United States. Inland Waterways Commission.

Preliminary report of the Inland Waterways Commission. Message from the President transmitting a preliminary report online

. (page 36 of 83)
Online LibraryUnited States. Inland Waterways CommissionPreliminary report of the Inland Waterways Commission. Message from the President transmitting a preliminary report → online text (page 36 of 83)
Font size
QR-code for this ebook


same. Chicago claims that because she is nearer San Francisco — and St. Louis makes
a similar claim — the rate to San Francisco should be relatively less than it is from
New York to San Francisco.

As a matter of fact the rate from New York to San Francisco on transcontinental
business is what should be properly styled a compelled rate — that is, a rate that is not
based on the cost of service rendered, or distance hauled, or anything of a similar
nature. It is a compelled rate because it is fixed by the rate by ocean from New York
around Cape Horn and up to San Francisco. The correct position, from a rate point
of view, of Chicago to San Francisco is in reality the rate from Chicago to New York plus
the rate from New York to San Francisco. What the interests of Chicago and St.
Louis seek is to have that compelled rate used as a basis and then oblige the railroads
to grade the rates from the eastern seaboard to the Pacific coast. * * *

Q. Does the city of Denver make a similar contention that it is entitled to still
less than the Chicago-San Francisco rate? — A. Yes; there is one of the difficulties.
If the principle involved that the compelled rate is not recognized and protected,
and this graded system of rates is introduced, you can at once see that with the rate
from New York to San Francisco $1 to begin with, to gi'ade that westward, you would
soon reach a point, perhaps after you left Denver, where there would not be any
rate to decide. You would be carrying goods for nothing.

Q. Under present conditions, a jobbing merchant in Chicago can compete on even
terms with one in New York in the whole California territory? — A. That is appar-
ently true, but not wholly true, for this reason. The Chicago merchant has against
him the rate that it originally cost him to get his stock from the east to Chicago, which
must be added to that rate which he must pav from Chicago to San Francisco. [IX,
875, 876.]

Statement of Charles D. Griffith, representing the Denver Chamber
of Commerce (May 8, 1901) :

RATES TO SAN FRANCISCO

All the rates west of Chicago take the eastern basis of 67 cents, first class; all west
of St. Louis take a basis of 87 cents to St. Louis, and west of the Missouri River I
think it is §1.47. They all have this same basis and their rates are all the same to
these points west of Denver. Kansas City, Omaha, St. Joseph, Chicago, St. Louis —
all river points — the rates added from the Atlantic seaboard are the same.

COMMODITY RATES TO THE PACIFIC COAST

There are special rates made on certain items that have been brought before the
Western Classification Committee, by which they were taken out of the class they
were in and placed in a class of their own, a commodity, as they term it, having a special
rate. [IX, 854.]



RELATION OF WATER AND RAILROAD RATES 325

RIVER AND RAIL RATES

The accompanying tables of river rates and rail rates to points
affected by river competition show that the water traffic materially
affects the rail rates. Boat lines as a rule make lower rates than
those made by rail carriers; but this is sometimes necessary on
account of the cost of marine insurance and charges for drayage and
for loading and unloading. Insurance is less necessary on rail ship-
ments because of the common-law liability of the rail carrier.
Where goods are shipped from or delivered at a warehouse on a rail-
road switch, freight cars can be loaded or unloaded directly by the
shipper, while boat freight has to be carried to and from the landing.
On the other hand the boat lines sometimes have the advantage of
location in receiving and delivering freight from warehouses on the
river banks.

On the upper Mississippi, river rates are in maii}'^ cases only two-
thirds of the rail rate, and in some cases the difference is even greater,
the rate from St. Paul to Alton, 111., and St. Louis, Mo., for example,
being 63 cents by rail and 40 cents by river for first-class freight.

The Diamond Jo Line reports as follows:

Our aim is to always make our freight rates less than the railroads' , and while we have
no agreement with any railroad, we make our freight tariffs out based on a reduction
of from 20 to 33 J per cent less than the rail rates, for on account of the frequent service
of the railroads and quicker time by rail, and also on account of the cost to shipper for
marine insurance on shipments of freight, it is necessary to make considerably lower
rates by river in order to secure a fair share of the business.

A circular issued by the Diamond Jo Line May 6, 1907, states that
the merchandise rates from St. Louis are as follows:

To all points to Keokuk, Iowa, inclusive, 20 per cent less than the rail rate. To
Nauvoo, Fort Madison, and Burlington, Iowa, 25 jser cent less than rail rate. To all
points north of Burlington, Iowa, to and including St. Paul, 33^ per cent less than
rail rate.

Tables 97 and 98 (pages 334-336) compare river and rail rates from
St. Louis and St. Paul to points on the upper Mississippi.

The effect of river competition is more clearly demonstrated by a
comparison of rail rates from St. Louis to points on the Mississippi
and points of equal distance on the Missouri, where there is no effective
water competition, as shown in Table 99 (page 337) and Map 1.
It will be seen that rates to Kansas City, Leavenworth, St, Joseph,
and Omaha are 60 cents per cwt., while to cities on the Mississippi
River of equal distance the rates range from 42.8 to 50 cents per
cwt. On the single Missouri River line rates are approximately one-
third lower than rail rates on Class I articles. Tables 100 and 101
(pages 338 and 339) show railroad freight rates from Missouri River
points to St. Louis for a series of years.

On the Illinois River rates are in most cases lower then rail rates,
as shown in Table 102 (page 340) ; but the difference between the rail
and river rates is less than on the upper Mississippi. It is of interest
to note that rates to Havana, Pekin, and Peoria are lower, both b}'
rail and river, than to cities where the distance is less.

On the lower Mississippi River the difference between the rail and
river rates does not seem to be as great as on the upper Mississippi.
Indeed, in many cases the rates are the same by both routes, and in
some cases, notabh' in the case of Louisiana intrastate rates, the
river rates are even greater than the rail rates. This relation results



326



REPORT OF THE INLAND WATERWAYS COMMISSION



in some cases also from the practice of the steamboat Hnes in charg-
ing the same rate to a large number of points. In some cases more
prompt and convenient delivery can be had by river than by rail.

The tariff sheets of the Eagle Packet Company, operating from
St. Louis to Commerce and Cape Girardeau, Mo., with intermediate
landings, show rates which approximate closely to the rail rates. It
is stated that shippers show a preference for the river route on account
of the greater facihty of delivery by the boats. In 1907, however,
the Eagle PacketCom'pany had a new competitor in the Cape Girardeau
trade in the steamer City of Memphis, which maugurated the policy
of rate cutting, so that the Eagle Packet Company was unable to
maintain the rates shown in its tariff sheets.

Officials of the St. Louis and . Tennessee River Packet Company
and of the Lee Line wrote the Secretary of the Business Men's League
of St. Louis, in April, 1907, to the effect that there was no longer any
through rate from St. Louis to New Orleans, either all water or water
and rail. The superintendent of the Lee Line wrote:

Four years ago we handled freight in connection with steamers at Memphis to
Vicksburg, Miss., and connecting at Vicksburg with steamer for New Orleans, and
the connecting lines at Memphis and Vicksburg found there was no money in the bus-
iness when dividing the through rate with three lines, and at the closing of navigation
in 1903 it was discontinued as it was not profitable for the three lines.

Tables 104, 105, 106, and 107 originally published by the Interstate
Commerce Commission '^ show the rates on grain, flour, pork, meats,
and hay carried by the river lines from St. Louis to the important
river points south, to and including New Orleans.

Table 108 shows river and rail rates from St. Louis to New Orleans
in effect in 1903.

The traffic manager of the St. Louis and Tennessee River Packet
Company stated, in April, 1907, that it was impossible to make a
combination rail and water rate from St. Louis to New Orleans, both
being basing and competitive points. He added that if there were
a through line of steamboats now operated between St. Louis and
New Orleans, the class rates would, in his opinion, be as follows:



1.


2.


3.


4.


5.


6.


D.


Cts.
50


Cts.
40


Cts.
35


Cts.
30


Cts.
25


Cts.
20


Cts.
10



According to a letter from Mr. P. W. Coyle, commissioner, freight
bureau of the Business Men's League of St. Louis, to Mr. W. F.
Saunders, secretary and general manager of the Business Men's
League, dated April 17, 1907, the all-rail class rates from St. Louis
to New Orleans were the same as they were in 1903. Beer had been
reduced 5 cents per 100 pounds, while lead pipe and sheet lead had
been advanced 2 cents on both carload and less-than-carload lots.
Bagging and ties may now be shipped in straight or mixed carloads,
which was not permissible in 1903.

Mr. Coyle also states that, early in 1906 (Jan. 30), the St. Louis,
Iron Mountain and Southern Railway advanced the rates from St.

oRailwaya in the United States in 1902, pp. 114-116.



RELATION OF WATER AND RAILROAD RATES



327



Louis to about 35 station s on the Memphis, Helena and Louisiana
division. Concerning this advance Mr. Coyle writes:

We set forth that water competition should be considered in the establishment of
rates to points on this branch of the St. Louis, Iron Mountain and Southern Railway,
which practically parallels the river, but we were informed that no boats were plying
between St. Louis and the points in question. Boats were operated from Memphis,
Vicksburg, Natchez, and New Orleans, hence the rates from those points remained
unchanged.

The following table submitted by Mr. Coyle shows the old and new
rates on the five classes and a number of commodities:

CLASS RATES



From—


1.


2.


3.


4.


5.


Governed by-


St. Louis:

Old


Cts.
90
108
60

} 60


Cts.
75
90
50

50


Cts.
65
72
40

40


Cts.
50
50
30

30


Cts.
40
45
22

22




Present


Western Classification.




Do.


Natchez




New Orleans


Do.







COMMODITY RATES



Old.



Present.



Axes, less than carloads

Agricultural implements, carloads ..

Axle grease, carloads

Dried beans, less than carloads

Beer, carloads

Candles, less than carloads

Special iron:

Carloads

Less than carloads

Paints and putty, less than carloads

Soap, less than carloads

Whisky in wood, less than carloads t

Woodenware, carloads

Baking powder, less than carloads. .

Canned goods, less than carloads

Bottles, glass, less than carloads

Flour, less than carloads

Corn, less than carloads

Com meal, less than carloads



An interesting comparison of all-rail rates applying to points on the
rivers and those of inland points located off the river is shown by Map
3. It will be noted that the inland cities of the same distance as
those located on the river are given higher rates in all cases. Tables
109, 110, 111, 11 2, and 113 and Maps 2 and 4, showing class rates applv-
ing from Chicago, St. Louis, Louisville, Cincinnati, and Mempliis,
give a further comparison of such rates.

Table 114 shows river and rail rates from St. Louis to Tennessee
Kiver points.

The Ohio River from Pittsburg down is navigated by many packet
and towdng companies. Bulk traffic constitutes the greater tonnage
of the river. Table 115 shows class rates applying from Pittsburg to
points on the Ohio and Mississippi rivers.

The movement of coal from the Great Kanawha down the Ohio
River is an important factor. As the coal fleets are owned by the
coal operators, there are no rates of freight. Table 116, however,



328 REPORT OF THE INLAND WATERWAYS COMMISSION

shows the effect of the water competition upon the rail lines operating
from mines in West Virginia to points along the Ohio River. The
rates to inland points of equal and even less distance are higher
in proportion by from 30 to 40 cents per ton. Map 6, showing the
all-rail rates oii bituminous coal by the Chesapeake and Oliio Rail-
way from the Kanawha district to points on the Ohio River and to
interior Kentucky cities, clearly demonstrates the same effect.

Mr. Robert E. Lee, general manager of the Lee Line steamers,
says:

We try to get as near the railroad rates as possible, allowing for expense of insurance
and expense for drayage when shipments originate from shippers who have tracks
alongside their stores or factories, and small differential for hauling to and from the
river on account of the steep grades of the levees, for which transfer companies charge
extra.

The St. Louis and Tennessee River Packet Company claims to make
its rates without considering any other lines, allowing circumstances
to regulate them as facts and conditions warrant.

The Arkansas River Packet Company reports:

In the majority of cases the rates of this line have to be made 50 per cent below rail
rates, to which 50 per cent the charge for insurance and drayage can be added and still
give a rate sufficiently attractive to bring traffic to the river. The "refund" system
of the railroads (which really operates as a rebate) allows the shipper from 50 cents to
11.50 a bale back. This obtains where cotton is compressed en route and is the differ-
ence between the sum of the local rail rate to the compress plus the rate from com-
press to the point of destination and the through rate from point of origin to point of
destination. Because of this refund the boats for several years could carry only flat
(that is, uncompressed) cotton.

There is a considerable difference between the rail rates applying
from New Orleans and Memphis to points on the river and to inland
points in the adjacent country. First-class rates from New Orleans
to Natchez, Vicksburg, Memphis, etc., are 45 cents; to interior points
of equal and less distance the rates named arfe higher in every case.

Table 117 shows the all-rail rates applying from New Orleans to
Mississippi River, Gulf and interior points in Mississippi, Louisiana,
Alabama, and Tennessee. It will be seen from this table that the rail
lines, in order to secure the traffic, charge a lower rate to the river
points, and, in turn, charge a comparatively higher rate to points
where there is no water transportation. This is further demonstrated
on Maps Nos. 4 and 5, which cover the rates charged on Class 1 articles
from Memphis, Tenn., and New Orleans, La., to river and inland
points.

Contrary to the conditions on other river routes, the river rates from
New Orleans to points in Louisiana are usually higher than the all-rail
rates. It is asserted that the higher rates via river are accounted for
by the fact that shipments by the boat lines make better time, which
inclines the shipper to route via the boat lines. Table 118 of class
rates applying from New Orleans to landings on the Mississippi River
shows the relation of the rail and river rates.

The steamboat lines operating on the Red, Black, Ouachita, and
tributary rivers do not go below the rail rates, and in some cases even
quote higher rates than those of the rail lines from New Orleans.
Apparently the same conditions exist as to points on the Mississippi
in Louisiana. It is asserted that, owing to the greater certainty as to
time of delivery by the river, the boat lines are in a position to name



RELATION OF WATER AND RAILROAD RATES 329

higher rates. When a planter ships b}^ river he knows his commodity
wdll reach its destination on a certain' day, and that he can take
advantage of ruHng market quotations, steamboat sugar and cotton
being considered as "spot" for the purpose of sale. On the other
hand, rail shipments are frequently delayed for many days, and it is
often a matter of weeks after application is made for cars before they
are furnished for loading, to say nothing of the delay that is likely to
occur in transit.

In November, 1904, the New Orleans Steamboats Traffic Asso-
ciation, through its freight traffic manager, applied to the railroad
commission of Louisiana for authority to increase the river freight
rates between New Orleans and points in Louisiana. The reasons
for the proposed increase were given as increase in wages, price of
fuel, and of general store supplies and repairs, and also the high rates
of insurance. In this latter connection it was stated that in the
event of an accident, whereby repairs are required, if the boat is
over 2 years old, the owners are required to pay 50 per cent of such
repairs. The authority to increase the rates was granted. Since
the increase the Louisiana intrastate rates are in many cases in
excess of the rail rates. In the case of sugar shipments, for ex-
ample, to New Orleans, from sugar mills along the river between
Baton Rouge and New Orleans, the rail rate and river rate were for-
merly the same, 7^ cents per himdred poimds, but when the advance
went into effect the river rate was fixed at 10 cents. It seems, how-
ever, that the steamboats retain more than half of the business on
account of the much greater facility of delivery by river. A planter
who ships by river knows that his sugar will be in New Orleans the
next day and that he can take advantage of ruling market quota-
tions, while rail shipments are frequently delayed for many days,
and it often takes weeks to secure cars.

Capt. L. V. Cooley, president of the Ouachita Transportation Com-
pany, denies that the cost of water transportation is cheaper than
that of rail transportation except in the case of coal, where the boats
or ''shells" are so inexpensive as to make the transportation cost rela-
tively small compared to transportation of other commodities re-
quiring more substantial hulls.

Tables 119, 120, 121, and 122 give freight rates applying on class
and special commodities to and from landings on the various rivers
in Louisiana and New Orleans, giving the rail and river rates between
these points.

Table 123 shows the all-rail rates applying on classes from Seat-
tle, Wash., to points on Puget Sound, and to interior cities located
in the adjacent country. It will be seen that the rates to
Puget Sound points are relatively lower than those to the inland cities
in the same locality. The rate on Class 1 articles as far north as Mount
Vernon is 7^ cents; to Bellingham, 12^ cents; and to New West-
minster, British Columbia, 20 cents. To inland cities of equal dis-
tances the rates range from 22^ to 25 cents. The effect of water
competition is more clearly demonstrated by Map 7.

In this connection it is of interest to note the comparison of rates
applying from Seattle to points on the Northern Pacific and Great
Northern railways -with the rates from Portland to points on the
Oregon Railroad and Navigation Company located on the Columbia

31673— S. Doc. 325, 60-1 22



330 REPOET OF THE INLAND WATERWAYS COMMISSION

River. The rates to points on Gray's Harbor and Willapa Harbor on
the Pacific coast are also lower than those to the intermediate cities
of shorter distances.

Table 124 shows class rates applying from Portland to points
on the Cohmibia River via rail and via river. It will be noted
that the rail rates are higher in most cases, and in others meet the
river rate. The first-class rate to Astoria and to The Dalles is 25
cents either by rail or river. To points just beyond The Dalles, where
navigation is interrupted, the rail line takes advantage of the rehand-
ling charges by the water route and names rates much in excess when
distance is used as a basis of comparison." The rate via rail to The
Dalles, a distance of 87 miles, is 25 cents; to Castle Rock, a distance of
161 miles, the rate is 75 cents; in other words, the rate to Castle Rock
is three times as high as the rate to The Dalles, while the distance is
not quite twice as great.

The effect of water competition on the Columbia is further shown
by a comparison of the rates applying from The Dalles, in Table
125. The rail rate to Portland, a distance of 87 miles, is 25 cents;
to Castle Rock, a distance of 74 miles, the rate is 50 cents. The
rate to Astoria, a distance of 187 miles, is 50 cents, while to Ains-
worth and Pasco the rate is 90 cents on first-class freight.

It will be seen that where the river is navigated water competition
is effective in lowering freight rates. The completion and opening of
the work now in progress around the falls of Celilo will give an unin-
terrupted boat service from Lewiston to the sea.

Table 126 shows class rates applying from Portland to points on the
Willamette and Yamhill rivers via rail and via river. The rates via
river are lower than those by rail.

On Map 9 will be seen a demonstration of the effect of water com-
petition in so far as freight rates are concerned. The rates to Puget
Sound, Pacific Ocean, and Columbia River points are less than those
to the intermediate and inland cities of approximately the same
distances.

The Sacramento and the San Joaquin rivers, together with tribu-
tary rivers leading into San Francisco Bay, are navigated by several
steamboat lines. The rail lines paralleling these waters or reaching
points located on them are in constant competition mth the water
carriers. Table 127 and Map 8 give the rates from San Francisco
to points on the various streams and to inland cities in the adjacent
country, showing the comparatively low rates applying to points
where steamboat traffic exists, while to points where the boat lines
can not reach comparatively higher rates are in effect.

Loss of prorating arrangements with the railroads. — A representative
of one of the packet lines on the Ohio states that up to about 1900,
when the United States Steel Corporation was formed, Pittsburg boats
had prorating arrangements with practically all the railroads tap-
ping the IVIississippi River, as well as the Oliio River, and reaching
the South and West. At about the time mentioned they received
verbal notices from all these railroads through their commercial

a There is a State Portage Railway 8 miles in length in operation since September,
1905, by means of which freight may be transferred from The Dalles to the head of
Celilo Falls,



RELATION OF WATER AND RAILROAD RATES 331

representatives terminating through rates. Instead of being able
to quote tlirough rates as formerly the packet lines are now obliged
to quote their own rate to the point where they connect with the rail-
road and then add the local tariff rate of the railroad from that
point to destination. The railroads formerly issued joint tariff
sheets with the packet lines just as they do with other roads.

The reason assigned b}^ such roads as the Louisville and Nashville
and the Queen and Crescent for the termination of joint tariff rela-
tions was the pressure brought to bear upon them by the roads out of
Pittsburg.

The loss of prorating arrangements has been a very serious matter
to some of the packet lines. It has practically ruined the traffic in
horseshoes, cotton ties, bar iron, wire nails, staples, etc., to the South
and West, which was formerly extensive.

A few j'-ears ago arrangements were in effect whereby sliipments
could be made from Pittsburg territory and prorated via river and
rail to Atlanta, Ga., Chattanooga, Tenn., Birmingham, Selma and
Montgomery, Ala., Kichmond and Roanoke, Va., and Texas, Colorado,
and California points; but the community of interest under which
the railroads now seem to work caused the withdrawal of the pro-
rating arrangements at almost all points on the Oliio and Mississippi
rivers, thus compelling shippers to forward by all-rail lines instead
of river and rail routes. Formerly shippers gladly availed them-
selves of the prorating arrangements, particularly when there was
a shortage of cars or congestion of freight.

The Pittsburg and Cincinnati Packet Line still retains prorating
arrangements with the Louisville and Nashville Railroad to Clarksville
and Nashville, Tenn., to which points there is water competition.

It is said that the American Steel and Wire^ Company will not make
any shipments by water to any point that can be reached by rail



Online LibraryUnited States. Inland Waterways CommissionPreliminary report of the Inland Waterways Commission. Message from the President transmitting a preliminary report → online text (page 36 of 83)