needed in time were built so far ahead of time that they did not even
pay their operating expenses for many years.

Another class of roads was intended for speculative purposes. Thus,
there were instances in which a line occupying a given territory had
antagonized its patrons by poor service, and extortionate charges.
Thereupon another company would obtain a charter--which was then easily
done--and build a competing line in the same territory, the former most
likely having scarcely enough business for one road.[18] The results
were almost always the same; a war of rate-cutting followed; the
stockholders of both roads lost heavily; and one or both went into the
hands of receivers.

=Competition and Pools.=--In many instances the consolidation of roads,
while cutting off disastrous competition in the territory jointly
occupied by the two roads, brought the consolidated road into fierce
competition with another adjacent system. If the roads had practically
the same territory but different terminals the competition was confined
mainly to local traffic. On the other hand, they might have the same
terminals but cover different local territories; in this case the roads
must compete for through traffic. Thus the Chicago, Burlington & Quincy
is brought into competition with the Union Pacific in Nebraska, but
inasmuch as the roads have different and widely distant terminals, their
local traffic is easily adjusted. The Chicago, Burlington & Quincy and
the Northwestern have common terminals at Chicago, St. Paul, Denver,
Omaha, and Kansas City. They must therefore compete with each other, and
with half-a-dozen other roads for their through traffic.

Competition between railways differs greatly from that between two
firms. If one of two firms cannot afford to compete, the manager may
discharge his help, and close doors; he then does not suffer actual
loss. But a railway, being a common carrier, cannot do this; the road
must keep its trains moving or lose its charter. If it cannot carry
goods at a profit it must carry them at cost or at a loss. Even the
latter is better than not carrying them at all, for the operating
expenses of the road must go on.

So between 1870 and 1880 most of the railway managements were busy
devising ways to stop a rate-cutting and competition that was ruinous.
In many instances great trunk lines would have consolidated had not
State laws prevented. They could not maintain rates because one or
another of