by means of manipulation of railway rates. Our railway rates under private control are also manipulated, but from different motives and with different results. In Europe those who are hurt by progress get the rates under government control adjusted in the direction of impeding the general development of the community. Here there is eternal vigilance, ceaseless effort, on the part of hundreds of traffic managers with a free hand, directed to making things move on to developing the traffic, to causing two blades of grass to grow where one grew before. There the effort is just as constantly made by centralized rate-making authority to meet the predominant political "pull," to protect vested interests, to keep things in the status quo. Europe marvels at the stupendous growth of the United States. We take it for granted; and, being badly advised, blindly propose national legislation on the European model.

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CHAPTER III

THE WORKINGS OF COMPETITION

IN 1872 the Lake Superior and Mississippi Railway was opened from St. Paul and Minneapolis to Duluth, thus giving to the region embracing the northern part of Wisconsin, all of Minnesota, a part of Iowa and the territory to the westward an additional outlet to the Atlantic by way of the Great Lakes. President Mitchell, of the Chicago, Milwaukee and St. Paul, waged for two years a fierce war on the Lake Superior and Mississippi Railway, for the purpose of preventing it from developing a traffic in grain from Minnesota and points farther west. Rates on grain from the contested territory fell so low that farming land 400 miles west of Chicago became more valuable than land in Wisconsin only 100 miles west of Chicago; and there was a movement of population from Wisconsin to Minnesota. The feeling aroused by this disturbance of values, together with the belief that the Chicago, Milwaukee and St. Paul was keeping local rates high in order to recoup the losses sustained in this rate war, was one of the reasons why the

Granger legislation of Wisconsin, in 1874, was so much more drastic than the similar legislation of the neighboring states.*

About ten years after this the trans-Mississippi Northwest was provided with a second road runProtests against ning to Duluth, built under rather the development remarkable circumstances. The St. of Duluth Paul, Minneapolis and Manitoba, which later became a part of the Great Northern, was begun as a St. Paul road. As such it was handicapped by the fact that it depended for an outlet to the East upon the roads leading from St. Paul to Chicago. In 1880 it tried to emancipate itself by shipping grain to New Orleans by the Mississippi River, but the effort proved unsuccessful. A few years later, in 1883, Mr. James J. Hill decided to move the startingpoint of his railway from St. Paul to Duluth, with a view to getting an outlet to the East by way of the Great Lakes. The scheme hardly promised well; for Duluth had never recovered from a reverse which it had suffered in 1873, and in the census of 1880 it had possessed only 3500 inhabitants. Moreover, at this time, 1883, the owners of vessels upon the Great Lakes had become discouraged, the railways having

* A. B. Stickney: The Railway Problem.

+ Annual Reports of the Trade and Commerce of Duluth, Minnesota, for the Years ending December 31, 1887-97; The Railroad Gazette, September 28 and October 5, 1888; February 8, June 7 and 21, and December 27, 1889; and Decisions of the Interstate Commerce Commission, Vol. II, In the Matter of the Chicago, St. Paul and Kansas City Railway Company.

gained constantly upon the lake vessels since 1875.* Nevertheless, the President of the present Great Northern system went ahead with his plans and by 1888 had transferred the point of origin of his railway system from St. Paul to Duluth. In 1887 he established the Northern Steamship Line, with six vessels of 2700 tons' capacity, and thus secured an outlet to Buffalo during the months in which the Lakes are open for navigation.† In the following year, 1888, the Duluth, South Shore and Atlantic "Duluth's Declaration of Independence" of Chicago

gave the Great Northern a direct all-rail outlet to the East by way of the Canadian Pacific, the Michigan Central and the Grand Rapids and Indiana Railroad. For the purpose of making this latter connection, the Duluth, South Shore and Atlantic built the most powerful ferry-boat in the world - a boat capable of piercing ice three feet thick.

As soon as the Great Northern had thus secured an outlet to the seaboard by way of the Great Lakes

*Monthly Summary of Commerce and Finance, June, 1902. TONNAGE OF AMERICAN VESSELS ENGAGED IN THE COMMERCE OF THE GREAT LAKES

The steamers in question carried 90,000 bushels of grain, and were called "mammoth" steamers. Ten years later, in 1897, The Empire City carried a cargo of 205,000 bushels from Duluth to Buffalo.

and by way of the Duluth, South Shore and Atlantic, it demanded that the rates on merchandise and manufactures from the East to Duluth be the same as the rates from the East to Chicago, and lower than the rates from the East to St. Paul. These demands it based on the fact that the distance by lake and rail was the same from the East to Duluth as to Chicago, and that the distance by rail from Duluth to the Northwest was less than the distance from St. Paul to the Northwest. These demands met with storms of protest from the newspaper press and the merchants of Chicago and St. Paul, as well as from the railways leading from Chicago to St. Paul and Minneapolis. But the demands were ultimately granted; and they brought about most far-reaching readjustments in the trade relations of Chicago, St. Paul and Duluth to the Northwest and the Southwest. The merchants of St. Paul were obliged to establish branch houses in Duluth, and to-day a large proportion of the coal, salt, lime, cement, heavy iron and hardware, sugar and staple groceries distributed from Duluth is handled on account of St. Paul merchants.

At the same time that the Great Northern made itself independent of the railroads leading from the Twin Cities to Chicago, the Minneapolis millers did the same by building the Minneapolis, St. Paul and Sault Sainte Marie. The building of this line to the Lakes, together with the movement northwestward