FROM MITCHELL HINSDILL, ESQ.. AND OTHERS, 
 
 OF KALAMAZOO, 
 
 UONCKRMNG THE COMPARATIVE RATES OF TRANSPORTATION OF KR EiOHT 
 OVER THE MICHIGAN CENTRAL RAIL ROAD, AS CHARGEABLE TO 
 
 IFFj ESTABLISHED TO TAKE EFFECT ON THE 
 TWENTIETH DAY OF AUGUST, 1848. 
 
 BY J. W. BROOKS, 
 
 Suiicrinlcndcni mid Hiifriy 
 
REPLY 
 
 COIMUMCATM 
 
 FROM MITCHELL HINSDILL, ESQ, AND OTHERS, 
 
 OF KALAMAZOO, 
 
 ’ElVENTIETII DA¥ OF A-UGDST, 1848 . 
 
 BY J. W. BROOKS, 
 
 Superintendent and Engineer. 
 
 DETROIT : 
 
 I'ltli\TE£) UY MONGER k I’ATTISON, 
 
 1848 . 
 
NOTE. 
 
 In making this reply, it seemed necessary to 
 review and consider the general policy upon which 
 that Tariff is founded, for the purpose of showing 
 the reasons and motives which governed in its 
 adoption; and it has therefore been deemed proper 
 to present it in this more convenient form, for the 
 consideration of others who may also feel interested 
 in the subject. 
 
REPLY 
 
 Micliig'aii I'eiitra! Rail Road Office ,) 
 
 Detroit, August \SlJi, 1818. S 
 
 Messrs. MITCHELL HLNSDILL. I. .MOFK \T ;ui,l mlicrs. K.M,.\M.rzo,. 
 
 Gentlemen: 
 
 I respectfully submit the folloiving remarlts 
 in reply to your communication received on the 13th 
 inst., concerning the tarifl’of reduced rates chargeable 
 for Freight over this road, which ha.s been established 
 to take effect on the 20th inst. 
 
 The cost of the Michigan Central Railroad, when 
 completed according to the requirements of its Char¬ 
 ter, will not be less than si.\ millions of dollars. To 
 make ten per cent, annual dividends upon this large 
 amount of capital, which dividends are equal to those 
 of similar enterprises in the Eastern States, will 
 require six hundred thousand dollars of annual nett 
 receipts. The annual expenses of operating the road 
 in obtaining this nett amount, aside from the depreci¬ 
 ation of the permanent way, structures and working 
 stock, and without any allowance for increasing the 
 working stock or enlarging the business accommo¬ 
 dations of the road, cannot be less than three hundred 
 thousand dollars, and if a very considerable amount 
 
of the receipts has to be obtained from sources where 
 competition reduces the rates below a fair price, 
 much more business would have to be doae, and the 
 cost of operatiog, though not increased in propor¬ 
 tion to the increase of business, would be consid¬ 
 erably greater. 
 
 The operating expenses are properly divisible into 
 two parts—that which is, and that which is not ma¬ 
 terially affected by the increase of business. 
 
 It is sufficiently accurate for the present purpose 
 to state, that the cost of the renewals of the wooden 
 part of the superstructure and bridges, arising fi'om 
 decay, the repairs of injmaes to bridges, culverts, and 
 other water ways, as well as injuries to cuts, embank¬ 
 ments, and road-bed, caused by the action of the 
 elements, the repairs of buildings and a considerable 
 proportion of the expenses at stations along the line, 
 together with some other itenis of a sinailar character, 
 will amount to about one hundred thousand dollars 
 per year, and constitute that portion of the necessary 
 expenditures which are but insensibly affected by the 
 increase of business done upon the road. 
 
 It will therefore be perceived that when business 
 effers which cannot be obtained except at very low 
 rates, by reason of competition or other causes, in 
 order to determine whether any advantage can be 
 derived from doing such business, at the rates which 
 can be had for it, the estimate for the real cost of 
 
doing this additional amount must be put down at 
 about two thirds the average cost of the whole busi¬ 
 ness of the road, when if the price which can be 
 obtained exceeds this, though it falls helow the aver¬ 
 age working expenses upon the same amount of 
 business on the whole line, a profit will nevertheless 
 be obtained. 
 
 This, the trile method of calculating the value of 
 contingent business, should be kept in view, and put in 
 practice whenever occasion offers; for though its 
 profits maybe Snlall, whatever they are,they go so far 
 to increase the ability of the company to reduce the 
 rates, and cultivate an increase of their local business. 
 
 It appears that there is required, to pay the current 
 expenses of operating the road and such a nett per 
 cent as other successful roads pay^ and such as this 
 was yielding upon its cost when purchased by the 
 company, the sura of nine hundred thousand dollars 
 as the gross annual earnings. When the road was 
 purchased with its invested capital of two millions of 
 dollai-s, we found it yielding a gross revenue of four 
 hundred thousaild dollars; if is therefore evident that 
 some economy in management will be required to 
 pay as well upon the six millions of capital with 
 gross earnings of only nine hundi'ed thousand dollars.- 
 
 From what sources is this large amount to be 
 derived ? 
 
 The local Passenger and Freight Receipts from 
 
Detroit to Kalamazoo ai-e not expected to yield more 
 than four hundred thousand dollars 5 the late reduc¬ 
 tion of rates probably amounting to quite as much as 
 the natural increase of one or two year's. 
 
 Extending westwai'd from Kalamazoo, the local 
 receipts will not he likely to amount to more than 
 twenty-five thousand dollars, before we come to a 
 district of country having other means of transporta¬ 
 tion, with which we must compete at low rates or 
 not at all. 
 
 Taking this at the highest rates which can be 
 charged we shall find it to yield probably not far from 
 seventy-five thousand dollars. 
 
 Were the whole local charges put down to the rate 
 found necessary to get the last mentioned receipts, 
 we should find most likely that they would amount 
 in the aggregate to less than four hundred thousand 
 dollars, and thus the company would be found with 
 less gross eai-nings by over twenty-five thousand 
 dollars, and 'with greater expenses,than if they had not 
 made the attempt to get the last seventy-five thou¬ 
 sand dollars of receipts. 
 
 But conducting the business as all similarly situ¬ 
 ated roads are conducted, we have still but five hun¬ 
 dred thousand dollars of receipts, and are forced to 
 look for the remaining four hundred thousand to the 
 theatre of still .stronger competition—the country 
 west of Lake Michigan. 
 
This latter amount is so much a matter of uncei'' 
 tain contingency, that to make estimates upon it 
 would seem like calculating on the results of untried 
 experiments ; it is not sufficiently relevant to the 
 matter in hand to say more upon it than that all 
 can readily see that it is not likely to produce any 
 thing like such an amount, and that before the full 
 amount required by their Charter be invested, their 
 whole business must materially increase or the com¬ 
 pany receive less dividends for the intervening time 
 than such works usually pay. 
 
 The sum total of the expenditure and outlay in 
 this enterprise is thus shown, and it is expected to 
 yield only a just and fair equivalent or compensation 
 —such as all business men will decide to be fair, such 
 only as can command the investment of capital, and 
 such, at least, as the Boston railroads have always 
 yielded. 
 
 If the dependence is c.vclusivcly on the receipts 
 from localities and places naturally and necessarily 
 tributary to the road, regardless of other places hav¬ 
 ing other outlets or means of transportation, which 
 now monopolize their whole carrying trade, then it 
 will be seen that their local receipts at present rates 
 fall far short of the sum sufficient to pay a fair per 
 centage on the investment. 
 
 In this exigency what is to be done 1 Why clearly 
 either the present rates on the regular local transpor¬ 
 tation ought to be increased to such amount as will 
 
10 
 
 produce this compensatiou, or continuing the present 
 local rates, other business, heretofore independent of 
 this means of transportation, must be sought after, 
 diverted and obtained in aid of the revenue necessary. 
 For the continuation and permanency of the advan¬ 
 tages and facilities afforded to the public by this work 
 of improvement, one or the other of these alternatives 
 should be chosen. E.vcept as a last resort, the first 
 would not be warrantable and would be the subject 
 of just disapprobation, as indeed it should be, if we 
 had the ability to legitimately use other means in 
 acquiring revenue, and should disregard or neglect 
 them. The chief dependence for this deficit would 
 then be on the adoption of the other alternative, and 
 to accomplish what this proposes we must enter into 
 direct competition for this business, by establishing 
 such rates of transportation as will reasonably prom¬ 
 ise success, or it could not be maintained; the effort 
 would therefore become fruitless—/Aa/ business would 
 continue to flow into its original channel, contribu¬ 
 ting to US no revenue, or comparatively none, and thus 
 the resort to an increased taxation of the local freights 
 would appear unavoidable and imperative. 
 
 In my view then, both duty and policy dictate the 
 course adopted in the establishment of the rates to 
 Niles, to which you refer. For it is evident that it 
 were better for all interested that we should take the 
 freight of that section of the country, at even any 
 
11 
 
 price above cost, than to loose the transportation of 
 it altogether. 
 
 It would therefore be proper, under the circum¬ 
 stances mentioned, for us to enter into this compe¬ 
 tition, when the profits on the transportation of a 
 barrel of flour from Niles to Detroit would be three 
 cents only, and on other articles pro-rata ; but would 
 it be contended that the rates which would yield 
 such profits should be the standai'd of charges for 
 transportation on the entire line of the road, when it 
 is evident that this rate of profit would not yield one 
 per cent on the capital invested, and which, there¬ 
 fore,would be equivalent to an absolute loss of nearly 
 the whole capital. 
 
 The rates chargable to Niles as fixed in that tariff, 
 cannot, therefore, bo reasonably made a criterion for 
 those to be charged to Kalamazoo ; for upon the 
 same principle on which these rates are made up, .it 
 would be proper, if necessary, to get that contingent 
 business, to so reduce those rates as to obtain a profit 
 of but four cents per barrel on flour, and the same rate 
 of profit upon other business, even reckoning this 
 profit as the excess of those receipts above the in¬ 
 creased cost they create. 
 
 About one third of the operating expenses are not 
 affected by the amount of business done. New busi¬ 
 ness, therefore, can be taken against competition, at 
 the exact average cost of regular business, and yield 
 
12 
 
 one third of its receipts as nett profits; or in other 
 words, a profit can be made upon this contingent, or 
 extra business, at a rate of chai-ge lelow the actual cost 
 upon the regular local business. 
 
 But it must be borne in mind, that all such contin¬ 
 gent or extra business, is charged with the highest 
 rates which will permit it to be obtained—although 
 they must always be below a fair price—and which, 
 of course, must range about even with those of the 
 routes in competition; and therefore the community 
 furnishing such business, ai-e far less benefitted by the 
 Railroad than interior localities, to which the road 
 affords an outlet, at greatly reduced rates. 
 
 It will then be e^ddent, that if the same rates now 
 fixed to Kalamazoo, were to be extended proportion¬ 
 ally to Niles, we should fail to divert this business 
 now foreign to our road, and the consequence would 
 be, a total loss to us, without any equivalent benefit 
 resulting to others. 
 
 Under such circumstances, and supposing the rates 
 to Niles should be increased in the ratio contemplat¬ 
 ed, would we not have a just claim upon those—in ac¬ 
 commodation of whose views, such rates should be 
 established, for the fairly estimated amount of that 
 loss ? 
 
 It is apparent, therefore, that a sound and judi¬ 
 cious policy requires us to seek this contingent, or 
 extra business from all som’ces, which will pay, either 
 
13 
 
 directly, or indirectly, any profit whatever, and thus 
 increase the earnings of the road ; rather than impose 
 the whole burthen of taxation necessary for the sup¬ 
 port and continuance of the advantages and facilities 
 it affords, upon the merely local and tributary freights. 
 
 One of the Railroads in Now England, the princi¬ 
 pal business of which is carrying passengers, com¬ 
 menced cxperiinently, with a general charge of three 
 cents per mile, which, it was soon ascertained, would 
 barely pay expenses ; being in rivalry with a water 
 route for through business, it was discovered that if 
 the Railroad could take through passengers at 1 1-2 
 cents per mile, they could successfully compete, and 
 with their local business, obtain a fair dividend on 
 their investment. This course, or an increase of the 
 rates on their regular local business to five cents per 
 mile, were presented for their adoption, and they 
 chose the first, secured a successful competition, and 
 were thus enabled to continue their original local 
 charges. 
 
 For similar reasons a like policy has been adopted 
 on the Western Railroad in Massachusetts. On that 
 road is charged a greater price for the transportation 
 of a barrel of flour from Greenbush, 57 miles east¬ 
 ward, and to all interior stations cast of that point, 
 than is charged to Boston, a distance of 200 miles. 
 
 Under their tariff arrangement, which in this re¬ 
 spect is somewhat similar to ours, the through freights 
 
14 
 
 are practically the same as by the water route with 
 which they are in competition ; they do not there¬ 
 fore afford any superior or extraordinary pecuniary 
 advantages to either Boston or Albany—the points 
 in competition—^but onl)'- offer additional facilities ; 
 leaving the interior stations to derive the direct pe¬ 
 cuniary benefits of whatever reduction on the rates 
 of transportation might be made from time to time 
 by reason of the increased income derived by the 
 Company from such competion—and it is to be fur¬ 
 ther noticed, that while their charges for transporta¬ 
 tion fifty-seven miles are greater than for 200 nfiles, 
 the average rates to Niles, 190 miles on our road, are 
 about equalled at 123 miles. 
 
 The soundness and justice of the principle involved 
 in this course ofpohcy, has always been, and is inva¬ 
 riably approved and adopted, wherever the like rela¬ 
 tive circumstances exist. For example, take the rates 
 of the passenger tariff established by the proper au¬ 
 thorities of this State as soon as this road was in a 
 condition to invite the travel from Chicago, via. this 
 inland route. By those rates the Hhnois passenger 
 was enabled to travel over this road from Kalamazoo 
 to Detroit, at a less charge or cost than the Michi¬ 
 gan passenger could from Battle Creek to Detroit, 
 a much less distance. Or, the Chicago passenger 
 was carried from Kalamazoo to Detroit for $3,00, 
 while the passenger from Kalamazoo was charged for 
 
15 
 
 the same distance !®4,40, and this arrangement foi- 
 the through travel, being the only one that could suc¬ 
 ceed, was wisely made as beneficial to the revenues 
 of the road, and to the State at large, by inducing 
 travel and business through its territory. 
 
 But unless a direct competition with the Lake route 
 had been thus entered into, little or no revenue from 
 the Chicago travel this way, could have been obtain¬ 
 ed, and the consequent loss must have induced the 
 assessment of higher rates on the way, or local travel 
 within the limits of the State, or it must have been 
 borne without remedy. 
 
 Regarding this policy as the true one, we have 
 therefore continued it in practice ; and no one within 
 my knowledge has ever questioned its propriety, or 
 censured its adoption. Yet upon the same principle, 
 and for similar reasons, the reduced rates to Niles 
 are established. 
 
 This general policy, and the motives which dictate 
 its adoption, evidently therefore, are entitled to, and 
 must receive the sanction and approval of all who 
 consider the subject in its true light; and it then re¬ 
 mains only to determine whether the present rates 
 chargeable to Kalamazoo and the other interior local 
 stations, are reasonable and proper. 
 
 This question I propose to discuss on its own 
 merits, and as a preliminary, I remark, that by the 
 charter of this Company, we are authorized to 
 
charge for the transportation of most of the leading 
 articles of produce and merchandize, the average 
 rates charged for the same on the Boston and Provi¬ 
 dence, Boston and Lowell, and Boston and Wor¬ 
 cester Railroads—yet on nearly all these, and other 
 prominent articles, (including flour and salt, to which 
 you have aUuded,) the rates we charge are below^; 
 and on some of the staple articles of produce from 
 Kalamazoo, less by nearly 50 per cent, than the 
 average rates chargeable as aforesaid, and on Lum¬ 
 ber we are authorized to charge 34 cents per 100 
 pounds, while our rates are but 14 cts. 
 
 The Railroad first mentioned has to contend with 
 an outside water communication—a formidable rival •, 
 the second is opposed by a parallel canal its entire 
 distance; and the tlikd is in competition with wagon 
 roads in the highest state of improvement. 
 
 The average tonnage of freight transported over 
 these roads, is more than double the amount we 
 shall carry upon ours, even when entirely complet¬ 
 ed ; and the average number of passengers taken by 
 them, is something over four times as many as will 
 be carried by us. Under such circumstances, and in 
 view of the comparatively small amount of business 
 done upon this road, our rates might with great rea¬ 
 son and justice, be considerably higher than the av- 
 arage of those roads; but when in anticipation of 
 an increased business from the sources, where it is 
 
expected to be obtained by the competition reten'ed 
 to, and for otlier reasons, we are induced to fix our 
 local rates helow those which we have a legal right 
 to charge, I cannot believe that either our motives 
 or out actions can justly become obnoxious to the 
 censure of any portion of the community. 
 
 In continuation, I now invite your attention to tlie 
 subjoined table, of the comparative average rates of 
 transportation on certain prominent articles, as 
 charged under the freight tarift’ established by the 
 State authorities, and which was continued in force 
 until the first day of July last; and the rates charge¬ 
 able for the same articles under the tarifi’ establish¬ 
 ed by us, and to which you refer. 
 
 I assume for the average in both cases, the rates 
 charged, and those chargeable to Jackson, that being 
 very nearly the central point between Detroit and 
 Kalamazoo ; and this assumption is warranted by the 
 estimate of our annual transportation business: and 
 by this it will be clearly perceived that a very large 
 reduction from the old rates has been made by the 
 establishment of our new tariff. 
 
T.iBLH Of COAtPARATiVB KITES, for the trmisportalion on the 
 M. C. Rc^road, of the artides hereinafter mentioned, with storage charges, 
 showing the per cenlage of redudionfrom the tariff—estaUished by the State 
 Authorities, and continued in force uidil July 1st, 1848. 
 
 Rates Charged: Rates chargeable 
 jtmder State Tariff.|under Tariff estab- 
 'aiid lu forcB untUHshed bv M. C. R.i 
 ARTICLES. July 1st,’48, ivithR. Co. which takes 
 Shipping and Stor-'effect on 20th Aug. 
 ‘age charges inclu-’48, with Storage 
 
 and in favor of pre¬ 
 sent rates as fixed 
 in Company’s Ta- 
 -iff, mentioned it 
 
 charges included.||preceding column. 
 
 1 AVERAGE. 1 AVERAGE. ] 
 
 Flour per bbL I 
 
 51 cts. 
 
 ; 38 cts. 
 
 254 per cent. 
 
 Wheat per 100 lbs. 
 Bran,shorts,coarse 
 grains, per 100 lbs. 
 Saltperbbl. 
 
 31 “ 
 
 19 “ 
 
 
 71 “• 
 
 ; 15 “ 
 
 ; 50 “ 
 
 58i “ “ 
 295 “ “ 
 
 Iron, Nails, &.c. 
 
 
 
 511 “ “ 
 
 per 100 lbs. 1 
 
 47 “ 
 
 : 18 “ 
 
 Gil “ 
 
 Lumber per M. I 
 
 
 ! 83,27 “ 
 
 41? “ 
 
 Plaster per 100 lbs. 
 Pig Iron to Detroit 
 
 33 “ 
 
 j 124 “ 
 
 62 “ “ 
 
 per 100 lbs. [ 
 
 30 “ 
 
 ■ 14 “ 
 
 534 “ “ 
 
 ’ The commission charges of 21-2 per cent usually allowed to fonvard- 
 ing houses on the advancement of hack charges, is not included in this^col- 
 mnn; an addition of these would increase the percentage of reduction, as 
 the Company pay back charges without commission. 
 
 t The storage charges included in this column, are for goods lying in 
 the Freight Depots of the Company at Detroit, and in the interior,/our 
 days ; if shipped or taken away within twenty-four hours after their arrival 
 in Detroit, which a large portion would be, or four days afterwards in the 
 interior, no such clmrge is incurred, and the percentage of reduction will 
 then be increased, while if they remain in the depots more than four days, 
 a small additional storage charge will be made, which will diminish the 
 rate of said percentage very slightly. 
 
 Here it will be seen that the cost of transportation 
 and other contingent charges on the prominent arti¬ 
 cles above enumerated, which was incurred and re¬ 
 quired to be paid by the parties in interest, up 
 to the 1st of July, 1848, have been lessened and re¬ 
 duced from 25 to 62 per cent, respectively, by our 
 
present tariff of rates, and by reason of the superior 
 advantages we afford in receiving, storing and ship¬ 
 ping property, which we have only been able to do 
 by an expenditure exceeding a quarter of a million 
 of dollars, in the erection of commodious and suita¬ 
 ble Freight depots; and it is especially gratifying to 
 know that all these reductions of the rates chargea- 
 hle on agricultural products, most eminently and di¬ 
 rectly benefit the producer, while equal benefits, in a 
 corresponding ratio, must indirectly accrue to the 
 consumer, on account of the reductions on other arti¬ 
 cles of general merchandize. 
 
 This exhibit is its own exponent; it certainly does 
 not show a disregard of the public interests, but it 
 proves, in my opinion, most conclusively, that our 
 present rates and prices are reasonable and proper; 
 and this fact being established, in connection with 
 another, that by unremitting efforts, and at a great 
 outlay of money, for the accommodation of the pub¬ 
 lic, we are enabled to furnish superior necessary 
 facilities either gratuitously, or at comparatively very 
 low charges, I submit, that it is all that you, or any 
 other portion of the community should demand, or 
 will require of us. 
 
 With due deference to your views, then. Gentle¬ 
 men, I may be allowed to say, that, admitting our 
 charges to Kalamazoo to be fair and reasonable, the 
 lesser rates chargeable to Niles ought not to be a 
 
20 
 
 subject of complaint with you 5 for it is evident that 
 at least no injustice has been done, in this respect, to 
 your location. 
 
 In the foregoing I have discussed in general terms, 
 the merits of the policy upon which the establishment 
 of the present rates is founded, and have in illustra¬ 
 tion candidly stated the reasons and motives which 
 have governed in its adoption : and I now again re¬ 
 vert to your communication for the purpose of con¬ 
 sidering your statement as to the effect of the same 
 upon the agricultural and commercial interests of 
 Kalamazoo and Niles respectively. 
 
 You say,-‘'The freight on flour from this place (Kal¬ 
 amazoo) to Detroit is fixed at 60 cents per barrel, 
 while from Niles it is 40 cents; this difference is 
 equal to 5 cents per bushel on wheat, which is made 
 to operate as so much loss to the producer.” The 
 average charge to Niles is about 51 cents and should 
 therefore be substituted for 40 cents, in the compari¬ 
 son to be made; the difference then is 2 cents per 
 bushel on wheat, but whatever this difference may be, 
 it cannot affect the pecuniary interests of the pro¬ 
 ducer as will be hereafter shown. 
 
 Our present rates to Niles, have been fixed as near¬ 
 ly equal with the cost of the water transportation 
 which is our rival there, as we were able to deter¬ 
 mine. Y'ou however remark, “Couldwe send our 
 flour from this place to Niles at the same rate (in 
 
21 
 
 proportion to distance as is charged from Niles to 
 Detroit) and there avail ourselves of water commu¬ 
 nication, we could put our flour into market at less 
 cost than by Rail Road to Detroit as is proposed by 
 the present tariff.” 
 
 You thus seem to suppose that our rates to Niles 
 are above the cost of that water transportation, as 
 you propose by a special reduction of rates from 
 Kalamazoo to Niles, to go there and avail yourselves 
 of our water rival. 
 
 Now if our rates to Niles are materially below 
 their old charges by water, you as well as ourselves 
 have misjudged, which may be true in this early ex* 
 perimental stage of the subject. 
 
 On the other hand having done nothing to injure 
 or impair the Detroit or Eastern market to which the 
 whole produce goes, we have increased the valne of 
 Kalamazoo products just the amount of the reduc¬ 
 tion we have made in the rates of transportation and 
 cost of other facilities, between the producer and the 
 consumer, which upon wheat is 9 cents, and on coarse 
 grains 18 cents per bushel. 
 
 It must therefore be obvious, I think, that the com¬ 
 pletion of the road to Niles, and the establishment 
 of the lesser rates to that place, does not afford them 
 the ability to pay as much increased price for 
 wheat, as our reduced rates to Kalamazoo raise 
 the value of it there; the result of which, instead of 
 
22 
 
 being a loss of 5 cents, is a clear gain of 9 cents on 
 wheat, per bushel, to the Kalamazoo producer. 
 
 Among the principal causes of the increased value 
 given to village property at Niles, by the extension of 
 the rail road to that point, are the commercial and 
 mercantile advantages arising from, or incident to its 
 peculiar location; but this fact cannot affect materi¬ 
 ally the value of property in the village of Kalama¬ 
 zoo, while the consfruction of this road, as well as 
 the late reduction of the rates of freight, storage, 
 &c., as is above shown, affect quite as beneficially 
 the agricultural property of Kalamazoo county, as 
 it does that in the vicinity of Niles. 
 
 You further remark, “ This difference in freight if 
 insisted upon, will lessen the value of real estate in 
 this county and vicinity, more than double the value 
 or expense of the road through the entire county.” 
 
 Upon further consideration, the incorrectness of 
 these premises will, I think, be clearly apparent. 
 
 Ifthe wheat of Berrien and Cass counties could be 
 transported to New York city free of charge to them, 
 I am still unable to see how that fact would reduce 
 the value of real estate in Kalamazoo county, and its 
 vicinity; for the staple productions of those counties 
 are not peculiar to their localities, exclusively. 
 
 The same products are raised throughout a large 
 portion of the United States, of Europe, and the rest 
 of the world. 
 
The markets of the world arc coiiiiuoii to all, the 
 fluctuations in prices aftecting equally the whole, thus 
 the entire system is kept in equilibrium, and the in¬ 
 creased facilities which might be afforded to any one 
 county in this State, would no more reduce the value 
 or price of wheat in the rest of the State, than if the 
 same facilities had been furnished to a like district of 
 country on the shores of the Mediterranean. 
 
 I have thus offered such explanations as a full under¬ 
 standing of the subject seemed to demand; from which 
 the following general propositions are deducible : 
 
 1st. The capital necessary to answer the require¬ 
 ments of the Company’s charter, is greater than the 
 entire local business from places necessarily tributa¬ 
 ry to the road, can pay a fair income upon, at the 
 rates of charges in the tariff referred to, 
 
 "2nd. But about two thirds of the operating expen¬ 
 ses are directly increased with the increase of busi¬ 
 ness, and therefore the cost properly to be estimated 
 against new business, which has other outlets as’ri¬ 
 vals to the road, is but two-thirds the average cost of 
 the whole, and thus it is ftiir to estimate that a profit 
 may be obtained on such business, though the price 
 received for it be only equal to the average cost of the 
 wholebut if the local business be done at the same 
 rate, it is clear that the entire capital of the company 
 would be lost. 
 
 3rd, The whole State, and more especially that 
 
24 
 
 portion of it necessarily tributary to the road, arc 
 equally interested with the Company in having all 
 the business done upon it, which can be procured, 
 when it will jdeld any profit whatever, as it all tends 
 to increase the abihty of the company to keep down, 
 or reduce its local rates, and benefits the State at 
 large by inducing business through its territory. 
 
 4/^. As the business done against the competition of 
 rival routes, though taken at rates below a fair price, 
 is charged as high as those routes will carry for, the 
 pecuniary advantages rendered to the people who 
 fiimish it, are far less than those rendered to interior 
 localities, where the raihoad charges are greatly low¬ 
 er than any other means of transportation. 
 
 oth. It is only in anticipation that under the policy 
 adopted, a very considerable amount of receipts may 
 be obtained fi:om this new or contingent business, or 
 that not directly tributary to the road, that the peo¬ 
 ple in the interior of this State are enabled to enjoy 
 the benefits of one of the best Railroads in the coun¬ 
 try, at reasonable charges, while from the comparative 
 scarcity of population and business along its line, they 
 furnish but a small portion of the revenue adequate to 
 its support. 
 
 6//i. The rates which the Company charge, espe¬ 
 cially upon agricultural productions, are considerably 
 below those charged by the State; the facilities they 
 oJl'er are much greater and at less cost, and the gross 
 
25 
 
 income which they will require, from economy of 
 management, much less, in proportion to the capital 
 tliey are required to invest, than when the road was 
 purchased of the State. 
 
 1th. The policy adopted by the Western Railroad 
 in Massachusetts, and all others similarly situated 
 throughout the country, as well as by the authorities 
 of this State in its passenger business, is similar to our 
 own; and being the only one that promises success, 
 doing injustice to none, and directly or indirectly ben¬ 
 efiting all, is therefore the only true and proper one. 
 
 Qtli. The local rates charged over this road upon 
 tlie principal articles of freight, are far below what 
 they were under the State, and helow the average of 
 three of the oldest Railroads in New England, whose 
 average business is from two to four times as much 
 as upon this road, and are therefore fair and reason¬ 
 able. 
 
 9;/(. Any increased facilities offered to Niles and its 
 vicinity by the construction of the road to that 
 place, cannot reduce the value of lands or products 
 in Kalamazoo, or any other county in the State, any 
 more than the construction of the road to Kalama¬ 
 zoo, and the late reduction of rates had that effect on 
 lands or products at Niles, or elsewhere; nor can any 
 injury be inflicted upon either, unless the common 
 market be impaired, or the cost of transportation 
 thereto be increased. The value of the agricultural 
 
property of Kalamazoo County has not, therefore, 
 been reduced, but has been increased just the amount 
 of the late reduction of rates. 
 
 Allow me now, in conclusion, to say, that among 
 the considerations which influenced the estabhshment 
 of the present freight tarifi’ in question, a proper re¬ 
 gard for the pubhc interests generally, and for local 
 and individual accommodation, were equally promi¬ 
 nent, with the attention due to the pecuniary profits 
 and business of this Company; for I am aware that 
 the success of this enterprise depends mainly on the 
 prosperity of the community interested in the advan¬ 
 tages and facihties which it affords—mutual benefits 
 are thus the result, and the interests of each are 
 therefore identical. 
 
 Entertaining such views, I have at all times en¬ 
 deavored to regulate and conduct such of the affairs 
 of the company, as have been committed to my su¬ 
 perintendence in strict conformity therewith; and 
 influenced by those considerations it is demonstra¬ 
 tively certain, that under all the circumstances, the 
 policy alluded to is the only one that could be adop¬ 
 ted and successfully maintained, and is calculated 
 to secure the desired results in the best practicable 
 manner. I therefore rest in the belief that when it is 
 fully understood—surveyed as a whole, and taken in 
 the range which it embraces, it cannot be justly ob¬ 
 noxious to censure, as injuriously affecting the rights 
 
2 ? 
 
 or interests of any location, or portion of commu¬ 
 nity ; but will be approved as tending to secure 
 the general benfits contemplated, and in the manner 
 most feasible and proper. 
 
 This being evident, then the present rates should 
 be continued as they are, until the same policy 
 would seem to indicate or require their alteration. 
 
 It will not therefore, be considered necessary for 
 me to reply in detail to the several interrogatories 
 proposed in the last part of your letter, as sufficient¬ 
 ly e.xplicit answers to them all will be found in this 
 communication, which I respectfully present, and 1 
 confidently rely on your intelligence and integrity 
 for a justification of our motives and actions—into 
 which we at all times invite the closest scrutiny, and 
 which are involved in the subject of this discussion. 
 
 I am Gentlemen, Respectfully 
 Your Ob’t. Serv’t. 
 
 J. W. BROOKS, 
 Superintendent.