In the United States and western Europe, in spite of the low cost of water transportation, the railways have almost wholly monopolized the transportation of commodities. This is due in part to the saving of time in transit—for under the demands of modern business, the only economy is economy of time—and in part to prompt delivery at the specified time.

Into a large centre of population like New York, London, or Berlin, many millions of pounds of perishable food-stuffs must be brought daily for consumption. Now these food-stuffs must be delivered with promptness, and no delay can be tolerated. A shipper having half a million pounds of meat or a hundred thousand pounds of flour or a car-load of fruit to deliver can take no risks; he sends it by rail, not only because it is the quickest way, but because experience has shown it to be the most prompt way; as a rule, it is delivered on the exact minute of schedule time.

Cargoes of silks and teas from China and Japan might be sent all the way to London by water, but experience has shown a more profitable way. The consignments are sent by swift steamships to Seattle; thence by fast express trains to New York; there they are transferred to swift liners that take them across the Atlantic to European ports. And although this method of shipment is enormously expensive as compared with the all-water route, the saving of time and certainty of prompt delivery more than offset the extra cost of delivery.

In the last half of the nineteenth century the cost of haulage in the United States by rail decreased so materially that in a few instances only—notably the Great Lakes and the Hudson River—do inland waters compete with the railways.[12] This is due in part to better organization of the railways, but mainly to the substitution of Bessemer steel for iron rails and the great improvements in locomotives and rolling stock.

The use of a steam-driven locomotive became possible for the first time when Stephenson used the tubular boiler and the forced draught,[13] thereby making steam rapidly enough for a short, quick stroke. In 1865 a good freight locomotive weighing thirty tons could haul about forty box-cars, each loaded with ten tons. This was the maximum load for a level track; the average load for a single locomotive was about twenty-five or thirty cars. Heavier locomotives could not well be used because the iron rails went to pieces under them.

The invention of Bessemer steel produced a rail that was safe under the pounding of a locomotive three or four times as heavy as those formerly employed; it produced boilers that would carry steam at 250 instead of 60 pounds pressure per square inch. As a result, with only a moderate increase in the fuel burned, a single locomotive on a level track will haul eighty or ninety box-cars, each carrying nearly seventy thousand pounds.[14]

The application of the double and the triple expansion principle has been quite as successful with locomotive as with marine engines in saving fuel and gaining power—that is, it has decreased the cost per ton-mile of hauling freight and likewise the cost of transporting passengers. Enlarged "fire-boxes," or furnaces,[15] enable steam to be made more rapidly and to give higher speed.[16] Only a few years ago forty-eight hours was the scheduled time between New York and Chicago; now there are about forty trains a day between these two cities, several of which make the trip in twenty-four hours or less.

Railway Development.—The railway as a common carrier, having its right by virtue of a government charter, dates from 1801, when a tramway was built between Croydon and Wandsworth, two suburbs of London. The rails were iron straps, nailed to wooden stringers. The charter was carefully drawn in order to prevent the road from competing with omnibus lines and public cabs.

When the steam locomotive succeeded horse-power, however, there followed an era of railway development that in a few years revolutionized the carrying trade in the thickly settled parts of the United States and Europe. Short, independent lines were constructed without any reference whatever to the natural movement of traffic. There seemed but one idea, namely, to connect two cities or towns. Indeed, the absence of a definite plan was much similar to that of the interurban electric roads a century later; local traffic was the only consideration.

At first an opinion prevailed that the road-bed of the railway ought to be a public highway upon which any individual or company might run its own conveyances, on the payment of a fixed toll; indeed, in both Europe and the United States, public opinion could see no difference between the railway and the canal. The employment of a steam-driven locomotive engine, however, made such a plan impossible, and demonstrated that the roads must be thoroughly organized.

At the close of 1850 there were nearly four hundred different railway companies in England; in the United States about a dozen companies were required to make the connection of New York City and Buffalo. A few of these paid dividends; a large majority barely met their operating expenses, defaulting the interest on their bonds; a great many were hopelessly bankrupt.

Consolidation of Connecting Lines.—Between 1850 and 1865 a new feature entered into railway management, namely, the union of connecting lines. This was a positive advantage, for the operating expenses of the sixteen lines, now a part of the New York Central, between New York and Buffalo were scarcely greater than the expenses of one-third that number. The service was much quicker, better, and cheaper. In England the several hundred companies were reduced to twelve; in France the thirty-five or more companies were reduced to six in number.

The consolidation of connecting lines brought about another desirable feature—the extension of the existing lines.[17] The lines of continental Europe were extended eastward to the Russian frontier, and to Constantinople; then the Alps were surmounted. In the United States railway extension was equally great. The Union and Central Pacific railways were opened in 1869, giving the first all-rail route to the Pacific coast. Other routes to the Pacific followed within a few years, one of which, the Canadian Pacific, was built from Quebec to Vancouver.

The period from 1864 was one of extensive railway building both in the United States and Europe. Some of the roads, such as the transalpine railways of Europe and the Pacific roads of the United States, were greatly needed. Others that created new fields of industry by opening to communication productive lands were also wise and necessary; the lands would have been valueless without them. Not a few lines that were to be needed in time were built so far ahead of time that they did not even pay their operating expenses for many years.

Another class of roads was intended for speculative purposes. Thus, there were instances in which a line occupying a given territory had antagonized its patrons by poor service, and extortionate charges. Thereupon another company would obtain a charter—which was then easily done—and build a competing line in the same territory, the former most likely having scarcely enough business for one road.[18] The results were almost always the same; a war of rate-cutting followed; the stockholders of both roads lost heavily; and one or both went into the hands of receivers.

Competition and Pools.—In many instances the consolidation of roads, while cutting off disastrous competition in the territory jointly occupied by the two roads, brought the consolidated road into fierce competition with another adjacent system. If the roads had practically the same territory but different terminals the competition was confined mainly to local traffic. On the other hand, they might have the same terminals but cover different local territories; in this case the roads must compete for through traffic. Thus the Chicago, Burlington & Quincy is brought into competition with the Union Pacific in Nebraska, but inasmuch as the roads have different and widely distant terminals, their local traffic is easily adjusted. The Chicago, Burlington & Quincy and the Northwestern have common terminals at Chicago, St. Paul, Denver, Omaha, and Kansas City. They must therefore compete with each other, and with half-a-dozen other roads for their through traffic.

Competition between railways differs greatly from that between two firms. If one of two firms cannot afford to compete, the manager may discharge his help, and close doors; he then does not suffer actual loss. But a railway, being a common carrier, cannot do this; the road must keep its trains moving or lose its charter. If it cannot carry goods at a profit it must carry them at cost or at a loss. Even the latter is better than not carrying them at all, for the operating expenses of the road must go on.

So between 1870 and 1880 most of the railway managements were busy devising ways to stop a rate-cutting and competition that was ruinous. In many instances great trunk lines would have consolidated had not State laws prevented. They could not maintain rates because one or another of the weaker roads would be compelled to lower their rates in order to meet their operating expenses. Therefore they were compelled to do one of three things, namely, to divide the territory, to divide traffic, or to divide earnings. Either of the two latter plans is called a pool.

Of these two forms of pooling the division of the traffic is the easier, but it is often unsatisfactory to the patrons of the road. The second plan, the division of the earnings, is a more difficult matter to adjust because each road is usually dissatisfied with its proportion. As a matter of fact, however, the first plan of pooling is very apt to grow into the second.

In several instances pools have been declared illegal by the courts, but, in general, railway service has been more satisfactory under the pool system than under any other. They have always aroused popular suspicion, however, from the fact that they increase power of the railway itself. In various instances important trunk lines have formed a general company, each having its separate organization, because they could accomplish under a combined organization what they could not as independent companies. The restrictions against pooling have therefore encouraged combination of competing lines.

Because the railway is an absolute necessity, and because it has power given neither to individuals nor to other corporations, it is a settled policy that both the State and general Government should have the power to regulate its rates, and should in every way prevent unjust discrimination. Both problems are very difficult, however, and the unintelligent adjustment of rates has frequently resulted in injustice both to the roads and their patrons.

A rate per ton-mile for each class of freight is out of question, because a large part of the cost to the company consists in loading, handling, and storing the goods. Once aboard the car, it costs but little more to carry a ton of freight one hundred miles than to move it one mile. The rates per mile, therefore, are necessarily greater for short distances than for long runs. A mile-rate based on a ten-mile haul would be prohibitive to the shipper if applied to a run between Chicago and New York. On the other hand, were the charges based on the long run, the local rates would be far less than the cost of the service.[19]

As a result freight rates are based very largely on the cost of the service, and this is particularly true of local freights. This practice is also modified by charging what the traffic will bear, and, on the whole, a combination of the two ideas gives the most reasonable and the fairest method of basing charges. Thus, a car filled with fine, crated furniture, which is light and bulky, can afford a higher rate than one filled with scrap-iron. Cars filled with grain, lumber, coal, or ore are made up in train-loads, and form a part of the daily haul; they can afford to be taken at a lower rate than the stuffs of which only an occasional car-load is hauled. In order to adjust this problem it is customary to divide freights into six general classes.

In handling through freights the problems are many, and, if two or more roads have the same terminal points, a great deal of friction of necessity results. The longest roads must either make their through rates lower than local rates between distant points, or lose much of their through business. They cannot afford to do the latter and the statutory laws may forbid the former. As a result the laws most likely are evaded, or else openly disobeyed.[20]

The difficulties in adjusting the matter of the long and the short haul, as has been shown, have caused the formation of pools and various other traffic associations, the object of which has been to prevent rate-wars. To this extent they resulted in positive good, for a rate-war in the end is apt to be as hurtful to the community as to the railway company. The attempt to settle such questions has also resulted in a great deal of legislation. Some of this has been wise and good; but not a little has been hurtful both to the railroads and to the community. The general result is seen in the great combination of competing lines and, more recently, of competing systems.Passenger Service.—Passenger traffic is more easily managed than the movement of freight. For the greater part the rates are fixed by law. On a few eastern roads local rates are two cents per mile; in the main, however, a three-cent rate prevails, except that in sparsely peopled regions the rates are four and five cents per mile. On many roads 1,000-mile books are sold at the rate of twenty dollars; on some the rate is twenty-five dollars per book.

Long-distance rates involving passage over several roads are somewhat less than the local rates. These rates are determined by joint passenger-tariff associations. Each individual road fixes its own excursion and commutation rates; one or another of the joint passenger associations determines the rates where several roads divide the traffic. The latter are usually one, or one and one-third fares for the round trip.

Except on a few local roads in densely peopled regions the passenger service is much less remunerative than freight business, and not a few railways would abolish passenger trains altogether were they permitted to do so. Rate-cutting between competing roads has not been common since the existence of joint passenger associations. It is sometimes done secretly, however, through the use of ticket-brokers, or "scalpers," who are employed to sell tickets at less than the usual rate; it is also done by the illicit use of tickets authorized for given purposes, such as "editors'," "clergymen's," and "advertising" transportation.

In many instances, where several roads have the same terminal points, it is customary for the road or roads having the quickest service to allow a lower rate to the others. Thus, of the seven or eight roads between New York and Chicago, the two best equipped roads charge a fare of twenty dollars on their ordinary, and a higher rate on their limited, trains. Because of slower time the other roads charge a sum less by two or three dollars for the same service. This cut in the rate is called a "differential."

Railway Mileage.—The railways of the world in 1900 had an aggregate of nearly four hundred and eighty thousand miles distributed as follows:

In western Europe and the eastern United States there is an average of one mile of railway to each six or eight square miles of area. In these countries railway construction has reached probably its highest development, and the proportion seems to represent the mileage necessary for the commercial interests of the people.

The railways of the United States aggregate 193,000 miles—nearly one-half the total mileage of the world. Over this enormous trackage 38,000 locomotives and 1,400,000 coaches and cars carry yearly 600,000,000 passengers and 1,000,000,000 tons of freight. They represent an outlay of about $5,000,000,000. Owing to the absence of the international problems that have greatly interfered with the organization of European railways, the roads of the United States have developed "trunk-system" features to a higher degree than is found elsewhere.

In the United States and Canada the farms of the great central plain, together with the coal-mines, are the great centres of production, while the seaports of the two coasts form great centres of distribution. Most of the trunk lines, therefore, extend east and west; of the north and south lines only two are important. The reason for the east-west direction of the great trunk lines is obvious; the great markets of North America, Europe, and Asia lie respectively to the east and the west.

Railway Ownership.—The ownership of railways is vested either in national governments or else in corporate companies; in only a few instances are roads held individually by private owners, and these are mainly lumber or plantation roads. Thus, the railways of Prussia are owned by the state; most of those of the smaller German states are owned either by the state or by the empire; still others are owned by corporate companies and managed by the imperial government. In their management military use is considered as first in importance.

In France governmental ownership and management have been less successful. Plans for an elaborate system of state railways failed, and the state now owns and operates only 1,700 miles, mainly, in the southwest. Belgium controls and operates all her lines, but as the latter are short and the area of the state small, there are no difficulties in the way of excellent management. In Great Britain all the railways are owned and controlled by corporate companies. The great transcontinental line of the Russian Empire was built by the government, but the latter does not own it.

In the United States the railways are now owned by corporate companies. Some of the western roads were built by Government subsidies;[21] other roads were built by the aid of States, counties, or cities, which afterward sold them to corporate companies. The first transcontinental railways required Government assistance, and could not have been built without it; nowadays, however, corporate companies find no difficulty in providing the capital for any railway that is needed.

Inasmuch as the railway is a positive necessity, upon whose existence depends the transportation of the food daily required in the great centres of population, the charter of the railway gives the company extraordinary powers. Most steam railway companies are permitted by the State to exercise the power of eminent domain—that is, they may seize and hold the land on which to locate their tracks and buildings, if it cannot be acquired by the consent of the owners; they may also seize coal and other materials consigned to them for shipment if such materials are necessary to operate their lines.

Therefore, in consideration of the unusual powers possessed by the companies, the various States reserve the right to regulate the freight and passenger tariffs. They may also compel the companies to afford equal facilities to all patrons, and take the measures necessary to prevent discrimination.

The control of the railways by the government may be absolute, as in the German state of Prussia; or it may consist of a general supervision, as in the case of the Canadian railways. In almost every European state there is a director or else a commission to act as a representative between the railways and the people. In the United States the various States have each a railway commission, while the general Government is represented by the Interstate Commerce Commission.

Electric Railways.—The use of electricity as a motive power has not only revolutionized suburban traffic but it has become a great factor in rural transportation as well. The speed of the horse-car rarely exceeded five or six miles per hour, while that of the electric car is about ten miles per hour in city streets and about twice as great over rural roads. As a result, the suburban limits of the large centres of population have greatly extended, and the population of the outlying districts has been increased from four to ten fold.

From some of the larger cities the electric roads reach out to distances of one hundred miles or more and have become the carriers of perishable freight, such as fruit and dairy products. These are not only delivered just as promptly as though they were sent over the steam roads, but the delivery is more frequent. Indeed, the marvellous success of the electric interurban railway is due mainly to the frequency of its service.

Public Roads and Highways.—Carriages propelled by steam, electric, and gasoline motors have become an important factor in the delivery of goods in nearly every city of Europe and America. They are not only speedier than the horse and wagon, but their keeping costs less. They are economical only on good roads. The bicycle, no longer a plaything, exerted a very decided effect on transportation when the "pneumatic" or inflated rubber tire came into use. Through the bicycle came the demand for good roads; and several thousand miles of the best surfaced roads are built in the United States each year.

The ordinary highways or roads, the paved streets of the large cities excepted, are popularly known either as "dirt" roads or "macadamized" roads, the latter name being applied to about every sort of graded highway that has been surfaced with broken rock. Most of the roads of western Europe are of this character. They are laid out with easy grades, and a thick foundation of heavy stone is covered with smaller pieces of broken rock, the whole being finished off with a top-dressing of fine material. Once built, the expense of keeping them in good order is less than that of keeping a dirt road in bad order.

Most of the country highways of the United States are dirt roads that are deep with dust in dry weather and almost impassable at the breaking of winter. Roads of this character are such a detriment that grain farming will not pay when the farm is distant twenty miles or more from the nearest railway. Many a farmer pays more to haul his grain to the nearest railway station than from the railway station to London.

Since it has become apparent that the commercial development of many agricultural regions depends quite as much on good wagon roads as upon railways and expensive farming machinery, there has been a disposition to grade and rock-surface all roads that are important highways. Intercommunication becomes vastly easier; the cost of transportation is lessened by more than one-half; and the wear and destruction of vehicles is reduced to a minimum. In every case the improvement of the road is designed to increase traffic by making a given power do more work in less time.

QUESTIONS FOR DISCUSSION

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