§ 8. Discrimination as to goods. Discrimination as to goods is charging more for transporting one kind of goods than for another, without a corresponding difference in the cost. When reasonably understood, this proposition does not apply to a higher charge for goods of greater bulk, as more per pound for feathers than for iron, the "dead weight" of car being much greater in one case than in the other. It does not apply where there is a difference in risk, as between bricks and powder, or coal and crockery; nor where there is a difference in trouble, as between live stock and wheat. Any difference that can reasonably be explained as due to a dif ference in cost is not discrimination ; on the other hand, a difference in cost without a difference in rate is discrimina tion. Discrimination as to goods may be by value, as low rates for heavy, cheap goods, and high rates for lighter, valu able ones. Coal always goes at a low rate as compared with dry goods, and sometimes more is charged for coal to be used for gas than for coal to be used for heating purposes.
Railroad discrimination so frequently has resulted in in justice to the shipping public that the term has taken on an evil significance. But it is well to observe that the word dis crimination is not derived from crimen (crime), but from discernere (to discern). There are both reasonable and un reasonable forms of discrimination. In general, discrimina tion as to goods more often appears, under certain conditions and made with due regard to the public interest, to be rea sonable; less often to be justified is the form of local dis crimination next to be described; and least often of all to be justified is the last-named form of personal discrimination.
§ 9. Local discrimination. Discrimination between places (called also local discrimination) is charging different rates to two localities for substantially the same service. This occurs when local rates are high and through rates are low; when rates at local points are high and at competing points are low ; when less is charged for shipments consigned to foreign ports than for domestic shipments; when more is charged for goods going east than for goods going west. The causes of local discrimination are : first, water competition, second, differences in terminal facilities, making some places better shipping-points than others; third, competition by other railroads, which is concentrated at certain points, only one tenth of the stations of the United States being junctions; fourth, the influence of powerful individuals or large corpora tions and the personal favoritism shown by railroad officials.
The effects of local discrimination are to develop some dis tricts and depress others; to stimulate cities and blight vil lages; to destroy established industries ; to foster monopolies at favored points; and to sacrifice the future revenues of the road by forcing industry to move to the competing points to get the low rates. The power of railroad officials arbi
trarily to cause rates to rise or fall is usually limited in prac tice by the need of earning as large and as regular an in come as possible, but even as exercised it has been at times as great as that possessed by many political rulers.
§ 10. Personal discrimination. Discrimination between shippers (personal discrimination) is charging one person more than another for substantially the same service. This most odious of railroad vices, rarely practised openly, is done by false billing of weight, by wrong descriptions or false classification to reduce the charge below published rate sheets, by carrying some goods free, by issuing passes to some and not to all patrons under the same conditions, or by dona tions or rebates after the regular rate has been paid. In some eases a subordinate agent shares his commission with the shipper, and the transaction does not appear on the books of the company. In other eases favored shippers are given secret information that the rate is to be changed, so that they are enabled to regulate their shipments to secure the lower rate.
One group of reasons for personal discrimination is con nected with the interests of the road. It is to build up new business; it is to make competition with rival roads more ef fective by favoring certain agents, as was very commonly done in the western grain business; it is to exclude compe tition, as by refusing to make a rate from a connecting line or to receive materials for a new railroad which is to be a competitor; and it is to satisfy large shippers whose power, skill, and persistence make the concession necessary. An other group of reasons has to do with the interests of the cor porate officials. It is to enable them to grant special favors to friends; or it is to build up a business in which they are interested; or it is to earn a bribe that has been given them.
The evils of personal discrimination are great. It intro duces uncertainty, fear, and danger into all business; it causes business men to waste, socially viewed, an enormous fund of energy to get good rates and to guard against sur prises; it grants unearned fortunes and destroys those hon estly made; it gives enormous power and presents strong temptations to railroad officials to 'injure the interests of the stockholders on the one hand and of the public on the other.