the weaker roads would be compelled to lower their rates in
order to meet their operating expenses. Therefore they were compelled to
do one of three things, namely, to divide the territory, to divide
traffic, or to divide earnings. Either of the two latter plans is called
a _pool_.

Of these two forms of pooling the division of the traffic is the easier,
but it is often unsatisfactory to the patrons of the road. The second
plan, the division of the earnings, is a more difficult matter to adjust
because each road is usually dissatisfied with its proportion. As a
matter of fact, however, the first plan of pooling is very apt to grow
into the second.

In several instances pools have been declared illegal by the courts,
but, in general, railway service has been more satisfactory under the
pool system than under any other. They have always aroused popular
suspicion, however, from the fact that they increase power of the
railway itself. In various instances important trunk lines have formed a
general company, each having its separate organization, because they
could accomplish under a combined organization what they could not as
independent companies. The restrictions against pooling have therefore
encouraged combination of competing lines.

Because the railway is an absolute necessity, and because it has power
given neither to individuals nor to other corporations, it is a settled
policy that both the State and general Government should have the power
to regulate its rates, and should in every way prevent unjust
discrimination. Both problems are very difficult, however, and the
unintelligent adjustment of rates has frequently resulted in injustice
both to the roads and their patrons.

A rate per ton-mile for each class of freight is out of question,
because a large part of the cost to the company consists in loading,
handling, and storing the goods. Once aboard the car, it costs but
little more to carry a ton of freight one hundred miles than to move it
one mile. The rates per mile, therefore, are necessarily greater for
short distances than for long runs. A mile-rate based on a ten-mile haul
would be prohibitive to the shipper if applied to a run between Chicago
and New York. On the other hand, were the charges based on the long run,
the local rates would be far less than the cost of the service.[19]

As a result freight rates are based very largely on the cost of the
service, and this is particularly true of local fre