The effect of free competition in trade is to bring the greatest competition to bear on those things in which there is the greatest trade. Thus, there is the smallest margin of profit over the cost of production on the necessaries of life, the next smallest on the common comforts, and the largest on the luxuries. This effect is not caused by any design on the part of traders nor from any beneficent legislation on the part of politicians. It results from the operation of natural laws of trade. The operations of the same laws produce the same effect on the rates of transportation. We find, as a rule, the lowest rates on coal, wood, petroleum, iron, lumber, etc.; the next lowest on flour, grain, provisions, etc.; we then have boots and shoes, cotton and woolen goods, clothing, etc.; and then a varying list of more costly or perishable articles and luxuries which are consumed in decreasing quantities. All the natural forces of competition which tend to reduce the rates of transportation co-operate in producing this discrimination in things which are moved in the largest quantities, and which are, of course, consumed in the largest amounts. The aim of the railroad manager is to secure the traffic. To do this he must make lower rates on cheap commodities, with those things which comprise the necessaries of life. It results in distributing the charges for transportation where they are most easily borne. Not only do the necessaries have the lowest rates and the luxuries the highest, but the necessaries consumed in the largest quantities have lower rates than those consumed in smaller quantities. We consume more fuel than bread, and more food than clothing, while the rates of transportation follow the opposite order.
This discrimination, though in favor of the necessaries and common comforts of life, is none the less a discrimination. It actually results in favoring classes. Those who consume but the necessaries, the day-laborers, are the most benefited; the artisans who consume, in addition to the necessaries, many of the comforts, the next; and so on as higher wages provide more of the comforts, and these merge into the luxuries. But the objection is frequently raised that the things having the lower rates are favored at the expense of the things required to pay the higher rates. That articles at low rates should be carried at the expense of things charged higher rates implies of necessity that the lower rates are below the cost, that the service is performed by the railroad at a loss. If the low-rate traffic is not carried at a loss—if the profit be ever so small—it can not, of course, be at the expense of the things paying higher rates. That the railroad should knowingly perform any part of its service at a loss is an absurdity, unless it be a case of nourishing an infant industry, where a temporary loss is incurred to secure a future gain. Those, indeed, who have been most forward in charging upon the railroads the fault of carrying part of their traffic at the expense of another part, would be the last to assert that the railroads are in the habit of doing a considerable part of their
