of the
Southern States, to cite another example--is a force that must be
considered in making rates and fares. Even towns served by only one
railway and by no waterway enjoy the benefits of this industrial
competition. Unless the railroad can give the industries in these
local towns rates that will enable them to market their products,
the industries will decline and the railway will lose its traffic.

An interesting result of the competition of roads connecting common
termini or joining a common industrial region with seaboard points is
that the road whose line is the longest and whose expenses of
transportation are greatest is obliged to charge the lowest rate. The
short lines can charge more because they compete for traffic under
more favourable circumstances. The lower charge of the longer line is
called a differential rate, and it is customary for the shorter or
"standard" lines to agree to allow the "differential" line a
stipulated differential rate. This is the concession which the
standard lines are obliged to make to temper competition and to
prevent rate wars. The Grand Trunk, running from Chicago to Boston by
way of Montreal, is a good example of a differential line, and the New
York Central is a good instance of a standard line.

GOVERNMENTAL REGULATION OF RAILROAD TRANSPORTATION

It is a maxim of common law that transportation charges must be
reasonable, and the exaction of an unreasonable rate by a public
carrier is a common-law misdemeanour punishable by the courts. But
when, as the result of severe competition of railroads with waterways
and with each other, unjust discriminations between persons, between
places, and as regards classes of traffic--the abuses which constitute
the railway question--became prevalent, the common-law provisions
applying to railway charges were given statutory form and were
supplemented and extended by such legislation as the circumstances
peculiar to the situation seemed to demand. The comprehensive
railway- and canal-traffic act passed by Great Britain in 1854 has
been the model adopted for much of the railway legislation in the
United States.

The Constitution of the United States gives Congress power to regulate
commerce "among the several States," but the jurisdiction over
intrastate traffic lies with the State governments. The States began
to pass general laws for the regulation of railroads fully twenty
years before Congress acted, and two thirds of the States have