, and what
railroad men are pleased to term a rate war would follow. As the
schedule rates had before been unreasonably high, so they became now
unreasonably low. Hostilities would be continued until all belligerents
became exhausted and manifested a disposition to negotiate a treaty of
peace. The former high rates would then be restored; the compact was
carried out for a short time, to be again violated and finally annulled.
These rate agreements were in vogue in New England before the War of the
Rebellion and gradually found their way to the Middle States and the
West. Wherever they were tried they were violated, until even among the
most unsophisticated of freight agents a rate agreement was looked upon
as a farce.

The statement is often made by railroad managers that excesses in
railroad competition are the result of the peculiar conditions of their
business, which has heavy fixed charges on one hand and a fickle
patronage on the other; that the uncertainty of through business compels
them to rely upon the local business for such revenue as is necessary to
meet these fixed charges; and that, inasmuch as their trains _must_ run,
and any through freight hauled by them is so much business taken from
the enemy, they can better afford to take it at any price than to have
one of their competitors take it.

It is difficult to see why this reasoning should not be applied to other
branches of business; for instance, to milling. The mill-owner, like the
railroad company, has heavy fixed charges. He has to earn the interest
on his capital, he has to keep his mill in repair, he now and then has
to meet the demands of the times and purchase improved appliances, and
he has to keep a certain number of employes, whether business is brisk
or slack. He might, therefore, if he saw fit to employ the logic of
railroad managers, earn revenue enough to meet his fixed charges from
the business which his regular customers give him, and then do any
business coming from beyond this circle at any price rather than
surrender it to a rival.

It will readily be conceded that any enterprise conducted on such
principles could, at the best, flourish only temporarily, for it would
soon encounter difficulties from two sources. Its local customers, thus
discriminated against, would withdraw their patronage, while its
competitors, finding their territory encroached upon, would, in
self-defense, offer still better terms to the public to regain their