country at rates which to it were satisfactory, it adopted the principle that no through rates should be given except on the basis of these local charges. Thus traffic, for instance, between Belgium, or Holland and Austria, might be brought up to the German frontier at whatever rate those states chose to fix, but, immediately upon entering on German territory, the local tariffs should apply. As a result, the through traffic was driven from the railroad to the rivers, and exports from Austria found their way to the sea on the Elbe and the Rhine. After the enforcement of the policy had "utterly destroyed" this through traffic on the German railways, the administration decided to profit by the experience to abandon their unnatural policy, and attempt to get back the traffic. Accordingly, they issued a tariff, which is instructive as showing how completely they gave up their artificial system and recognized in railway rates the natural forces controlling commerce. The heading of the tariff reads: "Exceptional tariff to and from the German seaports, for goods traffic between Hamburg, Harburg, Bremerhaven, Geestemünde, Bremen, and Regensburg, and Passau stations. To come in force on and from March 1, 1882. This tariff will apply only to goods traversing Germany and passing beyond Regensburg and Passau, and out of the district of the German customs, and in consignments of ten tons per truck and above (wool excepted). Smaller consignments will be charged at usual rates. Articles included in the exceptional tariff." It then continues to enumerate articles under seven "special tariffs." The testimony before the commission on this subject concludes as follows: "Now that shows that the strongest government in the world, I suppose, can not interfere with the course of traffic except at its peril, and, if they attempt to impose upon the commerce of the country an impossible system, they come to grief."
I have attempted to show that the rates on railroads are regulated by natural principles of competition, and that it is from the operation of these principles that discriminations are produced. This is but saying, in other words, that discriminating rates result from competition. An examination of the cases reported by the various State Railroad Commissioners will show that this is true; for it will be found that the discriminations effect a reduction in rates, not an increase. They are concessions made to secure traffic, which at former rates would not be carried. If this were not at least believed to be the result, there would appear no incentive for the company to make the reduction. In brief, the cause of discrimination is competition, the effect is reduction.
- Report to the House of Commons, July, 1882, pp. 170, 171.