ailroads connecting the same points.

We speak of the condition of railroads as an intermediate state
because it is one out of which a natural development takes other
carriers when their capacity for service is fully utilized. The same
cause--a complete utilization of the plants--would have a like effect
in the case of railroads; but the cause is so slow in coming into full
operation that few persons think of it as affecting the problem at
all. The problem of freight charges on railroads is usually regarded
as if the intermediate state were destined to be perpetual. It is,
however, entirely true that a full utilization of the plants of
railroads would tend to take them out of this state. If the increase
of business came after a combination had been effected, it would tend
to put a stop to the sharp discriminations to which the eager quest
for traffic has led. Different shippers could more easily secure
equally favorable treatment. Freight of a low grade would be less
desired, since the space it would require might otherwise be available
for business of a more profitable kind, and the rates on such freight
would rise. The increased traffic would make it possible to earn large
dividends without increasing charges on the lower grades of freight,
and while greatly reducing the charges on the higher grades; but no
economic force would be available for securing this adjustment. The
state, by positive regulation, might secure it and might bring the
earnings and the charges of the railroads more or less nearly to the
normal standards which prevail where competition rules; but if
competition were here to begin, it would result quite otherwise. It
would restore the old condition of partially utilized cars, track,
etc., and cause a new strife for traffic, which would cause some
freight to be taken at very low rates, but would lead to inevitable
consolidation and higher charges.

In general industry competition tends so to adjust prices as to yield
interest on capital, wages for all varieties of labor, including labor
of management, and nothing more, and this is the outcome elsewhere
demanded by a growth of business coupled with a theoretically normal
and perfect action of competition; but the peculiarities of
competition between railways do not bring about the evolution which
would give this result. Combination is effected long before the
returns from the total traffic are made normal and before the returns
from different parts