence is shown. That is what should he
regulated and the law enforced so as to
prevent the granting in any form, di-
rectly or indirectly, of preferential rates
for communities or individuals.
If the present law is enforced and
transportation companies are compelled to
exact and retain the published tariffs
there would not be any grounds for a
general reduction in rates or placing the
power OF making arbitrary rates for
transportation companies in a commits
trade and commerce and TRANSPORTATION
will regulate and govern as conditions and
development require and Justify
The difficulty heretofore in nlaintaipiny
a parity and equitable Correlation of
rates was the fact that. while nlayinin7
rates have been made. either by court
decisions or natural laws of competition.
no remedy has yet been adopted and ap-
pied for establishing minimum rates that
VIII prevent the nullifying of such court
decisions. or any adjustment that may be
and the rag 'oads desiring to make proper
adjustment of inouua alifips or