as an arbitrary and automatic discrimination against them imposed by their founders. What then do the clippings show is their attitude?

I quote from a New York paper a statement attributed to the general manager of a very active rate association in the West: "Total merchandise traffic through the Panama Canal amounted to about 5,000,000 tons in 1924, as compared with 627,000,000 tons of freight carried by Class I roads of the western district." The ton-mile factor-indisputably the only gauge of traffic density and volume-is adroitly overlooked. The fact that many tons of this 600,000,000 might only have been moved a hundred miles against the two thousand mile loss to the western lines alone on the transcontinental freight carried by water, is not even taken into account in this argument. Because of which, it is condemned without further reasoning, as being built on a fallacious basis.

Numerous business men in the Middle West, at meetings held under the auspices of the United States Chamber of Commerce, have considered the problem, not from the standpoint of helping the railroads merely from sentiment, but because they must be allowed to earn a certain net if they are adequately to carry the nation's business. Further, it is to the interests of the Middle West to protect its own markets on the coast from encroachments of eastern manufacturers who are aided by what amounts to subsidized competition.

The Panama Canal, representing as it does an investment in capital account and subsequent maintenance of more than $450,000,000, showed a handsome "profit" last year. The figures are arrived at, generally speaking, by deducting the operating costs from the revenues. No taxes, of course, are paid or even theoretically charged, nor is it evident, from the annual report that the interest on bonds is charged against the earnings of the Canal. Capital cost is being enlarged annually at the rate of $250,000, representing payments to the Republic of Panama for “right of way"; apparently an operating cost although not so charged.

Ship lines operating through the Government owned canal are protected by the laws which restrict the United States intercoastal traffic to ships under the American flag. Beyond collect

ing tolls, however, the Government is not interested in them. They may make such rates as they desire, or fix their charges by "conference" agreement, and unlike common carriers, are not obliged to accept unremunerative traffic.

During the calendar year 1924 (and the figures for the year 1925 do not differ materially) these lines carried approximately 5,275,000 short tons of merchandise freight, in addition to the oil traffic. The eastbound business predominated. These figures do not include the foreign business, a portion of which also formerly moved by rail. Had all of this traffic been handled by the railroads from coast to coast at the modest average of twenty dollars a ton, or one dollar a hundred pounds, the earnings of the western railways would have been enhanced by many millions of dollars. Of course, a portion of this freight always moved by water, either across Tehuantepec or around the Horn, although offsetting this, is a volume of foreign business formerly carried across the United States but which now moves direct to destination by water.

About half of the straight merchandise intercoastal traffic was to and from North Pacific Coast ports. Suppose the hypothetical figure produced by multiplying this tonnage by $20 had been distributed evenly among these railroads. A $10,000,000 increase alone would have been a substantial asset to each of the northwestern carriers, for a large part of it would have been net. The addition of the revenue from westbound freight alone would have been a material aid, filling as it would a portion of the now empty cars. In 1924, 44.5 per cent. of the westbound car mileage was empty, and the western roads as a whole suffered a loss of 1,000,000,000 ton-miles under the 1923 figures. It is reasonable to assume that part of this went through the canal, although a substantial part was due to a smaller volume of business in general. Nevertheless, the ton-miles handled by the carriers in the Northwest increased only three per cent. in nine years ending 1924, it was recently shown by H. M. Sperry, an analyst of the situation, compared with a fourteen per cent. increase for the United States as a whole, and twenty-one per cent. for all the western carriers.

Higher rail rates, at least to coastal points, are not a solution,

for a higher rate would drive more freight to the water lines, not only between seaport cities, but also to and from those located as far inland as the combination of water and inland rail rate remained lower than the straight all rail charge. Even now, the rail lines are penalized by not being permitted to make lower rates to the strictly coastal points. The charge on cotton piece goods, for instance, from New York to San Francisco is $1.875 a hundred pounds by rail against seventy-five cents by water. Eastbound, wool in bags moves at a rate of $1.50 by water from Los Angeles to New York, against $2.70 by rail. Obviously, with discrepancies such as these, not only the western railways but the mid-west manufacturers, whose rates either all rail to the coast, or rail and water via an eastern port, are proportionately higher, are being severely penalized. Whether the word "discrimination" is justified is perhaps a matter of personal opinion, but it is safe to say that the situation is one which must be faced and adjusted in the interests of a large portion of our population.

The matter of lower rail rates to more distant than to shorter points, where the shorter distance is included in the longer, is a matter of economic justice, warranted by conditions of trade and production, eminently fair to all concerned, approved by the vast majority, and, finally, of inestimable value and need to our western carriers. It is in the interests of those residing in sections somewhat removed from the Pacific Coast also to approve this, for adequate rail transportation is vital to them. If the railroads are to be penalized at coastal points, to and from which they might under different circumstances handle a volume of business, the improved facilities needed to care for an expanding traffic at interior points cannot be provided out of diminished earnings. The railroads seek a rate not so low that it will meet the water charges but rather one which will come within striking distance of them. Through faster rail service, with resultant lower interest charges to shippers and shorter intervals in which capital and goods are tied up in transit, they reckon that they can compete on fairly even terms with the water carriers. Obviously, they cannot regain all the water-borne traffic, nor is it right that the water lines should be deprived of their business, but even a small portion of it would be a substantial benefit to the railroads.

That our shipping industry needs encouragement and a fair measure of protection, no patriotic American can deny. Just where the line is to be drawn to afford this relief to the railways and at the same time assist the ships flying the American flag, is a question easier to propound than to solve.

No sooner had the Public Utility Commissioners advocated placing the intercoastal water carriers under the regulatory powers of the Interstate Commerce Commission, than the Merchants' Association of New York made an emphatic protest that the underlying motive of this was to raise the water charges, which would thereby penalize New York and other seaboard points. That the Commission has "managed" the railroads satisfactorily is becoming generally admitted, and with this as a background, much more may be heard of the proposition to place the water lines under its supervision. That the rail lines-the indispensible units of transportation-require some measure of protection, grows increasingly apparent. But that the shipping industry must also be considered is self-evident.

The solution of this perplexing problem is a challenge to business and transportation which cannot long be evaded.

A BRITISHER LOOKS AT RUBBER

BY H. ERIC MILLER

DURING the last two years the American public has heard a great deal more about the rubber industry than in all the preceding eighty-five years since Goodyear's discovery of vulcanization opened up the possibility of the wider application of rubber for the benefit of mankind. Much that was printed during 1925 presented a one-sided and misleading picture, but enough of the British side of the case has seen the light to give assurance that calmer and fairer opinions now prevail; and this paper furnishes an opportunity to attempt to analyze where mistakes have been made in the past, with a view to helping so far as possible to prevent their recurrence.

The ups and downs of rubber present an interesting study in human nature. Originally supplies were extracted from wild trees scattered throughout the tropical zone in somewhat inaccessible regions, and if the world today were dependent on them we would have to be content with only a fraction of what annually comes to market as the result of the initiation and development of the plantation rubber industry. It is exactly fifty years since the first steps were taken on behalf of the Government of India to experiment in tropical Asia in the growing of the types of rubber tree indigenous to South America and Africa. Of the many varieties tried, only the Heves Braziliensis was ultimately proved capable of practical large scale exploitation in plantations. Some twenty-five years elapsed, however, between the beginning of these experiments and the appreciation of the desirability of actually developing rubber plantations on a large scale. It was a dispensation of Providence that this move coincided with the development of the internal combustion engine, which led to the enormous expansion of the use of automobiles, for it is a fact that the simultaneous development of these two great industries in any way coördinated.