Part 14

Let A B and B C be two railroads connecting at B. Let the local rates A to B be 10 cents per 100 lbs. on grain, and B to C also 10 cents. Let the through rate A to C be 18, since longest hauls are usually cheapest per mile. Let A be a large grain market, such as Chicago. Now a merchant at C can save 2 cents per 100 lbs. by buying direct from A instead of buying from a merchant at B. For the grain will pay less for the single long haul than for the two short hauls. But perhaps the town of B has for many years enjoyed the trade of C, and there are large mills and warehouses erected there. B will then say it is "discriminated against," and will demand the privilege of "re-billing" or "milling in transit." That is to say, when a merchant or miller at B ships to C grain, or flour made of grain, which he received from A, the two roads consent to make a new way-bill and treat the shipment as a through shipment from A to C. The road B C charges but 8 cents, and the road A B gives B C one cent from the 10 it originally collected. This involves much trouble and a loss of revenue to the roads, and is, apparently, a discrimination against the home products of B, but roads frequently do it where there is competition at C by rival lines, and also at local points along their lines to build up mills, distilleries, and factories of all kinds in competition with those located elsewhere. As yet the Interstate Commerce Commission has not pronounced upon this practice.

The question of differentials is as follows: Suppose there are three lines, B, D, and E, between the cities A and C (Diagram, page 176). B, being the shortest, will get most of the business when rates are the same (10 cents, for instance) by each line. But D and E insist upon participating, so they demand that B shall allow them to operate lower or "differential" rates--that is, B must maintain his rate at 10 while allowing D to charge only 8 and E 6 cents, on account of their disadvantages. So that a differential is practically a premium offered for business by an inferior line.

The foregoing will illustrate how the rivalry of railroads with each other complicates the making of rates. But even more difficult to manage is the rivalry of markets, and of products, and of new methods which threaten property invested in old methods; as, for instance, the dressed-beef traffic from the West threatens the investments in slaughter-houses and stock-yards in the East.

As the roads have found it necessary to act together in establishing running rules and regulations, so, in spite of all rivalries, there must also be joint agreements reached in some way concerning rates. Usually the roads serving a certain territory form an "association," and their freight agents form "rate committees," which fix and publish joint rates. A tariff published by one of the trunk lines from the Eastern cities forms a good example. As the result of many long and bitter wars and many compromises, it has been agreed among these roads that the rates from New York to Chicago shall form a basis for all other rates, and a scale has been fixed showing the percentage of the Chicago rate to be used as the rate to each important point in the West. Thus Pittsburgh, Pa., is 60 per cent. of Chicago rate; Indianapolis is 93; Vandalia, 116. The tariff above referred to gives an alphabetical list of some 5,000 towns reached over these roads, and opposite each town the figure showing its percentage of the Chicago rate. The list begins with Abanaka, O., 90, and ends with Zoar, O., 74.

The tariff next gives what is called the "Trunk Line Classification," which is a list comprising every article known to commerce, in all the different conditions, shapes, and packages in which it is offered for transportation, and opposite each article is given its assigned "class." This particular classification assigns every article to one of six regular, or two special, classes, and the present rates to Chicago in cents per 100 lbs. are given as 75, 65, 50, 35, 30, 25, 26, 21. The list of articles begins with Acetate of Lime, in car-loads, 5th class; in less quantities, 4th; and ends with Zinc, in various forms from 1st to 6th--comprising in all nearly 6,000 articles. From these tables any desired rate readily appears. Thus, 500 pounds of acetate of lime would cost, from New York to Zoar, O., 74 per cent. of Chicago's 4th class rate, or 74 per cent. of 35--say, 26 cents per 100 lbs., or $1.30.

There is also given in the tariff pamphlet a list of some 300 manufacturing towns in New England, from each of which the same rates apply as from New York. So, on the whole, the pamphlet gives rates on about 6,000 articles from 300 points of origin to 5,000 destinations.

In different sections of the country different classifications are in use, some of them embracing twenty or more classes, and allowing finer shades of difference between articles according to their value, bulk, or many other varying conditions which determine the class into which each article is put.

Great efforts have been made to bring about a uniformity of classification over the whole United States, and the number of classifications in extensive use has been reduced from a very large number to perhaps a dozen.

But absolute uniformity cannot be obtained under the widely different conditions which prevail in different sections, without great loss and sacrifices somewhere. A road, for instance, competing with a river or canal must adjust the classification of the particular kinds of freight best adapted to river or canal transportation so as to secure the traffic in competition with boats. It must almost entirely disregard bulk, value, and all other conditions upon which a road not affected by this particular kind of competition arranges its classification. Uniformity would either force one of them to lose a legitimate business, or the other to reduce reasonable rates.

These rates and classifications are the battle-ground for all the innumerable rivalries of trade and commerce. Every city is here at war with every other city, every railroad with every other road, every industry with those which rival it, and every individual shipper is a skirmisher for a little special rate, or advantage, all to himself. State legislatures and commissions, Congress, and the Interstate Commerce Commission are the heavy artillery which different combatants manage to bring into the contest. On these rates probably a million dollars are collected every day, yet it is very rarely that the _positive_ rates are fought over or complained of. Their average is considerably below that of the average rates of any other country in the world, even though other nations have cheaper labor and denser populations. Fifty cents for carrying a barrel of flour a thousand miles cannot be called exorbitant, and, indeed, the retail prices paid for bread and clothing would probably not be reduced in the slightest were the transportation of all such articles absolutely free. But the battle is over the _comparative_ rates to different points, over different routes, and for different commodities.[19]

Passenger rates are established in much the same manner as freight rates. There are passenger-agents' associations and conventions, and they fight as do the freight men over comparative rates and differentials, and commissions to agents. The last within a few years has been a fearful abuse, and is not yet entirely abolished. This will illustrate:

The road A B has two connections, C and D, to reach E. It sells tickets over each at the same rate, and stands neutral between them. But C agrees with A's ticket-seller that he will give him a dollar for every ticket he can sell over C's line. D finds that he is losing travel, and offers, privately, a larger commission. Neither knows what the other is doing. The ticket-seller gets his regular salary from A, and from C and D often enormous sums as commissions, and is interested, not in sending ignorant travellers over the line which might suit them best, but over the one paying him the largest secret commission. This should be held as against public policy, because it tends to prevent reductions in rates to the public by robbing the roads of much of their revenue, and it also demoralizes the officers who handle a business which is practically but the giving away of large sums of money as bribes.

There is another practice in the passenger business which is unfair at the best and is the source of many abuses. It is charging the same to the man with no baggage as to the man with a Saratoga trunk. If the baggage service were specially organized as a trunk express, it could be more efficiently handled and without any "baggage smashing," while the total cost of travelling to persons with baggage would be no more than at present, and to those without, much less.

As an illustration of the sort of abuses to which it is now liable, I may cite a single case. I have known a merchant buy a lot of twenty trunks for his trade, pack them all full of dry-goods, check them to a city 1,000 miles away by giving a few dollars to baggage-men, and himself buy a single ticket and go by a different route. The roads which handled that baggage imagined that it belonged to their passengers, and were never the wiser. While the baggage service is free, no efficient checks can be provided against such frauds.

Essential parts of both freight and passenger departments are the soliciting agents. They are like the cavalry pickets and scouts of an army, scattered far and wide over the country and looking after the interests of their lines, making personal acquaintances of all shippers and travellers, advertising in every possible manner, and reporting constantly all that the enemy--the rival lines--are doing, and often a great deal that they are not. For the great railroad wars usually begin in local skirmishes brought on by the zeal of these pickets when the officers in command would greatly prefer to live in peace.

Besides their receipts from freight and passenger traffic, railroads derive revenue also from the transportation of mails and express freight on passenger trains, from the sleeping-car companies, and from news companies for the privilege of selling upon trains. Of the total revenue about 70 per cent. is usually derived from freight, 25 per cent. from passengers, and 5 per cent. from mail, express, sleeping-cars, and privileges. When it is considered that high speed involves great risks and necessitates a far more perfect roadway, more costly machinery and appliances, and a higher grade and a greater number of employees, the fast passenger, mail, and express traffic hardly seems at present to yield its due proportion of income.

* * * * *

We have now followed the line of organization and management through the physical maintenance of the road and rolling stock, the safe handling of the trains, the establishment of rates, and solicitation of business. It only remains to show how the revenue is collected, how the expenses of operation are paid, and all statistics of the business prepared. These duties are usually united under charge of an officer called the comptroller, general auditor, or some equivalent title. His principal subordinates, whose duties are indicated by their titles, are the auditor of receipts, auditor of disbursements, local treasurer, paymaster, and clerk of statistics.

The record of a single shipment of freight will illustrate methods, so far as limits will permit. A shipper sending freight for shipment sends with each dray-load a "dray ticket" in duplicate, showing the articles, weight, marks, and destination. If he has prepaid the freight, or advanced any charges which are to be paid at destination, it is also noted on the dray ticket. When the drayman reaches the outbound freight depot with his load, he is directed to a certain spot where all freight for the same destination is being collected for loading. A receiving clerk checks off his load against the duplicate dray tickets, keeps one and files it, and gives the drayman the other, receipted. In case of any loss arising afterward, the original dray ticket, made by the shipper himself, with his marks and instructions, becomes a valuable record. When the entire shipment has been delivered at the loading point, the shipper takes the dray tickets representing it to the proper desk, and receives "a bill of lading." This bill of lading is made in triplicate. The original and a duplicate are given to the shipper. He keeps the last and sends the former to the consignee. It represents the obligation of the railroad to transport and deliver the articles named on it to the person named, or his assignee. It is negotiable, and banks advance money upon it. But the shipper may still, by a legal process, have the goods stopped _en route_ should occasion arise, as, for instance, by the bankruptcy of the consignee. The goods are also liable for garnishments in certain cases, and there is much railroad and commercial law which it behooves the officials interested to be well posted in. When the goods arrive at destination the possession of the bill of lading is the evidence of the consignee's right to receive them.

Now we will return to the shipment itself and see how it is taken care of. The whole structure of the system of collecting freight revenue, holding accountable all agents who assess it and collect it, dividing it in the agreed proportions between all the railroads, boats, bridges, wharves, and transfer companies who may handle it in its journeys, even across the continent, and the tabulating of the immense mass of statistics which are kept to show, separately, the quantities of freight of every possible class and variety, by every possible route, and to and from every possible point of destination and departure--all this system, neither the magnitude nor the minute elaboration of which can be adequately described within limits, is founded upon a paper called the way-bill.

The theory of the way-bill is that no car must move without one accompanying it, describing it by its number and the initials of the road owning it, and showing its points of departure and destination, its entire contents, with marks and weights of each package, consignors and consignees, freight and charges prepaid or to be collected at destination, and the proportion of the same due to each carrier or transfer in the line. And not only must a way-bill accompany the car, but a duplicate of it must be sent immediately and directly, by the office making the original, to the office of the auditor of freight receipts. If the railroad is a member of any association, as the Trunk Line Association in New York, another duplicate is sent to its office, that it may supervise all rates, and see what each road is doing. The sum of all the way-bills is the total of a road's freight business. To facilitate taking copies they are printed with an ink which will give several impressions on strong, thin tissue-paper, forming "soft copies," while the "hard copy," or original, goes with the freight to be checked against it when the car is unloaded.

And while the original way-bill fulfils its important function of conducting the freight to destination and delivery, the duplicate which was forwarded directly to the auditor of freight receipts has no less important purposes. It is the initial record that freight has been earned, and it shows which agent of the company has been charged with its collection. Before making any entries from it its absolute correctness must be assured. For this purpose all its figures are first checked by a rate-clerk, who is kept constantly supplied by the traffic department with all current rates, classifications, and percentage tables by which through freights are divided. These way-bills, coming in daily by hundreds and thousands, are then the grist upon which the office of the auditor of receipts grinds, and from which come forth the accounts with every agent, showing his debits for freight received, and the consolidations showing the freight earnings of the road. Agents remit the moneys they collect direct to the treasurer, who makes daily reports of the credits due to each one. A travelling auditor visits every station at irregular intervals and checks the agent's accounts, requiring him to justify any difference between his debits and credits by an exhibit of undelivered freight.

The passenger earnings are obtained from daily reports by all conductors of their collections, and by all ticket-sellers of tickets sold. These reports are also checked by a passenger rate-clerk, and the travelling auditor frequently examines and verifies the tickets reported by agents as on hand unsold.

After the auditor of receipts has finished with the way-bills and ticket reports, they go to the statistical department, where are prepared the great mass and variety of statistics required by different officers to keep themselves thoroughly posted on the growth or decrease of business of every variety, and from and to every market reached by the road. Finally, the way-bills are filed away for reference in case of claims for overcharges, or lost or damaged goods.

The auditor of disbursements has supervision of all expenditures of money, which is only paid out by the paymaster or treasurer upon vouchers and pay-rolls approved by proper authority. The vouchers and pay-rolls then form the grist upon which his office works, and from which are produced the credits to be given all officers and agents who disburse money, and the classified records of expenses, and comparison of the same with previous months and years, and between different divisions.

* * * * *

I have thus outlined the skeleton of a railroad organization, and suggested briefly the relations between its most important parts, and some of the principles upon which its work is conducted. The scheme of authority is outlined in the diagram on page 185. But space is utterly lacking to clothe the skeleton with flesh and go into the innumerable details and adjustments involved in the economical and efficient discharge of all of its functions.

It seems a very simple matter for a railroad to place a barrel of flour in a car, to carry it to its destination, and to collect fifty cents for the service. It is done apparently so spontaneously that even the fifty cents may seem exorbitant, and I have actually heard appeals for free transportation on the ground that the cars were going anyhow. So it also seems a very simple matter for a man to pick up a stone and place it on a wall. But this simple act involves in the first place the existence of a bony frame, with joints, sinews, and muscles, sustained by a heart, lungs, and digestive system, with eyes to see, a brain to direct, nerves to give effect to the will-power, and a thousand delicate adjustments of organs and functions without which all physical exertion would soon cease. Similarly, a railroad organized to respond efficiently to all the varied demands upon it as a common carrier, by the public, and as an investment by its owners, becomes almost a living organism. That the barrel of flour may be safely delivered and the fifty cents reach the company's treasury, and a part of it the stockholder's pocket, the whole organization outlined in the diagram must thrill with life, and every officer and employee, from president to car-greaser, must discharge his special functions. All must be coordinated, and the organization must have and use its eyes and its ears, its muscle, its nerves, and its brain. It must immediately feel and respond to every demand of our rapidly advancing civilization.

Each road usually has its own individuality and methods, and its employees are animated with an _esprit de corps_, as are the soldiers in an army. There is much about the service that is attractive, and, on the whole, the wages paid railroad employees are probably in excess of the rates for similar talent in any other industry, although labor in every other industry in the United States is protected by high tariffs, while in this it is under the incubus of legislation as oppressive as constitutional limits will permit.