Note 504 — Chapter XII · THE MOVEMENT OF RATES SINCE 1870; RATE WARS

The continuation of Commons' index number of freight rates to date, seemed inadvisable on account of the changes in traffic conditions which have taken place. Originally well selected, the thirty-seven rates chosen in 1900 are not now representative. There are, for instance, no transcontinental quotations at all; none from the southern states, such as on raw cotton; none for the great staples elsewhere moving under commodity ratings, such as iron ore, chemical fertilizers, lumber, citrus fruit, etc. Moreover, twelve of the thirty-seven items chosen by Commons were rates on petroleum which now moves in bulk in pipe lines except locally. Several of the quotations for coal, and for all the other carload rates, as a matter of fact, have been so affected by changes in carload minimum rules, that the mere rate by itself has little significance.

Rejecting Commons' particular index number by reason of its inherent defects does not, however, lessen the desirability of choosing some other combination of rates which may be used as a standard for measurement of rate changes year by year. Yet the selection of such an index number is open to all the difficulties attaching to a similar index number of prices. Is the object, for example, an academic determination of rate changes per se; or is it intended to ascertain the financial burden of such charges upon the community? In the former case the volume of traffic affected would not be an important consideration. Local rates on indigo or millinery would be given the same weight as similar changes in the rate on wheat between Chicago and the Atlantic seaboard. The latter mode of approaching the question, on the other hand, would correspond to an index number of prices, weighted according to the volume of consumption. A doubled freight rate on hard coal to Perth Amboy would outweigh an equal change in the charge on castile soap in exact proportion to its commercial importance as measured by the total tonnage transported. Many such details would call for careful consideration before the final adoption of the rate items chosen to constitute the index number; but the Interstate Commerce Commission might well consider the initiation of such a statistical project, endeavoring to do for railroad rates what the Federal Commissioner of Labor performs so satisfactorily in officially recording current changes in the price of commodities. Such a record of railroad rates extending over a series of years, supplemented by data for ton mileage revenue, would be invaluable in the determination of the reasonableness of rate advances in future; even as the rate increases of 1910 clearly pointed to the need of a similar standard for purposes of comparison from year to year in the past.