Producing under conditions of decreasing costs, as has already been explained, simply means that the cost per unit declines with an increase in the number of units produced. Most manufacturers and retailers as well as a great many business men in other lines produce under these conditions, but none of them enjoy its benefits more than do railroads.

It is a fact easily observed that a large part of the expenses of a railroad goes on day after day whether one train or a half dozen are operated. Its roadbed, depots, terminals, and much of its equipment must be maintained whatever the volume of the traffic may be. Even a great deal of the expense incurred in the payment of wages is fairly constant. Thus, it is plain that the cost of handling additional traffic is in no wise proportionate to the increase in the traffic itself. Working under these conditions, railroad managers, as long as they were permitted to compete freely for business, were tempted to give large shippers the benefits of low rates; but in doing so they opened the door to the worst abuses with which the railroad business has ever been cursed.