So much for the standard rates. Just as certain railroad lines running
from New York to Chicago are permitted to charge two dollars less for
tickets than other "standard lines," because of slower running time, so
does the same factor make a "differential" in freight rates. Big roads
boast that they can haul the first-class freight--the "preference
freights"--from one city to the other in sixty hours. Others take a longer
time, and are permitted by their larger competitors to make their prices a
shade lower because of slower running time in freight service. Such a
"differential" is the Grand Trunk, handling New York-Chicago freight by a
roundabout route, from New York by water to New London, Conn., and thence
over the Central Vermont up into Canada and the Grand Trunk's main line.
Obviously such a longer route adds to the running-time and would be at a
keen disadvantage in securing travel, without a lower rate as bait for the
shipper. We have used New York-Chicago differentials simply as
illustrative cases. The differentials are apt to be found in any corner of
the country where there are long hauls and a number of railroads fighting
to secure them.
But the Grand Trunk as a factor in Chicago traffic to and from Boston
brought one of the earliest and most interesting decisions from the
Interstate Commerce Commission. St. Albans, Vt., complained to that board
that its local freight rate by Boston & Maine and Central Vermont from
Boston was higher than the through rate from Boston to Chicago. On the
face of it, it seemed as if justice must have rested with St. Albans, but
the railroad was able to prove its case and win a decision. It showed that
it could not live on shipments between Boston and St. Albans and other
local non-competitive points, or on the business interchanged between
these points. To earn its bread and butter it must fight for the rich
Chicago traffic; and to be in a position to fight for that traffic,
despite some disadvantage of location, it must make very low rates.
It proved that these low rates were possible for business that went
through in solid trains, like Boston-Chicago traffic, and that each of
these trains earned its proportion of the railroad's profit. For when you
come to handle freight at St. Albans, more particularly the case in still
smaller towns, you bring on a new traffic expense, and because of this
expense we get what is known as "back haul."
Public-domain text, read in full here on John Shaqi.
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