important industry, and the products of the dairy were shipped in the form of butter and cheese. The railroads appreciated and met the change by furnishing the proper facilities for the shipment of these products.

Aside from the influence of freight rates in modifying Iowa's industry, we must take into account the increase in wealth among the farmers, which enabled them to employ capital in various lines, and to undertake experiments with less hesitancy than before. Through their accumulations they had attained a strategic advantage in the adjustment of rates, and could make demands, rather than requests, of the railroads. Their patronage had come to be an item worthy of consideration.

But the industrial change was concerned not alone with farm products. In manufacturing and mercantile pursuits, the State developed wonderfully during the ten years, 1875-1885. Whereas formerly the jobbing centres had been located at Chicago, St. Louis, and New York, which had supplied Iowa with her manufactured products, wholesale houses were now established upon Iowa soil, and, through special rates secured from the roads, had been enabled to compete successfully with the metropolitan dealers for business among the Iowa people. Manufacturing centres had sprung up in Iowa, with which the wholesalers did a large portion of their business. The manufacturers and wholesalers did not occupy the independent position which the farmer had

succeeded in attaining. They were obliged to establish themselves at great expense in certain centres, and were then entirely at the mercy of the roads in the matter of rates. The farmers were indirectly affected, for they furnished the manufacturers with a large part of their raw material; but the agricultural industry per se was gradually shaking off the chains of railroad domination.

The railroad question in Iowa, then, had materially changed. Its concern now was to build up the manufacturing and wholesale centres, and to ship goods into and within the State, as well as out. Complaints of discrimination, which were almost unknown during the seventies, were now to be heard on all sides.

From Report for 1884, p. 76. Reports from 22 towns.

Number of Wholesale Houses

Capital .

Sales.

Net Increase in Business over '83

399

$22,704,505

68,393,500

5,119,330

1 It is impossible to secure classified tonnage before 1878, but the Table appended will sufficiently answer the purpose in showing the modifications that were going on in Iowa industry:

TABLE OF CLASSIFIED IOWA TONNAGE. - PERCENTAGES.

These statistics are taken from the Commissioner's Reports. They

are merely estimates, and make no pretence to exactness.

CHAPTER II.

DISCRIMINATION.

1

IN their first annual report, in referring to an alleged increase of rates by the companies, the Board pledged itself, in the following words, to oppose discrimination:

"The rapidly increasing commerce of Iowa demands every practicable agency for transportation and exchanges, and any attempt by discrimination to unjustly or oppressively interfere with or prevent the products of the State from seeking any market desired, or in any improper way to divert, limit, or repress the business of exchanges, will arouse the indignation of the people. The railroad corporations of Iowa can hardly afford to challenge the suspicion of discriminating against any portion of the State or people, much less the actual fact. Any attempt to discriminate against the commercial and producing interests of any section or any industry, should be jealously watched and guarded against, and will command the prompt action of the Commissioners whenever their attention is called to it in the manner contemplated by law."

The law establishing the Board of Railroad Commissioners prohibited unjust discrimination, while it permitted just discrimination, leaving the determination of the justice or injustice of the charge largely in the hands of the Board. Very early in its history, the Commission took the position that just discrimination

1 Page 76.

was entirely proper and should be allowed. It appears in the freight classifications of the railroads. Goods that are of high value are discriminated against, and made to pay a much higher rate than low-class commodities, not because the cost of transportation is greater, though something should be perhaps charged for the greater risk, but because the traffic will bear a higher rate. This form of discrimination is everywhere recognized as entirely just. So, also, the Commissioners argued that discriminating rates should be made in favor of competitive points. It might seem to the noncompetitive points unjust; but this was the railroad's only means of securing business at this point, and if any profit was made on competitive business, it would accrue to the benefit of non-competitive points through a lowering of rates. If obliged to carry all the business at the rates granted the competitive point, the railroad would be compelled to abandon the competitive business entirely. The Board, however, did not at all times unanimously maintain this position.

In the sixth annual report, Major Anderson, one of the members of the Board, argued against the high rates at non-competitive points. He said:

"It is safe to say that the railway manager is carrying freight to and from competing points on business principles, and that he is charging, at least, a reasonable compensation for his services; and from this standpoint it is manifestly unjust to permit him to charge a greater rate from non-competing points on the same line, to the same destination for a less distance. . . The building up and developing of the twenty-five towns or stations at the expense of the nine hundred and seventy-five remaining towns

1 Report, 1883, p. 61.

or stations in the State, under this system of discrimination, is a work so palpably wrong on its face, and so in contravention of the principle that demands the greatest good to the greatest number in the establishment of laws and public policies, that it needs only to be stated to be condemned."

An im

Commissioner Coffin, in the same report, arrived at the same conclusion, though by a somewhat different line of reasoning. The railroads have been built and should be operated for the public good. The producers of the State are in great measure the public. plied contract was made when the right of eminent domain was given the railroads, money voted, and grant of lands made, that all should have fair and equal facilities. The mass of the producing classes are best accommodated by a multiplicity of convenient trading-towns, and these should be untouched by the arbitrary rulings of common carriers.

Yet on the whole the Board argued for the perfect justice of discrimination in certain cases. They declared that either competition must exist, or there must be absolute equality of rates. Unrestricted competition had, of course, proved deceptive and disappointing. They argued, however, that "with just so little restriction as is absolutely necessary to correct evils resulting from competition run mad, competition becomes the great regulator, and a blessing instead of a curse. .. Discriminations, if unjust, should be prohibited or punished. Undue preference of persons should also be prohibited and punished, and all artificial advantages given one place over another should be regarded as violations of the just law which should govern carriers.

1 Report, 1886, p. 33.