The First Tycoon: The Epic Life of Cornelius Vanderbilt (Pulitzer Prize Winner)

by T.J. Stiles

Seemingly omnipotent to the general public, the railroads themselves felt helpless to control rates. As discussed earlier, it was in their interest to take traffic below cost rather than lose it, since such a large percentage of their operating costs remained constant no matter how many trains they ran. This led to ruinous rate wars over “competing points”—cities served by more than one line. Railroads offered rebates to big shippers to attract business, and cut through rates well below those paid on local freight. But what the corporations saw as desperate discounting, western farmers called “discrimination,” as Vanderbilt himself noted. After all, merchants, meatpackers, and millers, not farmers themselves, shipped agricultural products over long distances. And, by separating pricing from distance, rate discrimination represented yet another alarming way in which the corporate system abstracted economic from physical reality. For all these reasons, the Grangers lobbied state legislatures for pro-rata rate regulation.