to themselves, as against other competing communities or sections.

That species of gambling known as stock speculation has now become so common that there are but few who are not more or less concerned in it. Members of railway commissions are no less human than other individuals. Through their brokers it would be possible for them to engage in large transactions with practically no danger of detection. Moreover, every important case which would be decided by such a Commission would have more or less influence upon the price of the stock of the railroad affected. The members of this Commission, having a few days' advance knowledge of the way in which a case in question is about to be decided, could fairly estimate what would be the effect of its decision upon the market value of the stock of the interested railroad as soon as it should be made public. Is it not asking a great deal of human nature to expect that the commissioners will never so act upon the knowledge which they possess as to turn it to their advantage in secret transactions upon the stock market? Once the habit of speculation has been acquired by members of the Commission - and as long as they can trade with the practical certainty of profit we have every reason to believe that such habits will be acquired it is difficult to believe that their decisions would not be somewhat affected by their personal interests.

The cry of the alarmist is never popular, nor is he often taken seriously till subsequent developments reveal conditions even worse than those against which the public has been forewarned. It may be said that the courts have long dealt with problems involving the interests of large corporations, and yet no general charge of corruption has been made against them. Still it is seldom the case that an important decision affecting corporate interests is not discounted in the stock market before it is made public. The same is true of nearly every government grain or cot

ton crop report. Where do these "insiders" who act upon advance news of such decisions or reports get their information, if not directly from those who are responsible for such reports and decisions? It is not at all likely that such valuable information should have been imparted without compensation, and it may often be that much of the trading of this character is directly in behalf of the government officials themselves. At any rate it is reasonable to suppose that this is the case in view of the investigations of the past two years, which have proved that corruption has existed in those quarters where we should have least expected it. It is difficult to conceive of any situation which would offer more excellent opportunities for such transactions as we have described than placing the whole of the rate-making power of the country in the hands of a single Commission. The property interests involved in the cases that would come before this Commission in a single year would be greater than that of all the cases which would come before the Federal Courts in a decade.

But there is even a greater problem to be met in any attempt to fix rates by a Commission. This will appear whenever the Commission attempts to settle a differential. The East demands a rate which will enable it to compete with the South in the export trade in grain. Each section is convinced that the other has an undue advantage over it. How would it be possible for a Government Commission to settle such a dispute without involving the government in all the unpopularity with which such rates are invariably received upon both sides? It would be almost inevitable that such rates should become a political issue. Railroad rates are able to make and unmake great cities. Witness the conflict which Philadelphia waged with New York for a share in the export trade. Such diverging interests appear in almost every rate. Any low rate extended to one section means a comparative disadvantage to some other section of the country which competes with it. The

low rates on agricultural products from the West result in the destruction of the value of Eastern agricultural property. Whenever a political body is given the power to make rates, all the influence of established industries is brought to bear to prevent the extension of such rates as will build up competing industries elsewhere, or if that tribunal has not the power to name a minimum or absolute rate, they try to obtain rates for themselves which are enough lower than those extended to their competitors so that they are able to maintain the existing differentials and relative advantages.

Under the present system, such questions are settled by the forces of competition and compromise between railroads. This may at times lead to changes in the existing trade-routes, perhaps to the great disadvantage of certain vested interests, but it results in giving to the American farmer the benefit of the lowest possible rates to the world's markets.

This point has already been so thoroughly treated by various writers that, while we consider it perhaps the most important objection to government-made rates, we will pass it by with a bare notice. Professor H. R. Meyer has produced evidence which proves beyond all reasonable doubt that the system of government rate-making has had a most pernicious effect upon the development of the industries of Europe and Australia.

In Germany, sectional conflicts have prevented the extension of low rates to points where industries could be developed, and the traffic greatly increased. Points possessing the advantages of water communications have a tremendous advantage over other points which can be reached only by rail. The government has steadily refused to make rates that would enable the railways to compete with the river and canal routes. Important treaties and laws have been opposed by delegates of some of the Western States, in order to force the government to

withdraw certain low rates which had been extended in order to enable the grain of the more distant sections to move westward by rail, and thus to supply the Western manufacturing centres with this much-needed commodity. The Western agricultural interests were determined to leave no stone unturned to prevent this outcome, and unfortunately they were only too successful.

In France, no railroad may raise or lower a rate without the consent of the Commissioner of Railways. The various railways are compelled to maintain rates at least twenty per cent higher than those of the water routes. The guarantee of a high rate of dividends upon the stock of the railroads has proved most expensive to the government and conducive to lax management on the part of the railroads.

In Russia, the landowning aristocracy of the west has brought such political influence to bear, that even an autocratic government could not resist it, and the Minister of Railways was compelled to withdraw rates on grain which had enabled the cereal products of Siberia to find an outlet upon the Black and the Baltic Seas. At present the rate per ton-mile on Siberian grain which moves 1000 miles and upward is higher by at least 75 per cent than the rate per ton-mile for much shorter distances in Western Russia. The only port which the products of Siberia can now reach is Archangel, which is frozen up for the greater part of the year.

In Australia, the tremendous influence of the great seaboard cities has been brought to bear upon the government to prevent the building up of interior distributing centres. This object is accomplished by means of enforcing a uniform system of tapering rates. The only important inland cities in Australia are those which have been built up at the terminals of the railways, where a break in transportation occurs. But as soon as the railroad is extended beyond that point such cities invariably lose their

business to the larger distributing centres on the coast. Thus the city of Ballarat had attained considerable importance by virtue of its situation at the head of one of the railways, but as soon as the railway was built further into the interior, that city was unable to obtain rates which would enable it to compete on even terms with the seaboard cities, the result being that its business was practically destroyed. If the Australian railways had been under private control, the merchants of Ballarat would have gone to them and asked for rates which would have enabled them to remain in business, and there is every probability that their petition would have been favorably received by the railroads. But since the responsibility for the rates lay with the government, it was found impossible to obtain reasonable concessions against the strenuous political opposition of the great seaboard cities.1

If, then, we consider carefully the many objections to a system under which final responsibility for rates rests with the government rather than with the railroads themselves, and the limited scope in which government regulation is advantageous, we must conclude that the least governmental interference which will secure desired advantages is preferable to any system granting broad farreaching powers, the exercise of which will inevitably be attended with such evils as have been described.

1 For a full discussion of this subject, see H. R. Meyer, Government Regulation of Railway Rates, chapters i to viii. Also a series of articles by the same author in the Railway Age for 1903.