control of rates at competitive points, which enabled the companies to
maintain excessive schedule rates at local points.

Between 1875 and 1880 the pooling system rapidly spread all over the
Union. Wherever competition promised to regulate rates by the
application of the law of supply and demand, the pool was resorted to as
the never-failing remedy to preserve dividends on watered stock. As long
as lake and canal navigation controlled the carriage of heavy freights
between Chicago and New York by means of rates so low that railroads
found it, or at least thought it, impossible to compete with them in the
transportation of agricultural products during the greater part of the
year, railroad pools between Chicago and New York could not be
successfully maintained. In 1873 the railroads transported only about 30
per cent. of this kind of freight from the West to Eastern ports.

Owing, however, to the rapid decrease of the cost of transportation,
railroad companies from this time on were enabled to encroach rapidly
upon the business of water routes, so that in 1876 they carried over 52
per cent. of the entire volume of agricultural products that were moved
from the West to the East. As long as these products were carried almost
entirely by water from lake ports to the East, New York, as the terminus
of this route, enjoyed decided advantages over the other Atlantic ports.
When, however, the railroads commenced to successfully compete with the
water routes in the transportation of these commodities, a considerable
share of this business was diverted to Boston, Philadelphia and
Baltimore, and it soon became apparent that these ports, in some
respects, enjoyed advantages for the export trade not possessed by New
York. It was, therefore, not surprising that the business men of these
cities, together with the railroads terminating in them, made every
effort to come in for their share of the traffic which was drifting away
from New York.

Competition between the New York Central and the Pennsylvania Railroad
for the Western through traffic dated back as far as 1869, the year in
which both systems secured, through consolidation with connecting roads,
through lines to Chicago. Rates fell in one year from $1.80 to 25 cents
per hundred pounds. After a time the managers of the two companies met,
and schedule rates were restored. Rates were, at least outwardly,
maintained until the Baltimore and Ohio and the Erie system entered
Chicag