Bargain Regretted

It was a Government shipment, and the Southern Railway Co. speeded it over the most direct route. Nevertheless, the U.S. Comptroller General refused to let the bill be paid. He claimed that the freight charges should have been based on a circuitous routing, which, though many miles longer, would have resulted in a lower freight rate. Last week the Supreme Court upheld the Government's curious claim.

The longer routing would have diverted the freight to a section of the Southern Railway built years ago under a Government land grant. Under land grants made in 1850 and thereafter, the Government subsidized southern and western railroad-building by giving builders a total of 132 million acres of land--7,500 acres of adjacent land for every mile of track they laid. In return the railroads granted the Government, in perpetuity, a 50% reduction in rates for transportation of military supplies and troops.

The free land financed the building of 79 railroads. The railroad barons mortgaged the land, sent agents abroad to lure swarms of emigrants to the west. Jay Cooke's Northern Pacific publicity agent blanketed Europe with brochures describing the Northwest as "a vast wilderness waiting like a rich heiress to be appropriated and enjoyed." Adventurous easterners, meantime, found occasional diversion on the long trip west by shooting buffalo (see cut).

Though less than 8% of the total U.S. mileage was subsidized by land grants, the railroads cleared an estimated $434 million from the sale of land. Four of them-- Southern Pacific; Northern Pacific; Atchison, Topeka and Santa Fe; Union Pacific --still hold most of the remaining 16 million acres, worth $60 million. But the railroads have long since regretted their old bargain. The Government is now far & away the nation's biggest shipper.

The unhappy railroads figure that Government rebates are costing them $20 million a month, that they have forfeited more than $600 million since the first land grant act was passed. The Atchison, Topeka and Santa Fe, which has netted a total of $23 million from land-grant sales, returned $40 million in lower freight rates to the Government in 1943 alone. Last week railroaders breathed a hopeful sigh as the House Interstate and Foreign Commerce Committee reported out the Boren bill. Based on the premise that the roads have now repaid their subsidy in full, it would put an end to the system of Government rebates.

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