This practice of contracting ahead for t space ifl makes it possible for exporters to calculate' c osely on transactions. It is common for exporters in Western Europe to quote their prices periodically by cable, basing their calculations on options for freight space secured from some steamship company and options for a definite exchange rate given by some foreign exchange banker. Contracts based on such calcula tions hold no surprises and make it possible to quote "c.i. & e." without engaging in a speculative under taking.
8. Freight classification.—No such scientific classi fication of freight as is found in our railroad tariffs is possible in ocean rate-making. So far as there is any underlying principle applied, it is the principle of "charging what the traffic can bear." Some lines make a rough classification of six classes for measure ment-cargo and a special class for express steamers; others segregate the measurement-cargo from the dead-weight cargo and then subdivide each into classes; still another line has a detailed commodity tariff in which articles are dealt with individually.
The principal steamship lines which connect New York with Europe, Australia, South America and the Orient, are gradually developing such commodity tariffs.
9. Rate quotations.—The methods followed in quoting rates also differ widely. Rates on some goods are quoted by measurement ton, on others by weight, either long ton or short ton, on others per bushel, tr barrel or per bale, while rates on lumber may be quoted at a certain figure per thousand feet.
The rates are usually quoted in sterling, with "primage" to be added, though rates are also quoted in dollars and cents. Primage varies between 5 and YO per cent. It is said to be a vestige of the old cus tom of giving the captain and the crew a fat tip to insure careful handling of the goods. Primage now is paid to the company and merely increases the rate. It is being more and more incorporated into the latter.
When quotations are asked for, the steamship com pany requires detailed information in regard to the character of the goods, the method of packing, the dimensions of the packages, and the weight.
The following table, taken from the "Exporters' Encylopedia," shows in what space the usual export commodities stow: After the quotation has been received by the shipper from the steamship company prompt acceptance is necessary, not infrequently by wire. Unless an
swered promptly, it is void, except in cases where special agreements have been made.
10. Thru rates.—The thru bill of lading was dis cussed in a preceding chapter. In some cases special rates are quoted for goods "intended for export" con siderably cheaper than the rates on goods for domestic consumption. Similarly low rates are quoted on some imported articles.
From the railroad's point of view the following reasons have been given for such special rates : a. Goods intended for export have the choice of many routes, while goods intended for consumption in New York must be landed in New York ; goods intended for Liverpool may travel by way of the Gulf, Montreal, Boston, New York or Philadelphia. Keen competition exists between ocean carriers, and this makes it often necessary for railroads to assist the lines serv,ing their terminals in this struggle for freight.
b. Railroads are anxious to develop the territory which supplies them with freight. If in the long run the development of exports increases industry in their section of the country the railways are further bene fited.
Import rates on raw materials are often reduced to offset to some extent the tariff on these goods in order to encourage the development of industry. The fact that the bulk of the freight travels to the ports has also contributed to the cutting of the rail road transportation rates on imported goods in con sequence of the competition among the carriers to get freight for their "empties." A particular application of the principles 'stated in the preceding paragraph is found in the transportation of wheat. Professor W. Z. Ripley states the situation in regard to the exportation of wheat in the follow- • ing words : The United States produces every year a certain quantity of wheat. Of that quantity the greater part is consumed by our own people, but a very large surplus still remains which must be disposed of abroad. This surplus is sold to foreign countries in competition with that from other parts of the world, and it must be sold at the price obtain able in the foreign market. While at times that price may be practically fixed by the United States and while at times it is influenced by the price here, still it must be admitted that ordinarily the foreign market is not entirely determined by our own market.