general a consensus of opinion that no further argument is needed. The railroad managers have accepted it in their literature which is uniformly directed at showing that the present management of the railroads is on the whole more advantageous to the public than would be a system of greater government control.

More than this, railroads and people have come to a further agreement. In the past railroads have often sold similar services to different people at widely varying rates of compensation, thus bringing prosperity to one man's business and failure to that of his competitor. In doing this they have acted in the same way as the shoe manufacturer who sells identical goods to different customers at different prices. Such practices by common carriers have long been illegal and in bad odor. But, in the fierce competition for business, they have been widely prevalent, despite the prohibition of laws, often not too vigorously enforced. The new emphasis which the recent discussion has placed upon the public character of railroads has brought about a general agreement that the services of the carriers should be rendered to all persons, firms and corporations on equal and public terms for like services-that the established rate schedules should be open and known to all, and that "rebating" or departure from them for the advantage of any shipper should be punished. Very recently bodies of traffic managers of great railroad systems have met with the Interstate Commerce Commission and promised to use their best efforts to secure a strict compliance with the law against rebating. Rebating is now a criminal offence both on the part of the giver and the receiver of rebates. The government has shown great activity in enforcing the law; the railroads have promised to obey it; its justice is agreed upon by both railroad managers and people; and there seems every probability that personal discrimination in freight rates will be greatly lessened in the future, if not entirely abolished.

The fact is that the railroads are at present very much on their good behavior. Some people have just been led to think that they are growing excessively virtuous. While the principal complaint of discrimination has been as to freight

rates, the Pennsylvania, the New York Central and several other great systems have recently taken up the matter of discrimination in the carrying of passengers and have stopped the issuance of passes to others than employees. The prospect of such action becoming general all over the country is viewed with alarm in many quarters-although the plain citizen who pays full first-class fare is disposed to view with complacency the discomfiture of the pass-holders. Washington dispatches indicate that many congressional railroad regulators will be unable as heretofore to consider their comfortable mileage allowance a perquisite to be added to their salaries. Even New York and Pennsylvania state legislators are being aroused to the necessity of action upon the railroad question. There also come rumors that many editors of country newspapers will take pains hereafter to report railroad accidents in more lurid phraseology, not sparing the scare heads.

It is refreshing to read of the celerity with which the virtuous example of the railroads is being followed. Press reports tell us that the leading express companies will not, after January 15, "carry any business free of charge as a personal courtesy to merchants or other patrons, or for any other reasons.' A Cleveland, Ohio, dispatch, of January 4, says that President W. E. Corey, of the United States Steel Corporation, has issued an order forbidding the acceptance of rebates and special rates from the railroads by the corporation and its subsidiary companies. The same dispatch states that the United States District Attorney of that district is investigating the rebate question and that it is rumored that a report is to be made to President Roosevelt on the relations of the Steel Corporation to the Pennsylvania Railroad. Not only the railroads, the express companies, and the Steel Corporation are enlisted in the war against freight and passenger discriminations, but we also find a similar movement in another great business recently subjected to keen inquisition and free discussion. The three great New York life insurance companies are planning to fight rebating of life insurance premiums. While President Roosevelt, with his attorneys, is hot after railroad rebaters, ex-President Grover

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THE SOUTH ATLANTIC QUARTERLY.

Cleveland has been employed to conduct the campaign against insurance rebaters. With two presidents-both mighty hunters gunning after them, the unrighteous have fallen upon hard lines.

But the situation has abundant measure of consolation for the citizen without a "pull" who pays first-class fare on the railroad and the full annual premium on his life insurance policy. Nor is the war against discrimination without its advantage to the railroads themselves. The pass has been more or less a secret favor and consequently the railroads have never been willing to supply statistics of the value of the free transportation furnished by them. The New York Central Railroad, however, is said to have had an executive and two assistants constantly employed in conducting the business of its pass bureau. A writer in the financial department of the New York Times estimates the value of the transportation annually furnished by that road as at least one million dollars and probably two or three times that amount. The distribution of passes has been especially lavish during the sessions of the legislature at Albany. The Pennsylvania Railroad has also been a great sufferer from the pass evil. The demands upon it have come from both State and national sources, and there must have been an especially great loss of income in the matter of transportation to and from Washington. As these lines are being written, the newspapers announce that the Pennsylvania Railroad has been able to lessen the number of cars in certain of its express trains which have been habitually patronized by pass-holders. Of course, the increase of income due to the abolition of passes will not be equal to the value of the free transportation previously furnished. But much of the traveling which has been done on passes must be done in any event, and there will be an increase in the income of the roads from this source. It remains to be seen how much the railroads will suffer from "strike" bills introduced in legislatures by disgruntled deadheads of former days.. An enlightened and unprejudiced public opinion should protect them from unjust

measures.

It is clear, then, that much has already been accomplished

by public attention and discussion.

New and needed empha

sis has been placed upon the public character of the railroads and upon their liability to be regulated in the public interest. The railroad managers have generally recognized their responsibility to the public as well as to their shareholders. There is no longer any of "the public be damned" attitude which venerable tradition attributes to the founder of one of our great railroad systems. Tangible and substantial proof of improved conditions is seen in the movement among the great railroads to abolish inequitable discriminations in freight and passenger transportation. It is to be hoped that it is not a mere spasm of virtue on the eve of impending regulative legislation, but that it is a permanent gain.

Much yet remains to be settled. The country is looking forward to Congressional action. A score of bills proposing as many plans of railroad regulation have already been introduced. The contest is now waged around the question of the railroad rate-making power. Granted that the rates shall be public and the same to all shippers, there are other vital problems to be decided. How shall the initial schedule of rates be made? Upon what principles ought it to be made? Shall the government interfere to set aside what it may deem an unreasonable rate? If so, what governmental authority shall be given power to do this? If a rate is set aside, shall the government undertake to fix and enforce the new rate? What rate shall be in force during the hearing and adjudication of the complaint? These questions are not easy of solution and it is not strange that so many varying plans are proposed.

In considering these plans, a few general facts and principles should be held steadily in mind. No scheme of regulation should be entered upon in a spirit of hostility and prejudice against the railroads. Nothing but even-handed justice should be sought. The private enterprise enlisted in the conduct of our great transportation systems has wrought a wonderful work in the development of the resources of our country. The railroads have contributed to general prosperity and are entitled to share in it. As private property, they are entitled to a reasonable, and even a generous, return

upon the capital actually invested. Any system of rates which would make a reasonable return impossible would be confiscatory and unconstitutional. Again, it should be noted that freight rates in this country would seem in themselves reasonable, for they are considerably lower than in European countries. Complaint has usually been directed not against the absolute amount of the rates, but against discriminations as between localities and sections of the country. Rates have been objected to as comparatively unjust rather than as unjust in themselves for the service performed.

In the matter of the framing of the initial rate schedules, there are important reasons why the function should be left with the managers of the railroads. The more one studies the rate-making problem, the more intricate and complicated he finds it to be. To best serve the business interests of the country, railroad rates should be flexible and should vary easily with changing conditions. Single railroad systems now make and file annually with the Interstate Commerce Commission thousands of rate schedules. Many of these contain hundreds of separate rates. The railroad traffic managers, being in constant touch with station agents and shippers, are able to keep advised concerning local conditions. A commission at Washington, undertaking to fix literally millions of rates, would probably make rates more uniform and rigid and with its necessary lack of detailed local information would most certainly work greater injustice and harm to the business of the country than exists under the present rate-making plan. The nature of the railroad business is such that the principle of "charging what the traffic will bear" is the best attainable one, when taken to mean what the traffic will reasonably bear and not all that the traffic will bear. But experience with government made rates is that an attempt is usually made to base them on an impracticable cost of service principle, or upon a distance principle, which would hamper the development of new sections of the country and put a clog on progress.

While the government should not enter upon a policy of general rate-making, the public character of the railroads gives it abundant reason to concern itself with enforcing