The English people long ago reached a point which we are approaching fast, in that before a railroad is built its projectors must obtain a special charter, and in order to obtain that they must prove that there is a public need of the new line. Any one who has read the papers for the past few years will readily recall many instances of the destructive effects of building lines in territory already well supplied with transportation facilities. Take the West Shore road, which paralleled the New York Central, and not only sunk the capital of its own builders but forced a decline of fifty per cent. in the market price of New York Central, which from an eight per cent, dividend-paying corporation practically ceased to earn more than its fixed charges. The “Nickel Plate” road, paralleling the Lake Shore from Buffalo to Toledo, is another glaring instance in point. And still later we have the building of an unnecessary line from Kansas City to Chicago by the Atchison, Topeka and Santa Fé Railroad, which has resulted in the fall of the stock of the latter company from about par to less than fifty cents on the dollar, with a coincident cessation of dividends.
A host of mischiefs and evils have sprung from the almost unrestrained power of railroad officials in the matter of their charges. By charging some shippers more and others less by means of secret contracts, the officials opened to themselves a field of unlimited profit. An awkward fact, which there is no denying, is the large fortunes, in most cases running into the millions, possessed by men who are or who have been railroad officials on modest salaries, and who had nothing before entering upon these positions. The cost of transportation being such an important factor in the price of commodities, it was quite easy for the railway to enrich one man and beggar or drive out of business another in the same trade, and this was done according to the personal interests of the man or men who could thus make rates. More than this, it was not at all difficult for the railroad to impoverish one town or city and build up another by discriminating in rates.
In fact, the railroad had the power to say whether a merchant should or should not succeed in business, whether a town should or should not grow in population and prosperity. In the Hepburn committee’s investigation of the New York railroads in 1879 it was shown that the milling business in certain towns of northern New York had been killed by railroads granting rates which favored Minneapolis and other western points. In one town all the millers but one were obliged to go out of business, and it was elicited in the investigation that this man had a secret contract with the railroad by which they carried his commodity for much lower rates than any of the others. The merchants of New York at that time complained that the discriminations of the railroads against the metropolis were driving away its trade to Baltimore and other points. The nefarious contracts made by the railroads with the Standard Oil Company were discovered so recently as to be still fresh in the public mind. It will be remembered that the railroads not only carried the Standard’s oil for a fraction of that charged a certain individual oil refiner, but actually paid over to the Standard Oil Company the overcharges of which they mulcted the unfortunate individual refiner.