Competitive rates for road and rail transport have their origin in an unacknowledged, unintentional, but nevertheless acute competition between three groups of public authorities. Dominion, provincial, and municipal governments, yielding to the varying pressure exerted on each, have provided a framework which enabled or forced every transportation agency in the country to operate at rates below a strict cost-of-service basis. The result might be termed transportation chaos except that, so far, the system has not broken down. Since transportation is an essential economic function, it is inconceivable that it should be allowed to do so. In our wild, unplanned efforts to maintain it, however, there is every indication that a breakdown in public credit may be involved. The results of this policy reach the public through high taxation that is only partially offset by artificially low competitive rates based on uneconomic costs. It cannot continue indefinitely. Pressure of taxation, if nothing else, will eventually force a rationalization of the transportation structure. One might even go so far as to suggest that a discussion of the competitive aspects of rates is essentially a study in applied (or misapplied) public finance.