part of a through route; and the addition of the through to the former local traffic reduces still further the ratio of the cost of service.
This reduction in the ratio of the cost to the amount of traffic, which results more or less from all consolidations, secures an increase of profits even with no change in the rates or traffic. Thus far there is an injury to no one, and a benefit to the stockholder. But the advantages of the consolidation do not stop here. It has made possible lower rates with the same profit that formerly was earned with higher rates. Without risk of injury the new company is now able to make greater reductions in the rates on those local products of nature and of man, which will allow them to reach more distant markets, or will stimulate their development by enabling them to sell in their former markets with greater profit. By this means, more than by any other, is the railroad enabled to secure an increase of traffic; and, as an increase of traffic can be carried with only a fraction of the relative increase of cost, the decrease of rates increases the net income.
The extension of the same policy leads to the highest development, both of the resources of the country and the earning power of the corporation. To effect the increase of traffic is the constant study and aim of the railroad manager; and it is a self-evident fact that the increase of traffic can only be secured by furthering the interests of the shippers. It is true that all railroads, both great and small, have the same necessary interest in the prosperity and development of the territory served by them, and they all alike endeavor to increase their traffic. But the large corporation, supported by the traffic of the various products of many districts, is in a better condition to experiment in the development of new districts and industries. It frequently affords thus a rate or service beyond the point warranted by the present traffic, and is able to operate portions of its system at a temporary loss, in the hope of a future gain. With a small road, on the other hand, depending upon the present traffic of a limited area, its rates must be immediately remunerative, and to meet the current expenses there is frequently required the practice of every temporary economy, even at the expense of the future value of the property. The small roads, unless the circumstances are exceptional, maintain the highest rates, and afford the poorest service. The interest of the great companies in the development of the districts from which they derive their revenue is in proportion to their size; while their more economical management and extended resources free them from the bonds that confine the small local corporations.
That the advantages accruing from consolidation lead toward the adoption of that policy throughout the world is a conspicuous feature of railroad development; and the facts overwhelmingly demonstrate that the results as constantly lead to a reduction of the tariffs.
The Massachusetts Railroad Commissioners, in their report for 1873 (page 80), draw the following conclusions, after an examination