local considerations, has its leveling effect upon the rates on every pound of this vast traffic. The next map shows the ultimate reach of the rate-making power of Missouri.

It is true that the illustration has proceeded thus far on the assumption that Missouri might make a reduction in its existing class rates, and not on the fact that such reduction has been made. But Iowa has precisely the same control over interstate adjustments that the illustration demonstrates Missouri to have, and as matter of fact east-and-west class rates are what they are today because Iowa some years ago prescribed 60 cents as the maximum charge, first class, for the haul within its borders between the Mississippi and the Missouri rivers. The Iowa distance tariff of 1887 actually measures to-day the revenues of the interstate railroads on all interstate freight passing into or out of or beyond that state.

Besides, Missouri has actually made radical reductions in other rates that illustrate as well the principle of our contention. The legislature of 1905 ordered drastic reductions of rates on grain, flour, lime, salt, cement, stucco, lumber, agricultural implements, furniture, wagons, and live stock, and the legislature of 1907 added stone, gravel, and other commodities. The rates have not been published, as the constitutionality of the legislation is in question before the courts; but if the state's right to order the reductions is finally established, the interstate rates on these bulk commodities, which constitute a large percentage of the carload tonnage of all western carriers, will come down with them.

The reductions which will result in rates on grain will illustrate. The short-line distance rate between the Missouri and Mississippi rivers will be reduced from 13 cents per 100 pounds, on wheat, and 12 cents per 100 pounds on corn and other grain, to 81 cents per 100 pounds on all grain. The state's action also calls for a reduction of cent per 100 pounds in the proportional rate on wheat between Kansas City and Hannibal. This proportional rate of 9 cents is the rate applied on all wheat coming from beyond the Missouri river, and, as in the case of the class rates, it is the pivotal rate in the whole adjustment. If the legislature's

action is finally upheld, a readjustment of the whole rate fabric on western grain will result. There is no more sensitive adjustment in existence than the grain rates. No single part of any of the through rates can be disturbed without disturbing the revenue on a large part of the whole movement.

Competition and market conditions require that the rates on grain from the States of Kansas and Nebraska shall be so adjusted that the grain raised in those states can move eastward freely through either of the primary markets at the Missouri river, Kansas City, or Omaha. When these markets are reached, not alone the grain markets of the United States, but the foreign markets as well must be open to the producer, so that the Nebraska or Kansas producer may have the benefit of the best prevailing market price of the world to-day; and the adjustment must be maintained from day to day so that the large grain buyers may take the surplus grain into elevator storage, not only at the Missouri river, but at the large storage points at the Mississippi river, the Ohio river, the Lake ports, the milling centers, and the Atlantic and Gulf seaboard, with the full assurance that when the demand makes eastern or southern shipment desirable he will have a parity of rates in either direction through any market. If the reduced rates are finally enforced, the material reductions within the state will be insignificant compared with the automatic reductions in the interstate adjustment which must follow. The same reduction must be made from Omaha, not only to St. Louis but to the other Mississippi river crossings; to Peoria and Chicago, the gateways to the Central States; to Louisville, Evansville, Cairo, and Memphis, the market points for all the southeastern states; to Little Rock, Texarkana, Fort Worth, Dallas, and Shreveport, the principal market gateways for the States of Arkansas, Louisiana, and Texas; and to Minneapolis, the largest of the milling centers. Any reduction in the rate to the Mississippi river and Chicago means just that much reduction in the revenue on grain moving to Boston, New York, Philadelphia, Baltimore, and Newport News for export, as these rates are all made on the Mississippi river combination. And when these rates go down, a similar reduction

is forced in the rate to Pensacola, Florida, Mobile, Alabama, New Orleans, Louisiana, and Port Arthur and Galveston, Texas, for export.

It has never been found feasible to carry local and proportional rates on the same basis, and there is therefore the probability of further reduction in the proportional basis. To what figure the proportional rate on wheat across Missouri might fall as the result of carrying a local rate of 83 cents is, of course, problematical. The rates up to this time have always been maintained about four cents lower than the local rates. The accompanying chart only illustrates the direct reductions in the existing proportional rates.

Reduction in the wheat and flour rate adjustment immediately resulting from reduction in the state mileage rates ordered by the Missouri legislature.

The broad line indicates the controlling distance of 199 miles between the Missouri and Mississippi river basing points.

LEFT-HAND FIGURES PRESENT PROPORTIONAL RATES

RIGHT-HAND FIGURES

RATE FROM KANSAS CITY TO HANNIBAL

KANSAS AND NEBRASKA

During the year 1907 the Railroad Commission of Kansas forced a reduction of 15 per cent in the existing rates on grain. within the state. A reduction in grain rates always applies as well on flour, meal, and other grain products. The Nebraska Commission forced a 15 per cent reduction in state rates, not only on grain and grain products, but on live stock, coal, lumber and fruits, and vegetables.

Kansas and Nebraska do not consume a hundredth part of what they produce, and the great bulk of the commodities consumed within these states is produced outside of them. The freight destined from points of origin within either state and moving under the state's mileage rates to points of consumption within the state, is as nothing to that which moves to points beyond the state. That is to say, nearly all the traffic of both the states is interstate, and subject to the influence of the competitive interstate rate adjustments.

The products of Kansas and Nebraska find their primary markets (Kansas City, Kansas, and Omaha, Nebraska) on the Missouri river at the extreme eastern boundary of the state, and the state regulation fixes the rate at which the product is hauled from points of production to these primary markets, no matter what the ultimate destination of the product may be. As a result, the 15 per cent reductions in the grain rates required by both state commissions have called for a flat reduction of just that amount in all interstate rates, and a corresponding shrinkage in railroad revenues on practically all of the grain raised in both the states.

A contingent result is a horizontal reduction in the rates on Oklahoma grain. The Choctaw line of the Rock Island operates in Oklahoma under a charter which provides that its rates in that state must not be higher than they are in the states from which it enters Oklahoma. The line enters Oklahoma from Kansas, as well as from Arkansas, and the charter provision required an immediate adjustment of the Oklahoma rates on the Kansas scale. With the Oklahoma rates on the Kansas basis it

was found impossible to maintain the adjustment formerly prevailing from points in southern Oklahoma to points in Texas, and a readjustment there was necessary. Similar reductions of the rates to Arkansas points will be required.

CHANGES IN WHEAT RATES1

Left-hand figures are former rates.

Right-hand figures are rates forced by Commission's reductions.

1 Necessitated by the 15 per cent reduction ordered by the Kansas and Nebraska Commissions on their intrastate rates. Other grains and grain products are similarly affected. Every point is affected like the few here shown.