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Mark: In re Point 2: All railroads were members of regional collective rate-making organizations (aka, rate bureaus). Each such organization had "articles of organization and procedure" whereby a railroad could propose to establish rates on any commodity from, to or via points it served. Normally, such proposals would be publicized for review by member lines (and shippers) and a vote. If approved by a majority, the rate would be published in a tariff. If disapproved, nothing happened unless the proposing line took "independent action" to establi***he rate via its line. This "right of independent action" was guaranteed in the articles and could not be stopped by any other line, short of a protest to the ICC, and that seldom succeeded. If the "announced" rate required a second line to complete the route, that line had to "announce" also. This right was particularly important with regard to rate increases, especially the "general rate increases" (aka, Ex Partes). An entire region (say, the East (aka, Official Territory)) might approve an across-the-board 12% increase on all traffic from, to and within the territory. That approval would be sent to the South (aka, Southern Freight Association or SFA), and the West (aka, Western Railroad Traffic Assiciation, or WRTA) for concurrence. The Southern Railway, a member of SFA, having reviewed its competitive matrix, would conclude that several commodities such as steel between Official Territory and SFA were threated by truck competition, so it would "flag out" of the increase for its routes on those commodities (or perhaps agree to only a 3% increase). The Eastern Lines, then, had only limited concurrence in the change they had proposed and only the limited increase could be published to apply on traffic to and from the Southern. (Because of this type of "independent action," general increase tariffs became very complex.) In the case of pre-existing rates (and there were always pre-existing rates), "low man wins" was the rule. A rate increase could not be forced on any line. By the same token, no line could force a new, lower rate on a connection, "high man wins" being the rule. Serious stresses developed in the industry over these issues, and with the Staggers Act, some lines began withdrawing concurrences in through rates, leaving only combination rates. The revenue generated by through rates "divided" between railroads according to agreed to divisions or ICC-prescribed divisions, but combination rates divided "as made." In such cases, each individual line controlled its own rates and revenue, but the poor shipper was left with an even more chaotic rate structure. In re Point 3: No, I would not say that regulation sought to protect the weak, with one notable exception. After 1958, railroad rate-making was largely deregulated, as a practical matter, and the ICC did not often, if ever, arbitrarily impose a higher rate on an efficient line to protect a weaker one. The exception was typically in merger cases when the ICC would routinely impose conditions on the merging lines requiring them to maintain pre-existing routes with other lines. The effect was more cosmetic than real in most cases, for if the merger provided new, more efficient single-line routes then the newly merged line would successfully market that service. Sure, the dregs were still there, but only for a while. These matters are arcane, I know, and of limited interest. Yet, there are misperceptions and misunderstandings that reverberate and color current thinking and decisions. For example, I remain convinced that the rush of the newly "deregulated" post-Staggers railroads to embrace "secret" contracts cost the railroad industry, quite literally, billions of dollars in profit. Only now are "public" rates regaining favor in the industry. History is not without its lessons.
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