St. Paul, Omaha, and Kansas City? Here, indeed, there
is competition; and it is of great importance because of the enormous
bulk of the traffic which traverses these few routes.

It is a peculiar feature of the railway business which we have now to
consider, and one which is not generally understood. We have already
perceived the principle that competition cannot permanently exceed a
certain intensity; and the proof of this principle in the case of the
railway is remarkably plain. Suppose two roads are competing for the
traffic between Omaha and Chicago. A shipper at the former city who
wishes to send a few tons of freight to Chicago may go to one company
and ask their rates, then to the other and induce them to give him a
lower rate, and then back to the first again, until he secures rates low
enough to suit him. Now it is a fact that either company can afford to
carry this especial freight for less than the actual cost of carrying
it better than it can afford to lose the shipment. This is because it
costs the company practically _no more_ to carry the goods than if they
were not shipped by its line; and hence whatever is received for the
freight is so much profit. Stated in the form of a principle, this fact
is expressed thus: _Receipts from additional traffic are almost clear
profit_. Nor is this all. The practical impossibility of distinguishing
_additional_ traffic from other traffic, and the enactment of State and
National laws requiring uniform rates to be charged, places all traffic
on a common basis; and the same cause which makes it more profitable to
carry additional traffic for a song than to lose it, makes it better for
a railroad to carry traffic, temporarily at least, for less than the
actual running expenses of the road, rather than to lose it. The train
and station service, the general office and shop expenses, must all be
kept up, though the freight and passengers carried dwindle to almost
nothing; and the capital invested in the road is a total loss, unless
the line is kept in operation and earns some income, even though it be
small. This last influence, as we shall see later, is a most important
and far-reaching one in its effect on industrial competition.

The cause of the intensity of competition in railway traffic is now
evident. And from what we have seen, it follows that two railway lines
competing freely with each other cannot possibly do business at a
profit. Let us see what are the actual re