This outstanding study reviews the history of transportation in the United States and examines a host of systemic pricing abuses that affected the U.S. economy.

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Category: Maritime & Transportation Of Interest: Railroad Consolidation: Its Economics & Controlling Principles Railroad Reorganization Railroads: Finance & Organizations Railroads: Rates-Service-Management Railway Problems Transcontinental Railway Strategy, 1869-1893: A Study of Businessmen

First published in 1912, this weighty study of early Federal Government regulation of railroads shows how this primary component of commercial transportation, by the setting of its prices and rates, affected the costs of many other goods and the general cost of living of ordinary citizens.

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William Zebina Ripley was born Oct. 13, 1867, in Medford, Mass., U.S. American economist and anthropologist. Ripley was trained in civil engineering at the Massachusetts Institute of Technology and in political economics at Columbia University, New York City (Ph.D., 1893). He spent most of his career as professor of political economy at Harvard University (1902-33). During World War I he served as administrator of labour standards for the U.S. War Department. In 1920-23 he drew up for the Interstate Commerce Commission the Ripley Plan for the regional consolidation of U.S. railways. In 1931-32, while testifying before the U.S. Senate, he advocated close federal restraint on investment trusts and on the financial practices of large business corporations.

He died Aug. 16, 1941 in Boothbay, Maine.

Other Beard Books by William Z. Ripley

• Railroads: Finance & Organizations  
• Railway Problems

Significance of geographical factors, 1. -- Toll roads before 1820, 2. -- The "National pike,: 3. -- Canals and internal water-ways before 1830, 4. -- The Erie Canal, 4. -- Canals in the West, 6. -- First railroad construction after 1830, 7. -- Early development in the South, 9. -- Importance of small rivers, 10.

The decade 1840-1860, 11. -- Slow railway growth, mainly in the East, 12. -- Rapid expansion 1848-1857; western river traffic, 13. -- Need of north and south railways, 14. -- Traffic still mainly local, 15. -- Effect of the Civil War, 16. -- Rise of New York, 17. -- Primitive methods, 17.

The decade, 1870-1880, 18. -- Trans-Mississippi development, 18. -- Pacific Coast routes opened, 19. -- Development of export trade in grain and beef, 20. -- Trunk line rate wars, 21. -- Improvements in operation, 23. -- End of canal and river traffic, 24.

The decade, 1880-1890, 27. -- Phenomenal railway expansion, 28. -- Transcontinental trade, 28. -- Speculation rampant, 29. -- Growth of western manufactures, 30. -- Rise of the Gulf ports, 31. -- Canadian competition, 33. -- General resume and forecast, 34.

Public land grants, 35. -- Direct financial assistance, 37. -- History of state aid, 39. -- Federal experience with transcontinental roads, 40.

CHAPTER II
THE THEORY OF RAILROAD RATES

Analysis of railroad expenditures, 44. -- Constant v. variable outlays, 45. -- Fixed charges, 46. -- Official grouping of expenses, 40. -- Variable expenses in each group, 51. -- Peculiarities of different roads and circumstances, 56. -- Periodicity of expenditures, 61. -- Joint cost, 67. -- Separation of passenger and freight business, 68.

CHAPTER III
THE THEORY OF RAILROAD RATES (Continued) 

The law of increasing returns, 71. -- Applied to declining traffic, 73. -- Illustrated by the panic of 1907, 75. -- Peculiarly intensified on railroads, 76.

Growth of mileage and traffic in the United States since 1889, 77. -- Increase of earnings, 79. -- Operating expenses, gross and net income, 80. -- Comparison with earlier decades, 85. -- Density of traffic, 86. -- increase of train loads, 88. -- Limitations upon their economy, 92. -- Heavier rails, 93. -- Larger locomotives, 94. -- Bigger cars, 95. -- Net result of improvements upon efficiency and earning power, 97.

The law of increasing returns due to financial rather than operating factors, 99.

CHAPTER IV
RATE MAKING IN PRACTICE

Evolution of rate sheets, 101. -- Terminal v. haulage costs, 102. -- Local competition, 104.. -- What the traffic will bear, 107. -- Trunk line rate system, 111.. -- Complexity of rate structure, 113. -- Competition of routes, 114. -- Competition of facilities, 116. -- Competition of markets, 118. -- Ever-widening markets, 119. -- Primary and secondary market competition, 121. -- Jobbing or distributive business, 124. -- Flat rates, 127. -- Mississippi-Missouri rate scheme, 128. -- Relation between raw materials and finished products, 134. -- Export rates on wheat and flour, 135. -- Cattle and packing house products, 139. -- Refrigerator cars, 140. -- By-products and substitution, 142. -- Kansas corn and Minnesota flour, 143. -- Ex-Lake grain rates, 145.

CHAPTER V
RATE MAKING IN PRACTICE (Continued)

Effect of changing conditions, 147. -- Lumber and paper rates, 148. -- Equalizing industrial conditions, 148. -- Protecting shippers, 149. -- Pacific Coast lumber rates, 150. -- Elasticity and quick adaptation, 152. -- Rigidity and delicacy of adjustment, 153. -- Transcontinental rate system, 154. -- Excessive elasticity of rates, 155. -- More stability desirable, 159. -- Natural v. artificial territory and rates, 159. -- Economic waste, 159. -- Inelastic conditions, 161. -- Effect upon concentration of population, 162. -- Competition in transportation and trade contrasted, 163. -- No abandonment of field, 165.

Cost v. value of service, 166. -- Relative merits of each, 167. -- Charging what the traffic will bear, 169. -- Unduly high and low rates, 171. -- Dynamic force in value of service, 177. -- cost of service in classification, 179. -- Wisconsin paper case, 181. -- Cost and value of service equally important checking one another, 184.

CHAPTER VI
PERSONAL DISCRIMINATION

Rebates and monopoly, with attendant danger to carriers, 185. -- Personal discrimination defined, 188. -- Distinction between rebating and general rate cutting, 188. -- Early forms of rebates, 189. -- Underbilling, underclassification, etc, 190. -- Private car lines, 192. -- More recent forms of rebating described, 195. -- Terminal and tap-line, 196. -- Midnight tariffs, 197. -- Outside transactions, special credit, etc., 198. -- Distribution of coal cars, 199.. -- Standard Oil Company practices, 200. -- Discriminatory open adjustments from competing centres, 202. -- Frequency of rebating since 1900, 204-6. -- The Elkins Law of 1903, 205. -- Discrimination since 1906, 207. -- The grain elevation cases, 211. -- Industrial railroads once more, 212.

CHAPTER VII
LOCAL DISCRIMINATION

Concrete instances, 215. -- Hadley's oyster case not conclusive, 217. -- Two variants: lower long-haul rates by the roundabout route, as in the Hillsdale, Youngstown , and some Southern cases, 221. -- or by the direct route, as in the Nashville-Chattanooga and other southern cases, 225. -- Complicating influence of water transportation, 232. -- Market competition from various regions, a different case, 234. -- The basing point (southern) and the basing line (Missouri river) systems, 238. -- Their inevitable instability and probable ultimate abandonment, 242. -- Postage-stamp rates, illustrated by transcontinental tariffs, 245. -- which line makes the rate? 255. -- Cost not distance, determines, 256. -- Fixed charges v. operating expenses, 257. -- Proportion of local business, 259. -- Volume and stability of traffic important, 261. -- Generally the short line rules, but many exceptions occur, 268.

CHAPTER VIII
PROBLEMS OF ROUTING

Neglect of distance, an American peculiarity, 264. -- Derived from joint cost, 265. -- Exceptional cases, 265. -- Economic waste in American practice, 268. -- Circuitous rail carriage, 269. -- Water and rail-and-water shipments, 273. -- Carriage over undue distance, 277. -- An outcome of commercial competition, 278. -- Six causes of economic waste, illustrated, 280. -- Pro-rating and rebates, 281. -- Five effects of disregard of distance, 288. -- Dilution of revenue per ton mile, 289. -- Possible remedies for economic waste, 292. -- Pooling and rate agreements, 293. -- The long and short haul remedy, 295,

CHAPTER IX
FREIGHT CLASSIFICATION

Importance and nature of classification described, 300. -- Classifications and tariffs distinguished, as a means of changing rates, 301. -- The three classification committees, 304. -- Wide differences between them illustrated, 304. -- Historical development, 306. -- Increase in items enumerated, 309. -- Growing distinction between carload and less-than-carload rates, 310. -- Great volume of elaborate rules and descriptions, 312. -- Theoretical basis of classification, 314. -- Cost of service v. value of service, 315. -- Practically, classification based upon rule of thumb, 319. -- The "spread" in classification between commodities, 319. --  Similarly as between places, 320. -- Commodity rates described, 322. -- Natural in undeveloped conditions, 323. -- Various sorts of commodity rates, 324. -- The problem of carload ratings, 325. -- Carloads theoretically considered, 326. -- Effect upon commercial competition, 327. -- New England milk rates, 329. -- Mixed carloads, 331. -- Minimum carload rates, 322. -- Importance of car capacity, 334. -- Market capacity and minimum carloads, 338.

Uniform classification for the United States, 337. -- Revival of interest since 1906, 339. -- Overlapping and conflicting jurisdictions, 340. -- Confusion and discrimination, 341. -- Anomalies and conflicts illustrated, 342. -- Two main obstacles to uniform classification, 345. -- Compromise not satisfactory, 346. -- Classifications and distance tariffs interlock, 347. -- General conclusions, 351.

CHAPTER X
THE TRUNK LINE RATE SYSTEM: A DISTANCE TARIFF

Conditions prevalent in 1875, 356. -- Various elements distinguished, 358. -- The MacGraham percentage plan, 360. -- Bearing upon port differentials, 361. -- The final plan described, 363. -- Competition at junction points, 368. -- Independent transverse railways, 370. -- Commercial competition, 372. -- Limits of the plan, 375. -- Central Traffic Association rules, 376.

CHAPTER XI
SPECIAL RATE PROBLEMS:  THE SOUTHERN BASING POINT SYSTEM; TRANSCONTINENTAL RATES; PORT DIFFERENTIALS, ETC.

Contrast between the basing point and trunk line systems, 380. -- Natural causes in southern territory, 381. -- Economic dependence, 381. -- Wide-spread water competition, 382. -- The basing point system described, 383. -- Its economic defenses, 384. -- early trade centres, 384. -- Water competition once more, 385. -- Three types of basing point, 387. -- Purely artificial ones exemplified, 388. -- Different practice among railroads, 390. -- Attempts at reform, 391. -- Western v. eastern cities, 391. -- Effect of recent industrial revival, 392. -- The Texas group system, 393. -- An outcome of commercial rivalry, 394. -- Local competition of trade centres, 395. -- Possibly artificial and unstable, 395. -- The transcontinental rate system, 395. -- High level of charges, 395. -- Water competition, 395. -- Carload ratings and graded charges, 398. -- Competition of jobbing centres, 398. -- Canadian differentials, 400. -- "Milling-in-transit" and similar practices, 401. -- "Floating Cotton," 402. -- "Substitution of tonnage," 403. -- The latest decision, 403. -- Historically considered, 403. -- Import and export rates, 404-409.

CHAPTER XII
THE MOVEMENT OF RATES SINCE 1870; RATE WARS

Contrast before and after 1900, 411. -- Revenue per ton mile data, 412. -- Their advantages and defects, 414. -- Nature of the traffic, 416. -- Low-grade traffic increasing, 416. -- Growing diversification of tonnage, 418. -- Present conditions illustrated, 419. -- Length of the haul, 421. -- The proportion of local and through business, 422. -- Effect of volume of traffic, 424. -- Proper use of revenue per ton mile, 425. -- Index of actual rates, 426. -- Its advantages and defects, 427. -- Difficulty of following rate changes since 1900, 427. -- Passenger fares, 429. -- Freight rates and price movements, 430.

Improvement in observance of tariffs, 431. -- conditions in the eighties, 432. -- The depression of 1893-1897, 433. -- Resumption of prosperity in 1898, 436. -- The rate wars of 1903-1906, 438. -- Threatened disturbances in 1909-1911, 439.

CHAPTER XIII
THE ACT TO REGULATE COMMERCE OF 1887

Its general significance, 441. -- Economic causes, 442. -- Growth of interstate traffic, 442. -- Earlier Federal laws, 443. -- Not lower rates but end of discrimination sought, 448. -- Rebates and favoritism, 445. -- Monopoly by means of pooling distrusted, 446. -- Speculation and fraud, 447. -- Local discrimination, 448. -- General unsettlement from rapid growth, 449. -- Congressional history of the law, 450. -- Its constitutionality, 451. -- Summary of its provisions, 452. -- Its tentative character, 453. -- Radical departure as to rebating, 454.

CHAPTER XIV
1887-1905. EMASCULATION OF THE LAW

Favorable reception, 456. -- First resistance from unwilling witnesses concerning rebates, 457. -- Counsel man and Brown cases, 458. -- The Brimson case, 459. -- Relation to Federal Courts unsatisfactory, 460. -- Interminable delay, 461. -- Original evidence rejected, 461. -- The Commission's court record examined, 462. -- Rate orders at first obeyed, 467. -- The Social Circle case, 469. -- Final breakdown in Maximum (Cincinnati) Freight Rate case, 469. -- Other functions remaining, 472. -- The long and short haul clause interpreted, 474. -- The Louisville and Nashville case, 474. -- The "independent line" decision, 476. -- The Social Circle case again, 478. -- "Rare and peculiar cases," 479. -- The Alabama Midland (Troy) decision, 481. -- Attempted rejuvenation of the long and short haul clause, 483. -- The Savannah Naval Stores case, 484. -- The dwindling record of complaints, 485.

CHAPTER XV
THE ELKINS AMENDMENTS (1903): THE HEPBURN ACT OF 1906

New causes of unrest 1809, 487. -- The spread of consolidation, 487. -- The rise of freight rates, 488. -- Concentration of financial power, 490. -- The new "trusts," 491. -- The Elkins amendments concerning rebates, 492. -- Five provisions enumerated, 493.

More general legislation demanded, 494. -- Congressional history 1903-1905, 495. -- Railway publicity campaign, 496. -- President Roosevelt's leadership, 498. -- The Hepburn law, 499. -- Widened scope, 499. -- Ratemaking power increased, 500. -- Administrative v. judicial regulation, 501. -- Objection to judicial control, 503. -- Final form of the law, 505. -- Broad v. narrow court review, 506. -- An unfortunate compromise, 507. -- Old rates effective pending review, 508. -- Provisions for expedition, 511. -- Details concerning rebates, 512. -- The commodity clause, 513. -- History of its provisions, 514. -- Publicity of accounts, 515. -- Extreme importance of accounting supervision, 516. -- The Hepburn law summarized, 520.

CHAPTER XVI
EFFECT OF THE LAW OF 1906; JUDICIAL INTERPRETATION, 1905-10

Large number of complaints file, 522. -- Settlement of many claims, 524. -- Fewer new tariffs, 525. -- Nature of complaints analyzed, 526. -- Misrouting of freight, 527. -- Car supply and classification rules, 527. -- Exclusion from through shipments, 529. -- Opening new routes, 530. -- Petty grievances considered, 530. -- Decisions evenly balance, 532. -- The banana and lumber loading cases, 532. -- Freight rate advances, 534. -- General investigations, 536.

Supreme Court definition of Commission's authority, 538. -- The Illinois Central car supply case, 538. -- Economic v. legal aspects considered, 540. -- The Baltimore and Ohio decision, 541. --  The Burnham Hanna , Munger case, 542. -- The Pacific Coast lumber cases, 543. -- Decisions revealing legislative defects, 546. -- The Orange Routing case, 546. -- The Portland Gateway order, 547. -- The Commission's power to require testimony affirmed, 549. -- The Baird care, 549. -- The "Immunity Bath" decision and the Harriman case, 550. -- Interpretation of the "commodity clause," 592. -- Means of evasion described, 553

CHAPTER XVII
THE MANN-ELKINS ACT OF 1910

Prompt acquiescence by carriers, 557. -- Opposition begins in 1908, 557. -- Political developments, 558. -- President Tafts's bill, 559. -- Three main features of the new law, 560. -- Suspension of rate charges, 561. -- Former defective injunction procedure remedied, 562. -- The new long and short haul clause, 564. -- Provision for water competition, 566. -- The new Commerce Court, 566. -- Congressional debates, 567. -- Jurisdiction of the new Court, 568. -- Its defects, 569. -- Prosecution transferred to the Department of Justice, 570. -- Liability for rate quotations, 571. -- Wider scope of Federal authority, 572. -- The Railroad Securities Commission, 573. -- Its report analyzed, 574. -- The statute summarized, 578.

CHAPTER XVIII
THE COMMERCE COURT: THE FREIGHT RATE ADVANCES OF 1910

The Commerce Court docket, 581. -- The Commerce Court in Congress, 582. -- Supreme Court opinions concerning it, 583. -- Legal v. economic decisions, 584. -- Law points decided, 586. -- The Maximum (Cincinnati) Freight Rate case revived, 588. -- Real conflict over economic issues, 590. -- The Louisville and Nashville case, 590. -- The California Lemon case, 592. -- Broad v. narrow court review once more, 593.

The freight rate advances of 1910, 594. -- Their causes examined, 595. -- Weakness of the railroad presentation, 596. -- Operating expenses and wages higher, 597. -- The argument in rebuttal, 598. -- "Scientific management," 598. -- The Commission decides adversely, 599.

CHAPTER XIX
THE LONG AND SHORT HAUL CLAUSE: TRANSCONTINENTAL RATES

"Substantially similar circumstances and conditions" stricken out in 1910, 601. -- Debate and probable intention of Congress, 602. -- Constitutionality of procedure, 603. -- Nature of applications for exemption, 604. -- Market and water competition, 605.

The Intermountain Rate cases, 610. -- The grievances examines, 611. -- The "blanket rate" system, 611. -- Its causes analyzed, 612. -- Previous decisions compared, 615. -- graduated rates proposed by the Commission, 618. -- The Commerce Court review, 620. -- Water v. commercial competition again, 620. -- Absolute v. relative reasonableness, 622. -- Legal technicalities, 625. -- Minimum v. relative rates, 624. -- Constitutionality of minimum rates, 625.

CHAPTER XX
THE CONFLICT OF FEDERAL AND STATE AUTHORITY

History of state railroad commissions, 627. -- The legislative unrest since 1900, 628. -- New commissions and special laws, 629. -- The situation critical, 630. -- Particular conflicts illustrated, 631. -- The clash in 1907, 632. -- Missouri experience, 633. -- The Minnesota case, 634. --The Governors join issue, 634. -- The Shreveport case, 635.

Control of coastwise steamship lines, 638. -- Panama Canal legislation, 641. -- The probable effect of the canal upon the railroads, especially the transcontinental lines, 643. 

Index, 649

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