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diff --git a/29294.txt b/29294.txt new file mode 100644 index 0000000..1e9cf6b --- /dev/null +++ b/29294.txt @@ -0,0 +1,16802 @@ +The Project Gutenberg EBook of The Railroad Question, by William Larrabee + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: The Railroad Question + A historical and practical treatise on railroads, and + remedies for their abuses + +Author: William Larrabee + +Release Date: July 2, 2009 [EBook #29294] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK THE RAILROAD QUESTION *** + + + + +Produced by Peter Vachuska, Barbara Kosker, Chuck Greif +and the Online Distributed Proofreading Team at +https://www.pgdp.net + + + + + + + + + + +The Railroad Question. + + + + + THE RAILROAD QUESTION + + + A HISTORICAL AND PRACTICAL TREATISE ON + RAILROADS, AND REMEDIES FOR THEIR ABUSES + + + BY + + WILLIAM LARRABEE, + LATE GOVERNOR OF IOWA. + + + _Salus populi suprema lex._ + + + NINTH EDITION. + + + CHICAGO: + THE SCHULTE PUBLISHING COMPANY. + 1898. + + + + + Copyright, 1893, + + BY + + WILLIAM LARRABEE. + + + + + +PREFACE. + + +The people of the United States are engaged in the solution of the +railroad problem. The main question to be determined is: Shall the +railroads be owned and operated as public or as private property? Shall +these great arteries of commerce be owned and controlled by a few +persons for their own private use and gain, or shall they be made +highways to be kept under strict government control and to be open for +the use of all for a fixed, equal and reasonable compensation? + +In a new and sparsely settled country which is rich in natural resources +there may be no great danger in pursuing a _laissez-faire_ policy in +governmental affairs, but as the population of a commonwealth becomes +denser, the quickened strife for property and the growing complexity of +social and industrial interests make an extension of the functions of +the state absolutely necessary to secure protection to property and +freedom to the individual. + +The American people have shown themselves capable of solving any +political question yet presented to them, and the author has no doubt +that with full information upon the subject they will find the proper +solution of the railroad problem. The masses have an honest purpose and +a keen sense of right and wrong. With them a question is not settled +until it is settled right. + +It must be conceded that of all the great inventions of modern times +none has contributed as much to the prosperity and happiness of mankind +as the railroad. + +Our age is under lasting obligations to Watt and Stephenson and many +other heroes of industry who have aided in bringing the railroad to its +present state of perfection. Their genius is the product of our +civilization, and their legacies should be shared by all the people to +the greatest extent possible. An earnest desire to aid in attaining this +end has prompted this contribution to the literature on the subject. + +The author is not an entire novice in railroad affairs. He has had +experience as a shipper and as a railroad promoter, owner and +stockholder, and has even had thrust upon him for a short time the +responsibility of a director, president and manager of a railroad +company. He has, moreover, had every opportunity to familiarize himself +with the various phases of the subject during his more than twenty +years' connection with active legislation. + +He came to the young State of Iowa before any railroad had reached the +Mississippi. Engaging early in manufacturing, he suffered all the +inconveniences of pioneer transportation, and his experience instilled +into him liberal opinions concerning railroads and their promoters. He +extended to them from the beginning all the assistance in his power, +making not only private donations to new roads, but advocating also +public aid upon the ground that railroads are public roads. + +As a member of the Iowa Senate he introduced and fathered the bill for +the act enabling townships, incorporated towns and cities to vote a five +per cent. tax in aid of railroad construction. He favored always such +legislation as would most encourage the building of railroads, believing +that with an increase of competitive lines the common law and +competition could be relied upon to correct abuses and solve the rate +problem. He has since become convinced of the falsity of this doctrine, +and now realizes the truth of Stephenson's saying that where +combination is possible competition is impossible. + +It is the object of this work to show that as long as the railroads are +permitted to be managed as private property and are used by their +managers for speculative purposes or other personal gain, or as long +even as they are used with regard only for the interest of stockholders, +they are not performing their proper functions; and that they will not +serve their real purpose until they become in fact what they are in +theory, highways to be controlled by the government as thoroughly and +effectually as the common road, the turnpike and the ferry, or the +post-office and the custom-house. + +This book has been written at such odd hours as the author could snatch +from his time, which is largely occupied with other business. He is +under obligations to many of our ministers and consuls abroad for +statistics and other valuable information concerning foreign railroads, +as well as to a number of personal friends for other assistance, +consisting chiefly in rendering the railroad literature of Europe +accessible to him. + + WILLIAM LARRABEE. + _Clermont, Iowa, May, 1893._ + + + + +CONTENTS. + + + I. HISTORY OF TRANSPORTATION 17 + + II. THE HISTORY OF RAILROADS 46 + + III. HISTORY OF RAILROADS IN THE UNITED STATES 76 + + IV. MONOPOLY IN TRANSPORTATION 90 + + V. RAILROAD ABUSES 124 + + VI. STOCK AND BOND INFLATION 163 + + VII. COMBINATIONS 189 + + VIII. RAILROADS IN POLITICS 205 + + IX. RAILROAD LITERATURE 231 + + X. RAILROAD LITERATURE--_Continued_ 273 + + XI. RAILROADS AND RAILROAD LEGISLATION IN IOWA 319 + + XII. THE INTERSTATE COMMERCE ACT 349 + + XIII. THE RATE QUESTION 370 + + XIV. REMEDIES 389 + + APPENDIX--TABLES AND STATISTICS 459 + + + + +LIST OF AUTHORS AND WORKS CONSULTED AND QUOTED + + + ACWORTH, W. M. The Railways of England + + ADAMS, C. F., JR. Railroads, Their Origin and Problems + + ADAMS, H. C. Public Debts + + ADAMS, HENRY History of the United States + + ATKINSON, EDWARD The Distribution of Products + + BAGEHOT, WALTER The English Constitution + + BAKER, C. W. Monopolies and the People + + BEACH, CHARLES F., JR. On Private Corporations + + BLACKSTONE, W. Commentaries on Laws of England + + BOISTED, C. A. The Interference Theory of Government + + BOLLES, ALBERT S. Bankers' Magazine + + BONHAM, JOHN M. Railway Secrecy and Trusts + + BRYCE, JAMES The American Commonwealth + + BUCKLE, H. T. History of Civilization of England + + CAREY, H. C. Principles of Social Science + + " " Unity of Law + + CARY, M. View of System of Pennsylvania Internal + Improvements. + + CLOUD, D. C. Monopolies and the People + + CLEWS, HENRY Twenty-eight Years in Wall Street + + COOLEY, THOMAS M. Constitutional Limitations + + CONGRESSIONAL RECORD. + + COMPILATION OF ENGLISH LAWS UPON RAILWAYS. + + DABNEY W. D. The Public Regulation of Railways + + DILLON, SIDNEY North American Review + + DORN, ALEXANDER Aufgaben der Eisenbahnpolitik + + DRAPER, J. W. Intellectual Development of Europe + + ENCYCLOPEDIA, AMERICAN. + + ENCYCLOPEDIA BRITANNICA. + + ENCYCLOPAeDIE (ROeLL'S) DES EISENBAHNWESENS, 1892. + + FINDLAY, GEORGE Working and Management of English Railways. + + FINK, ALBERT Cost of Railroad Transportation, etc. + + FISHER, G. P. Outlines of Universal History + + FISK, JOHN American Political Ideas + + " " Critical Period of American History + + FOREIGN COMMERCE OF AMERICAN REPUBLICS AND COLONIES. + + GRAHAM, WM. Socialism Old and New + + GIBBON, EDWARD Decline and Fall of the Roman Empire + + GREEN, JOHN K. History of English People + + GILPIN, WM. The Cosmopolitan Railway + + GRINNELL, J. B. Men and Events of Forty Years + + GUNTON, GEORGE Wealth and Progress + + GUIZOT, M. History of Civilization + + HABOUR, THEODOR Geschichte des Eisenbahnwesens + + HADLEY, A. T. Railway Transportation + + HALL'S LIFE OF PRINCE BISMARCK. + + HUDSON, J. T. The Railways and the Republic + + JEANS, J. S. Railway Problems + + JERVIS, JOHN B. Railway Property + + JEVONS, W. S. Methods of Social Reform + + KENT, JAMES Commentaries on American Law + + KIRKMAN, M. M. Railway Rates and Government Control and other + works. + + LECKEY, W. E. H. England in Eighteenth Century + + LIEBER, FRANCIS Political Ethics + + " " Civil Liberty and Self-Government + + " " Miscellaneous Essays + + LODGE, H. C. Life of General Washington + + MARTINEAU, HARRIET History of England + + MCMASTER, J. B. History of People of United States + + MACAULAY, T. B. History of England + + MOTLEY, J. L. The Dutch Republic + + " " The United Netherlands + + PAINE, CHARLES The Elements of Railroading + + PATTEN, J. H. Natural Resources of the United States + + PEFFER, W. A. The Farmer's Side + + POOR'S RAILWAY MANUAL. + + PORTER, HORACE North American Review + + RAWLINSON, GEORGE Seven Great Monarchies + + REDFIELD On Law of Railways + + RECORDS OF CENTRAL IOWA TRAFFIC ASSOCIATION, 1886-1887. + + RECORDS OF ASSOCIATION OF GENERAL FREIGHT AGENTS OF THE WEST. + + RECORDS OF JOINT WESTERN CLASSIFICATION COMMITTEES. + + REPORTS OF STATE BOARDS OF COMMISSIONERS. + + REPORT OF HEPBURN COMMITTEE. + + REPORTS OF UNITED STATES CENSUS. + + REPORT OF WINDOM COMMITTEE. + + REPORT OF BANKERS' ASSOCIATION, 1892. + + REPORT OF CULLOM COMMITTEE. + + ROEMER, JEAN Origin of English People, etc. + + REUBEAUX, F. Der Weltverkehr und seine Mittel + + RICHARDSON, D. N. A Girdle Round the Earth + + ROGERS, JAMES E. THOROLD Economic Interpretation of History. + + ROSCHER, WM. Political Economy + + SCHREIBER Die Preussischen Eisenbahnen + + SCHURZ, CARL Life of Henry Clay + + SMITH, ADAM Wealth of Nations + + SPELLING, T. CARL On Private Corporations + + SPENCER, HERBERT Synthetic Philosophy + + STERN, SIMON. Constitutional History and Political + Development of the United States. + + STICKNEY, A. B. The Railroad Problem + + STATISTIQUES DES CHEMINS DE FER DE L'EUROPE, 1882. + + TAYLOR, HANNIS Origin and Growth of the English Constitution. + + THE AMERICAN RAILWAY. Published by Charles Scribner's Sons. + + VERSCHOYLE, REV. J. History of Ancient Civilization + + VON WEBER, M. M. Privat-, Staats- und Reichs-Bahnen + + " " " " Nationalitaet und Eisenbahn Politik + + VON DER LEGEN, ALFRED Die Nordamerikanischen Eisenbahnen. + + WALKER, ALDACE F. The Forum + + WEEDEN, W. B. Economic and Social History of New England. + + + + +THE RAILROAD QUESTION. + + + + +CHAPTER I. + +HISTORY of TRANSPORTATION. + + +While the prosperity of a country depends largely upon its +productiveness, the importance of proper facilities for the expeditious +transportation and ready exchange of its various products can scarcely +be overrated. The free circulation of commercial commodities is as +essential to the welfare of a people as is the unimpaired circulation of +the blood to the human organism. + +The interest taken by man in the improvement of the roads over which he +must travel is one of the chief indications of civilization, and it +might even be said that the condition of the roads of a country shows +the degree of enlightenment which its people have reached. The trackless +though very fertile regions of Central Africa have for thousands of +years remained the seat of savages; but no nation that established a +system of public thoroughfares through its dominion ever failed to make +a distinguished figure in the theater of the world. There are some +authors who go even so far as to call the high roads of commerce the +pioneers of enlightenment and political eminence. It is true that as +roads and canals developed the commerce of Eastern Asia and Europe, the +attention of their people was turned to those objects which distinguish +cultured nations and lead to political consequence among the powers of +the world. The systems of roads and canals which we find among those +ancients who achieved an advanced state of civilization might well put +to shame the roads which disgraced not a few of the European states as +late as the eighteenth century. + +Among the early nations of Asia of whose internal affairs we have any +historic knowledge are the Hindoos, the Assyrians and Babylonians, the +Phoenicians, the Persians and the Chinese. + +The wealth of India was proverbial long before the Christian era. She +supplied Nineveh and Babylon, and later Greece and Rome, with steel, +zinc, pearls, precious stones, cotton, silk, sugar-cane, ivory, indigo, +pepper, cinnamon, incense and other commodities. If we accept the +testimony of the Vedas, the religious books of the ancient Hindoos, a +high degree of culture must have prevailed on the shores of the Ganges +more than three thousand years ago. Highways were constructed by the +state and connected the interior of the realm with the sea and the +countries to the northeast and northwest. For this purpose forests were +cleared, hills leveled, bridges built and tunnels dug. But the broad +statesmanship of the Hindoo did not pause here. To administer to the +convenience and comfort of the wayfaring public, and thus still more +encourage travel and the exchange of commodities, the state proceeded to +line these public roads with shade trees, to set out mile-stones, and to +establish stations provided with shady seats of repose, and wells at +which humane priests watered the thirsty beasts. + +At intervals along these routes were also found commodious and +cleanly-kept inns to give shelter to the traveler at night. Buddha, the +great religious reformer of the Hindoos, commended the roads and +mountain passes of the country to the care of the pious, and the Greek +geographers speak with high praise of the excellence of the public +highways of Hindostan. + +Among the Babylonians and Assyrians agriculture, trade and commerce +flourished at an almost equally remote period. The ancient inhabitants +of Mesopotamia cultivated the soil with the aid of dikes and canals, and +were experts in the manufacture of delicate fabrics, as linen, muslin +and silk. To them is attributed the invention, or at least the +perfection, of the cart, and the first use of domestic animals as beasts +of burden. Their cities had well-built and commodious streets, and the +roads which connected them with their dependencies aided to make them +the busy marts of Southeastern Asia. + +During the later Babylonian Empire immense lakes were dug for retaining +the water of the Euphrates, whence a net-work of canals distributed it +over the plains to irrigate the land; and quays and breakwaters were +constructed along the Persian Gulf for the encouragement of commerce. +While highways among the Babylonians served the development of +agriculture and the exchange of industrial commodities, they were +constructed chiefly for strategic purposes by the more warlike +Assyrians, whose many wars made a system of good roads a necessity. The +Greek geographer Pausanias was shown a well-kept military road upon +which Memnon was said to have marched with an Assyrian army from Susa to +Troy to rescue King Priam. Traces of this road, called by the natives +"Itaki Atabeck," may be seen to this day. + +The Phoenicians, who were the first of the great historic maritime +nations of antiquity, occupied the narrow strip of territory between the +mountains of Northern Palestine and the Mediterranean Sea. From their +situation they learned to rely upon the sea as their principal highway. +They transported to the islands of the Mediterranean as well as the +coast of Northern Africa and Southern Europe heavy cargoes consisting of +the product of their own skill and industry as well as of the manifold +exports of the east. They sailed even beyond the "Pillars of Hercules" +into the Atlantic Ocean and the North Sea. Through their hands "passed +the gold and pearls of the east and the purple of Tyre, slaves, ivory, +lion and panther skins from the interior of Africa, frankincense from +Arabia, the linen of Egypt, the pottery and fine wares of Greece, the +copper of Cyprus, the silver of Spain, tin from England, and iron from +Elba." + +But while the Phoenicians for their commercial intercourse with other +nations relied chiefly upon the sea, the great highway of nature, they +neglected by no means road-building at home. They connected their great +cities, Sidon and Tyre, by a coast road, which they extended in time as +far as the Isthmus of Suez. They also established great commercial +routes by which their merchants penetrated the interior of Europe and +Asia. Caravan roads extended south to Arabia and east to Mesopotamia and +Armenia, penetrating the whole Orient as far as India, and even the +frontiers of China. The Phoenicians thus became the traders of +antiquity, Tyre being the link between the east and the west. + +The Persian Empire, which under Darius stretched from east to west for a +distance of 3,000 miles and comprised no less than two million square +miles, with a population of seventy or eighty millions, had, with the +exception of the Romans, perhaps the best system of roads known to +ancient history. Indeed, it is doubtful whether without it such a vast +empire, more than half as large as modern Europe, could have been held +together. Each satrap, or prefect of a province, was obliged to make +regular reports to the king, who was also kept informed by spies of what +was taking place in every part of the empire. To aid the administration +of the government, postal communication for the exclusive use of the +king and his trusted servants connected the capital with the distant +provinces. This postal service was, four or five centuries later, +patterned after by the Romans. From Susa to Sardes led a royal road +along which were erected caravansaries at certain intervals. Over this +road, 1,700 miles long, the couriers of the king rode in six or seven +days. Under Darius the roads of the empire were surveyed and distances +marked by means of mile-stones, many of which are still found on the +road which led from Ecbatana to Babylon. These roads crossed the wildest +regions of that great monarchy. They connected the cities of Ionia with +Sardes in Lydia, with Babylon and with the royal city of Susa; they led +from Syria into Mesopotamia, from Ecbatana to Persepolis, from Armenia +into Southern Persia, and thence to Bactria and India. + +The Chinese commenced road-building long before the Christian era. They +graded the roadway and then covered the whole with hewn blocks of stone, +carefully jointed and cemented together so that the entire surface +presented a perfectly smooth plane. Such roads, although very costly to +build, are almost indestructible by time. In China, as well as in +several other countries of Asia, the executive power has always charged +itself with both the construction and maintenance of roads and navigable +canals. In the instructions which are given to the governors of the +various provinces these objects, it is said, are constantly commanded to +them, and the judgment which the court forms of the conduct of each is +very much regulated by the attention which he appears to have paid to +this part of his instructions. This solicitude of the sovereign for the +internal thoroughfares is easily accounted for when it is considered +that his revenue arises almost entirely from a land-tax, or rent, which +rises and falls with the increase and decrease of the annual produce of +the land. The greatest interest of the sovereign, his revenue, is +therefore directly connected with the cultivation of the land, with the +extent of its produce and its value. But in order to render that produce +as great and as valuable as possible, it is necessary to procure for it +as extensive a market as possible, and, consequently, to establish the +freest, the easiest and the least expensive communication between all +the different parts of the country, which can be done only by means of +the best roads and the best navigable canals. + +In Africa the Egyptians and Carthaginians are the only nations of +antiquity of which we have much historic knowledge. The former kept up a +very active commerce not only with the south, but also with the tribes +of Lydia on the west and with Palestine and the adjoining countries on +the east. To facilitate commerce, they constructed and maintained a +number of excellent highways leading in all directions. One of the most +important among these was the old royal road on the coast of the +Mediterranean Sea, or the "Road of the Philistines" of the Scriptures. +This road crossed the Isthmus of Suez and led through the land of the +Philistines and Samaria to Tyre and Sidon. Another road led, in a +northwesterly direction, from Rameses to Pelusium. This, however, +crossed marshes, lagoons and a whole system of canals, and was used only +by travelers without baggage, while the Pharaohs, accompanied by their +horses, chariots and troops, preferred the former road. A third road +led from Coptos, on the Nile, to Berenice, on the Red Sea. There were +between these two cities ten stations, about twenty-five miles apart +from each other, where travelers might rest with their camels each day, +after traveling all night, to avoid the heat. Still another road led +from the town of Babylon, opposite Memphis, along the east bank of the +Nile, into Nubia. Much of the commerce of Egypt in ancient times, as in +our day, was conducted on the Nile and its canals. The boatman and the +husbandman were, in fact, the founders of the gentle manners of the +people who flourished four thousand years ago in the blessed valley of +the Nile. There is one canal among the many which deserves special +mention. It flowed from the Bitter Lakes into the Red Sea near the city +of Arsinoe. It was first cut by Sesostris before the Trojan times, or, +according to other writers, by the son of Psammitichus, who only began +the work and then died. Darius I. set about to complete it, but gave up +the undertaking when it was nearly finished, influenced by the erroneous +opinion that the level of the Red Sea was higher than Egypt, and that if +the whole of the intervening isthmus were cut through, the country would +be overflowed by the sea. The Ptolemaic kings, however, did cut it +through and placed locks upon the canal. + +Carthage was a Phoenician colony. The city was remarkable for its +situation. It was surrounded by a very fertile territory and had a +harbor deep enough for the anchorage of the largest vessels. Two long +piers reached out into the sea, forming a double harbor, the outer for +merchant ships and the inner for the navy. This city early became the +head of a North African empire, and her fleets plied in all navigable +waters known to antiquity. Her navy was the largest in the world, and +in the sea-fight with Regulus comprised three hundred and fifty vessels, +carrying one hundred and fifty thousand men. Though we have but meager +accounts of the internal affairs of Carthage, there can be no doubt that +much attention was given, both at home and in the colonies, to the +construction of highways, which were distinguished for their solidity. +It is said that the Romans learned from the Carthaginians the art of +paving roads. + +European history began in Greece, the civilization of whose people +passed to the Romans and from them to the other Aryan nations which have +played an important role in the great historical drama of modern times. +The physical features of the Balkan Peninsula were an important factor +in the formation of the character of its inhabitants. The coast has a +large number of well-protected bays, most of which form good harbors. +Navigation and commerce were greatly stimulated in a country thus +favored by Nature. Nearly all the principal cities of Hellas could be +reached by ships, and the need of internal thoroughfares was but little +felt. Nevertheless, public highways connected all of the larger towns +with the national sanctuaries and oracles, as Olympia, the Isthmus, +Delphi and Dodona. Athens, after the Persian wars the metropolis of +Greece, was by the so-called Long Walls connected with the Piraeus, its +harbor. This highway, protected by high walls built two hundred yards +apart, was over four miles long, and enabled the Athenians, as long as +they held the command of the sea, to bring supplies to their city, even +when it was surrounded by an enemy on the land. + +Rome is the connecting link between antiquity and mediaevalism. The great +empire sprang from a single city, whose power and dominion grew until +it comprised every civilized nation living upon the three continents +then known. Under the emperors, the Roman empire extended from the +Atlantic to the Euphrates, a distance of more than three thousand miles, +and from the Danube and the English Channel to the cataracts of the Nile +and the Desert of Sahara. Its population was from eighty to one hundred +and twenty millions. The empire was covered with a net-work of excellent +roads, which stimulated, together with the safety and peace which +followed the civil wars, traffic and intercourse between the different +regions united under the imperial government. More than 50,000 miles of +solidly constructed highways connected the various provinces of this +vast realm. There was one great chain of communication of 4,080 Roman +miles in length from the Wall of Antoninus in the northwest to Rome, and +thence to Jerusalem, a southeastern point of the empire. There were +several thousand miles of road in Italy alone. Rome's highways were +constructed for the purpose of facilitating military movements, but the +benefits which commerce derived from them cannot easily be +overestimated. These military roads were usually laid out in straight +lines from one station to another. Natural obstacles were frequently +passed by means of very extensive works, as excavations, bridges, and, +in some instances, long tunnels. The resources of the Roman Empire were +almost inexhaustible, and no public expenditures were larger than those +made on account of the construction of new roads. The fact that many of +these roads have borne the traffic of almost two thousand years without +material injury is abundant proof of the unsurpassed solidity of their +construction. The Roman engineers always secured a firm bottom, which +was done, when necessary, by ramming the ground with small stones, or +fragments of brick. Upon this foundation was placed a pavement of large +stones, which were firmly set in cement. These stones were sometimes +square, but more frequently irregular. They were, however, always +accurately fitted to each other. Many varieties of stone were used, but +the preference was given to basalt. Where large blocks could not be +conveniently obtained, small stones of hard quality were sometimes +cemented together with lime, forming a kind of concrete, of which masses +extending to a depth of several feet are still in existence. The +strength of the pavements is illustrated by the fact that the substrata +of some have been so completely washed away by water, without disturbing +the surface, that a man may creep under the road from side to side while +carriages pass over the pavement as over a bridge. The roads were +generally raised above the ordinary surface of the ground. They +frequently had two wagon-tracks, which were separated by a raised +foot-path in the center, and blocks of stone at intervals, to enable +travelers to mount on horseback. Furthermore, each mile was marked by a +numbered post, the distance being counted from the gate of the wall of +Servius. The mile-post was at first a roughly hewn stone, which in time +was exchanged for a monument, especially in the vicinity of Rome and +other large cities. The most celebrated road of Italy, which has always +excited the admiration of the student of antiquity, was the Via Appia, +the remains of which are still an object of wonder. It was first built +from Rome to Capua by Appius Claudius Caecus in the fourth century before +Christ, and was afterwards continued as far as Brundisium. It was broad +enough for two carriages to pass each other, and was built of solid +stone. The stones were hewn sharp and smooth, and their corners fitted +into one another without the aid of any connecting material, so that, +according to Procopius, the whole appeared to be one natural stone. Each +side of the street had a high border for foot-passengers, on which were +also placed alternately seats and mile-stones. In spite of its age and +heavy traffic parts of this road are still in a good state of +preservation. After the completion of the Via Appia similar roads were +constructed, so that under the emperors seven great highways started +from Rome, viz.: the Via Appia and Latina to the south; two, Valeria and +Salaria, to the Adriatic; two, Cassia and Aurelia, to the northwest; and +the Via AEmilia, serving for both banks of the Po. + +Nor were the provinces by any means neglected. During the last Punic war +a paved road was constructed from Spain through Gaul to the Alps, and +similar roads were afterwards built in every part of Spain and Gaul, +through Illyricum, Macedonia and Thrace, to Constantinople, and along +the Danube to its mouths on the Black Sea. So, likewise, were the +islands of Sardinia, Corsica, Sicily and Great Britain crossed by them. +It has justly been said that the roads of the Roman Empire, whose strong +net-work enlaced the known world, were the architectural glory of its +people. These military roads caused in the various parts of the empire a +wonderful social and commercial revolution. They made it possible for +civilization to penetrate into the most remote retreats and to conquer +their inhabitants more completely than could Caesar at the head of his +legions. + +The Romans also had an efficient postal service, which was first +instituted by Augustus and greatly improved by Hadrian. The former, as +Gibbon states in his "Decline and Fall of the Roman Empire," placed +upon all roads leading away from the golden milestone of the Forum, at +short distances, relays of young men to serve as couriers, and later +provided vehicles to hurry information from the provinces. These posts +facilitated communication through all parts of the empire, and while +they were originally established in the interest of the government, they +proved serviceable to individuals as well, for there is no doubt, that, +together with the official dispatches, every courier carried private +letters also. + +The expenses of the post were largely defrayed by the cities through +which it passed, these cities being obliged to provide the stations +established within their territories with the necessary stores. At the +principal stations were found inns, where the proprietors were held +responsible for injuries suffered by travelers while in their houses. + +The communication of the Roman Empire was scarcely less free and open by +sea than it was by land. Italy has by nature few safe harbors, but the +energy and industry of the Romans corrected the deficiencies of nature +by the construction of several artificial ports. + +After the downfall of the Roman Empire its roads were either destroyed +by the people through whose territories they led or by the conquerors, +to render more difficult the approach of an enemy. + +Civilization and commerce greatly suffered through the downfall of Rome, +and did not again revive until after the struggles of the Northern +Christian races with the Southern and Eastern nations, which had become +Mohammedan. The sixth and seventh centuries were the darkest in the +history of Europe. Charlemagne, toward the close of the eighth century, +caused many of the old Roman roads to be repaired and new ones to be +constructed. He, as well as several of his immediate successors, made +use of mounted messengers to send imperial mandates from one part of the +realm to the other. The rulers of the succeeding centuries did not +profit, however, by this example, and the roads of the empire again fell +into decay. Moreover, the public safety was greatly impaired by robbers +and feudal knights, whose depredations were so heavy a tax upon commerce +as to greatly discourage it. Trade under these circumstances would have +been entirely destroyed, had it not been for the merchants' unions which +were formed by the larger cities for the protection of their interests. +These organizations maintained the most important thoroughfares, and +even furnished armed escorts to wayfaring merchants. Commerce thus +flourished in, and commercial relations were kept up among, the cities +immediate between Venice and Genoa, as well as the cities on the Rhine +and Danube. Florence, Verona, Milan, Strasbourg, Mayence, Augsburg, Ulm, +Ratisbon, Vienna and Nuremberg were flourishing marts, and through them +flowed the currents of trade between the north and the south. Out of +these commercial unions grew in time the Hanseatic League, which from +the thirteenth to the fifteenth century controlled the commerce of the +northern part of Europe on both the water and the land. The object of +this league, which at the height of its power included eighty-five +cities, was to protect its members against the feudal lords on the land +and against pirates on the sea. Its power extended from Norway to +Belgium and from England to Russia. In all the principal towns on the +highways of commerce the flag of the Hansa floated over its counting +houses. Wherever its influence reached, its members controlled roads, +mines, agriculture and manufactures. It often dictated terms to kings, +and almost succeeded in monopolizing the trade of Europe north of +Italy. + +It is characteristic of the social and political condition of this time +that the postal service was not carried on by the state, but was in the +hands of the various municipalities, convents and universities. During +the fifteenth and sixteenth centuries national power and national life +made themselves felt, and with a change in the political system the +system of communication and transportation changed also. Louis XI. of +France took the first step toward making a nation of the French when he +transferred the postal service from the cities and other feudal +authorities to the state. Two or three centuries later, France obtained +a national system of roads and canals. The idea was largely due to +Colbert, the minister of Louis XIV. It was, however, not executed in +detail until the middle of the last century. Many abuses grew up in +connection with it, but on the whole it was probably the soundest and +most efficient part of the French administration. A system of lines of +communication, radiating from Paris, was constructed by skilled +engineers, and placed under the supervision of men of talent, especially +trained for the purpose at the Ecole des Fonts et Chaussees. The whole +system was further improved by Napoleon, and has served as a basis for +the present system of railroad supervision. + +The first artificial waterway constructed in France was the Languedoc +Canal, connecting the Bay of Biscay with the Mediterranean. This +gigantic work, designed by Riquet, was commenced in 1666, and completed +in 1681. The canal is 148 miles long and its summit level is 600 feet +above the sea, the works along its line embracing over one hundred locks +and fifty aqueducts. A large number of canals have since been +constructed, and France has at present over 4,000 miles of artificial +waterways, or more than any other country of Europe. + +Nowhere else was the same completeness of organization possible. The +regular mail service of Germany dates back to the year of 1516, when +Emperor Maximilian established a postal route between Brussels and +Vienna and made Francis Count of Taxis Imperial Postmaster-General. The +postal service of the empire greatly improved up to the time of the +Thirty Years' War, which completely demoralized it. After the war the +individual states and free cities, usurping imperial prerogatives, +established postal routes of their own and thereby crippled the national +service. The same war also did great damage to the public thoroughfares, +and the commercial and manufacturing interests of the German empire were +until the end of the eighteenth century in a deplorable condition. +Frederick the Great, recognizing the fact that the industrial paralysis +of Germany was owing chiefly to its defective means of communication, +commenced to construct turnpikes and canals in Prussia, and the minor +German princes one by one imitated his example, until the Napoleonic +wars again put an end to internal improvements. The good work was +resumed, however, after the downfall of Napoleon, and in 1830 Germany +was intercrossed by from three to four thousand miles of turnpike. + +In the Netherlands canals were constructed as early as the twelfth +century. Being particularly well adapted to the flat country of Holland, +they were rapidly extended until they connected all the cities, towns +and villages of the country, and to a large extent took the place of +roads. The largest canal of Holland is the one which connects the city +of Amsterdam with the North Sea. It was constructed between the years +of 1819 and 1825 at an expense of more than four million dollars. The +city of Amsterdam owes to this canal its present commercial prosperity. + +Public roads and the state postal service are of comparatively recent +origin in Great Britain. The first public postal route was established +in 1635, during the reign of Charles I. In 1678 a public stage-coach +route was established between Edinburgh and Glasgow. The distance is +only forty-four miles, but the roads were so bad that, though the coach +was drawn by six able horses, the journey took three days. It was +considered a great improvement when in 1750 it could be completed in +half the time originally required. In 1763 a mail-coach made only +monthly trips between London and Edinburgh, eight long days being +required for the journey, which to-day is made in less than twelve +hours. The number of stage passengers between these two capitals +averaged about twenty-five a month, and rose to fifty on extraordinary +occasions. In those days coaches were very heavy and without springs, +and travelers not unfrequently cut short their journeys for want of +conveniences. + +Turnpikes in Great Britain do not even date as far back as +stage-coaches. It is true the first turnpike act was passed as early as +1653, but the system was not extensively adopted until a century later. +Previous to that time the roads of England, such as they were, were +maintained by parish and statute labor. In the latter half of the last +century, under improved methods of construction, turnpike roads +multiplied rapidly. Both roads and vehicles attained, previous to the +advent of the railroads, such a degree of perfection that the +stage-coach made the journey between London and Manchester, 178 miles, +in 19 hours; between London and Liverpool, 203 miles, in less than 21 +hours; and between London and Holyhead, 261 miles, in less than 27 +hours. + +In spite of these improved facilities, the transportation of merchandise +continued to be very expensive. Goods had to be conveyed from town to +town by heavy wagons, and the cost of land-carriage between Manchester +and Liverpool, a distance of thirty miles, was at times as high as forty +shillings per ton. + +The various disadvantages of land transportation directed, toward the +middle of the last century, the attention of the British people to the +importance of a system of canals. They realized that these water +highways would open an easier and cheaper communication between distant +parts of the country, thus enabling manufacturers to collect their +materials and fuel from remote districts with less labor and expense, +and to convey their goods to a more distant and more profitable market. +It would also facilitate the conveyance of farm produce to a greater +distance and would thereby benefit both the producer and consumer. The +canal era was formally inaugurated in 1761, when the Duke of Bridgewater +presented to Parliament a petition for a bill to construct the canal +which has since borne his name. The canal was commenced in 1767 and was +completed in 1772. The next forty years were a period of great activity +in canal building, but it was left to private enterprise, with very +little aid from the government. Over a hundred canal acts were passed by +Parliament before the year 1800. The largest canal of the British Isles +is the Caledonian, extending from Inverness to Fort William, a distance +of sixty-three miles. It was commenced in 1803 and completed in 1847, +and cost L1,256,000. Other canals of importance are the Great Canal, +which connects the North Sea with the Atlantic Ocean, and the Grand +Function Canal, which is over one hundred miles long and connects most +of the water-ways of central England with the Thames River. It is +estimated that there were over 2,200 miles of navigable canals in Great +Britain before the introduction of railroads. + +Canal-building in Spain dates back to the beginning of the sixteenth +century, when Charles V. built the Imperial Canal of Aragon, which is +over sixty miles long. The political and commercial decline of the +country during the seventeenth and eighteenth centuries, however, +brought the development of her highways to a standstill, and, with the +exception of Turkey, probably no European country has at the present +time more deficient transportation facilities than Spain. + +The comparatively high state of civilization which existed in the +Italian cities during the middle ages, their commercial and industrial +thrift and the importance of Rome as the metropolis of the Catholic +Church combined to maintain many of the excellent ancient highways of +Italy. A number of canals were built in Northern Italy as early as the +fifteenth century, and it is claimed by some writers that locks were +first used on the Milanese canals in 1497. But while public +thoroughfares have always been well maintained in Northern Italy and +even as far south as Naples, they were during the past two or three +centuries permitted to greatly deteriorate in the southern part of the +peninsula, to the great detriment of both agriculture and commerce. The +condition of the large Italian islands is still more lamentable, Sicily +and Sardinia being almost entirely devoid of roads. She that was the +granary of ancient Rome to-day scarcely produces enough grain to supply +her own people. + +Denmark and the Scandinavian peninsula had a good system of highways +long before the railroad era. Among the many excellent canals of Sweden +may be mentioned the Goeta Canal, which was commenced by Charles XII. in +the early part of the last century, but was not entirely completed until +1832. It is, inclusive of the lakes, 118 miles long, and its +construction cost $3,750,000, three-fifths of which was contributed by +the state. This canal connects the Baltic Sea with Lake Wener, as well +as, through the Goeta-Elf, with the North Sea. + +Next to Turkey and Spain, no country of Europe has been as slow to +appreciate the advantages of a system of highways as Russia. At the +beginning of the nineteenth century the vast empire of the Czar had but +a few roads connecting its principal cities, and these were almost +impassable in the spring and fall. Much progress has, however, been made +since then, and at present Russia has over 75,000 miles of wagon-road +and artificial waterway, and 19,000 miles of railroad. A road has been +built through Siberia, extending from the Ural Mountains to the city of +Jakutsk on the Lena and sending out many branch roads north and south. +The development of Russia's resources has kept pace with that of her +system of highways, and the agricultural and mineral products of that +country are in the markets of the world constantly gaining ground in +their competition with the products of Western Europe and America. + +Passing now to the Western Hemisphere, we find that in ancient Peru the +Incas built great roads, the remains of which still attest their +magnificence. Probably the most remarkable were the two which extended +from Quito to Cuzco, and thence on toward Chile, one passing over the +great Plateau, the other following the coast, Humboldt, in his "Aspects +of Nature," says of this mountain road: "But what above all things +relieves the severe aspect of the deserts of the Cordilleras are the +remains, as marvelous as unexpected, of a gigantic road, the work of the +Incas. In the pass of the Andes between Mausi and Loja we found on the +plain of Puttal much difficulty in making a way for the mules over a +marshy piece of ground, while for more than a German mile our sight +continually rested on the superb remains of a paved road of the Incas, +twenty feet wide, which we marked resting on its deep foundations, and +paved with well-cut, dark porphyritic stone. This road was wonderful and +does not fall behind the most imposing Roman ways which I have seen in +France, Spain and Italy. By barometrical observation I found that this +colossal work was at an elevation of 12,440 feet." The length of this +road, of which only parts remain, is variously estimated at from 1,500 +to 2,000 miles. It was built of stone and was, in some parts at least, +covered with a bituminous cement, which time had made harder than the +stone itself. All the difficulties which a mountainous country presents +to the construction of roads were here overcome. Suspension bridges led +over mountain torrents, stairways cut in the rock made possible the +climbing of steep precipices, and mounds of solid masonry facilitated +the crossing of ravines. Under the rule of the Spaniards the roads of +the Incas went to ruin. In fact, throughout South America but little, if +anything, was done by the mother country to aid transportation. + +North America, or at least that part of it which was settled by the +Anglo-Saxon race, fared much better in this respect. The great utility +of good roads was universally recognized even in the colonial times, but +the scarcity of capital, the great extent of territory as compared with +the population, and the want of harmonious action among the various +colonies, delayed extensive road and canal building until after the +establishment of the Union. Mistaken local interests but too often +wrecked well-advanced plans, and what road-building was done during the +colonial times was almost entirely left to individual exertion, without +any direct aid from the government. + +The first American turnpike was built in Pennsylvania in 1790. From +there the system extended into New York and Southern New England. Up to +1822 more than six million dollars had been expended in Pennsylvania for +turnpikes, one-third of which sum, or over $1,000 a mile, had been +contributed by the commonwealth. + +In 1800 three wagon-roads connected the Atlantic coast with the country +west of the Alleghanies, one leading from Philadelphia to Pittsburgh, +one from the Potomac to the Monongahela, and a third passed through +Virginia to Knoxville, in Tennessee. Much as was done during this period +for the improvement of the roads, stage-coach travel remained for years +comparatively slow. In 1792 Mr. Jefferson, then Secretary of State, +wrote to the Postmaster-General to know if the post, which was then +carried at the rate of fifty miles a day, could not be expedited to one +hundred. Even this latter rate was considered slow on the great +post-roads forty years later. In the year 1800 one general mail-route +was extended from Maine to Georgia, the trip being made in twenty days. +From Philadelphia a line went to Lexington in sixteen and to Nashville +in twenty-two days. The government of the United States, appreciating +the importance, for military purposes, of good roads leading to the +frontiers, commenced the construction of national, or military, roads. +A road was thus built from Baltimore through Cincinnati to St. Louis, +and another from Bangor to Houlton, in Maine. In 1807 Albert Gallatin, +Secretary of the Treasury, advocated the extensive construction of +public roads and canals by the general government. Mr. Gallatin took the +ground that the inconveniences, complaints, and perhaps dangers, +resulting from a vast extent of territory cannot otherwise be radically +removed than by opening speedy and easy communications through all its +parts; that good roads and canals would shorten distances, facilitate +commercial and personal intercourse, and unite by a still more intimate +community of interests the most remote quarters of the United States, +and that no other single operation within the power of the government +could more effectually tend to strengthen and perpetuate that union +which secured external independence, domestic peace and internal +liberty. The principal improvements recommended by Mr. Gallatin were the +following: + +1. Canals opening an inland navigation from Massachusetts to North +Carolina. + +2. Improvement of the navigation of the four great Atlantic rivers, +including canals parallel to them. + +3. Great inland navigation by canals from the North River to Lake +Ontario. + +4. Inland navigation from the North River to Lake Champlain. + +5. Canal around the Falls and Rapids of Niagara. + +6. A great turnpike road from Maine to Georgia, along the whole extent +of the Atlantic sea-coast. + +7. Four turnpike roads from the four great Atlantic rivers across the +mountains to the four corresponding Western rivers. + +8. Improvement of the roads to Detroit, St. Louis and New Orleans. + +Mr. Gallatin also recommended that a sufficient number of local +improvements, consisting either of roads or canals, be undertaken so as +to do substantial justice to all parts of the country. The expenditure +necessary for these improvements was estimated at twenty million +dollars. Local jealousy and State rights prejudice practically defeated +this movement, the Cumberland road, or National Pike, being the only +result of any importance. The failure of the government to provide the +country with adequate roads left the construction of turnpike roads to +private enterprise, and these roads, before the general introduction of +railroads, often yielded much profit to capitalists. Great as were the +conveniences afforded by the turnpike, they were entirely inadequate for +the development of the resources of the interior of the country. The +products of a forest or a mine could not be transported upon them to any +great extent. The crossing of a single water-shed, owing to the +necessity for largely increased motive power, would often materially +decrease the value of the goods to be transported. + +These drawbacks of land transportation directed, toward the close of the +last century, the attention of the people of the United States to the +necessity of providing for a system of canals that should bind together +the various parts of their extended country in the interest of commerce. +General Washington was among the first to urge upon his countrymen the +introduction of this great highway of interstate traffic, although but +little was done in this direction until after the War of 1812. The +people of New York had from an early period of the settlement of their +State been impressed with the importance of connecting the Hudson with +the Western lakes. In 1768 the provincial legislature discussed this +subject, but the political agitations of the times and the following +revolutionary struggle arrested further proceedings. After the war the +project was frequently brought before the legislature, but nothing was +done until 1808, when the assembly appointed a committee to investigate +the subject and to solicit the cooperation of the general government, if +the project should be found practicable. The report of the committee +concerning the practicability of the undertaking was in every respect +favorable, and in 1810 the legislature provided for a survey of the +entire route from the Hudson River to Lake Erie. The survey was made, +but, the expected aid from the national government not being +forthcoming, the matter rested until after the war with England. In 1816 +a new board of commissioners was appointed, and the following year an +act was passed providing for a system of internal improvements in the +State. On the 4th day of July next the excavation of the Erie Canal was +commenced, and on the 26th of October, 1825, the first boat passed from +Lake Erie to the Hudson. The canal was 378 miles long and four feet +deep. It had a width of 40 feet at the surface and 28 feet on the +bottom, and carried boats of 76 tons burden. Owing to the rapid increase +of trade, the capacity of the canal was found inadequate within ten +years after its opening, and in 1835 measures were taken to enlarge it +to a width of 70 and 56 feet by a depth of seven feet, thus allowing the +passage of boats of 240 tons. The total length of the canal was, +however, subsequently shortened 12-1/2 miles, making its present length +365-1/2 miles. This enlargement was completed in 1862, and cost the +State over $7,000,000, making the total cost of the canal about +$50,000,000. New York has, inclusive of branches, some ten other canals +in operation, among them the Champlain Canal, extending from the head of +Lake Champlain to its junction with the Erie Canal at Waterford; the +Oswego Canal, from Lake Ontario at the city of Oswego to the Erie Canal +at Syracuse; the Black River Canal, from Rome to Lyon Falls; the Cayuga +and Seneca canals, extending from the Erie Canal to the Seneca and +Cayuga lakes. The State has expended for the construction of canals not +less than $70,000,000. + +Canal-building in the State of Pennsylvania commenced about the time +that the original Erie Canal was completed in New York. In 1824 the +legislature authorized the appointment of commissioners to explore canal +routes from Philadelphia to Pittsburgh and the West. A year later +surveys were authorized to be made from Philadelphia to Pittsburgh, from +Allegheny to Erie, from Philadelphia to the northern boundary of the +State, and also south to the Potomac River. The construction of the main +lines of communication between the east and the west and the coal fields +in the north was soon commenced. Large loans were repeatedly made, and +the work was vigorously prosecuted. In 1834 Pennsylvania had 589 miles +of State canals, among them the Central Division Canal, 172 miles long, +and the Western Division Canal, 104 miles long. Public opinion strongly +favored an extended system of internal improvements, and it was believed +that these water-ways would soon become a source of revenue to the +State. These expectations might have been realized had the State carried +on enterprises on a less extensive and more economical basis. In 1840 +the financial condition of the State had become such that canal-building +had to be abandoned. The amount expended by the State of Pennsylvania +for canals, including the Columbia Railroad, was about $40,000,000, +while the difference between net earnings and interest paid by the State +up to that time is estimated at $30,000,000. In 1857 and 1858 these +works were sold to the Pennsylvania Railroad Company and the Sunbury and +Erie Railway Company for $11,375,000, or about one-sixth of their cost +to the State. + +In Ohio the legislature authorized the survey of a canal from Lake Erie +to the Ohio River. In 1825 an act was passed providing for the +construction of the Ohio Canal and a number of feeders. In 1831 the +canal was in operation from Cleveland to Newark, a distance of 176 +miles, and the whole system was finished in 1833. + +The State of Illinois completed in 1848 the Illinois and Michigan Canal, +connecting Chicago with La Salle on the Illinois River. This canal is +102 miles long, 60 feet wide and six feet deep. The construction by the +general government of the Hennepin Ship Canal, connecting the +Mississippi with Lake Michigan, has long been agitated in the Northwest. +Such a canal would be one of the most important channels of commerce in +the country, and it is to be hoped that this great project will be +completed at no distant day. + +We have besides in the United States a large number of canals that were +constructed, and are still operated, by private companies, as the +Delaware and Hudson in New York and Pennsylvania, the Schuylkill, Lehigh +and Union canals in Pennsylvania, the Morris Canal in New Jersey, the +Chesapeake and Ohio and Maryland, etc. A large number of canals, some +public and others private property, have since the construction of +railroads been abandoned. Thus in New York 356 miles of canals, costing +$10,235,000; in Pennsylvania 477 miles, costing $12,745,000; in Ohio 205 +miles, costing $3,000,000; in Indiana 379 miles, costing $6,325,000, are +no longer in use. All the canals that were ever built in New England +have likewise been abandoned for commercial purposes. + +Nor was Canada slow in realizing the advantages which a system of canals +connecting the great lakes with the Atlantic Ocean promised to give her. +The construction of the Welland and St. Lawrence canals made it possible +for vessels to clear from Chicago direct for Liverpool, and this has to +a considerable extent diverted grain shipments to Montreal, giving the +Canadian dealers a decided advantage in this traffic. + +It is a strange fact that, at least in this country, the zenith of the +canal-building era is found in the decade following the invention of the +steam railroad. For many years it was not believed that under ordinary +circumstances the iron horse could ever compete with the canal boat in +rates. The most sagacious business men had unlimited faith in the +destiny of the canal as a prime commercial factor and invested largely +in canal stocks. To many these investments proved a disappointment. The +marvelous improvements in locomotives and other rolling stock, the +unprecedented reductions in the prices of iron and steel, and above all +the fact that in our climate canal carriage is unavailable during five +months of the year, gave the railroads a decided advantage in their +competition with canal transportation. There can be no doubt, however, +that the presence of this competition was one of the chief causes of the +great reduction of railroad rates on through routes. In this respect +alone the canals have accomplished a very important mission. In the +transportation of many of the raw products of the soil and the mine +canals still compete successfully with the railroads, and it is still an +open question whether future inventions may not enable them to regain +lost ground in the carriage of other goods. It would certainly be a +short-sighted policy for our people to discourage the construction of +new canals. + +For the improvement of navigable rivers, appropriations have been made +by Congress ever since the establishment of our national government, and +these appropriations now amount to millions of dollars annually. Since +the introduction of railroads the usefulness of these national highways +of commerce has ceased to depend upon the tonnage carried upon them, but +the influence which they exert upon the cost of transportation is so +great that it is not likely that the policy of making annual +appropriations for the improvement of these water ways will be abandoned +by the American people for many years to come. + +There has recently been a strong agitation in some portions of the +United States in favor of extending government aid to the Nicaragua Ship +Canal, and there seem to be indeed many arguments in favor of such a +policy. President Harrison said in his annual message to Congress in +December, 1891: + + "The annual report of the Maritime Canal Company of + Nicaragua shows that much costly and necessary preparatory + work has been done during the past year in the construction + of shops, railroad tracks and harbor piers and breakwaters, + and that the work of canal construction has made some + progress. I deem it to be a matter of the highest concern to + the United States that this canal, connecting the waters of + the Atlantic and Pacific oceans, and giving to us a short + water communication between our ports upon those two great + seas, should be speedily constructed, and at the smallest + practical limit of cost. The gain in freights to the people + and the direct saving to the government of the United + States in the use of its naval vessels would pay the entire + cost of the work within a short series of years. The report + of the Secretary of the Navy shows the saving in our naval + expenditures which would result. The Senator from Alabama, + Mr. Morgan, in his argument upon this subject before the + Senate of the last session, did not overestimate the + importance of the work when he said that 'The canal is the + most important subject now connected with the commercial + growth and progress of the United States.'" + +And in his message of 1892 that: + + "It is impossible to overestimate the value from every + standpoint of this great enterprise, and I hope that there + will be time, even in this Congress, to give it an impetus + that will insure the early completion of the canal and + secure to the United States its proper relation to it when + completed." + +It is sincerely to be hoped that the people of the United States can be +convinced of the advisability of extending government aid to this +enterprise. It must be admitted that the experience of our government +with the Pacific railroads has created a strong prejudice among the +masses against such subsidies as were granted to those corporations, but +it is probable, with the people on the alert, that Congress would not +again permit great impositions to be practiced against the government. +When the great advantages to be derived by the people of the United +States from the use of this canal and the small outlay required are +considered, it would seem to be a wise policy for our government at once +to take such steps as are necessary to secure the early completion and +the future control of this great international highway. + + + + +CHAPTER II. + +THE HISTORY OF RAILROADS. + + +In making inquiry into those inventions and improvements which were the +precursors of the modern railroad, we meet early the desire to render +the movement of wagons easier by a smooth roadway. Traces of this may be +found even in ancient times. The Romans constructed tracks consisting of +two lines of cut stones, and in the older Italian cities stone tracks +may still be seen in the streets, corresponding to wagon tracks, and +evidently designed for the purpose of rendering the movement of the +wheels easier. + +The first rail tracks of which we have any knowledge were constructed at +the end of the sixteenth century. These rails, which were made of wood, +appear to have been an invention of miners in the Hartz Mountains. They +were the result of pressing necessity, for, as mines were usually so +situated that roads could only with great difficulty and expense have +been built to them, some cheaper sort of communication with the high +road had to be contrived. + +After various experiments the wooden railway was adopted, and the +product of the mine was carried upon them to the place of shipment by +means of small cars. Queen Elizabeth had miners brought into England, to +develop the English mines, and through them the rail track was +introduced into Great Britain. Later the wooden rail was covered with an +iron strap to prevent the rapid wear of the wood, and about the year +1768 cast-iron rails commenced to be used. At the end of the last +century wheels were constructed with flanges, to prevent derailing. +More attention was also paid to the substructure, wood, iron and stone +being used for this purpose. Wrought-iron rails were patented in 1820. + +The first authentic account of heat or steam engines is found in the +"Pneumatica" of Hero of Alexandria, who lived in the second century +before Christ. Hero describes a number of contrivances by which steam +was utilized as a source of power. Although these contrivances were at +the time of very little practical value, they are interesting as the +prototypes of the modern steam engine. The attempts to move wheels by +steam date back to the seventeenth century, when a number of experiments +were made, but their exact nature is not known, because they were all +soon abandoned, either on account of unsuccessful results or lack of +means. At the beginning of the eighteenth century Denis Papin +constructed a small steamboat, upon which he sailed in 1707 on the Fulda +River from Cassel to Munden, a distance of about fifteen miles. + +The construction of locomotives engaged the attention of ingenious minds +a century and a half ago. It is claimed that Newton experimented with a +steam motor in 1680. Dr. Robinson described in 1759, in his "Mechanical +Philosophy," a steam vehicle. The Glasgow engineer James Watt devoted +himself from 1769 to 1785, with great energy, to the development of the +steam engine, and succeeded in inventing the system which became the +parent of the modern engine. An American, Oliver Evans, constructed at +the beginning of the present century a carriage propelled by steam, and +exhibited it, in 1804, in the streets of Philadelphia, before twenty +thousand spectators. While Evans' invention was never put to any +practical use, he prophesied that the time would come when steam cars +would be considered the most perfect means of transportation. On +Christmas eve, 1801, Richard Trevithick exhibited at Camborne, England, +a steam coach, and soon afterwards he and his cousin, A. Vivian, +obtained an English patent on a "steam engine for propelling carriages." +Seven years later a Mr. Blinkensop, of Middleton Colliery, near Leeds, +constructed another locomotive engine, upon which he obtained a patent +in 1811. These and a number of other inventors of steam engines vainly +expended great ingenuity in attempting to overcome a purely imaginary +difficulty. They believed that the adhesion between the face of the +wheel and the surface of the road was so slight that a considerable +portion of the propelling power would be lost by the slipping of the +wheels. It was not until about the year 1813 that the important fact was +ascertained that the friction of the wheels with the rails was +sufficient to propel the locomotive and even drag after it a load of +considerable weight. On the other hand these inventors failed to provide +in their engines adequate heating-power for the production of steam. In +1814 George Stephenson commenced to apply himself to the construction of +an improved locomotive. When, owing to his invention of the tubular +boiler, he saw, after fifteen years of arduous toil, his labors crowned +with success, the civilized world entered upon a new era of social, +industrial and commercial life. The first line upon which Stephenson's +invention was used was the Liverpool and Manchester Railway. In the year +1821, a number of Liverpool merchants formulated a plan for the +construction of a tramway between their city and Manchester. The +question of motive power was left open as between horses and the steam +engine, with which Mr. Stephenson was then experimenting. After much +opposition on the part of Parliament and the public a charter was +obtained in 1826. When the construction of the road was nearly +completed, the directors of the company, after having determined upon +the use of steam engines, offered a prize of L500 for the best +locomotive engine to run at a public trial on the Liverpool and +Manchester Railway. This proposal was announced in the spring of 1829, +and the trial took place at Rainhill on the 6th of October of that year. +The competing engines were the Rocket, constructed by Mr. Stephenson; +the Sanspareil, by Hackworth; the Perseverance, by Burstall, and the +Novelty, by Messrs. Braithwaite and Ericsson. Both Braithwaite and +Ericsson became subsequently residents of the United States, and the +latter achieved immortal fame as the inventor of the screw propeller and +the builder of the Monitor. The Rocket was the only engine that +performed the complete journey proposed, and obtained the prize. It is +claimed by the biographers of John Ericsson that he had really built a +much faster locomotive than Stephenson, and that, although it had to be +constructed very hastily and therefore broke down during the trial, the +superiority of the principle involved in it was universally recognized +by the engineers of that time. The Stephenson engines became the motive +power of the Liverpool and Manchester road, which was opened for public +traffic on the 16th of September, 1830. This line was, however, neither +the first public railway nor even the first steam railway. The first +railway or tramway act was passed in England in 1758, and in 1824 no +less than thirty-three private railway or tramway companies had been +chartered. In 1824 a charter was granted by Parliament authorizing the +construction of the Darlington and Stockton Railway, to be worked with +"men and horses, or otherwise." By a subsequent act the company was +empowered to work its railway with locomotive engines. The road was +opened in September, 1825, and was practically the first public carrier +of goods and passengers. The Monklands Railway in Scotland, opened in +1826, and several other small lines soon followed the example of the +Darlington and Stockton line and adopted steam traction, but the +Liverpool and Manchester Railway was the first to convince the world +that a revolution in traveling had taken place. + +The road was from the very first successful, its traffic and income +greatly exceeding the expectations of its managers. It should also be +noted here that the cost of construction fell largely below the +elaborate estimates made by several distinguished engineers. The company +had expected to earn about L10,000 a year from passenger traffic, and +the very first year the receipts from that source were L101,829. The +gross annual receipts from freight had been estimated at L50,000, but +were L80,000 in 1833. From the first the stockholders obtained a +dividend of eight per cent., which soon rose to nine and to ten per +cent. It has since been demonstrated that the revenues of new roads +almost always exceed expectations. + +The success of this railway stimulated railway enterprise throughout +Europe and America. But while railroad projects created much enthusiasm +on one side, they also met with bitter opposition on the other. The +prejudice of the short-sighted and the avarice of those whose interests +were threatened by a change in the mode of transportation used every +weapon in their power against the proposed innovation. The arguments +used were often most absurd. It was said that the smoke of the engine +was injurious to both man and beast, and that the sparks escaping from +it would set fire to the buildings along the line of road, the cows +would be scared and would cease to give their milk, that horses would +depreciate in value, and that their race would finally become extinct. +Nor did many of the European governments favor the new system of +transportation. Some openly opposed it as revolutionary and productive +of infinitely more evil than good. The Austrian court and statesmen +especially looked upon the new contrivance with undisguised distrust; +and from their point of view this distrust was perhaps well founded. The +rapid movement of the iron horse seemed to savor of dangerous +radicalism, not to say revolution. When the Emperor finally, in 1836, +concluded to sign a railroad charter, he based his action upon the +dubious ground that "the thing cannot maintain itself, anyhow." It may +be said that the history of the railroad is a conspicuous illustration +of human short-sightedness. The Prussian Postmaster-General Von Nagler +opposed the construction of a railroad between Berlin and Potsdam upon +the ground that the passenger business between those two cities was not +sufficient to keep even the stage-coach always full. It never occurred +to the Postmaster-General, as it does not occur to many railroad men of +to-day, that new and cheaper means of transportation increase the +traffic. Even so wise a statesman as Thiers said when railroad +construction was first agitated in France: "I do not see how railroads +can compete with our stage-coaches." M. Thiers also opposed for years +the building of a railroad between Paris and Versailles, declaring that +on account of a railroad not one passenger more would make the journey +between these two places. + +But railroads came whether monarchical governments liked them or not. +The success of the Liverpool and Manchester Railroad stimulated railroad +building in England to a marvelous extent. Between 1830 and 1843 no +less than seventy-one different companies were organized, representing +about 2,100 miles. During the next four years 637 more roads, with an +authorized length of 9,400 miles, were chartered. The construction of +each new road required a special act of Parliament. These early roads +averaged only fifteen to thirty miles in length. The competition which +ensued soon led to the consolidation of roads, which continued until now +the 14,000 miles of railway in England and Wales are practically owned +by only a dozen companies. The total number of miles of railroad in +Great Britain and Ireland is at present over 20,000. + +The news of the opening of the first steam railway in England spread +through Europe comparatively slowly. There were in those days but few +newspapers printed on the continent, and these were read very sparingly. +Railroad discussions were confined to merchants and manufacturers. Even +after the success of the railroad was assured in England, a large number +of people would not believe that, except between the largest cities, +railroads on the continent could ever be profitable. But few railroads +have ever been built which with honest, efficient and economical +management would not pay a fair rate of interest on actual cost of +construction. But in spite of this we have to this day a large number of +otherwise well-informed people who question the financial success of +every new railroad that is proposed. + +In those days it occurred only to the most sagacious minds that with +increased facilities commerce would expand. The missionaries of railroad +enterprise found it therefore a difficult matter to interest capital in +their projects. Railroad committees were in time formed in all cities of +any importance, but, with capital cowardly, as usual, and governments +distrustful, their task was often a thankless one. Railroad projects +matured very slowly, and, when matured, were often wrecked by jealous +and short-sighted governments. After the formation of a company five and +even ten years would often pass away before a charter could be secured +and the work of construction commenced. It is true, there were some +laudable exceptions to this rule. Thus the governments of France and +Belgium led the people in railroad construction; but upon the whole it +can be said that the railroad forced itself by its intrinsic merit upon +monarchical governments. It soon became evident even to the most stupid +of autocratic ministries that it was a choice between the new mode of +transportation and national atrophy. + +The first German line was built between the cities of Nuremberg and +Furth in 1835. It was only about four miles long, but the success of the +experiment gave an impetus to railroad building in other parts of +Germany. The Leipzig and Dresden line followed in 1837, and the +Berlin-Potsdam and Brunswick-Wolfenbuttel lines in 1838. At the end of +1840 Germany had 360 miles of railroad. In that year Frederick William +IV. succeeded to the throne of Prussia and inaugurated a new and +exceedingly liberal railroad policy in his realm. In 1843 the Prussian +government concluded to guarantee certain railroad companies a dividend +of 3-1/2 per cent. on the capital actually invested. The state also +secured considerable influence in the administration of the roads as +well as in the right to assume the management of the various lines under +certain conditions. The governments of the states of Southern Germany +now commenced to build state roads, and their example was, chiefly for +strategic reasons, soon imitated by Prussia. The system has since grown +to over 26,000 miles, and no less than eighty-seven per cent. of the +mileage is under state control. In all the states and provinces of the +empire, except Bavaria, the rates for transportation of passengers and +freight on all lines are controlled absolutely by the government. + +In Austria, as has already been indicated, the building of railways was +greatly discouraged by the government until 1836. In that year the +Emperor rather reluctantly granted Baron Rothschild a charter for a +railway from Vienna into the province of Galicia. Another charter was +granted to a Baron Sina for a line from Vienna to Raab and Gloggnitz. +The policy then adopted in Austria guaranteed to each railroad company a +monopoly in its own district during the period for which the charter was +granted. Soon after the state also commenced building lines, but the +growth of the Austrian system was slow until after the war of 1866. An +era of railroad speculation was then inaugurated, which ended with the +crisis of 1873. The total length of the railroads of Austria-Hungary was +10,790 miles in 1875. At present that monarchy has nearly 16,400 miles +of railway, 8,600 of which are owned by private companies. + +It has been the policy of Austria to reduce rates, and several roads, +especially those built in mountainous districts, have a certain revenue +guaranteed to them by the government. + +The zone system recently adopted in Hungary reduced both the passenger +and freight rates of the government roads at least one-third, and this +reduction has, contrary to expectation, greatly increased their net +revenues. + +In France railroad agitation commenced in 1832. A few short lines were +opened, as those from Paris to St. Germain and to Versailles; but, +owing to the conservatism of French capitalists, but little more was +done until the state took the matter in hand. Thiers proposed a scheme +by which the state was to furnish about half the cost while private +companies were to build the lines and operate them. The Western +Railroad, the first line of any great extent, was opened in 1837 between +Paris and Rouen, and the Eastern Railroad was opened two years later. +There were in 1859 six large companies operating their lines with +profit, but, to induce them to build additional lines that were needed, +the state guaranteed the interest on the capital required to make their +improvements. In 1884 there were about 17,000 miles of railroad in +operation. To bring about the construction of another 7,000 miles of +road, and to thus complete the railroad system of the country, the +government now guaranteed each company a dividend equal to the average +of recent years, but not to exceed seven per cent. It is doubtful +whether this system of monopoly has in all respects been favorable to +the encouragement of enterprise in the railroad circles of France. In +granting charters the state has, however, reserved valuable rights which +at a future period it will have an opportunity to assert for the public +benefit. The railroad companies have generally a lease for ninety-nine +years, and their lines become the property of the state after the +expiration of that period. To extinguish the bonded debt and stock, a +sinking fund has been created, from which a certain portion of the +shares and outstanding bonds is annually paid off and canceled. The +government requires of the companies the free carriage of the mails and +the transportation of military and other employes at very low rates. +Besides this the state levies upon the traffic of the railroads a duty +of ten per cent. of their gross earnings from passengers and from all +goods carried by fast trains. These facts are usually overlooked by our +railroad men when they indulge in making comparisons between the +railroad rates of this country and those of France. The French Republic +had 13,400 miles of road in 1875, and 22,600 in 1890. When all of the +proposed lines are completed, the total mileage of that country will be +over 25,000. + +Belgium has the best-developed track system on the continent. The state +commenced the construction of railroads as early as 1834, and the first +line (Brussels Malines) was opened May 5th, 1835. Four great state lines +were constructed in different directions, and between these lines +private roads were permitted to be built. Between 1850 and 1870 the +private lines increased from 200 to 1,400 miles, and competition between +them and the state lines became so active as to reduce rates to the +lowest possible point. In 1870 the government decided to buy a large +number of competing lines. In 1874 it had acquired more than half, and +at present, with a few exceptions, they are all owned and controlled by +the state. The exceptions to this are a few short lines that were built +in the early days of railroad construction. The total mileage is now +3,210. Rates have, however, not been increased since this consolidation, +and they are still lower than any other country in Europe. The +transportation of mails is free, and troops, military materials and +prison vans are carried at reduced rates. + +Railroads were originally built in Switzerland merely for the +accommodation of tourists and the local traffic. The first line, between +Zurich and Aarau, was completed in 1847, but general railroad enterprise +did not develop until after 1860. The St. Gothard route was then +projected, which opened a direct through line between Italy and +Germany. The roads are all owned by private companies, but are under +strict government control. Great publicity of their affairs is required. +The total mileage of Switzerland was 2,043 in 1891. + +In Italy railroad enterprises have received attention since 1853. The +first roads were those of Lombardy, being commenced while that province +was still under Austrian rule. The treaties of Zurich in 1859 and of +Vienna in 1866 delivered these roads and the Venetian lines to the +kingdom of Italy. Between 1860 and 1870 the systematic construction of a +railroad net was commenced which connected the various lines with each +other and with Rome. Nearly all the railroads of Italy fell into the +hands of the government, but in 1885 they were leased for a term of +sixty years to three companies, terminable at the end of twenty or forty +years by either party upon two years' notice. Under the lease the state +received two per cent. of the gross receipts. The tariffs are fixed by +the state, are uniform and can be reduced by the state. A Council of +Tariffs, composed of delegates for the government, for agriculture, +commerce and industry, and for the railroad companies, all elected by +their own boards, has been instituted to study the wants and best +interests of the country. The total number of miles of railroad in Italy +was 8,110 in 1889. + +The first road in Spain was opened in 1848 between Barcelona and Mataro. +The government greatly encouraged railroad construction by subsidies, +and during the decade following 1855 the development of the railway +system of the country was rapid. More than thirty companies have been +formed, which have built about twenty main lines, aggregating 6,200 +miles. + +In Portugal very little railroad building was done previous to 1863, +when a little over three hundred miles of road was constructed. The +government owns nearly half of the roads of the country, the remaining +lines being the property of private companies. The total number of miles +operated in the kingdom in 1889 was 1,280. The service and the financial +condition of the roads of Portugal are far from being satisfactory. + +In Denmark the first railroad was built on the island of Seeland in +1847. Previous to 1880 the larger part of the roads of the kingdom was +owned by private companies. Since then several of the most important +private roads have been purchased by the state, which in 1889 owned 963 +miles, while only 251 miles remained in private control. Only about +thirty miles more have since been constructed. The roads are well +managed, but their net earnings are less than two per cent. of the +capital invested. + +On the Scandinavian Peninsula the railroad system has developed rather +slowly. Norway built the first line from Christiana to Eidsvold in 1854, +and Sweden commenced railroad building two years later. The narrow-gauge +system is fully developed here. While in Norway the greater part of the +lines is owned by the state, the roads of Sweden are chiefly in the +hands of private companies which on an average control but little more +than twenty-five miles each. The total mileage of Sweden is 5,970, and +that of Norway 970. + +The first line of railroad in the Russian Empire was constructed from +St. Petersburg, sixteen miles, to Tsarskoji-Sielo, in 1842. The St. +Petersburg and Moscow line was opened in 1851. Railroad building then +stagnated until after the Crimean War, when a large number of lines +were constructed at once. The roads were surveyed by the government, but +constructed and operated by private companies. + +State aid was, however, freely given. During the past ten years the +Russian government has directed its attention to the development of the +railroad system in its Asiatic possessions. A railway between the Black +and Caspian seas was completed in 1883, and the Siberian railroad is +extended as fast as the financial condition of the empire permits. There +are now about 20,000 miles of road in the Russian Empire operated by +private companies. The construction of a large number of the Russian +railways was dictated by military rather than commercial considerations. +Maximum rates are specified in charter, and every change of rates must +be approved by the Minister of Finance. + +In the Balkan Peninsula railroad facilities are still ill provided for. +A few lines have been built, but these are, as a rule, badly managed. +Trains are slow, and rates often so high as to be prohibitory. Roumania +has undoubtedly the best railroad system of any of the Balkan states, +the government controlling 1,000 miles of road. Greece is also making +some progress and has at the present time 610 miles of railway. There is +reason to believe that through communication will soon be established in +these countries on a larger scale. + +The introduction of the railway into Asia has been, except in the +Russian and English possessions, a very difficult task. The conservatism +or ignorance of the governments and the superstition of the people +combined to throw numberless obstacles before those who proposed to pave +the way for the iron horse. British India opened her first railway for +public traffic between Bombay and Tannah on November 18, 1852. In 1855 +she had 841 miles of road, which increased to 6,515 miles in 1875 and to +15,828 miles in 1889, of which 8,423 miles were owned and operated by +the state. The total cost of these roads was $880,000,000. + +In Asiatic Turkey the first line was opened between Smyrna and Trianda +on the 24th day of December, 1860. This line was in 1866 extended to +Aiden, and in 1882 to Sarakio. There are at present five lines with a +total extent of 446 miles, all owned by English companies. New lines, +covering in all 3,952 miles, have recently been projected. + +The first line in Persia, only seven miles long, and extending from +Teheran to Schah-Abdal-Azzim, was opened on the 25th day of June, 1888. +Another line, from the Caspian Sea to Amol, is now in process of +construction. A line was opened last September between Joppa and +Jerusalem. It is 53 miles in length. + +Japan may be said to be already thoroughly familiar with the European +system. The first and principal line was opened on the island of Napon, +between Tokio and Yokohama, on the 14th of October, 1872. Two other +short lines followed in 1874 and 1876, when the total extent of the +Japanese roads was about 135 miles. In 1883 the construction of the +Grand Trunk Railroad, from Tokio to Kioto, was commenced, which line has +been in operation for the past five years. Other lines, aggregating over +400 miles, will soon be opened for traffic. The total extent of road in +operation in 1888 was 580 miles, 310 of which were controlled by the +state, and the remainder by private companies. In 1890 the total number +of miles exceeded 900. The total average cost per mile was $58,000. + +No nation has probably opposed the introduction of the railway as +stubbornly as the Chinese. The first railroad, scarcely seven miles +long, was built by an English company near Kaiping to facilitate the +transportation of coal from the mines in that vicinity. In 1886 a +Chinese company purchased this line and has since extended it to +Tientsin, making its present length about eighty-four miles. The Chinese +government has recently authorized the further extension of this line to +Yangchou, a place but a few miles distant from Pekin. + +Of the Asiatic islands Java has the largest and oldest railroad system. +On the 10th of August, 1867, the first line was opened between Samarang +and Tangveng. Other coast lines have since been constructed, but +communication is still sadly neglected in the interior. In 1889 there +were operated on the island nearly 800 miles of road, the greater part +being the property of private companies. + +A road was opened upon the island of Ceylon between Colombo and Kandy in +1867, to which several branch lines and extensions have since been +added. The total system comprises at present about 180 miles. + +Short lines have also been built in Burmah (1889); in the Malay +Peninsula (1885), in Sumatra (1876), and in Cochin China (1885). A line +from Bangkok to Bianghsen, in Siam, is being projected at the present +time. + +In Africa, if we except its northern coast, the construction of +railroads has only kept pace with the slow development of the resources +of that continent. Its European colonies are still but thinly inhabited, +and their industrial and commercial life still resembles much that of +the American colonies of the seventeenth century. There can be little +doubt, however, that with the increasing immigration the growing demand +for better transportation facilities will speedily be met by European +capital. + +The first railroad upon African soil was built by the Egyptian +government from Alexandria to Cairo, and from there through the desert +to Suez. A part of this line, 130 miles long, was opened to traffic in +1856, and the remaining ninety miles the year following. Nothing further +was done until after Ismail Pasha ascended the throne, in 1863. The +railroad system of Lower Egypt, between Alexandria in the west, Cairo in +the south, and Ismaila in the east, was then greatly extended and the +service materially improved. + +After the opening of the Suez Canal the line through the desert to Suez +was abandoned. The railroad system of Egypt comprises at present about +1,250 miles, all of which belongs to the government except two short +lines which are private property. + +The beginning of the railroad system of Algiers dates back to 1860, when +the French government gave a charter to the Companie des Chemins de Fer +Algerians, authorizing it to build a number of lines connecting the +principal cities of the province with the Mediterranean. The line from +Algiers to Blidah, thirty-two miles long, was opened on September 8, +1862. Further construction was then delayed until 1863, when the charter +of the original company was transferred to the Paris, Lyons and +Mediterranean Railroad Company. The original plans were then in the main +carried out, until the disturbances caused by the Franco-Prussian war +again put an end to railroad enterprises. In 1874 three new companies +were chartered and railroad building was resumed. In 1888 the Algerian +railroad system comprised 1,350 miles. + +The first road in Tunis was built in 1872 from the city of Tunis to +Bardo and Gouletta by English capitalists. It was, in 1880, sold to an +Italian company to which the Italian government for political reasons +had seen fit to guarantee certain dividends. Other small lines have +since been constructed, and more important ones have been prospected. +The number of miles at present in operation is 153. + +The French colony on the Senegal River has a number of short lines, of +which the first was opened in July, 1883. These lines aggregate at +present about 200 miles. It is now contemplated to extend this system to +the upper Niger. This would necessitate the construction of 240 +additional miles of road. + +The Cape Colony has the largest mileage of any of the European colonies +in Africa, the absence of navigable rivers rendering railroads here more +necessary than elsewhere. The first line was opened on the 13th of +February, 1862. It then extended from Cape Town to Earste River, but was +extended to Wellington the following year. The number of miles of road +in operation in 1875 was 906, and in 1891 it had increased to 2,067. All +the roads of the colony, excepting a line of 93 miles belonging to the +Cape Copper Mining Company, are operated by the colonial government. +Their net revenue in 1886 was 2.84 per cent. of the capital actually +invested. + +Port Natal built her first railroad in 1860. It was only two miles long +and extended from the city of Durban to its harbor. Since then several +inland lines, aggregating over four hundred miles, have been constructed +at a cost of twenty-two million dollars. The roads are operated by the +colonial government and yielded in 1891 a net revenue of 4.4 per cent. +on the capital expended. + +Short lines have also been built on Mauritius and Reunion, and there is +now every indication that Portuguese Africa and the Congo State will be +provided with railroad facilities in the near future. + +The introduction of railroads into Australia dates back to the sixth +decade of the present century. The total number of miles of road +reported in 1889 by the several colonies was 8,883. If we estimate the +population of the continent at 3,000,000 for that year it will be seen +that Australia has more miles of road per capita than any other grand +division of the globe, save North America. + +New South Wales, the mother colony of the Australian continent, opened +its first road on September 26, 1855, between Sydney and Paramalta. This +road was built by a private company, but was soon after its completion +purchased by the colonial government, and was in 1869 extended to +Goulbourn. In 1875 the colony had only 436 miles of road in operation. +The mountains, however, which separated the wide plains of the interior +from the coast had been surmounted, and the government commenced to push +the construction of new roads with great vigor. At the end of the year +1886 New South Wales had no less than 1,888 miles of road in operation, +for which the colony had expended $113,000,000. The net revenue during +that year was 2.9 per cent. on the capital invested. The total number of +miles of railroad in this colony was 2,247 in 1889. + +Victoria, the smallest of the colonies, has made by far the greatest +progress in railroad building. The first road in the colony, and, in +fact, the first road upon the Australian continent, was built in 1854 +between the city of Melbourne and its port, a distance of two and +one-half miles. Within the next five years four other lines were +constructed, connecting Melbourne with Williamstown, St. Kilda, +Brighton and Echuca, respectively. In 1870 there were in the colony 275 +miles of railroad, which had increased to 1,198 miles in 1880, and to +2,283 miles in 1889. Several of the roads were originally owned by +private companies, but all of them were in time acquired by the colonial +government, the last one in 1878. The total capital invested in 1887 was +$125,000,000, which yielded a net revenue of $5,800,000. All lines are +under the control of a board so constituted as to be entirely removed +from political influence. + +In South Australia a short line was built in 1856 from the city of +Adelaide to Port Adelaide. Another line was constructed in 1857 from +Adelaide to Salisbury, which three years later was extended to Kapunda. +The colony had then forty miles of road. The increase during the next +decade was only ninety-three miles. Since then the development has been +much more rapid, the whole system of railroads comprising 1,752 miles in +1889. All the roads save a few suburban lines are owned and operated by +the colony. Their total cost is not far from $60,000,000, and their net +annual revenue is about two and one-half per cent. of the capital +invested. + +The colony of Queensland has only a system of narrow-gauge roads, with +the construction of which it commenced in 1865. Up to September, 1887, +the colonial government had constructed 1,641 miles of road at a total +cost of $47,700,000. The total number of miles has since been increased +to 2,058. The net revenue of the roads was a little over one million +dollars in 1886. + +The transportation facilities of West Australia are still far behind +those of her sister colonies. The first line was opened in 1873, and the +total number of miles of road operated in the colony in 1889 was only +496. The government controls nearly all the railroads of the colony. + +Of the islands of Australasia, Tasmania and New Zealand are as yet the +only ones that have railroad communication. The former built its first +road in 1870 and had at the end of the year 1890 about 1,900 miles in +operation. New Zealand opened its first railroad between Christchurch +and Lyttleton on December 1, 1863. The development of the system was +slow at first, there being but 25 miles of road in operation in 1870. In +1891 the number of miles of road had increased to 1,916, all but 92 +miles being operated by the colonial government. The total amount +expended by the government for railroads is $55,000,000. The net revenue +in 1887 was about 2-1/2 per cent of the amount invested. + +In South America railroad building is of comparatively recent date. The +first road was built in 1851, but the line was short and remained the +only one for several years. With thirty million people the South +American states have at present but little more than 16,000 miles of +railroad, a condition which must at least in part be ascribed to the +peculiar conservatism of the Latin race. + +The United States of Colombia possesses less than 250 miles of road. Its +first line was the Panama Railroad, from Colon to Aspinwall. It connects +the Pacific with the Atlantic ocean, is 48 miles long and was +constructed in 1855. This, as well as the several other roads of +Colombia, is the property of private companies. A number of new roads +have recently been surveyed. + +Venezuela opened in 1866 a road, 56 miles long, from Puerto Caballo to +Palito, which in 1870 was extended to Aroa. A number of other short +roads, aggregating about 350 miles, have since been constructed. The +total extent of railroad in Venezuela was 432 miles in 1889, of which +the greater part was operated by private companies. Several important +lines are in the process of construction, and will connect Caracas with +Carabobo, San Carlos and the port of La Guayra. + +The Republic of Ecuador constructed in 1876 a road from Jaguachi to +Puente de Chimbo, a distance of 43 miles. This line was recently +extended to Siambe, and has now a total length of 94 miles. In 1886 a +charter was granted to a North American company, authorizing the +construction of a road from San Lorenzo to Esmeraldas and guaranteeing +certain dividends on the investment. At the close of the year 1889 +Ecuador had 167 miles of road. + +The first railroad in Peru was built in 1851, connecting the seaport +Callao with the capital, Lima. After this but little was done for more +than twenty years. At the beginning of the seventies an extensive +railroad system was projected at the instigation of President Don Manuel +Pardo, and the construction of the principal road of the system from +Mollendo on the Pacific Ocean to Santa Rosa was at once entered upon. +This road ascends the Western Cordillera, crosses a number of prodigious +mountain passes, reaches Lake Titicaca, and then proceeds in a +northwesterly direction to Santa Rosa. It is over 300 miles long, and +reaches near Puna an altitude of 14,700 feet. An extension of this line +from Santa Rosa to the old Inca city Cuzco was opened in 1875, but was +subsequently destroyed in the war with Chile, and has not been reopened. +Another road, extending from Callao to San Mateo, was opened in 1876. It +is eighty-seven miles long, and reaches with its enormous grades a +height of over 13,000 feet. It belongs, with the Santa Rosa road, to the +boldest creations of railroad engineering. Since the war with Chile +railroad enterprise has been checked. The number of miles of road in +operation rose from 962 in 1875 to 1,615 in 1880, but was, owing to the +abandonment of certain lines, diminished to 813 in 1884. Since that time +about 400 miles of new road have been opened. + +In the Republic of Bolivia the first railroad was built about twenty +years ago from Antofogasta to Solar. After the cession of the province +of Antofogasta to Chile there remained but thirty-five miles of road in +Bolivia. More than 200 miles have since been added by the construction +of several short roads, chiefly the property of mining companies. + +The Republic of Chile was the first of the South American states to +initiate the construction of railways. The building of a line from the +seaport Caldera to Copiapo was commenced in May, 1850, and was completed +on January 2, 1852. This line was constructed and operated by a private +company. The first state road, extending from Valparaiso to Santiago, +was opened on the 15th of September, 1865. To this road has since been +added an extension to Talcahuana, as well as several branch lines. The +total amount that has been expended by the Chilean government for the +construction of railroads is $43,000,000. The total number of miles of +road operated in Chile in 1887 was 1,674, of which 992 were the property +of private companies and 682 miles were owned by the state. Two hundred +and fifty miles of road have since been constructed, and the +construction of 700 additional miles of railroad has been authorized by +the government. + +The Argentine Republic opened its first road, extending from Buenos +Ayres to Belgrano, in December, 1862. Several other lines soon +followed, and in 1870 over 600 miles of road had been constructed. This +number had increased to 1,440 in 1880 and to 5,100 in 1889. Since then +several new lines have been completed, aggregating over 600 miles. Among +the principal lines of the Argentine Republic is the transcontinental +road which connects the Atlantic with the Pacific Ocean. The whole line +is 880 miles long, of which 665 miles are in the Argentine Republic and +the remaining 115 miles in Chile. Of the 3,705 miles of road which were +in operation at the beginning of the year 1887 the republic owned 1,148, +the province of Buenos Ayres 572, the province of Santa Fe 102, and +private companies 1,888 miles. The total amount invested in railroads +was $154,000,000 in 1887, which yielded an average dividend of 3.9 per +cent. + +The oldest railroad in Brazil is the Petropolis road. It was built by a +private company and opened on December 16, 1856. In 1881 the total +number of miles in operation was 2,422, and in 1889 it had increased to +5,766. Furthermore charters had been granted for the additional +construction of 2,271 miles of road. Of the lines in operation about +1,200 miles are the property of the state, yielding a revenue of nearly +3 per cent. on the capital invested. The state gives aid, besides, to +several private roads. The most important road of Brazil is the state +road Dom Pedro I., which connects the three richest provinces of the +country, Rio de Janeiro, Minas Gerals and Sao Paolo, with the national +capital. It was opened in 1883, and has a total extent of 544 miles. + +The principal roads of Uruguay were built between 1865 and 1875. In the +latter year the total number of miles in operation in Uruguay was 190, +which in 1880 had increased to 230, and in 1889 to 469 miles. + +In the remaining political divisions of South America the railroad +extended its dominion still more slowly. Paraguay opened as early as +1863 a line 45 miles long from Asuncion to Itangua, and in 1892 her +railroad system had increased to 159 miles in extent. British Guiana +completed in 1866 a line from Georgetown to New Amsterdam, but not one +mile of railroad has been built in that colony since. Of the islands of +South America Trinidad is the only one into which the railroad has been +introduced. The island has at present 50 miles of road, to 16 in 1878. + +Central America has less than 600 miles of railway. The causes which +have retarded the development of the railroad system in South America +are also operative here. Of the five republics of Central America Costa +Rica has the largest number of miles of railroad, viz.: 161. It has +three different lines, of which the Limon and Carillo line, seventy +miles long, is the most important. This road, which connects with a New +York line of steamers at Limon, has greatly furthered the cultivation of +bananas in the Santa Clara valley. + +Nicaragua completed its first road in 1880 between Corinto and +Chinandega, and has at present about 100 miles of railway in operation. +The Nicaragua Canal Company is constructing a road from Juan del Norte +to Ochoa, a distance of thirty-two miles, to be used in the construction +of the canal. + +Honduras opened in 1871 its only line, thirty-seven miles long, between +Puerto Caballo and San Jago. In recent years an extension of nine miles +has been added to it. + +San Salvador has, besides a street-car line between the cities of San +Salvador and Santa Tecla, only one line of railroad between Acajutla +and Armea, which was constructed with public funds and opened for +traffic on July 15, 1882. + +Guatemala was the last of the Central American States to introduce the +railroad. Its first road, seventy-four miles long, and extending from +San Jose on the Pacific Ocean to the capital, Guatemala, was built by a +San Francisco company and opened on August 20, 1884. The state has at +the present time about 100 miles of road, with several short but quite +important lines under construction. + +The West Indies have between 1,200 and 1,400 miles of railway, of which +more than 1,000 are in Cuba. The first road upon this island, 179 miles +long and extending from Habana to Guanajay, was opened as early as 1837. +The next ten years developed almost the whole of the railroad system of +the western half of Cuba. A number of important roads have since been +opened in the central and eastern portions of the island, whose railroad +mileage is at present larger per capita than that of any other political +division of the Western Hemisphere save that of Canada and the United +States. The second of the West India islands to construct a railroad was +Jamaica. A line connecting Kingston and Spanishtown was opened on the +21st of November, 1845. Two branch lines have since been added, making +the total number of miles of road on this island seventy-six at the +present time. About twenty-five miles more are now in the process of +construction. San Domingo and Hayti have also recently commenced to +build railroads. In the former republic a line from Sanchez to LaVega, +sixty-two and one-half miles long, is now open to traffic, and Hayti is +constructing a line from Gonaives, on the western coast, to Porte de +Paix, on the eastern coast of the island. The Spanish government in +1888 also granted a charter for the construction of a railroad on the +island of Porto Rica. + +Of our neighbors on the North American continent, Mexico and Canada, the +former has been by far the slower to avail herself of the advantages of +railroad communication. The slow growth of the railroad system of Mexico +must be ascribed chiefly to the frequent political disturbances of the +country as well as to the many topographical obstacles which presented +themselves to the railroad engineer. The first Mexican railway, +excepting tramways, was the one which connects the capital with the city +of Vera Cruz. It was constructed by an English company and was opened on +the first day of January, 1873. In 1875 the total number of miles of +road in Mexico was 327, and five years later somewhat less than 700. +Since then the development of the system has been much more rapid. In +1880 several companies were formed for the purpose of building a system +of roads which would connect the Mexican capital with the United States +as well as with the most important harbors of the gulfs of Mexico and +California. The projectors of these lines, who were citizens of the +United States, received the hearty cooperation of the Mexican +government, and the work was at once pushed very vigorously. At the end +of the year 1885 more than 2,500 miles of new road were open for +traffic, and a thousand miles more at the end of the following year. In +1889 Mexico had 5,332 miles of road. The principal one of the newly +constructed roads is the Mexican Central, which connects Paso del Norte +with the City of Mexico. This line will also, when its branches are +completed, form a through route between the Gulf of Mexico and the +Pacific Ocean. Another scarcely less important through line north and +south is the National Mexican Railway, which is 722 miles long and +connects Laredo, on the Rio Grande, with the capital and the southern +states. Another line has recently been opened from Torreon to Durango. +The number of miles of road at present in operation in the Republic of +Mexico is about 6,800, with a number of new lines rapidly nearing +completion. The development of Mexico's resources has, during the past +decade, kept pace with the rapid expansion of its railroad system. + +In the Dominion of Canada about fifteen miles of railroad line were +built as early as 1837, but only forty-three miles was added during the +next ten years. In 1852 there was still only 212 miles of railroad in +all of the British possessions in North America. At that time the +construction of the Grand Trunk system was commenced, the first section +of the system, Portland-Montreal, being opened in 1853. After this +railroads increased very rapidly in Canada, reaching an extent of 2,087 +miles in 1860, 4,826 miles in 1875, 6,891 miles in 1880, and 10,150 +miles in 1890. The majority of Canadian railroads are in the hands of +private companies, some of which have been very materially aided by the +government. One of the conditions upon which the union of the several +British provinces, except Newfoundland and Prince Edward Island, was +effected in 1867, was the construction of a railroad by the Dominion +government connecting the provinces of Ontario, Quebec, Nova Scotia and +New Brunswick. This road, the main line of which extends from Point +Levis, opposite Quebec, to Halifax, was accordingly built, and is still +operated by the Canadian government. Its cost was about 46,000,000. + +But the most important enterprise in which the government is interested +is the Canadian Pacific Railway. Like the intercolonial railway, this +line was a result of the political union of the colonies. Its +construction was commenced by the government, but was subsequently +assigned to a private corporation, the Canadian Pacific Railway Company, +all that had been done by the government being turned over to the +company as a gift. It is estimated that the direct gifts of money, the +land grant and other privileges conferred by the Dominion government +upon the Pacific Railway Company exceed $100,000,000 in value, and that, +with the amount of bonds and stock guaranteed by the government, the par +value of its various aids amounts to $215,000,000, or $48,000,000 more +than the cost of the road, as will be shown by the following table, +taken from the report of the Interstate Commerce Committee of the Senate +of the Fifty-first Congress: + + Subsidy granted by the act of Parliament of + February 13, 1881 $25,000,000 + Seven hundred and fourteen miles of railroad + constructed by the Dominion Government, original + cost and interest 36,760,785 + Capital stock guaranteed 65,000,000 + Loan to the company authorized by Parliament of + 1884, in part 29,880,912 + Balance of above loan 15,000 000 + Bonds, interest guaranteed by the Dominion for + 50 years at 3-1/2 per cent 15,000,000 + Land grant bonds 25,000,000 + Subsidy of $186,000 a year, for 20 years 3,720,000 + ------------ + Total $215,361,697 + + Total cost of road, according to the company's + balance sheet of December, 1888 $131,350,019 + +The Dominion Government owns and operates four railways, the cost of +which up to June 30, 1890, was $52,800,000. It has also granted to +railroad companies cash subsidies which to June 30, 1889, amounted to +over $46,000,000. The total number of miles of railroad in Canada was +14,004 in 1890. The people of Canada have, since the political union of +the colonies, pursued an exceedingly liberal policy toward their +railroads, but it appears that the great indulgence of the government +only bred license in railroad circles. The evil increased from year to +year, until the many complaints on the part of the public against +railroad management caused Parliament in 1886 to appoint a commission to +examine into the alleged abuses and to report as to the advisability of +the adoption of a general railroad law, and the appointment of a Board +of Railroad Commissioners. The committee reported to the +Governor-General of Canada on the 14th of January, 1888, and, acting +upon its recommendation, Parliament passed the Railway Act of May 22, +1888. This act, containing 309 paragraphs, provides for the complete +regulation of railroad affairs, and for this purpose creates a Board of +Railroad Commissioners, consisting of the Minister for Railroads and +Canals, the Minister of Justice and two or more members of the Privy +Council. The act also repeals all former railroad laws. Though it has +been in force less than five years, its beneficial effects are already +extensively felt by the Canadian public. + + + + +CHAPTER III. + +HISTORY OF RAILROADS IN THE UNITED STATES. + + +In no country in the world has the growth of railroads been so rapid as +in the United States. With a population less than one-fifth as large as +that of Europe this country has a larger number of miles of railroad +than that continent. While European countries generally opposed the +introduction of the new system of transportation, our people extended to +it a hearty welcome. This difference of sentiment can easily be +accounted for. At the time of the invention of railroads Europe had a +system of turnpikes and canals which, at least for the time being, +answered every purpose. It became necessary for the railroads to enter +into competition with these well-established agencies of transportation, +which had the test of time, popular prejudice and governmental sanction +in their favor. Moreover, the railroad as a new and unknown quantity +caused a feeling of uneasiness in all conservative circles. It seemed to +make war against time-honored principles of statecraft and society, and +threatened to bring about a revolution the outcome of which no one could +foresee. + +The condition of things was entirely different in the United States. +There were but few good roads and still fewer turnpikes and canals. A +vast territory in the interior awaited cultivation. Excepting the coast +and a few cities situated on the large navigable rivers, the East and +the West and the North and the South were practically without commercial +relations, and were only held together by a community of political +traditions and the artificial cement of a common constitution. Even had +the country had a system of turnpikes and canals, the Mississippi River +would still have been a forty days', and the extreme Northwest a three +months' journey distant from New York. It seems extremely doubtful +whether the different sections of so large a realm, having so little +community of commercial interests, could long be kept together under a +republican system of government. The settlement of the central portion +of the country and the development of its resources seemed to be the +task of future centuries. The railroad under these circumstances made +its appearance at a most opportune time for America, and the American +people were not slow to make the best of the opportunities presented to +them. + +In the United States, as in England, the railroad was preceded by the +tram-road. The first tram-road in this country was opened in 1826. It +connected the granite quarries of Quincy with the Neponset River, and +was operated by horsepower. The second road of this kind was the Mauch +Chunk tramway, in Pennsylvania, opened in 1826, for the transportation +of coal. The trains were drawn up an inclined plane by stationary +engines and were moved down by their own weight. During the same year +the Delaware and Hudson Canal Company opened the Carbondale and +Homesdale tramway, connecting their mines with the Delaware and Hudson +Canal. It appears that an English locomotive was imported for use on +this line in 1828, but that it did not answer its purpose. + +During the same year was commenced the construction of the first line of +importance in this country, the Baltimore and Ohio. The line was opened +for traffic in 1830, having then an extent of fourteen miles. In 1831 it +was extended sixty-one miles, and the year following sixty-seven miles. +For a year the road was operated by horsepower, but in 1831 the company +purchased for its road an American locomotive. + +The first road upon which a locomotive engine of American manufacture +was used was the South Carolina Railroad, which was commenced in 1830. +The engine was manufactured at West Point and was placed upon the road +in December of the same year. The line had then an extent of ten miles. +In 1832 it had increased to sixty-two miles, and in 1833 to 136 miles. +The construction of the Mohawk and Hudson was commenced in August, 1830, +and the road was opened in September of the following year. Its first +locomotive engine was also imported from England, but, being found too +heavy, was soon replaced by an American engine of half its weight. In +1831 two other New York roads were commenced, the Saratoga and the New +York and Harlem. A small portion of the latter was opened during the +same year, and the former in July, 1832. The Camden and Amboy Railroad +in New Jersey was likewise commenced in 1831, but its completion was not +reached till 1834. The New Castle and Frenchtown Railroad was completed +in 1832, the Philadelphia and Trenton in 1833, and the New Jersey in +1834. In 1835 the Washington branch of the Baltimore and Ohio was +opened, and the entire line had at the end of that year attained an +extent of 115 miles. During the same year three Massachusetts roads, +connecting Boston with Providence, Worcester and Lowell respectively, +were opened. In 1836 the New York Central route was opened to Utica. In +1837 the Richmond, Fredericksburg and Potomac Railroad was completed +from Richmond to Fredericksburg. In 1838 the Richmond and Petersburg and +the Philadelphia, Wilmington and Baltimore railroads were opened. The +Wilmington and Weldon Railroad was completed in 1840, and the Petersburg +and Roanoke three years later. There was now a continuous line of +railway from the Potomac to Wilmington, North Carolina. In 1842 the +whole line of the Boston and Albany road was completed, which thus +became the first important through route in America. + +The construction of railroads in the United States was from the first +carried on without a system. Railroads in an early day were purely local +affairs. Each locality operated its own road in its own interest and +without any supervision from the State which had granted its charter. +Acts of incorporation or charters were granted as a matter of course. +Railroads were looked upon as the natural feeders of canals, and their +future importance was foreseen by very few men. The early roads were a +heavy burden on the capital of the country. A number of small roads were +built that proved unprofitable and had to be abandoned. After the +financial panic of 1837 there was, except in New England, a very +perceptible stagnation in railroad enterprise, which lasted until the +discovery of gold in California, in 1848. The average number of miles of +road constructed per annum during the ten years preceding 1848 was 380, +while it was nearly 1,800 per annum during the seven years following. + +It may be said that with the discovery of gold in the West ends the +first or formative period of railroad construction. From the first +opening of the Baltimore and Ohio to the beginning of the year 1848, a +period of eighteen years, there were constructed in the United States +5,205 miles of railroad, or an average of 289 miles per annum. The +discovery of gold on the Pacific gave a new impetus to railroad +construction throughout the country. Railroads now ceased to be local +works and became interstate or national thoroughfares. Extensive new +lines were built and through routes were formed by the coalition of +local roads. It was during this period that railroad companies first +became conscious of the importance of their mission and that they +commenced to compete with river and canal carriers. In 1848 a through +route was completed between Cincinnati and Lake Erie. A more direct +line, the Cleveland, Columbus and Cincinnati road, was opened in 1851. +During the same year the Erie Railroad reached Lake Erie and connected +the lake with the Hudson, and a year later Chicago received railroad +connection with the East by the completion of the Michigan Central and +Michigan Southern. In 1854 the Chicago and Rock Island reached the +Mississippi River, and in 1855 the Chicago and Galena was opened. One +year later the Illinois Central reached the Mississippi at Cairo, and +the Chicago, Burlington and Quincy Railroad was opened to Quincy. The +Ohio and Mississippi, between Cincinnati and St. Louis, was completed at +about the same time. The Pittsburgh, Fort Wayne and Chicago, an +extension of the Pennsylvania road, was completed to Chicago in 1858. At +the beginning of 1859 the Hannibal and St. Joseph Railroad reached the +Missouri River, and eight years later the Cedar Rapids and Missouri was +completed to the Missouri at Council Bluffs. + +To encourage the extension of railroads into new and thinly settled +territories, and to thus hasten their settlement and the development of +their resources, the people of the United States began at the +commencement of this period to favor the policy of land grants. Such +grants had repeatedly been made to roads and canals prior to the crisis +of 1837. The first railroad that received a land grant was the Illinois +Central. The scheme was proposed as early as 1836, but the act making +the grant was not passed until September 20, 1850. Other grants followed +in 1852 in Missouri, in 1853 in Arkansas, in 1856 in Michigan, +Wisconsin, Iowa, Florida and Louisiana. As a rule these lands were +granted by the National Government to the States, and by them to the +railroads. The land grants made during President Fillmore's +administration amounted to eight million, and those made during Pierce's +administration to nineteen million acres. The financial crisis of 1857 +and the War of the Rebellion again checked railroad building, but this +period developed a new phase of railroad enterprise as well as of the +land grant policy. In those times of national trial a railroad to the +Pacific Coast seemed a political necessity. The project of connecting +the Atlantic and Pacific oceans by a line of railroads was first brought +prominently before the American people by Asa Whitney of New York. At a +meeting held under his auspices in Philadelphia on the 23d day of +December, 1846, a movement was inaugurated for the purpose of +interesting the people in this enterprise and securing the aid of the +government for its accomplishment. Various plans were urged, and earnest +discussions followed, in which the ablest minds of the nation +participated. The continual agitation of the subject finally led, on the +1st of July, 1862, to the passage by Congress of an act incorporating +the Union Pacific Railway Company and the adoption of the central route. +The Union and the Central Pacific companies received a virtual money +subsidy of $30,000,000 and a land grant aggregating nearly twenty-three +million acres, a domain almost equal to the State of Indiana. Other +direct grants of territorial lands soon followed. The Northern Pacific +received, just before the close of the war, a grant of forty-seven +million acres of land. In the Southwest public lands were also freely +given to new Pacific lines. The various grants made to railroads +comprise no less than 300,000 square miles, equal to four and a half +times the area of New England, or six times that of the State of New +York, or equal to the total area of Iowa, Wisconsin, Illinois, Indiana, +Michigan and Ohio. Where these grants were not deemed sufficient +inducement for the construction of roads, counties, cities and towns +freely voted subsidies, while private citizens made donations to or +subscribed for the securities of the new railroads. + +As has already been stated, the consolidation of connecting lines and +their transformation into a few large through routes was one of the +characteristic features of this period. As through traffic, and +particularly through freight, grew in importance, it became more and +more apparent that frequent transhipment was an expense to the railroads +as well as a burden to the public. The system of railroad ownership and +management soon adapted itself to the necessities of business. The +change seems to have been inevitable, for it occurred in all parts of +the world at about the same time. Sagacious men early recognized the +importance of railroads as national lines of communication. This idea no +doubt controlled the projectors of the Baltimore and Ohio, of the Erie, +and of the Boston and Albany roads. The first consolidation of any +importance took place in 1853, when eleven different roads between +Albany and Buffalo were united to form the New York Central. Five branch +roads were added to the system between 1855 and 1858. In 1864 Cornelius +Vanderbilt secured control of the Hudson River road, and in 1867 of the +New York Central, which lines he consolidated in 1869. By gaining soon +afterward control of the Lake Shore and Michigan Central and Southern +Canadian roads, he united under one management over 4,000 miles of +railroad between New York and Chicago, and thus created the first +through line between the East and the West. + +As has already been stated, the Pennsylvania road gained control of the +Pittsburgh, Fort Wayne and Chicago in 1858 and thus extended its system +as far as Chicago. Through the absorption of other lines it reached an +extent of over 7,000 miles. The creation of this through route was +chiefly the work of Thomas A. Scott, at that time vice-president, and +later president, of the Pennsylvania railroad. + +In 1874 the Baltimore and Ohio, under the management of John W. Garrett, +extended its system to Chicago, and became a competitor of the two older +lines in the transportation of through freight. At about the same time +two other parallel trunk lines were developed, the Grand Trunk on the +north, and the Erie, between the Lake Shore and Pennsylvania lines. +There were, therefore, in 1874 five rival trunk lines competing for the +business between the West and the seaboard. + +During the same period large rival lines developed west of Chicago and +St. Louis. From the former city radiate the St. Paul and Northwestern +systems, each with from 6,000 to 8,000 miles; the Atchison, Topeka and +Santa Fe with over 9,000 miles; then the Rock Island, the Chicago, +Burlington and Quincy, the Illinois Central, the Chicago Great-Western, +and the Chicago and Alton, their systems ranging from 1,000 to 6,000 +miles in extent. From St. Louis radiate the various branches of the +Missouri Pacific and the closely allied Wabash system, controlling +together some 10,000 miles of road. + +This process of consolidation also went on in the Southern States, +though to a less extent. Their systems do not run parallel, like the +trunk lines, nor do they radiate from a common center, like the roads of +the Northwest, but they radiate from the principal ports of the Atlantic +and the Gulf of Mexico toward the interior. + +We now enter upon the third period of the history of American railroads, +the period of combinations. During the time of great activity in +railroad construction following the War of the Rebellion many abuses in +railroad management had been developed, which caused general complaint +and led to what is known as the Granger movement. Laws were demanded, +especially in the agricultural States of the West, which should regulate +the rates, methods of operation, and the political relations of the +railroads. The friends of this movement were successful in the political +contests that followed, and Granger legislatures were elected in the +States of Illinois, Wisconsin, Iowa and Minnesota. Laws were passed +fixing the rates on different classes of roads and providing penalties +for their violation. The companies contested these acts in the courts, +but were defeated at every step, until in 1877 the Supreme Court of the +United States sustained the constitutionality of the Granger laws. In +the meantime railroad managers tried their utmost to render, by shrewd +manipulation, these laws obnoxious, and they finally succeeded in having +them repealed or so amended as to render them largely ineffectual. + +It was the principal object of the Granger movement to do away with the +many discriminating tariffs which so injuriously affected local points. +It is true, discriminations between individuals were practiced at +business centers, but rates upon the whole were low at such points as +compared with those which obtained at local stations. While the Granger +contest was still going on in the West, a new evil developed in the +East, which became characteristic of the period and finally grew into +one of the most intolerable abuses of railroad management. Railroad men +had gradually learned that it was in their power to maintain high rates +at competitive as well as at non-competitive points, provided all the +roads centering at such points could be induced to cooperate, or rather +to conspire for that purpose. The final solution of the problem was, +after some experimentation, found in the device to control the prices of +transportation generally known as the pool. It is doubtful whether any +contrivance connected with railroad management ever threatened to +subvert long-established principles of the common law more completely +than this. Within a few years it extended its dominion over the whole +country, exacting a heavy tribute from its commerce, until the people's +patience finally became exhausted and their determined demand for +railroad reform led to the enactment of the Interstate Commerce Act in +1887. + +When this act passed, dire results were predicted by nearly every +railroad man in the country. Prophecies were freely made that it would +ruin half of the roads and seriously cripple and sadly interfere with +the usefulness of the other half, that it would derange the business of +the country, greatly depreciate all railroad securities and put an end +to railroad construction. Nearly seven years have passed since the +adoption of the law, but not one of these prophecies has come to pass. +There are at present probably less bankrupt roads in the United States +than there have been at any time for twenty years, our business +interests have been improved, the securities of honestly managed roads +are in better repute than they were previous to the passage of the law, +and the railroad mileage of the country is increasing at the rate of +about 6,000 miles a year. If any branch of business has suffered in +consequence of the enactment of the law, it is the branch monopolized by +Wall Street. Since 1885, the time when the Interstate Commerce Bill was +first seriously agitated, the aggregate of railroad securities has +increased nearly $2,500,000,000, or about one-third. This certainly does +not look as if capital had been seriously frightened by the Interstate +Commerce Act. There are other proofs of railroad prosperity. In 1885 the +gross earnings of the railroads of the United States were $772,568,833, +or 9.9 per cent. on their reported capital. In 1886 their gross earnings +were $829,940,836, or 10.2 per cent. on the reported railroad capital. +In 1890 the gross earnings had increased to $1,097,847,428, and equaled +10.8 per cent. on the reported capital. This includes even the +capitalization of new lines and others not reporting operations. Mr. +Poor gives the reported cost of the lines actually operated as +$8,519,670,421, against $10,122,635,900 reported cost of all the +railroads built. Omitting from the computation the lines not reporting +operations, the gross earnings of the roads actually operated equaled +12.7 per cent. and their net earnings 4 per cent. on the actual cost of +the lines which reported. The gross earnings for 1891 were +$1,138,024,459, and for the year ending June 30, 1892, $1,222,711,698. + +The gross earnings per mile have increased from $6,265 in 1885, and +$6,570 in 1886, to $6,946 in 1890, and $7,409 in 1892. In 1885 the +capitalization per mile of road was $55,059 and the net earnings per +mile were $2,185. In 1890 the capitalization per mile had decreased to +$53,783, while the net earnings per mile increased to $2,195. The +railroad mileage of the country has grown from 128,361 in 1885 to +166,817 in 1890, to 170,601 in 1891, and to 175,000 in 1892. + +The railroad system of the United States has had a phenomenal growth, +especially since 1870, since which time nearly 120,000 miles of road, or +more than two-thirds of the total mileage, have been constructed. The +table below shows the number of miles of railroad constructed and in +operation, by quinquennial periods from 1830 to the close of 1890, +inclusive: + + YEAR. MILES IN OPERATION. INCREASE. + + 1830 23 + 1835 1,098 1,075 + 1840 2,818 1,720 + 1845 4,633 1,815 + 1850 9,021 4,388 + 1855 18,374 9,353 + 1860 30,626 12,252 + 1865 35,085 4,459 + 1870 52,922 17,837 + 1875 74,096 21,174 + 1880 93,296 19,200 + 1885 128,361 35,065 + 1890 166,817 38,456 + +It will be noticed that in the sixty years covered by the above table +there are but two quinquennial periods which show a falling-off in the +rate of growth, viz.: 1860-65 and 1875-80. During the former period +railroad construction was partially checked by the War of the Rebellion, +during the latter by the general financial depression following the +panic of 1873. + +The length of railroads in the world has grown from 206 miles in 1830 to +about 400,000 miles in 1892. The following table shows the growth of +railroad mileage by quinquennial periods: + + YEAR. MILES. + + 1830 206 + 1835 1,502 + 1840 5,335 + 1845 10,825 + 1850 23,625 + 1855 42,340 + 1860 66,413 + 1865 90,280 + 1870 131,638 + 1875 182,927 + 1880 231,190 + 1885 303,172 + 1890 385,000 + +From this table it is seen that the railroad mileage of the world has +doubled during the past fifteen years, and that its average annual +increase is at present not far from 17,000 miles. There is no doubt that +the extent of railroad construction has everywhere exceeded all +anticipations. So fast has the railroad system expanded in the most +highly civilized countries that it soon outgrew in nearly all of them +the laws originally adopted for railroad control. In time an almost +universal demand arose for reform, and the most progressive governments +were not slow in heeding it. For the past fifteen years there has been a +decided drift on the European continent toward state ownership of +railroads, or to such strict control of the transportation business as +virtually deprives the operating companies of the power to do injustice +to the public. + +The railroad is assuming more and more the character of an international +highway. A movement is on foot to connect the railroad systems of the +United States with those of South America by an intercontinental or +"Pan-American" railroad. Appropriations have been made by the United +States and several of the South American republics for a preliminary +survey of the proposed line. Three different surveying parties are in +the field, one in Central America and the other two in the United States +of Colombia and Ecuador. The progress so far reported by them is +encouraging, and there is now some hope that before the close of the +nineteenth century one may be able to travel by railroad from New York +to Valparaiso without even a change of cars. + +It has also been proposed to span Behring Strait and connect North +America with Asia and Europe by an international railway. This line, if +constructed, would be simply an extension of the proposed Pan-American +railroad and would follow the western coast of the United States as far +as Behring Strait, then cross over into Asia, traverse Siberia and +finally reach London via St. Petersburg, Berlin and Paris. It is very +questionable whether such a line is at present feasible either from a +technical or financial point of view, but the time will probably come +when the railroad track will connect New York and London. + + + + +CHAPTER IV. + +MONOPOLY IN TRANSPORTATION. + + +From time immemorial efforts have been made by designing men to control +either commerce or its avenues, the highways on the land and on the sea, +by a power which law, custom, ingenuity, artifice or some other agency +had placed into their hands. + +The ancient Phoenicians early aimed at and finally obtained the empire +of the sea by making themselves masters of the most commodious harbors +of the Mediterranean Sea and the Arabian Gulf. They established a +regular intercourse with the countries bordering on the Mediterranean as +well as with India and the eastern coast of Africa. From these latter +countries they imported many valuable commodities which were not known +to the people of other parts of the world, and during a long period they +held this lucrative branch of commerce without a rival. The character +and the situation of the Phoenicians aided them greatly in acquiring +this mastery of commerce. Neither their manners and customs nor their +institutions showed any marked national peculiarity; they had no +unsocial prejudices and they mingled with the people of other countries +without the least scruple or repugnance. As their native country was +small and quite barren, they early learned to rely upon commerce as the +best source of riches and power. Like the other Semitic tribes, the +Phoenicians were noted for their energy and acumen, and while they +were not a literary people in the strict sense of the word, ancient +civilization received probably a more powerful impetus through their +commercial supremacy than through any other agency. + +During the reign of King Solomon the Jews made an attempt to wrest from +the Phoenicians at least a part of the world's trade. Solomon built +ships and imported Phoenician sailors for his fleet. For a time it +seemed as if the Israelites might become the rivals of their teachers in +the art of navigation and in the mysteries of trade; but their peculiar +religious customs in that early day proved a serious impediment to +commercial ascendancy, as it rendered them incapable of that unreserved +intercourse with strangers so essential in commerce. + +The monopoly of the sea, at least of the Mediterranean, passed to the +Carthaginians, their descendants. The latter extended their navigation +toward the west and north. They planted colonies and opened new harbors, +and up to the time of the Punic wars kept almost the entire trade of the +countries bordering on the Mediterranean in their hands. + +After the downfall of Carthage the control of the commerce of Southern +Europe and Northern Africa descended to the Romans. When Rome became the +capital of the world, it gathered the wealth and valuable productions of +all its provinces. Under the consuls and the earlier emperors the +vigilance of the Roman magistrates and the spirit of the Roman +government gave every possible security to commerce and prevented for a +time the rise of monopoly. Nowhere was national union so complete or +commercial intercourse so perfect as in the Roman empire. The +intelligence and the power of Rome stimulated and regulated the industry +of her people and permitted them to enjoy the fruits of their efforts +without public or private restrictions. + +We have seen that the intercourse of Rome and her provinces was +facilitated by the construction of roads and the establishment of +imperial posts. During the decline of the empire the maintenance of +these posts led, however, to a grave abuse. We are informed by Gibbon in +his "Decline and Fall of the Roman Empire": + +"But these beneficial establishments were accidentally connected with a +pernicious and intolerable abuse. Two or three hundred agents or +messengers were employed, under the jurisdiction of the master of the +offices, to announce the names of the annual consuls and the edicts or +victories of the emperors. They insensibly assumed the license of +reporting whatever they could observe of the conduct either of the +magistrates or private citizens, and were soon considered as the eyes of +the monarch and the scourge of the people. Under the warm influence of a +feeble reign they multiplied to the incredible number of ten thousand, +disdained the mild though frequent admonitions of the laws, and +exercised in the profitable management of the posts a rapacious and +insolent oppression. These official spies, who regularly corresponded +with the palace, were encouraged by favor and reward anxiously to watch +the progress of every treasonable design, from the faint and latent +symptoms of disaffection to the actual preparation of an open revolt. +Their careless or criminal violation of truth was covered by the +consecrated mask of zeal; and they might securely aim their poisoned +arrows at the breast either of the guilty or the innocent, who had +provoked their resentment." + +After the downfall of the Romans, commerce remained paralyzed during the +period of Gothic ignorance and barbarism. The crusades for the recovery +of the Holy Land from the Saracens, in the eleventh and following +centuries, opened again communication between the east and the west by +leading multitudes from every European country into Asia; and though the +object of these expeditions was conquest, and not commerce, their +commercial effects were both beneficial and permanent. The crusades were +especially favorable to the commercial pursuits of the Italian states. +The vast armies which marched from all parts of Europe toward Asia gave +encouragement to the shipping of Venice, Genoa, and Pisa, which +sometimes transported them, and always supplied them with provisions and +military stores. Besides the immense sums which these states received on +this account, they obtained commercial privileges of great consequence +in the settlements which the crusaders made in the East. All the +commodities which they imported or exported were exempted from every +imposition, the property of entire suburbs in some of the maritime +towns, and of large streets in others, was vested in them, and all +questions arising among persons residing within their precincts, or who +traded under their protection, were decided by their own laws and by +judges of their own appointment. When the crusaders took Constantinople, +the Venetians did not neglect to secure to themselves many advantages +from that event. Nearly all the branches of commerce were in time +transferred from Constantinople to their city. At the end of the crusade +period Venice had monopolized nearly all the foreign trade of Europe. +She supplied the people of Italy, France and Germany with those +commodities with which the crusaders by their intercourse with more +refined nations had become acquainted. The possession of many Eastern +ports and the maintenance of a powerful navy made it possible for the +Venetians to retain their monopoly for several centuries. + +The growth of commerce in Central Europe was but slow, owing to the +dangers to which it was exposed in those days of feudalism. The mountain +fastnesses of robber knights, which controlled every road and navigable +river, were so many toll-gates at which the wayfaring merchant was +stopped to pay tribute. In time this system of plunder grew to such an +extent that hundreds of feudal lords relied upon it for their support. +Such a tax upon commerce greatly enhanced the value of all commodities, +and this deplorable state of things lasted until the cities made their +power felt by forming alliances for mutual protection. One of these +alliances, the Rhenish League, comprised in time seventy towns, and the +ruins of the strong castles destroyed by its forces still exist along +the Rhine, picturesque memorials of these lawless times. + +Perhaps the most powerful commercial union of the middle ages was the +Hanseatic League. To protect their commerce, the cities of Hamburg and +Lubeck formed about the middle of the thirteenth century an alliance for +mutual defense. The advantages derived from this union attracted other +towns to the confederacy. In a short time about eighty of the largest +cities lying between the Baltic and the Rhine joined this famous league, +which in time became so formidable that its alliance was courted and its +enmity was dreaded by the greatest monarchs. The League divided its +territory into several districts. Its members, like railway associations +of the present day, made their own laws, and met for this purpose at +regular intervals in the city of Lubeck. The original object of the +League, mutual assistance against outside attacks, was soon lost sight +of, and its constantly growing power was used to obtain still greater +commercial privileges in the adjoining countries, and even to force +their rulers to concede to its members a commercial monopoly. In 1361 a +controversy arose between the League and the King of Denmark, which led +to a long and bitter war between them. This war was participated in by +no less than seventy-seven cities on the part of the League. It +terminated in 1370, leaving the Hansa master of the situation. For many +years after this the League exerted its power in Denmark, Sweden and +Norway, and the rulers of these countries were compelled to respect the +wishes and even submit to the orders of these proud merchants. The +countries bordering on the Baltic Sea remained the domain of the League +for several centuries. They gathered there immense quantities of raw +material, which they sold in the various ports of Europe. The influence +of the League even reached as far as Novgorod in the east and London in +the west. In both cities the League had its quarters, and within them it +virtually exercised the right of sovereignty. Its main market was at +Bruges in Flanders, which was then a bee-hive of industry and thrift. +There the Italian traders came with the products of the east, such as +spices, perfumes, oil, sugar, cotton and silk, to exchange them for the +raw materials of the north. While taxes and imposts everywhere else +harassed merchants, commerce was free in the cities of Flanders, owing +to the liberality, or rather shrewdness, of her rulers. In Bruges the +members of the Hansa met the merchants of Venice on equal terms, and the +exchange of the products of the north for those of the east and south +could be effected there to the greatest advantage of both. + +While it must be admitted that the Hanseatic League developed the +resources of Northern Europe, and that, even at the time of its greatest +power, there was always competition among its own members, the fact +remains that it abused its power by the suppression of all outside +competition, and that it usurped rights which belong only to the state, +thus often producing abuses as great as those which it was organized to +remedy. Its final downfall was caused by the development of national +power in the northern kingdoms and the growth of commerce and +navigation in Great Britain. A stubborn assertion of antiquated +privileges on the part of the Hansa involved it in a feud with the +illustrious and lion-hearted Queen Elizabeth of England. In 1589 the +Queen caused sixty of their vessels to be captured on the Tagus, and +later even took possession of their hall and wharves in London. After +this the League's decline was very rapid, though its organization was +kept up till 1669, when its delegates held their last session. + +Contemporary with the decline of the Hanseatic commerce in the north was +that of the Italian cities, especially Venice, in the south. They had +prospered by their commerce with the Levant until Vasco de Gama +discovered the sea route to East India in 1497. His countrymen, the +Portuguese, soon utilized this discovery. They took possession of the +coast of India and of the islands to the south of it. They also +succeeded in excluding the Arabs from the commerce with that country, of +which up to that time they had had exclusive control. For this purpose +they built fortresses and factories on the west coast of Hindostan, took +possession of the island of Socotra in the Arabian, and of Ormus in the +Persian Gulf, and forced the Indian princes to grant them the exclusive +privilege of trading with their subjects. They also captured the city of +Malacca, where the trade between China, Japan, the Philippine Islands, +the Moluccas and India had concentrated itself. In this way they got in +a comparatively short time control of the commerce of India, Arabia, and +even Egypt. By forcing the Venetians and their commercial allies out of +those markets, they secured for themselves a monopoly of the commerce +between Europe and the east. The political ascendancy of the Turks in +the islands situated in, and in the countries bordering on, the Eastern +Mediterranean, caused the loss of Cyprus, Crete (Candia) and Morea to +the Venetians and greatly aided the Portuguese in establishing their +commercial supremacy. Less profitable for the latter was the possession +of their American colonies. They, as well as the Spaniards, adopted here +a policy which ultimately brought commercial and industrial ruin upon +both. Entirely neglecting agriculture and relying on the mineral +resources of their transatlantic colonies, which were believed to be +inexhaustible, they strove to amass riches by reserving for themselves +the exclusive privilege of supplying them with the manufactures of +Europe in exchange for American gold. Neglecting home industries, they +bought their supplies as well as those of their colonies in France, +Holland and England. A spirit of speculation and adventure enervated +their people, and led in time to commercial bankruptcy and political +disaster. + +Spain also drained her treasury by her wars with her Dutch dependencies, +and the loss of her northern provinces was a serious blow to her +commerce. Antwerp, which had become the successor of Bruges as the +commercial emporium of the north, began to decline, and Amsterdam, the +metropolis of the new Dutch republic, became heir to its glory and its +riches. The young republic at once commenced to compete in the carrying +trade with Spain and Portugal, and to make inroads into the eastern +commerce of the latter. + +The Dutch East India Company, which was organized in 1602, sent a fleet +of fourteen vessels into the Indian Archipelago to found colonies in +Java, Sumatra and the Moluccas. In a short time they had monopolized the +entire spice trade, which immediately became a source of great wealth. +A cargo of five vessels, which returned to Amsterdam in 1603, consisted +of over two million pounds of spices. This cargo was purchased for +588,874 florins and was sold for 2,000,000 florins. It is under these +circumstances not surprising that the dividends of the company's +stockholders often amounted to 75 per cent., and never went below 12-1/2 +per cent. previous to 1720. Holland's colonial trade made Amsterdam the +commercial metropolis of Europe. It became the grain market from which +Spain, Italy and other countries drew their supplies. All the products +of the world found purchasers here, and a well-developed banking system +greatly facilitated the exchange. The rapid accumulation of fortunes by +the Dutch merchants and bankers was without precedent in Europe. Besides +this, the progress which Holland made in ship-building and navigation +and the advantages which she derived from her colonial trade placed her +in a position to outstrip all other nations in the carrying trade of +Europe. During the first half of the seventeenth century the Dutch were +justly called the freighters of Europe. But the injury which their +policy did to the commercial and manufacturing interests of other +European nations led both England and France to adopt measures well +calculated to accomplish, in a short time, their commercial +emancipation. Louis XIV., in order to build up French shipping, +collected a tonnage from every foreign ship which entered a French +harbor. England went still further. In 1651 Oliver Cromwell promulgated +the Navigation Act, by which foreign ships were prohibited from +importing into England any goods except such as were produced or +manufactured in their own countries. This was a heavy blow at the Dutch, +who were thus deprived of the privilege of effecting the exchange of +commercial commodities between England and her colonies as well as the +continent. The war which the Dutch Republic waged against England, to +force her to revoke this act, resulted in favor of the latter and ended +the commercial supremacy of the Dutch in Europe. + +England, which before this time had played but a secondary role as a +commercial power, rose fast to prominence after her successful struggle +with the Dutch. She commenced to strengthen her industries by the +adoption of a high tariff policy, and her merchants were encouraged to +enter into commercial relations with colonists and foreigners. The +privileges which had been given to foreign tradesmen were revoked, while +ship-building and navigation were greatly favored by the government. As +England gained greater strength as a naval power, her foreign policy +became more aggressive. + +In 1600 the "Company of Merchants of London Trading to the East Indies" +obtained a charter, and, in spite of Dutch and Portuguese opposition, +soon gained a foothold on the Moluccas and the coast of Malabar, whence +it extended in time its dominion to Surat, Bombay, Madras and Calcutta. +Here they built forts and established their commerce. From these places +the company pushed into the interior, until finally, after repeated +struggles with the natives and European rivals, the whole of Hindostan +came under English dominion. As its power increased, the company +commenced to abuse shamefully the monopoly which it had been granted, by +inaugurating a system of plunder and oppression which is perhaps without +its equal in the annals of history. These growing abuses led to frequent +revolts and seriously imperiled England's dominion in these territories. + +To remedy these evils, Parliament at the close of the seventeenth +century annulled the charter of the company and declared the commerce +with the East Indies open to all of the King's subjects. A number of +small companies were formed, but in 1702 they all combined and organized +the East India Company. Monopoly was again established, but the patience +of the natives was exhausted, and England's interests in Hindostan were +in a critical condition. At this juncture the East India Company adopted +a policy of moderation, and this, together with the aid which the +government gave to the company, enabled it to strengthen again its +weakened commercial relations and to further enlarge its territory. But +the temptation to abuse its power was too great for this strong +corporation to be long resisted. Abuses again crept into its management +and continued to grow until its charter was finally repealed. + +The policy adopted by Great Britain for the government of her American +colonies during the eighteenth century was less rapacious, but scarcely +more just than that pursued in her eastern possessions. To retain those +colonies as commercial no less than as political dependencies, +Parliament enacted laws compelling their people to trade with the mother +country exclusively and laying restraint on their manufactures. But the +American pioneers felt that they had brought with them across the ocean +the rights of Englishmen; they objected to taxation without +representation, and the men who for opinion's sake had left comfortable +homes to brave upon a distant shore the dangers of frontier life were +prepared, if necessary, to emphasize their objection by armed +resistance. England, intent upon maintaining her barbaric system of +discriminative duties and commercial monopolies, blindly attempted +coercion, but the war which resulted wrested from the English crown its +brightest jewel, and the War of 1812 established upon American soil the +principle of industrial and commercial liberty. + +It must not be supposed, however, that America and the United States in +particular have been free from monopolies growing out of the +transportation business. Nothing would be farther from the truth. There +is no law so stringent but that it will be violated; there is no +government so vigilant but that it will at times be imposed upon. It is +true, our government sanctions no monopoly, but the very liberty of +action which exists here among corporations as well as individuals +offers to organized wealth and power a wide field for abuses. + +We have seen in the foregoing that almost from time immemorial efforts +have been made to monopolize transportation and trade, and that these +efforts were successful whenever either from ignorance or weakness the +masses fell into political apathy. There is a natural tendency among men +to utilize commercial advantages to the detriment of others. In modern +times the opportunities for building up large monopolies have greatly +increased and have been turned to the most profitable account by +designing men. Great and even unbearable abuses have always followed +where the greed and ambition of such men have not been checked by +governmental agencies. In this respect the people of the United States +have had about the same experience as the rest of mankind. Ever since +the introduction of railroads into this country there has been a +well-marked drift toward monopolizing the transportation business. + +As long as the dangers of monopoly remained unknown to the American +people, legislation for the control of railroads and other public +carriers was both scarce and crude, and shrewd railroad men were not +slow in taking advantage of the situation. It is foreign to the design +of this treatise to give a complete history of railroad monopoly in the +United States. The author will therefore confine himself to showing that +transportation companies will, like the great commercial organizations +of the past, when left to follow their instincts, invariably use their +power to oppress the public by exacting excessive charges for their +services, or to discriminate against the many by extending special +privileges to the few. Hundreds of cases might be given to illustrate +the above rule, but a history of two of these corporations will suffice +to show to what extent corporate abuses can be carried, and to serve as +a warning against the adoption of any "_laissez faire_" policy in the +railroad legislation of the future. The corporations selected for this +purpose are the Camden and Amboy Railroad and the Standard Oil +Companies, both typical representatives of the Rob Roy policy which +organized wealth has pursued since the dawn of civilization, when not +prevented by the wisdom and strength of a good government. + + +THE CAMDEN AND AMBOY RAILROAD COMPANY. + +For almost forty years the Camden and Amboy Railroad was the only direct +route between the cities of New York and Philadelphia. It is doubtful +whether previous to the war a more important or a more remunerative road +existed in the United States, for, besides connecting the two largest +cities in the Union, it formed part of the direct land route from the +East to the South. + +The efforts to open a direct through route between New York and +Philadelphia date back to the year 1812, when the construction of a +canal between the Hudson and the Delaware was proposed, but an +ill-advised jealousy of the State of Pennsylvania delayed for many years +the realization of the project. When this obstacle was finally overcome, +a change of sentiment had taken place in New Jersey. Railroads had just +made their appearance in the United States, and a large number of the +people of New Jersey preferred a railroad to a canal. + +The matter was finally compromised in the legislature of New Jersey, +which on the 4th of February, 1830, simultaneously granted charters to +the Delaware and Raritan Canal Company and the Camden and Amboy +Transportation Company, fixing the capital stock of each company at +$1,000,000, with the right to increase it to $1,500,000. The charter +further stipulated what taxes should be paid to the State, and also +contained the provision that within five miles of the starting-point and +within three miles of the terminus of each line no other railroad or +canal should be built. It was believed the existence of both a water and +a land route would be sufficient to maintain competition on this +important thoroughfare of interstate traffic. The construction of the +railroad, which had been surveyed in almost a straight line between its +termini, was at once commenced. A number of well-to-do and practical men +took hold of the enterprise, among them one John Stevens, who together +with his three sons took one-half of the capital stock. The canal +project did not do so well at first. At the middle of the year 1830 only +about one-twelfth of its capital stock had been sold, and there was +great danger that the company might forfeit its charter, as the time +allowed for the subscription of its stock was nearing its end. At this +juncture Robert Field Stockton, a young man of ability, enthusiasm and +wealth, came to the rescue of the canal company. He not only bought for +himself a goodly share of the canal stock, but also prevailed on his +rich father-in-law, Mr. John Porter, to invest $400,000 in the +enterprise. The financial difficulties of the company were thus removed. +At the next session of the legislature Mr. Stockton secured an amendment +to their charter which apparently only authorized the enlargement of the +canal, but in reality empowered the canal company to construct a second +railway. + +It was from the beginning Mr. Stockton's object to share with the +railroad company the advantages which their line promised to give them. +The enlargement of his company's franchise placed him in a position to +dictate terms to the Camden and Amboy Transportation Company. The latter +was given the choice, to prepare for competition with a rival railroad +line, or to consolidate with the Delaware and Raritan Canal Company. It +chose the latter alternative, and on the 15th day of February, 1831, the +two companies became one. The consolidation still required the sanction +of the legislature. This was obtained in consideration of the transfer +of 2,000 shares of the capital stock of the company to the State. It was +further stipulated that the new company should pay to the State a tax of +10 cents for each passenger and of 15 cents for each ton of freight +carried over its line through the State, as well as an annual tax of +$30,000, and that the State in return should protect the company against +any and all competition in the direct passenger and freight traffic +between the cities of New York and Philadelphia. Serious doubts were at +the time entertained by many, whether the State of New Jersey under the +Federal Constitution possessed the right to thus create a monopoly in +transportation facilities, and to regulate arbitrarily the commerce +between sister States. + +Five days after it had granted this charter to the Camden and Amboy +Company, the legislature granted another charter authorizing the +construction of a railroad from Jersey City to New Brunswick on the +Raritan River. On the 23d of February of the same year a charter had +been granted by the legislature of the State of Pennsylvania to a +company which had been formed for the purpose of constructing a railroad +from Philadelphia to Trenton. This company had likewise been authorized +by its charter to buy the right of way for a railroad from Trenton to +New York, which it proceeded at once to do. It was evident that as soon +as the two new roads would meet at New Brunswick, an understanding would +be reached between them, by which another through line would be created +between New York and Philadelphia, which would have the advantage over +the Camden and Amboy road that it touched the capital of New Jersey and +could thus make itself serviceable to members of the legislature, +officers of State and influential politicians. + +The Camden and Amboy Freight Company soon arrived at the conclusion that +it could not permit such rivalry. It appealed to the legislature for +protection. Resolutions were passed in its favor, but the Philadelphia +and Trenton Railroad Company paid no attention to those resolutions, but +quietly continued to lay its track. Mr. Stockton and his friends did not +dare to invoke the aid of the courts, because a judicial investigation +might have resulted in the destruction of their own charter. The +situation was critical, but Mr. Stockton was equal to the occasion. He +bought quietly a sufficient number of shares to control the management +of the Philadelphia and Trenton road, and, in April, 1836, secured the +consolidation of the Philadelphia and Trenton and the Camden and Amboy +railroad companies. + +The canal of the company was not completed until 1838. It had consumed a +sum of money largely in excess of the original estimate. To connect the +two lines of the consolidated company, a branch road was constructed +from Trenton to Bordentown. Later the road from Trenton to Brunswick was +completed and an agreement entered into with the Jersey City company for +a division of the traffic of the two roads. The large cost of these +improvements suggested to the company the advisability of increasing its +revenues and of decreasing its expenditures. Its charter provided for a +payment to the State of 10 cents for each through passenger. By an +artifice the company avoided the payment of this tax. It compelled its +through passengers to walk over the bridge at Trenton and then continue +their journey by rail via Bordentown to Jersey City. + +The company's charter also stipulated, that the fare between New York +and Philadelphia should not exceed $3 per passenger. Its officers +interpreted this stipulation to apply only to the intermediate traffic +and proceeded to collect $2.50 for the trip from New York to Trenton, +and $1.50 from there to Philadelphia, thus increasing the fare for the +entire journey to $4.00, one dollar above the maximum allowed by law. +One Jacob Ridgway, who was the owner of a ferry-boat at Camden, saw here +an opportunity for starting a lucrative business. He bought a steamer +and carried passengers from Philadelphia to Trenton for one-third of the +fare demanded by the railroad. After the Camden and Amboy Company had +made several unsuccessful attempts to intimidate Mr. Ridgway and his +force, one of which even brought Mr. Stockton in contact with the +criminal courts, it purchased the boat with all terminal facilities at +Philadelphia and Trenton. The attention of the legislature of New +Jersey was repeatedly called to the company's failure to comply with the +provisions of its charter, but these appeals were on the whole of no +avail. In 1842, after a long discussion, a resolution was carried +declaring the charge of $4 for the through journey illegal, but the +company entirely ignored this legislative reminder and continued its old +tariff. + +The company's charter also reserved for the State the right to acquire +the Camden and Amboy road under certain conditions upon the payment of a +reasonable compensation. In 1844, through Mr. Stockton's engineering, +the constitution of New Jersey was so amended as to practically deprive +the State of the power to acquire the company's property. + +During the first few years of the existence of the Camden and Amboy +Transportation Company its business was managed in the interest of its +owners, but soon a few of its leading stockholders managed to turn its +enormous profits into their own pockets. The Stevens and Stockton +families, together with two other directors of the Camden and Amboy +Company, had come into possession of a line of steamers that plied on +the Raritan, between New Brunswick and New York. The enterprise, in +spite of its largely watered capital, had been made to pay dividends +ranging from 30 to 40 per cent. Its owners saw an opportunity for a +larger field of usefulness and larger dividends. In 1834 a majority of +the board of directors of the Camden and Amboy Company proposed that the +company rid itself of the responsibility connected with the +transportation business and lease its railroad and canal. Mr. Stevens, +as representative of the Camden and Amboy Company, then negotiated with +Mr. Stevens, the representative of the Napoleon Steamer Company, and the +negotiations soon resulted in an agreement between the two companies by +which the latter leased the railroad and canal lines of the former and +agreed to pay it a fixed toll of $7.64 per ton upon all freights carried +by rail, and one-quarter of all its revenues derived from the canal. +Soon afterward the Napoleon Company entered into a similar contract with +the Camden Ferry Company and now had a complete monopoly of the +transportation business between New York and Philadelphia. It at once +commenced to develop a system of organized plunder. Instead of the +maximum charter tariff of 8 cents per ton per mile, it charged 10, 12, +and even 15 cents. The through rates charged were several times as high +as those fixed by the charter. Canal rates were raised to such an extent +as to make them prohibitory and to compel the public to ship by rail. It +is difficult even to estimate the total annual profits of the +directorial syndicate. Their accounts, if any were kept, were not +accessible, and surmises can only be based upon such data as +occasionally found their way to the public. In 1845 the share of the +canal tolls paid to the company's stockholders was $359,000. The +directors' share under the terms of their lease is thus found not to +have been less than $1,077,000. Another item of $170,000, tolls +collected for the transportation of 27,000 tons of freight, was so +divided that the Camden Ferry Company, or its other self, the +directorial syndicate, received $32,000 for one mile, while the Camden +and Amboy Railroad Company received $63,000, or less than twice as much, +for ninety-two miles. The directors under their lease were entitled to +the remaining $75,000. + +The service of the company was as bad as it was expensive; its trains +were slow and irregular, and its employes arrogant. The syndicate which +controlled the company defied its stockholders, the public and the +courts alike. When one of the stockholders, a Trenton merchant by the +name of Hagar, applied to the courts for an order to compel the +directors to produce their books and render an account, the syndicate +bought Mr. Hagar's shares, for which he had paid $125 a share, at the +price of $1,456 a share. The suit was then withdrawn and the matter +hushed up. + +In 1848 a number of articles appeared in a paper published at +Burlington, Pa., which were signed by "A Citizen of Burlington" and +contained much surprising information concerning the Camden and Amboy +Transportation Company. It was charged that the directors had defrauded +both the State and the company's stockholders of large sums of money, +that they had grossly violated their charter by charging illegal and +extortionate rates, oppressive to both commerce and travel. It was shown +that while the average rate per ton per mile of thirty-five neighboring +roads was 2.85 cents, that of the Camden and Amboy Company was 4.54 +cents. It was also shown that neither the stockholders nor the State had +received the share of the company's revenues to which they were +entitled. These articles were extensively reprinted and caused a great +commotion wherever they appeared. After the first storm had subsided the +directors issued an address to the people of New Jersey, in which they +bitterly complained of the people's loss of confidence in their +integrity, and declared that the charges preferred against them were +founded on falsehoods. + +The "Citizen of Burlington" replied by accusing the directors of +defalcation and falsifying their books. He charged that from 1840 to +1847 no account had been rendered of the receipt of no less than +$5,266,431, on which $493,066 was due to the State. As soon as the +legislature convened, a resolution was introduced that a commission be +appointed to investigate the charges preferred against the Camden and +Amboy Transportation Company. The resolution was adopted, but it was +virtually left to the accused to select the members of the commission. +That the directors had a guilty conscience appeared from the fact that +the last annual report of the company, which had just been printed, was +withdrawn and destroyed. To silence their unknown accuser, they +threatened him with criminal prosecution. He now gave his name. It was +Henry C. Carey, the noted writer and authority on political economy. Mr. +Carey did not give up the contest. He proceeded to show how the policy +of the managers of the Camden and Amboy Transportation Company depressed +commerce, manufactures and agriculture alike. He showed how the company +as a public carrier discriminated in favor of industries which they +carried on as private individuals. He claimed that the company had +forfeited its charter, and that it was the duty of the State to +authorize the construction of another road. In the meantime, early in +1849, the legislative investigation committee submitted its report. It +was perhaps as shameless a document as was ever placed before a +legislative assembly. It lauded the directors, to whose influence the +members of the commission owed their selection, and whitewashed their +past management of the company's affairs. + +But the people of New Jersey were far from being satisfied with this +report and demanded the appointment of another committee. Another +investigation was ordered, and this time the company, or rather its +directors, found it impossible to control the selection of its members. +Soon after their appointment the committee asked Mr. Carey to lend them +his assistance in their labors, and he readily consented. During the +summer of 1849 the members of the committee had occasion to go to +Bordentown, to inspect the company's books. From that time on a +wonderful change seemed to have come over the committee. They found they +could dispense with Mr. Carey's further services. What had previously +appeared to them a ring of rapacious monopolists seemed now an +association of worthy philanthropical gentlemen. In their report to the +legislature they completely exonerated the company's managers. They +admitted that the State had not been paid all that was due to it, but +they asserted that this difference in the company's accounts was due +solely to clerical errors, for which the management were in no wise +responsible. The report was accepted, although not even the annexed +testimony supported it, and thus the matter was dropped. + +This was a great victory for Mr. Stockton and his friends. It +demonstrated the success of their methods of dealing with public +servants. Mr. Carey repeated his charges, but the directors failed to +prosecute him for libel as they had threatened. He asked that he be +permitted to inspect the company's books, but was met with a peremptory +refusal. Public opinion was defied, and the old methods were continued. + +The extortionate and discriminating tariff of the only through route of +New Jersey affected seriously the agricultural as well as the commercial +interests of that State. The Camden and Amboy monopoly kept the State of +New Jersey for many years far behind the New England States in railroad +facilities. In 1860 New Jersey had only one mile of railroad for every +17.6 square miles of territory, while the proportion of miles of +railroad to square miles of territory for the same year was 1 to 7.9 in +Connecticut, 1 to 7.6 in Rhode Island, and 1 to 6 in Massachusetts. At +present New Jersey has one mile of railroad to every 3.79 square miles, +and therefore leads all the States in the Union in density of railroad +track. + +The question may be asked how the Camden and Amboy Transportation +Company, or rather the syndicate which controlled it, contrived to +maintain its power for so many years, to the great detriment of industry +and commerce. The only answer that can be given is that the men for whom +the maintenance of the monopoly was a source of great wealth were +constantly using a part of this wealth for the corruption of those who +were in a position to influence public opinion or to direct the policy +of the State. Prominent politicians were favored with passes, attorneys +were retained by the company as local solicitors, corrupt and servile +legislators were bribed by money or the promise of lucrative positions, +and newspapers were given large subsidies. In addition to this public +men were constantly made to realize the political power of the company, +whose many employes had always been trained to do the bidding of their +masters. If the opposition, in spite of this, was ever successful at +legislative elections, the company's managers found it less expensive to +gain the good will of a few members of the legislature after election +than it would have been to gain the good will of their constituents +before election. Dissatisfied stockholders who threatened with judicial +investigation were quietly bought out or impressed with the danger of +inviting public discussion in regard to the validity of the company's +charter, as it might lead to its annihilation. The good people of New +Jersey made several attempts to rid the State of the despotism of the +company by making the question a political issue, but they were each +time defeated through the lavish and scandalous expenditure of the +company's money. + +The original charter of the Camden and Amboy Railroad Company was +granted for a period of twenty years, and should have expired in 1853, +but its managers succeeded in having it extended to January 1, 1859. In +1854 another extension was asked for, and after a long and bitter debate +the company was again triumphant. An act was passed on the 16th of +March, 1854, making it illegal to build previous to the first day of +January, 1869, without the consent of the Camden and Amboy +Transportation Company, a railroad in the State of New Jersey for the +transportation of passengers and freight between New York and +Philadelphia. At the end of this period even a third extension was +granted, and the company, though after January 1, 1867, under a new +name, maintained its monopoly until it consolidated, in 1871, with the +Pennsylvania Railroad Company. + +That the spirit of the past is still at work was shown by the recent act +of the legislature of New Jersey legalizing the consolidation of the +coal roads. The coal barons found the legislature as servile as the +managers of the Camden and Amboy Railroad Company had found them of +yore, and their well-planned scheme would probably have been successful +had it not been for Governor Abbot's courageous veto of the disgraceful +act, and it is more than probable that they will yet succeed. They have, +in fact, during the last year advanced the price of coal about one +dollar per ton. + + +THE STANDARD OIL MONOPOLY. + +The Standard Oil monopoly may be said to be the crowning monument of +corporation conspiracy. It is, indeed, doubtful whether the combined +brotherhoods of mediaeval knights ever were guilty of such acts of +plunder and oppression as the Standard Oil Company and its railroad +allies stand convicted of before the American people. The facts that +have been unearthed by official investigations show a frightful +prevalence of corporate lawlessness and official corruption, and there +can be no doubt that, could certain high railroad dignitaries have been +compelled to testify, and could the truth have been fathomed, it would +have been found that not only the public, but railroad stockholders as +well, were victimized by those transactions. + +The founder of the Standard Oil monopoly was some twenty years ago part +owner of a petroleum refinery at Cleveland, Ohio. His fertile brain +conceived the thought that with the cooperation of the railroad +companies a few men of means could control the petroleum business of the +United States. With this end in view he approached the managers of the +New York Central, the Erie and the Pennsylvania Central railroad +companies, and on January 18, 1872, entered with them into a secret +compact by which they agreed to cooperate with the South Improvement +Company (an organization formed by that gentleman to aid in the +accomplishment of his designs) to grant to said companies certain +rebates and to secure it against loss or injury by competition. The +South Improvement Company, in consideration of these favors, guaranteed +to the railroad companies a fair division of its freights. The existence +of this contract soon became known and caused a violent protest among +the oil-producers. An indignation meeting was held and a committee was +appointed to wait on the railroad managers and demand fair treatment for +all. + +The railroad companies yielded and promised to give equal rates to all +shippers and to grant to no person either rebates or any other advantage +whatever. New rates were fixed for the transportation of both crude and +refined oil, and it was agreed on the part of the railroad companies +that at least ninety days' notice should be given of any change that +might be made in the rates. Steps were also taken to have the charter of +the South Improvement Company canceled because it had been found that it +was neither the owner of a refinery nor of an oil well, and could +therefore not comply with the legal requirements concerning the +organization of stock companies. While the South Improvement Company +thus came to a sudden and rather inglorious end, its founders soon +contrived other means to carry out their ingenious plans. They bought a +refinery, reorganized by taking the prepossessing title of Standard Oil +Company, and were now prepared to resume their operations under the +guise of legal authority. + +The railroad companies seemed to have relished their novel business +connections, for, without paying the least attention to the agreement +into which they had entered with the other producers and refiners of +oil, they extended the privileges of the defunct South Improvement +Company to its successors. The new company received secret rebates +ranging from 50 cents to $1.32 per barrel. The agreement also contained +the stipulation that if lower rates should ever be granted to their +competitors, an additional rebate should be given to the Standard Oil +Company. Endowed with these privileges, the favored company proceeded to +unite under its banner, by consolidation, purchase or lease, the +leading refineries of Cleveland. + +The effect of the discriminations practiced against independent +refineries soon became apparent. In less than two years there were +closed in Pittsburgh twenty-one refineries, that represented an +aggregate capital of $2,000,000 and had given employment to over 3,000 +people. A large number of the remaining refineries were forced to +consolidate with the Standard Oil Company. + +The next step toward the entire suppression of competition was an attack +planned against the independent pipe lines. The Standard had early +secured control of the United Pipe Line. To exterminate competing lines, +they again appealed to the railroad companies, and on the 9th day of +September, 1874, J. H. Rutter, general freight agent of the New York +Central, issued a new oil tariff which discriminated greatly in favor of +the oil brought by the United Pipe Line to the refineries. Up to that +time this company had done from 25 to 30 per cent. of the total business +of the various pipe lines. Within one year after the adoption of the new +tariff it did fully 80 per cent. of the entire business. This forced the +independent lines either to sell out to the Standard or to suspend +business, for the latter's rebate was larger than their toll. The oil +tariff of the Pennsylvania Central compelled the independent Pittsburgh +refiners to ship their refined oil over that company's line, if they +would avail themselves of the rebate which it granted on the rates for +the transportation of crude oil to Pittsburgh. The evident purpose and +the effect of such a tariff was to prohibit oil shipments over the +Baltimore and Ohio. Had this road made ever so reasonable a tariff, the +combined charges for the transportation of the crude petroleum from the +oil regions to Pittsburgh by the Pennsylvania Central, and for that of +the refined oil to the sea coast by the Baltimore and Ohio, would still +have been prohibitive in competition with the special transit rates +granted to the Standard Oil Company. As a remedy it was proposed to +organize a new pipe line, it being believed that the crude oil could be +brought to Pittsburgh by that line, refined there, shipped to the +seaboard by the Baltimore and Ohio, and sold there at as good or even a +better profit than the product of the Standard, notwithstanding the +favors received by the latter from the allied trunk lines. This movement +resulted in the creation of the Columbia Conduit Company, which at once +proceeded to lay its pipes from the oil wells to Pittsburgh. Under the +laws of the State of Pennsylvania it became necessary for this company +to obtain the permission of property-holders to lay the pipes through +their lands. Consent was everywhere readily given, and the pipes were +laid without hindrance until the track of the Pennsylvania Railroad was +reached, within a few miles of the Pittsburgh refineries. This company +peremptorily refused to let the pipes be laid under its track. The pipe +line company after some delay contrived a way to obviate the difficulty. +It laid its pipes on each side of the road as close to the track as it +could without trespassing against the legal rights of the Pennsylvania +Central, and then conveyed the oil from one side of the track to the +other by means of large oil tanks on wheels, which could not be +prevented from passing over the railroad track at the public crossing. +After several months the railroad company allowed the pipes to be laid +under its track, but it soon appeared that another combination had been +effected to destroy the value of this concession. A railroad war had +given the three trunk lines an opportunity to force the Baltimore and +Ohio into the pool. A uniform rate of $1.15 was established for +shipments of refined petroleum from any point to the seaboard. While +this was in itself an unjust discrimination against Pittsburgh, which is +250 miles nearer tidewater than Cleveland, the railroads in addition +granted the Standard secret rebates which enabled it to sell its oil on +the coast for less than the sum of its first cost at the refineries and +the open rate of transportation to the points of export. The independent +refiners of Pittsburgh found themselves again cut off from the market, +but necessity soon made them discover another outlet. Shipping their oil +down the Ohio River to Huntington, W. Va., they had it taken by the +Chesapeake and Ohio Railroad to Richmond. In spite of the fact that this +route was more than twice as long as the direct line from Pittsburgh to +the seaboard, and in spite of the further fact that it necessitated an +expensive transfer, a rate equal to about two-thirds of the trunk line +rate for the direct shipment proved remunerative to the Chesapeake and +Ohio. The independent refiners kept up their competition for some time, +but the great disadvantage of river travel and the insufficient export +facilities of Richmond finally forced them to give up the contest. + +Until the year 1877 the Standard Oil Company had worked hand in hand +with the railroads. It had obtained all its privileges by asking for +them and by holding out inducements to railroad managers to grant them. +It now commenced to dictate terms to refractory railroad companies. + +The Pennsylvania road ventured to carry oil not the property of the +Standard on terms which that company did not approve. The latter ordered +the road to refuse to carry the product of their competitors. This the +railroad company declined to do, and the Standard at once withdrew its +custom. The Pennsylvania retaliated by carrying the oil of the +independent refineries at merely nominal rates and even went so far as +to make its rates dependent upon the profits realized by the shippers. A +fierce freight war was thus precipitated, in which the Erie and New York +Central supported the Standard Company. The Pennsylvania road was soon +forced to surrender and sign an ignominious treaty. + +The Baltimore and Ohio, which had again commenced to carry the product +of those Pittsburgh refineries which received their crude oil through +the Columbia Conduit Company, was in a similar manner forced to reject +their freights. The pipe line, whose value was thus almost entirely +destroyed, was soon after sold to the Standard Oil Company. This company +had now an almost complete monopoly of the oil business of the United +States, and still it was not satisfied. It appears that some of the +producers of crude oil had been in the habit of shipping a part of their +product in spite of the advantages which the Standard had through its +rebates. To prevent even these shipments, or rather to exact another +tribute from railroad stockholders, the American Transfer Company, one +of the auxiliaries of the Standard Oil Trust, in 1878, demanded and +received from the Pennsylvania road a "commission" of 20 cents a barrel +on all shipments of petroleum _made by any_ shipper. It had been shown +to the satisfaction of the Pennsylvania Railroad Company that similar +commissions, ranging from 20 to 35 cents a barrel, were being paid by +the New York Central and Erie roads. + +When, in 1879, an effort was made to establish a pipe line from the oil +regions to the seaboard, nothing was left undone by the trunk lines to +thwart the enterprise. The new company finally succeeded in making +connection with a railway which had no part in the pool, and there was +some hope that under this arrangement competition might at least be +maintained at some points. The Standard Company again appealed to the +trunk lines to protect it against injury by competition and obtained +from them a special rate of 20 cents per barrel, which rate was even +reduced to 15 cents per barrel two months later. Against such a rate it +was impossible to compete, and after a short struggle the new line found +itself compelled to sell its works to the Standard. + +To crown its monopoly, the Standard Oil Company finally bought of the +New York Central and Erie roads their terminal facilities for the +transportation of oil, and thereby made it virtually impossible for them +to transport oil for any of its few remaining competitors. Mr. Josiah +Lombard, part owner of the New York refinery, stated in 1879 before the +investigating committee of the legislature of New York that in 1878 he +had requested the Erie Company to transport for him 100 cars of crude +oil from Carrollton to New York; that he had called upon Mr. Vilas, the +general freight agent of the company, in person, but had never been able +to obtain the cars, though the oil had been held in Carrollton three or +four months ready to be loaded. This gentleman also testified that he +had found it impossible to obtain cars from the New York Central, and +that the company's general freight agent had informed him that the road +did not own and could not furnish any oil cars. + +After the Standard Oil Company had secured control of the various pipe +lines of the oil regions, it frequently lowered the price of crude oil +to such an extent as to make its production unprofitable. It even +refused to buy oil, basing its refusal upon the ground that the railroad +companies failed to furnish cars for its transportation. When the +well-owners had their tanks filled, they had the choice to let the oil +run away or to be at the expense of closing up their wells. In one +instance, however, when their ruse threatened to cause a riot, several +hundred cars were brought to the wells within a few hours. + +The Standard Oil Trust, not satisfied with the monopoly of the wholesale +trade, even tried in places to control the retail trade by peddling oil +at private houses. This method of destroying competition was chiefly +resorted to where independent dealers obtained their supply by a water +route. + +That many of the deeds of the Standard are dark is evident from the fact +that its members, when summoned by the Hepburn committee, declined to +testify, lest their testimony be used to convict them of crime. +Officials of the trust have bribed or attempted to bribe employes of +rival firms, for the purpose of ruining their business. By its peculiar +methods the company has been successful in courts of justice and +legislative halls, and has enjoyed an impunity for its conspiracy +against the public that is without precedent in America. It has +accumulated a capital of more than $100,000,000, and it is even claimed +that for years its annual dividends have exceeded in amount the capital +actually invested. This is not at all strange when it is considered that +they have levied upon the producers, consumers and transporters alike. +Mr. Cassat testified before the New York investigating committee that in +eighteen months the railroads had paid the Standard in rebates no less +than $10,000,000. And the very payment of these enormous rebates +enabled the Standard to decrease the price of oil to the producer and to +increase it to the consumer. + +It is claimed by the defenders of the Standard monopoly that under the +trust the price of petroleum has been constantly decreased to the +consumer. That the price of kerosene is lower now than it was fifteen +years ago is undoubtedly true, but the reductions were brought about not +by the trust, but in spite of the trust. The price now maintained is an +unnatural one. The Standard Oil Company never lowered the price of its +oil except when compelled to do so by competition. The largely increased +output of crude oil, the improved methods of refining, the greatly +lowered cost of transportation would have lowered the price of coal oil +without the philanthropy of the Standard Oil Company. Iron, steel, +calico, woolen goods and a thousand other commodities have within almost +the same period suffered much larger reductions than coal oil. But even +if the Standard monopoly had voluntarily lowered the price of its +products, the American people could never approve of its methods. They +can never be made to believe that the end sanctifies the means, +especially when those means are railroad favors, secret combinations, +bribery, intimidation and lawless arrogance. + +Many other interesting cases might be given. The Southern Pacific +Railway Company, for instance, owns nearly all of the railways of +California, and enjoys at the present time almost a complete monopoly of +the transportation business of that State and much more of the Pacific +Coast. Perhaps no set of managers would be more considerate of the +people's rights in the absence of legal restraint than those in charge +of this company, yet there is not a business man on the Pacific Coast +who comes in contact with this company who does not realize and feel +the power of its iron hand, unless it be those who for various reasons +are recipients of its special favors. It has become notorious that the +legislature, Board of Railroad Commissioners and some of the judges of +the courts of that State are as servile to the demands of this railway +company as are its own employes. + +The railway company is a closely organized body of shrewd, active men, +while those who furnish business for it are not organized, and they will +never be able to properly protect their own interests until they control +the machinery of their State government. + + + + +CHAPTER V. + +RAILROAD ABUSES. + + +As has already been shown, railroad enterprise met with comparatively +little opposition in the United States, for, as compared with the +interests certain to be benefited by the introduction of the new mode of +transportation, those likely to be injured by it were insignificant. It +is true, the innate conservatism of man even here recorded its +objections to the innovation. It viewed with distrust the new power +which threatened to revolutionize well-established systems of +transportation and time-honored customs and to force upon the people +economic factors the exact nature and value of which could only be +ascertained by practical tests. But the progressive portion of the +community was so decidedly predominant that these protests were soon +drowned in the general demand for improved facilities of transportation. +The farmer who had to haul his produce a great distance to reach a +market appreciated the advantages to be derived from the location of a +railroad station nearer home. The manufacturer who heretofore had, had a +very limited territory for the sale of his products well realized that +he could with the aid of a railroad enlarge his territory and increase +his output, and with it his profits. The pioneer merchant found that he +could no longer compete with former rivals in adjoining towns, since the +iron horse had reached them and lowered their freights, and he also +became a convert to the new order of things and clamored loud for +railroad facilities. Railroads seemed the panacea for industrial and +commercial ills, and every inducement was held out and every sacrifice +made by communities to become participants of their blessings. So great +was the estimate of the conveniences afforded by them and so strongly +was public opinion prejudiced in their favor that it is no exaggeration +to say that railroad companies as a rule were permitted to prepare their +own charters, and that these charters almost invariably received +legislative sanction. + +To such an extent was the public mind prepossessed in favor of railroads +that any legislator who would have been instrumental in delaying the +granting of a railroad charter for the purpose of perfecting it, to +protect the people against possible abuses, would have been denounced as +a short-sighted stickler and obstructor of public improvements. Anxious +for railroad facilities, the people were deaf to the warnings of +history. Their liberality knew no bounds. National, State and county aid +was freely extended to new railroad enterprises. Communities taxed +themselves heavily for their benefit, and municipalities and individuals +vied with each other in donating money, rights of way and station +buildings. This was especially true of the West, whose undeveloped +resources had most to gain by railroad extension. So large were the +public and private donations in several of the Western States that their +value was equal to one-fifth of the total cost of all the roads +constructed. To still more encourage promoters of railroad enterprises, +general incorporation laws were passed which permitted companies to be +formed and roads to be built practically without State supervision. In +their admiration for the bright side of the picture, the people entirely +overlooked the shady side. + +Besides this, there was virtually an absence of all law regulating the +operation of railroads. It was, under these circumstances, not strange +that abuses early crept into railroad management which, long tolerated +by the people and unchecked and even encouraged by public officers, +finally assumed such proportions as to threaten the very foundation of +free government. Great discoveries that add rapidly to the wealth of a +country tend to overthrow a settled condition of things, and organized +capital and power, if not restrained by wholesome laws and public +watchfulness, will ever take advantage of the unorganized masses. The +people of those regions which the railroad stimulus had caused to be +settled thrived for years so well upon a virgin soil that they gladly +divided their surplus with the railroad companies. They looked upon the +railroads as the source of their prosperity and upon railroad managers +as high-minded philanthropists and public benefactors, with whom to +quarrel would be an act of sordid ingratitude, and they paid but little +attention to the means employed by them to exact an undue share of their +earnings. Railroad men did whatever they could to foster through their +emissaries this misplaced adoration. They posed before the public as the +rightful heirs of the laurels of Watt and Stephenson, insisting that +their genius, capital and enterprise had built up vast cities and opened +for settlement and civilization the boundless prairies of the West. +These claims have been persistently repeated by railroad men, though +they are so preposterous that they scarcely deserve refutation. The +railroad, gradually developed by active minds of the past, and greatly +improved by the inventions of hundreds of men in the humbler walks of +life, is the common inheritance of all mankind, though no class of +people have derived greater benefits from it than railroad constructors, +managers and manipulators. Railroad managers are no more entitled to +the special gratitude of the public for dispensing railroad +transportation at much more than remunerative rates than is the Western +Union monopoly for maintaining among us an expensive and inefficient +telegraph service. No one believes that the disbanding of the Western +Union would leave us long without telegraphic communication. In like +manner railroads will be built whenever and wherever they promise to be +profitable. If one company does not take advantage of the opportunities +offered, another will. That large cities have been built up by the +railroads is true, but it is equally true that these cities by their +commerce and manufactures administer to the prosperity of the railroads +as much as the railroads administer to theirs. Commercial centers in +days gone by existed without railroads, but railroads could not long +exist without the stimulating influence of these busy marts of trade. +The same argument applies with still greater force to the agricultural +sections of our country, especially the great Northwest. The dry-goods +merchant might as well boast of having clad the public as the railroad +manager of having built up farming communities by selling to them +transportation. + +And yet the American people have never ceased to be mindful of the +conveniences afforded to them by this modern mode of transportation. On +the contrary, they have been but too prone to credit railroad men with +being benefactors, when they were but beneficiaries, and this liberality +of spirit made them overlook, or at least tolerate, the abuses which +grew proportionately with the wealth and power of the companies. + +The first railroad acts of England had contemplated to make the roads +highways, like turnpikes and canals. These roads were established by the +power of eminent domain. Companies were empowered to build and maintain +them and to reimburse themselves by the collection of fixed tolls. Had +the owners of the roads from the beginning been deprived of the +privilege of becoming carriers over their own lines, the system might +have so adjusted itself as to become entirely practicable; but as they +were allowed to compete with other carriers in the transportation of +passengers and merchandise, they were soon able to demonstrate, at least +to the satisfaction of Parliament, that the use of the track by +different carriers was impracticable and unsafe. A number of +circumstances combined to aid the railroad companies in their efforts to +monopolize the trade on their lines. In the first place, when the early +railroad charters were granted, but few persons had any conception of +the enormous growth of commerce which was destined to follow everywhere +the introduction of railways. The tolls as fixed in the charters soon +yielded an income out of proportion to the cost of the construction and +maintenance of the roads. Their large margins of profit enabled the +owners of the roads to transport goods at lower rates than other +carriers and to thus compel the latter to abandon their business. +Another defect of the original charters worked greatly to the +disadvantage of independent carriers. They contained no provision as to +the use of terminal facilities. The railroad companies claimed that +these facilities were not affected by the public franchise and were +therefore their personal property. This placed independent carriers at a +great disadvantage and made in itself competition on a large scale +impossible. These carriers were thus at the mercy of the railroad +companies for the transportation of their cars, and the companies never +permitted their business to become lucrative enough to induce many to +engage in it. It soon became apparent that under the charters granted +to the railroad companies such competition as existed on turnpikes and +canals was out of the question on their roads. In England the great +abundance of water-ways exercised for many years a wholesome control +over the rates of railway companies, until these companies, greatly +annoyed by such restraint, absorbed many of the larger canals by +purchase and made them tributary to their systems. These companies have +also acquired complete control over many important harbors. + +In the United States the people depended from the beginning of the +railroad era on free competition for the regulation of railroad charges. +This desire to maintain free competition led to the adoption of general +incorporation acts, it being quite generally believed that such +competition as obtains between merchants, manufacturers and mechanics +was possible among railroads and would, when allowed to be operative, +regulate prices and prevent abuses. The remedy was applied freely +throughout the country, but for once it did not prove successful. +Stephenson's saying, that where combination was possible competition was +impossible, was here fully verified. The great ingenuity of the class of +men usually engaged in railroad enterprises succeeded in thwarting this +policy of commercial freedom. The opportunities for those in control of +railroads to operate them in their own interest, regardless of the +interests of their patrons or stockholders, were so great that men of a +speculative turn of mind were attracted to this business, which indeed +soon proved a most productive field for them. One road after another +fell into the control of men who had learned rapidly the methods +employed to make large fortunes in a short time. + +As the roads multiplied, transportation abuses increased. A considerable +number of people early favored State control of railroads as the best +means of regulating transportation, but a majority looked upon the +existing abuses as being merely incidental to the formative period, and +hoped that with a greater expansion of the railroad system they would +correct themselves. And this doctrine was industriously disseminated by +railroad managers and their allies. They lost no opportunity to impress +upon the people that State regulation was an undue interference with +private business and that such a policy would soon react against those +who hoped to profit by it, inasmuch as it would prevent the building of +new roads and would thus hinder, rather than aid, in bringing about the +right solution of the railway question, viz., regulation by competition. +They contended, in short, that State regulation would be destructive to +railroads as well as to every other class of property. + +Railroad sophistry for many years succeeded in preventing the masses +from realizing that an increased supply of transportation does not +necessarily lower its price, or, in other words, that railroad abuses do +not necessarily correct themselves through the influence of competition. +A large capital is required to build and maintain a railroad, which must +necessarily be managed by a few persons. Besides this, the construction +of a railroad practically banishes at once from its field all other +means of land transportation. The railroad has thus a practical monopoly +within its territory, and its managers, if left to follow their +instinct, will despotically control all the business tributary to it, +with unlimited power to build up and tear down, to punish its enemies +and to reward its friends. + +It is not true that State control checks railroad building. While it may +prevent the construction of useless lines and discourage speculation, it +will encourage the building of roads for which there is a legitimate +demand. Stockholders as a whole do not participate in the management of +the roads and do not profit by railroad abuses, the origin of which may +almost invariably be traced to selfish designs on the part of a few +entrusted with the management of the property. Where through wise +legislation these abuses are prevented, the roads are managed in the +interest of all the stockholders, develop business and enjoy lasting +prosperity. + +It may be laid down as a general rule that the policy which best +subserves the interests of the patrons of a road is always the best +policy for its owners. Injustice to a railroad will interfere with its +usefulness; injustice to shippers depresses production and consumption; +and in either case both the road and its patrons will suffer. State +control is therefore as much needed in the interest of the owners of +railroads as in the interest of their patrons. What should be the nature +of such control will be discussed hereafter. A full understanding of the +question at issue, however, makes necessary an inquiry into the various +abuses which unrestrained railroad management of the past has developed. +Perhaps no better presentation of the evils and abuses of railroads and +their consequences can be found than that contained in the report of the +Senate Committee on Interstate Commerce, submitted by Senator Cullom, in +1886. This report charges: + +1. That local rates are unreasonably high, as compared with through +rates. + +2. That local and through rates are unreasonably high at non-competing +points, either from the absence of competition or in consequence of +pooling agreements that restrict its operation. + +3. That rates are established without apparent regard to the actual cost +of the service performed, and are based largely on "what the traffic +will bear." + +4. That unjustifiable discriminations are constantly made between +individuals in the rates charged for like service under similar +circumstances. + +5. That improper discriminations are constantly made between articles of +freight and branches of business of a like character, and between +different quantities of the same class of freight. + +6. That unreasonable discriminations are made between localities +similarly situated. + +7. That the effect of the prevailing policy of railroad management is, +by an elaborate system of secret special rates, rebates, drawbacks and +concessions, to foster monopoly, to enrich favored shippers, and to +prevent free competition in many lines of trade in which the item of +transportation is an important factor. + +8. That such favoritism and secrecy introduce an element of uncertainty +into legitimate business that greatly retards the development of our +industries and commerce. + +9. That the secret cutting of rates and the sudden fluctuations that +constantly take place are demoralizing to all business except that of a +purely speculative character, and frequently occasion great injustice +and heavy losses. + +10. That, in the absence of national and uniform legislation, the +railroads are able by various devices to avoid their responsibility as +carriers, especially on shipments over more than one road, or from one +State to another, and that shippers find great difficulty in recovering +damages for the loss of property or for injury therefor. + +11. That railroads refuse to be bound by their own contracts, and +arbitrarily collect large sums in the shape of overcharges in addition +to the rates agreed upon at the time of shipment. + +12. That railroads often refuse to recognize or to be responsible for +the acts of dishonest agents acting under their authority. + +13. That the common law fails to afford a remedy for such grievances, +and that in cases of dispute the shipper is compelled to submit to the +decision of the railroad manager or pool commissioner, or run the risk +of incurring further losses by greater discriminations. + +14. That the differences, in the classifications in use in various parts +of the country, and sometimes for shipments over the same roads in +different directions, are a fruitful source of misunderstandings, and +are often made a means of extortion. + +15. That a privileged class is created by the granting of passes, and +that the cost of the passenger service is largely increased by the +extent of this abuse. + +16. That the capitalization and bonded indebtedness of the roads largely +exceed the actual cost of their construction or their present value, and +that unreasonable rates are charged in the effort to pay dividends on +watered stock and interest on bonds improperly issued. + +17. That railroad corporations have improperly engaged in lines of +business entirely distinct from that of transportation, and that undue +advantages have been afforded to business enterprises where railroad +officials were interested. + +18. That the management of the railroad business is extravagant and +wasteful, and that a needless tax is imposed upon the shipping and +traveling public by the necessary expenditure of large sums in the +maintenance of a costly force of agents engaged in a reckless strife for +competitive business. + +Under the operation of the Interstate Commerce Law some of these evils +have, so far at least as interstate commerce is concerned, disappeared, +and others have been considerably mitigated. It cannot be expected, +however, that a bad system of railroad management, to the development of +which the ingenuity of railroad managers has contributed for two +generations, could be entirely reformed in a few years. It is a +comparatively easy task for shrewd and unscrupulous men, assisted by +able counsel and unlimited wealth, to evade the spirit of the law and to +obey its letter, or to violate even both its letter and spirit, and +escape punishment by making it impossible for the State to obtain proof +of their guilt. + +It is a humiliating spectacle to see the self-debased railroad officials +confessing their own guilt by refusing to testify before the Interstate +Commerce Commission on the ground that they would thereby criminate +themselves. Congress should have sufficient respect for this commission +and for itself to provide a way to punish such recusant witnesses who +are willing to degrade themselves in so base a manner. Whether the law +will eventually be respected by all depends upon the vigilance and +courage of the people. + +That our railroad legislation is not yet perfect even its friends will +admit; and as under a free government the demand of an enlightened +public opinion is the first step toward the enactment of a law, it +behooves the intelligent citizen to study the various railroad problems +and to then exert his influence toward bringing about such a solution of +them as justice and wisdom demand. + +In discussing the various evils of railroad management, the author will +commence with and dwell more particularly upon those abuses which maybe +said to be the cardinal ones, viz., discrimination, extortion, +combinations and stock and bond inflation. When these are once +effectually eradicated, other abuses of railroad management which have +been the subject of public complaint will not long survive them. + +One of the strongest arguments that could be adduced by the founders of +the American Constitution in favor of the establishment of a more +perfect union was that the inequality of taxes placed upon commerce by +the various States was a serious obstacle to its free development. Much +as the individual States dislike to give up a part of their sovereignty +to a central or national power, the demand for a common and uniform +system of commercial taxation was so great that they were forced to +yield and ratify the new Constitution. Our forefathers thus considered +it a dangerous policy to permit a single State to lay any imposts upon +the commercial commodities which passed over its borders. They were +rightly of the opinion that industrial and commercial liberty was as +essential to the welfare of the nation as political freedom and that +therefore interstate commerce should not be hemmed in or controlled +within State lines, but that the power to regulate it should be lodged +in the supreme legislative authority of the nation, the Congress of the +United States. For over half a century Congress alone exercised the +power thus conferred upon it by the people. After the introduction of +railroads, however, their managers gradually assumed the right to +regulate the commerce of the country in their own interest through the +adoption of arbitrary freight tariffs. Freight charges are practically a +tax which follows the commodity from the producer to the consumer. An +arbitrary and unjust charge is therefore an arbitrary and unjust tax +imposed upon the public without its consent. It is a well-established +rule of society that laws should be equitable and just to all citizens. +Congress never assumed the role of Providence by attempting to equalize +those differences among individuals which superior intellect, greater +industry and a thousand other uncontrollable forces have ever created +and will ever create. It has been reserved to railroad managers to +demonstrate to the public that a power has been allowed to grow up which +has assumed the right to counteract the dispensations of Providence, to +enrich the slothful, to impoverish the industrious, to curtail the +profits of remunerative industries and revive by bounties those +languishing for want of vitality, to humble proud and self-reliant marts +of trade and to build up cities in the desert. It will scarcely be +claimed even by railroad managers that their policy of thus arbitrarily +regulating commerce originated in philanthropic motives. They are forced +to admit that it grew out of an attempt to increase the income of +railroads by the extension of favors to naturally weak enterprises and +to recoup by overtaxing stronger ones. + +The practical operation of this system soon showed to railroad managers +their power and to the patrons of railroads their dependence upon those +who dispensed railroad favors. The former soon discovered that their +power might be used to further their private interests as well as those +of the roads, and unscrupulous patrons were not slow to offer +considerations for favors which they coveted. When such favors were once +granted by the officials of one road, rival roads would grant similar +ones in self-protection. Thus this vicious system grew until the payment +of a regular tariff rate was rather the exception than the rule, and +special rates became an indispensable condition of success in business. + +We may distinguish three classes of railroad discriminations, viz.: + +1. Those which affect certain individuals. + +2. Those which affect certain localities. + +3. Those which affect certain branches of business. + +Discrimination between individuals is the most objectionable, because it +is the most demoralizing of all. Where such discrimination obtains, +every shipper is in the power of the railroad corporation. It makes of +independent citizens of a free country fawning parasites and obsequious +sycophants who accept favors from railroad managers and in return do +their bidding, however humiliating this may be. The shipper, realizing +that the manager's displeasure or good will toward him finds practical +expression in his daily freight bills, finally loses, like the serf, all +self-esteem in his efforts to propitiate an overbearing master. He is +intimidated to such an extent that he never speaks openly of existing +abuses, lest he lose the special rates which have been given him, or, if +he is not a participant of such privileges, lest additional favors be +given to his rivals and they be thus enabled to crush him. Intimidation +of shippers prevailed to such an extent previous to the enactment of the +Interstate Commerce Law that when, in 1879, the special committee on +railroads appointed by the legislature of New York invited all persons +having grievances against railroads to come before them to testify, not +one shipper testified voluntarily. On the contrary, they all insisted +upon being subpoenaed, hoping that the railroad managers would not +hold them responsible for any statement which they might be compelled to +make under such circumstances. The report of that committee stated that +the number of special contracts in force within the period of one year +on the New York Central and Hudson River Railroad alone was estimated +by the railroad people at 6,000. Mr. Depew, when he made the statement: +"In territories comparatively new, and with little responsibility on the +part of the managers to distant owners, they became in many cases very +arbitrary and exercised favoritism and discriminations, which led to +popular indignation and legislation," had probably not heard of this. +The committee's report further stated that these special rates conformed +to no system and varied without rule, that every application for a +special rate was judged by itself and with reference to its own peculiar +circumstances, and that it depended upon the judgment, or rather +caprice, of the officer to whom the application was made, whether and to +what extent a special rate should be granted. The reductions made to +privileged merchants often amounted to more than what would be a fair +profit to the dealer on the commodities shipped. The privileged dealer +was thus enabled to undersell his rivals and eventually force them out +of business or into bankruptcy. It was not at all uncommon for railroad +companies to allow discounts amounting to 50, 60, 70 and even 80 per +cent. of the regular rates. The New York Central gave a Utica dry-goods +merchant a special rate of 9 cents while the regular rate was 33 cents +on first-class freights. The lowest special rate granted at Syracuse was +as low as 20 per cent. of the regular tariff rate on first-class goods. +David Dows & Company and Jesse Hoyt & Company, by means of a grain rate +from 2-1/2 to 5 cents lower than those given to other firms, were +enabled to control in the winter of 1877 the grain trade of New York. +The railroad even extended its fostering aid to A. T. Stewart & Co., +giving them a special rate "to build up and develop their business." The +testimony given by Mr. Goodman, assistant general freight agent of the +New York Central, in reference to the principle by which he was guided +in granting special rates, is of sufficient interest to be given a place +here: + +Question. You made the rate for A. T. Stewart & Company? Answer. Yes, +sir. + +Q. Was that to build up and develop their business? A. Yes, sir. + +Q. That was the object? A. That was one of the objects. + +Q. January 11th, 1879? A. Yes, sir. + +Q. You thought that business was not yet sufficiently built up and +developed? A. No, sir; not the manufacturing part of it. + +Q. How long had the factories of A. T. Stewart & Company been in +existence? A. The one at Duchess Junction about three years, I think; it +isn't completed yet. + +Q. And they were languishing and suffering? A. To a great extent; yes, +sir. + +Q. And you acted as a fostering mother to A. T. Stewart & Company to +build it up? A. Yes, sir; I added my mite to develop their traffic; we +wanted to carry the freight; boats might have carried it in the summer. + +Q. Do you know anything of G. C. Buell & Company? A. Yes, sir. + +Q. You wanted to develop their business? A. Yes, sir; they are at +Rochester--wholesale dealers. + +Q. Do you know H. S. Ballou, of Rochester? A. I do not. + +Q. He seems to be a grocer there? A. A small concern, perhaps. + +Q. Small concerns are not worth developing, according to your opinion? +A. Our tariff rates are low enough for them at Rochester. + +Q. That is to say, a small concern ought to pay 40, 30, 25 and 20, as +against a large concern, 13; that is your rule? A. Well, if he is a +grocer, most of his business is fourth-class freight. + +Q. And he ought to pay 20, as against 13? A. Yes, sir. + +Q. That small man has no right to develop? A. He has the same chance +that the other man has. + +Q. At 20 against 13? A. Oh, yes. + +Q. Do you call that the same chance? A. About the same chance, yes, sir. + +Q. You consider it the same chance? A. Yes, sir. + +Many reasons were assigned by railroad men in justification of their +practices. It was claimed that special rates were given to regular +shippers, but it has been proved that not all regular shippers had +special rates, and that persons who made only single shipments were +often fortunate enough to obtain special favors. It was further claimed +that special rates were given to those who, starting out new in business +or developing new enterprises, needed aid and encouragement. But it was +shown on the other hand that the aid and encouragement thus given to +some bankrupted others, and in the end deprived the companies of more +business than their policy of discrimination brought them. Railroad +managers also argued that they could afford to make lower rates on large +shipments than on small ones for the same reasons that the wholesale +merchant can sell his goods for less than the retailer. But while this +may be a good reason why rates on car-load shipments should be lower +than rates on shipments in less than car-load lots, it is certainly no +good reason why five car-loads belonging to one shipper should be +transported the same distance for less than five carloads belonging to +five shippers. In the case of local shipments the car is scarcely ever +loaded to its full capacity; one shipment after another is taken from it +as the train moves along, and the car perhaps reaches its final +destination nearly, if not entirely, empty. The terminal charges are +here also largely increased, and it is but just that the shipper should +pay the additional cost of carrying and handling the goods. The case is +entirely different when the railroad company carries five full carloads +from one station of its line to another. Whether they have been loaded +by one or five persons, whether they are consigned to one or five +persons, matters little to the railroad company. It merely transports +the cars, and in either case its responsibility and its services are the +same. The car-load must therefore be accepted and is now generally +accepted by the best railroad men as the unit of wholesale shipments, +and any discrimination made in favor of large wholesale shippers is +arbitrary and unjust. In the shipment of some commodities, such as +wheat, flour and coal, a small advantage in rates is sufficient to +enable the favored shipper to "freeze out" all competitors. It is +certainly not to the interest of any railroad company to pursue such a +policy; for by driving small establishments out of the business it +encourages monopoly, which almost invariably enhances prices and +decreases consumption. The railroad thus suffers in common with the +public the consequences of its short-sighted policy. That even railroad +managers realize that these practices cannot be defended upon any +principle of justice or equity is apparent from the fact that one of the +never-varying conditions of special rates is that they be kept secret. A +specimen of a special rate agreement which was placed before the New +York investigating committee is here presented to the reader: + + "This agreement, made and entered into this eighteenth day of + March, 1878, by and between the New York Central and Hudson + River Railroad Company, party of the first part, and + Schoellkopf & Mathews, of the city of Buffalo, N.Y., party of + the second part: + + "Witnesseth, That said party of the first part hath promised + and agreed, and by these presents does promise and agree to + transport wheat from the elevator in Buffalo, reached directly + by said first party's tracks, except at such mills as time + said tracks may be obstructed by snow or ice, to the which + said second party may erect or operate at Niagara Falls, N. Y., + at and for the rate of one and a quarter cents per bushel. + + "And further, that said first party shall and will at all + times give, grant and allow to said second parties as low + rate of transportation on all property shipped by them from + their said mills at Niagara Falls, and as favorable facilities + and accommodation in all respects as are afforded by the party + of the first part to the millers of Buffalo and Black Rock. + And also that the said party of the first part will transport + for said second party all of their east-bound New York freight + at and for the price or rate of forty-seven per cent. of the + current all-rail through rates, via the route of party of the + first part, from Chicago to New York, at the times of shipment, + adding thereto three cents per barrel for flour and one and + one-half cents per hundred pounds for mill feed or grain, as + a terminal charge, to provide for the incidental expenses + attending local transportation. + + "And will transport their freight to Boston and all points in + New England, taking Boston rates at the same rate as to New + York, with ten cents per barrel added for flour and five cents + per hundred pounds added for mill feed or grain. + + "Provided, however, and this agreement is made upon the express + understanding and consideration, that said second party shall + regard and treat this agreement as confidential, and will use + all reasonable precaution to keep the same secret. + + "And upon condition also that said second party shall ship + by the first party's road all the product from their mill at + Niagara Falls destined to all points in New York, Pennsylvania + and New England, reached by said first party, directly or by + connections with other routes. + + "And this agreement shall be and remain in force for the term + of five years from and following the first day of September, + 1878, after which period it may be terminated by sixty days' + written notice from either party. + + "In witness whereof, the parties hereto have signed these + presents the day and year first above written. + + "N. Y. C. & H. R. R. R. Co., + By J. H. RUTLER, + General Traffic Manager. + SCHOELLKOPF & MATHEWS." + +It will be noticed that this agreement was based upon the expressed +condition that Schoellkopf & Mathews treat it as "confidential," and use +all reasonable precaution to keep it secret. It is difficult to account +for this strong injunction of secrecy except upon the assumption that +the managers of the road, conscious of the great wrong which they +inflicted upon the body of the people by their discriminations, hoped to +escape public criticism by adopting a policy of secret dealing. Much as +special rates were sought after, but few shippers to whom they had been +granted were contented with their lot, for none was confident that his +rivals did not have better rates than himself. + +Discriminations between localities had their origin in the natural +desire of competing roads to increase their business at the expense of +their rivals. When two or more railroads touched the same point each +would attempt to secure the largest possible share of the through +business by holding out every possible inducement in rates to the +shippers of that place. Indeed, the freight rates at competitive points +were often so low that railroad managers found themselves placed in a +rather unpleasant dilemma. They either had to admit that the rates +charged by them at non-competitive places were exorbitant or that they +were carrying the freights of competitive points at a loss and were thus +squandering the money of their stockholders. They preferred as a rule +to admit that they were doing competitive business at a loss, but +asserted that, inasmuch as they were compelled to run their trains, they +could better afford to do competitive business temporarily at a loss +than not to do it at all. The same logic might with equal propriety be +employed by the grocer. To draw to him distant customers, he might offer +to sell to them at cost or even at a loss; and then, to recuperate, he +might advance the prices of his goods for his regular customers. If +there is any difference between the grocer and the railroad company, it +lies in the fact that the former's old customers would soon find relief +at a rival store, while the patrons of the railroad at non-competitive +points are like the traveler in the hands of a highwayman, without +immediate redress. The railway company which discriminates between +competitive and non-competitive points forgets that its line is a common +highway for all points tributary to it; that all have equal rights, and +that the only differences in tariff which the principles of the common +law permit are those which arise from a difference of service and cost. +All other differences that railroad companies may make are unjust +discriminations in violation of their charter and expose them to a +forfeiture of the franchises conferred upon them. + +The nature and extent of the discrimination practiced between different +places are often such that no interest of the company can possibly be +subserved by them, and the conclusion is forced upon us that the +advantages granted by railroad managers to certain places are designed +to serve chiefly personal and selfish interests. The great fortunes +amassed in a brief period of time by railroad managers can in almost +every case be traced to stock, real estate, commercial and other +speculations directly or indirectly connected with railroad +construction or management. And where other than personal interest +cannot be shown, this is the only basis upon which the many apparent +absurdities of railroad discrimination can be harmonized. + +It is claimed by railroad men that transportation by water is a +regulator of railway rates which they must respect. It is contended, for +instance, that, although the cities situated on our large lakes enjoy +superior commercial advantages which are mainly due to their having at +their disposal water communication with the Atlantic Ocean, inland towns +have no cause to complain against the railroads for not equalizing those +differences which nature has largely created. It might be more difficult +to meet this argument if, owing to peculiar combinations, these water +rates were not made to extend their influence to almost every inland +city north, east and south in the Union, and if those cities were not +given much lower rates than hundreds of places much nearer the lakes. +The teamster who, half a century ago, found it impossible to compete +with the canal, river or lake boats, simply surrendered the field to +them and confined his operations to such a territory as could give him +assurance of a profitable business. Let the railroads do likewise. No +company has a right to destroy a rival route, water or rail, by adopting +special tariffs for competing points. There are at points accessible to +water transportation certain freights requiring speedy carriage which +will go to the railroads at profitable rates, but the heavier freights, +as coal, lumber and even certain kinds of grain, should go to the +carrier by water if he can afford to transport them at lower cost. + +There have been but few legislative investigations of railroad abuses in +this country, but the disclosures which they have made to the public +are astounding. The most noteworthy of these were made by the Hepburn +committee, of New York, to which reference has already been made. It is +difficult to understand how a free and enlightened community could so +long and so patiently bear railroad despotism. Individual discrimination +might, under the veil of secrecy, long escape notice, but that a system +of open and widespread discrimination affecting every non-competitive +and even many a competitive point in the State, doing visible and +irreparable injury to thousands of shippers, and infringing upon the +rights of millions, should long be borne by a free and enlightened +people, is a strange phenomenon of democratic endurance. + +It would lead us too far from our subject to review in detail the many +and glaring instances of local discrimination which the report +enumerates. A few will suffice to show their scope and nature. + +William W. Mack, of Rochester, a manufacturer of edged tools, testified +that, in order to save fourteen cents per hundredweight on his freights +to Cincinnati, he shipped his goods to New York and had them shipped +from there to their destination, via Rochester; and that he availed +himself of the same roundabout route for his St. Louis shipments, and +saved thereby eighteen cents per hundredweight. In both of these cases +the railroad company carried the goods 700 miles farther than the direct +distance for a less charge. + +Port Jervis millers had their grain shipped from the West to Newburgh, a +point fifty miles to the east of them, and then had it returned to Port +Jervis on the same line, at a less rate than that charged for a direct +shipment. + +The grain rates from Chicago to Pittsburgh were 25 cents per hundred in +March, 1878, and only 15 cents from Chicago to New York. + +Flour was carried from Milwaukee to New York for 20 cents, while the +rate from Rochester to New York was 30 cents at the same time. It was +also carried from East St. Louis to Troy at the same rate as from +Rochester to Troy. The rate on butter from St. Lawrence County, N.Y., to +Boston, over the Ogdensburg and Lake Champlain and Vermont Central, was +60 cents per hundred; from the nearer county of Franklin, 70 cents; it +then continued to increase as the distance decreased, until it reached +90 cents at St. Albans, Vermont. + +Soap shipped by Babbit & Co., of New York, to Crouse & Co., of Syracuse, +paid 8 cents per box when the freight was paid in Syracuse, but 12 cents +per box when paid by the shipper in New York. + +It cannot even be said that New York fared worse than any of her sister +States. There is hardly a business man in any community in the United +States who cannot cite many cases of similar discrimination. Hundreds of +well authenticated cases have been reported from every part of the +country. A few striking ones may be given space here: + +The Illinois Central Company hauled cotton from Memphis to New Orleans, +a distance of 450 miles, at $1.00 a bale, while the rate from Winona, +Miss., to New Orleans, about two-thirds of the distance, was $3.25 a +bale. The same company charged for fourth-class freight from Chicago to +Kankakee, a distance of 56 miles, 16 cents per hundred, and only 10 +cents to Mattoon, 116 miles farther. The rate from New York to Ogden was +$4.65 per hundred, and only $2.25 per hundred from New York to San +Francisco. The car-load rate on the Northern Pacific was $200 from New +York to Portland and just twice as much to a number of points from 100 +to 125 miles east of Portland. The Chicago, Burlington and Quincy hauled +stock from points beyond the Missouri River to Chicago for $30 per +car-load, while it exacted $70 per car in Southwestern Iowa for a much +shorter haul. + +To what extent local discrimination has been carried by railroad +companies is well illustrated by the following incident: A nurseryman +residing at Atlantic, Iowa, a station on the Chicago, Rock Island and +Pacific Railroad, 60 miles east of Council Bluffs, bought a car-load of +grapevines at Fredonia, New York. Finding that the through rate from +Fredonia to Council Bluffs, plus the local rate from the latter place to +Atlantic, was less than the rate for the direct shipment from Fredonia +to Atlantic, he caused the car to be consigned to Council Bluffs, +intending to have it thence hauled back to Atlantic. Being short of +stock at the time the train containing his car passed through his town +on its way to Council Bluffs, the consignee prevailed upon the station +agent to set out his car. In due time he received a request from the +general office of the railroad to pay an amount equal to the rate per +car-load from Council Bluffs to Atlantic. The request was promptly +complied with by the appreciative nurseryman, who after all had been +saved an annoying delay by the courtesy of the company's agent. + +An infinite number of similar discriminations might be cited. They all +show the same violation of the fundamental principles of justice and +equity, the same despotical assertion of the power of the railroads to +regulate the commerce of the country as the caprice or selfish interests +of their managers might direct. + +Discriminations between commodities, or, as they might also be called, +discriminations in classification, are probably the most common of +unjust railroad practices. For the purpose of establishing as near as +may be uniform rules in all matters pertaining to rates, the various +roads operating in a certain territory usually form traffic +associations. The general freight agents of the roads that are members +of the association in turn form a select body known as the rate +committee. These committees of freight agents have for more than twenty +years constituted the supreme authority in all matters pertaining to +freight classification. The trunk line classification recognizes six +regular and two special classes, and every article known to commerce is +placed in one of these classes. One whom Providence has not favored with +the mysterious wisdom of a general freight agent might suppose that +considerations of bulk, weight, insurance and similar factors formed a +basis of railroad classification. Nothing, however, is farther from the +truth. Freight charges, when permitted to be fixed by railroad +companies, are invariably such as the traffic will bear, and freight +classifications are arranged on this principle, provided competition by +water, rail or other land transportation does not demand a modification. +It is, as a rule, not to the advantage of a railroad to entirely starve +out any commercial or industrial concern along its line. Hence tariffs +are scarcely ever made entirely prohibitory. Railroads proceed here upon +the principle of the robber knight of mediaeval times, who simply +plundered the wayfaring trader to such an extent as to reduce his +profits to a minimum. He never stripped him, for by doing so he would +have prevented his return and would have destroyed his own source of +revenue. In like manner a railroad will never annihilate any weak branch +of business along its line, nor will it, if it is in its power, permit +any business to prosper without paying to it heavy tributes out of its +profits. Every commodity is therefore made to pay a transportation tax +based chiefly on its value and the profit which it yields, and all +classifications are prepared with this object in view. + +The protection which, through exceptionally low rates, is extended by +the railroad companies to certain industries, may not be objectionable +_per se_, but the question arises whether the railroad companies or the +people should exercise the right to determine when and where such +protection is necessary. Moreover, to tax one branch of commerce for the +benefits bestowed upon another is a practice of extremely doubtful +propriety, and the power to do so should certainly never be conferred +upon a private corporation. When customs laws are proposed in Congress +ample opportunity is given to the representatives of the various +industries of the country to be heard upon the subject. No hasty step is +taken. Members of Congress have every opportunity to ascertain the +sentiment of their constituents, through the public press, petitions and +private correspondence. The subject is discussed in all its phases, both +in the committee-rooms and upon the floors of both houses of Congress. +Every detail is fully considered, and many compromises are often +necessary to secure for a bill the support of the majority. When it +finally passes it represents the will of the people, or at least the +will of their legal representatives, who may be expected to know their +wants and are accountable to them for their acts. Freight +classifications, however, while they are fully as far-reaching as +customs laws, are made by a few freight agents meeting in secret +session, listening to no advice and acknowledging no higher authority. + +It is claimed by the railroad men that it is to the interest of railroad +companies to do justice to all, and that the best classification for +the largest number of people is also the best for the roads. If this be +true, it is difficult to see why railroads should fail to consult their +patrons in the arrangement of their freight classifications. Intelligent +shippers may certainly be supposed to know as well as the railroad +companies what classification is to their common interest. Railroad +managers are naturally despotical. They do not wish and do not tolerate +any outside interference with what they obstinately term their private +business. Even if the general policy of the companies designed the +greatest good to the greatest number, the opportunities and temptations +of their agents to pursue selfish ends or take advantage of individuals +in the preparation or application of their tariffs are such that in the +practical execution the evil will always outweigh the good. + +It is not within the scope of the present inquiry to review in detail +the various classifications in force, or to point out the unjust +features. The author will confine himself to showing by a few +characteristic examples that the power now in the hands of the railroad +companies to classify the various commodities of commerce for the +purpose of rating is greatly abused and is a potent means of railroad +extortion. And that it may not be charged that abuses have been cited +which are a thing of the past, the examples will chiefly be taken from +cases which have come before the Interstate Commission for adjudication. + +A complaint was filed with the commission in 1887 by T. J. Reynolds +against the Western New York and Pennsylvania Railroad Company, from +which it appeared that that company charged a greater price for the +transportation of railroad ties from points in the State of Pennsylvania +to points in the State of New York than was charged at the same time +for the transportation of lumber between the same points. The commission +held that this was a case of unjustifiable discrimination and ordered +the company to place railroad ties in the same class with other rough +lumber. Many Western roads for years have been guilty of the same +discrimination. The reasons for such a policy are obvious. A high tariff +on railroad ties prevents their being shipped, depreciates their market +price at home, to the sole benefit of the discriminating company, which +is thus enabled to buy ties at a low price. Prohibitory rates on ties +and rails are also often maintained by railroad companies to either +delay or render more costly the construction of new lines which threaten +to become their competitors. The Union Pacific Railroad Company several +years ago even went so far as to make prohibitory rates on steel rails +intended for the construction of a road which promised to become a +competitor of one of its connecting lines. + +From another case decided by the Interstate Commerce Commission it +appeared that the Lake Shore and Michigan Southern Railway Company +charged for blocks intended for wagon-hubs, and upon which only so much +labor had been expended as was necessary to put them in condition, a +higher rate than for lumber, claiming that such blocks were unfinished +wagon material and were therefore, as articles of manufacture, subject +to higher charges than raw material. The commission justly held that +these blocks were as much to be regarded as raw material as the boards +from which wagon-boxes are made. + +In the classification of the Southern Railway and Steamship Association +pearline was placed in the fourth class, with a rate of 73 cents per +hundred pounds, and common soap in the sixth class, with a rate of 49 +cents per hundred pounds. This latter article, when shipped by large +manufacturers, enjoyed besides a special rate of 33 cents per +hundredweight. Pearline and soap are competitive; there is no +appreciable difference between them as regards the cost of +transportation; but one commands a higher price in the market than the +other, and upon this fact solely did the railroad company base its +alleged right to levy upon pearline a transportation tax 120 per cent. +in excess of that levied upon soap, though the service rendered by the +company was the same in either case. The commission held that the +discrimination made by the "special rate" of the Southern Railway and +Steamship Association between pearline and common soap was unjust, and +ordered that it be discontinued and that, with common soap in the sixth +class, pearline be placed in the fifth. + +For years the rate from Indianapolis to New York was the same for corn +as for its direct products, such as ground corn, cracked corn, corn +meal, hominy and corn feed. Such a tariff made it possible for Western +mills to compete with similar mills that had been established in the +East, since a discrimination of 5 per cent. was sufficient to absorb +three or four times the profits of any Western mill. It was shown by the +evidence produced that the actual cost of transportation was +substantially the same for direct corn products as for the raw corn. The +only defense which the railroad company could make for this +discrimination was that in the carriage of raw corn they had to meet +lake competition. The weakness of this argument will be perceived when +it is remembered that Indianapolis is 154 miles from the nearest +lake-shipping point. There is but little doubt that this discrimination +was made by the railroad company because it was to its interest to haul +the raw corn from the West to the East and to return it in altered +form. Railroads care, as a rule, little for a waste of force, if such +waste is to their own advantage. + +In another case brought before the commission in 1889 it was shown that +the "Official Classification" placed common soap in carload lots in +Class V, while such articles as coffee, pickles, salted and smoked fish +in boxes or packages, rice, starch in barrels or boxes, sugar, cereal +line and cracked wheat are placed in Class VI. The chief reply of the +railroad companies to this complaint was that soap was justly placed in +Class V because the components from which it is in part made stood in +Class V. + +In another case it was shown that one kind of soap was burdened with a +higher transportation tax than another, irrespective even of cost, +because one had been advertised as toilet and the other as laundry soap. + +The principle of charging what the traffic will bear is well illustrated +by the relative rates on patent medicines and ale and beer, as +maintained by the Official Classification. + +In a complaint made by a prominent manufacturer of proprietary medicines +against the New York Central and other roads, it was shown that the +complainant's products were shipped at owner's risk, and that they were +in bulk and intrinsic value similar to ale and beer, but that in spite +of these analogies the former were rated as first-class and the latter +as third-class goods, simply because they retailed at a higher price. + +Another unwarrantable discrimination is that in favor of live stock and +against dressed beef. While Mr. Fink, the commissioner of the Trunk Line +Pool, himself admitted that the cost of carrying dressed beef from +Chicago to New York was only 6-1/4 cents per 100 pounds in excess of +the cost of hauling live stock, the trunk lines maintained on dressed +beef a rate 75 per cent. higher than that on live cattle. The railroad +companies asserted that this was due to those people in the East whose +living depended on the live-stock interest. The railroads have in this +assumed a paternalism which would not be tolerated even in the +Government. To protect the East, railroads will not permit the West to +engage in new industries. + +The position which the Interstate Commerce Commission has assumed in +interpreting the rights of shippers under the law which railroad +companies are bound to respect in the preparation of their tariff sheets +and classifications cannot but be most gratifying to the people. In a +decision relating to the classification and rates for car-loads and less +than car-loads, filed March 14, 1890, the commission laid down the +following rules for the guidance of railroad companies: + + "1. Classification of freight for transportation purposes is + in terms recognized by the act to regulate commerce, and is + therefore lawful. It is also a valuable convenience both to + shippers and carriers. + + "2. A classification of freight designating different + classes for car-load quantities and for less than car-load + quantities for transportation at a lower rate in car-loads + than in less than car-loads is not in contravention of the + act to regulate commerce. The circumstances and conditions + of the transportation in respect to the work done by the + carrier and the revenue earned are dissimilar, and may + justify a reasonable difference in rate. The public + interests are subserved by car-load classification of + property that, on account of the volume transported to reach + markets or supply the demands of trade throughout the + country, legitimately or usually moves in such quantities. + + "3. Carriers are not at liberty to classify property as a + basis of transportation rates and impose charges for its + carriage with exclusive regard to their own interests, but + they must respect the interests of those who may have + occasion to employ their services, and conform their charges + to the rules of relative equality and justice which the act + prescribes. + + "4. Cost of service is an important element in fixing + transportation charges and entitled to fair consideration, + but is not alone controlling nor so applied in practice by + carriers, and the value of the service to the property + carried is an essential factor to be recognized in + connection with other considerations. The public interests + are not to be subordinated to those of carriers, and require + proper regard for the value of the service in the + apportionment of all charges upon traffic. + + "5. A difference in rates upon car-loads and less than + car-loads of the same merchandise, between the same points + of carriage, so wide as to be destructive to competition + between large and small dealers, especially upon articles of + general and necessary use, and which, under existing + conditions of trade furnish a large volume of business to + carriers, is unjust and violates the provisions and + principles of the act. + + "6. A difference in rate for a solid car-load of one kind of + freight from one consignor to one consignee, and a carload + quantity from the same point of shipment to the same + destination, consisting of like freight or freight of like + character, from more than one consignor to one consignee or + from one consignor to more than one consignee, is not + justified by the difference in cost of handling. + + "7. Under the official classification the articles known in + trade as grocery articles are so classified as to + discriminate unjustly in rates between car-loads and less + than car-loads upon many articles, and a revision of the + classification and rates to correct unjust differences and + give these respective modes of shipment more relatively + reasonable rates is necessary and is so ordered." + +The efforts which the commission has made to bring about a uniform +classification throughout the country are in the right direction, while +the results of its labor are not yet satisfactory. + +In their fifth annual report, the Commissioners, after giving an account +of their efforts and the shuffling and double-dealing of the railroad +companies with them upon this matter of uniform classification, said: + + "Its conviction remains unchanged that the necessities of + commerce require that the existing classifications be + consolidated, and that this result should be accomplished as + speedily as may be found practicable; and it does not feel + justified in asking for the further efforts of the carriers + the same measure of indulgence which from time to time it + has heretofore suggested should be extended to them, and + which was thought to be required in the public interest. + + "The commission can not but think that if legislation to + that end be enacted by Congress the carriers will speedily + consummate the reform already begun in this direction. It is + therefore recommended that an act be passed requiring the + adoption within one year from the date of its passage of a + uniform classification of freight by all the carriers, + subject to the act to regulate commerce, and providing that + if the same be not adopted within the time limited, either + this commission or some other public authority be required + to adopt and enforce a uniform classification." + +The present confusion which exists in the classification and rates of +the seventeen hundred railroad organizations of the country makes it +difficult for the commission to do justice to all interests and +localities. With the adoption of a uniform classification it is to be +hoped that in time many of the present inequalities will be adjusted, +especially if an intelligent public sentiment upon the subject of +railroad regulation is maintained. A prominent railroad manager in the +East, whose devotion to corporate interest is only equaled by his +political ambition, has recently made repeated efforts to convince the +people that railroad abuses are things of the past and that, if any such +abuses still linger in isolated districts, they are simply unavoidable +exceptions to the rule which will soon have to yield to the general +spirit of fairness and amity for which, in his opinion, the railroads +have of late been distinguished. He reasons that the law has fulfilled +its mission, that the railroads have reformed, and that it now behooves +the people to relent and to extend to the much persecuted corporations +the hand of friendship and good will. The postprandial eloquence of this +gentleman has often suavely intimated that the repeal of the Interstate +Commerce Act would be the most opportune recognition of restored +confidence. + +Still bolder champions of the railroad cause do not hesitate to demand +the repeal of the law. It is not likely that the sophistry of railroad +hirelings will triumph over the practical logic of an intelligent +public. No law, be it ever so wise, can in the space of a few years +correct all the abuses which half a century of unbridled railroad +domination has developed. Yet, since both the friends and the enemies of +the law agree that it has been partially successful in its operation, it +should be continued and improved to keep it in harmony with new +conditions and a progressive public sentiment. It is claimed by railroad +managers that the adoption of a uniform classification will remove the +only vestige of discrimination still left. This is not true, for by far +the largest number of complaints that have recently been brought before +the Interstate Commerce Commission charged personal and local +discrimination independent of any question of classification. + +It is shown by the reports of the commission that discriminations are +still practiced by various companies, that annual passes are still +illegally issued to bribe or appease men of influence, that discounts +are still given to favor shippers under various pretexts, that some +large railroad centers still enjoy more favorable rates than smaller +towns, and that the long and short haul clause of the Interstate +Commerce Act is still violated by railroad companies. There are besides +these scores of other devices in vogue among railroad managers to +subvert the principles of the common law. No doubt discriminations are +now much less frequent, and are possibly the exception where but a few +years ago they were the rule, but the fact that such abuses still exist +is a strong argument for the retention of the law as well as for the +necessity of continued vigilance on the part of the people and those +especially charged with the execution of the laws. The railroad acts of +Congress and the various States ask nothing of common carriers but just +and equitable treatment for all their patrons. If this is freely +accorded, these laws are no burden to the railroads. If, on the other +hand, there is a tendency on the part of the railroads to resort to +subterfuges and evasions, the wholesome restraint of the statute is +absolutely necessary for the protection of the shipper. + +The repeal of the Interstate Commerce Law, or the adoption of such +amendments as are demanded by railroad men, would be interpreted by them +as an abandonment of all its principles and would inaugurate an era of +unprecedented railroad oppression. History ever repeats itself. +Unchecked license will always lead to arrogance and despotism, and any +power which is long permitted to defy the state will in time control it. +It is not likely that the people of the United States can be induced to +demonstrate to the world that democratic government is incapable of +profiting in the dear school of experience. + +Our railroad legislation contains no principle that is not found in the +common law. Its maxims are our birthright and will be the birthright of +our children and children's children, and while railroad companies may +be able in the future, as they have been in the past, to violate the law +temporarily with impunity, they will never be able to prevail upon the +American people to abandon the policy of railroad reform which the +passage of the Interstate Commerce Law inaugurated. + +The Interstate Commerce Commissioners say in their sixth annual report: + + "Whoever will read the report of the special committee of + the United States Senate, commonly called the 'Cullom + Committee,' will be astounded at the magnitude and extent of + railroad abuses brought to light by their investigation. + Those unfamiliar with the facts made public at that time can + hardly believe the outrages which were proven to exist and + the manifold devices by which the most flagrant injustice + was perpetrated. A single illustration will furnish a better + reminder than extended comment. + + "It appears from that report that the Standard Oil Company, + in one instance at least, boldly demanded from a certain + railroad that its shipments should be carried for 10 cents a + barrel; that all other shippers should be charged 35 cents a + barrel on the same article, and that 25 cents of the 35 paid + by such other shippers should be handed over by the railroad + to the Standard Oil Company, and the penalty threatened for + non-compliance with this impudent extortion was a withdrawal + of its entire business. + + "The foregoing statements but imperfectly describe the + situation which existed when the Interstate Commerce Law was + enacted. In any reasonable view of the case it was too much + to expect that the common and long continued abuses of + railroad management could be corrected in less than half a + dozen years, or that the first scheme of legislative + regulation would prove adequate to that end. It would be + contrary to all experience if so great and radical a reform + could be thus speedily accomplished, or if the initial + statute should be found sufficient to bring it about. The + law was the outgrowth of an aroused and determined public + sentiment, which, while united in demanding Government + interference, was divided and uncertain as to the best + methods of affording relief. Like all attempts in a new + field of legislation, the statute was a compromise between + divergent theories and conflicting interests. It was + scarcely possible that it should be so complete and + comprehensive at the outset as to require no alteration or + amendment. Those who are familiar with the practices which + obtained prior to the passage of this law and contrast them + with the methods and conditions now existing will accord to + the present statute great influence in the direction of + necessary reforms and a high degree of usefulness in + promoting the public interest. + + "Whoever will candidly examine the reports of the commission + from year to year, and thus become acquainted with the work + which has been done and is now going on, will have no doubt + of the potential value of this enactment in correcting + public sentiment, restraining injustice and enforcing the + principle of reasonable charges and equal treatment. + Imperfections and weaknesses which could not be anticipated + at the time of its passage have since been disclosed by the + effort to give it effective administration. The test of + experience, so far from condemning the policy of public + regulation, has established its importance and intensified + its necessity. The very respects in which the existing law + has failed to meet public expectation point out the + advantages and demonstrate the utility of Government + supervision. + + "Moreover, it may be fairly claimed that much greater + benefits would have been realized had the statute as enacted + expressed the evident purpose of those who framed it, and + received a construction according to its apparent import. It + is not too much to say that judicial interpretation has + limited its scope and ascribed to it an intent not + contemplated when it was passed. If its supposed meaning, as + understood at the time of its passage, had been upheld by + the courts, it is believed that its operation would have + been much more effective and its usefulness greatly + increased. So far as failure has attended the efforts to + give it proper administration, that failure can be mainly + attributed to differences between its apparent meaning and + the judicial interpretation which some of its provisions + have received; and the commission is of the opinion that if + the present law could be so altered as to express clearly + and beyond doubt what it was evidently intended to express + at the time of its enactment, it would prove, even without + other amendment, an instrumentality of the highest value in + removing the evils against which it is aimed. + + "The specific instances in which the statute has received + judicial construction, and the limitations upon its scope + and meaning which the courts have imposed, will be alluded + to at greater length in another part of this report. + + "It seems proper, however, to observe in this connection + that the effect of these decisions in weakening the law and + preventing its enforcement has been greatly exaggerated. The + impression has been created in many directions that judicial + construction has invalidated the essential feature of the + statute and condemned the general principle which lies at + its foundation. That impression cannot be too speedily + corrected, for nothing has been decided which permits such + an inference. On the contrary, neither the power of the + national legislature to regulate the transportation of + interstate commerce nor the general policy of the existing + law has been questioned by any tribunal." + +Probably no law in the United States has ever before been so fiercely +attacked at all of its vital points as has this law. It is not strange +that among the great number of National and State courts the railroad +companies have found occasionally a judge ready and willing to assist +them in breaking it down, but upon the whole the judiciary has been +disposed to co-operate with other departments of the Government in their +efforts to secure effective regulation of the transportation business. + + + + +CHAPTER VI. + +STOCK AND BOND INFLATION. + + +The complaint is frequently heard from railroad men that our freight +rates are too low, and in support of it the statement is usually made +that the greater part of the railroad stocks of the United States pays +dividends considerably smaller than the average interest realized by +capitalists on money loaned or invested in other enterprises. + +This statement may be true, and yet it is valueless as an argument for +higher rates. It may be admitted that the dividends declared upon the +face values of railroad stocks are quite moderate, but it is a fact too +well authenticated to be contradicted that railroad securities represent +to a considerable extent only fictitious capital. The public concedes +that liberal returns should be allowed to railroad companies on money +actually invested, but it naturally objects to being taxed for the +purpose of making dividends on watered stock. The evil referred to is a +serious one, and has contributed much to the general demand for railroad +reform. Most of the early roads of this country were built for the +accommodation of local traffic. They were constructed and managed by +business men upon business principles. The stock issued by the companies +was in most cases paid for in full and was not unfrequently sufficient +for the completion of the entire road, and no incumbrance was permitted +by the owners to be placed upon the property. These enterprises as a +rule proved very profitable. One of the first roads running west of +Chicago will serve as an illustration. The Galena and Chicago Union +Railroad Company paid a 10 per cent. dividend within a year after being +opened to traffic, and gradually increased its dividends to 15, 20 and +22 per cent. During the first two years of the road's operation its +expenses were only 38-1/2 per cent. of its earnings. During the second +year the company, after paying a 15 per cent. dividend, diminished its +debt nearly $60,000 and increased its surplus $11,700. In 1856 the road +had a length of 232 miles, on which the gross earnings amounted to +$2,315,787. This revenue exceeded the estimate made by the company's +officers the year previous by $300,000. In his annual report for 1856 +the president of the company said: "This result shows an _increased +surplus_ of $65,000, after paying 22 per cent. in dividends and all +expenses and interests chargeable to income account." The report also +shows that expensive improvements, such as large permanent bridges and +stone culverts, displacing as a rule wooden ones, were charged to +current expenses. + +The financial success of railroads soon attracted the cupidity of +financial adventurers--men of great energy, but small means--whose aim +was to secure the greatest possible returns with the least possible +outlay of money. With the introduction of these elements into railroad +circles the era of speculation commenced. Take the line just referred +to. In 1852 the average number of miles operated was 62, and the year +following, 90. But while the number of miles operated increased less +than 50 per cent., the capital stock of the company grew from $444,193 +to $1,362,559, and its debt from $60,145 to $542,287. The capitalization +of the road was thereby increased from $8,000 to $21,000 per mile, and +this was done for the purpose of making the capital appear adequate to +its earnings. Nearly all railroads became in time the foot-balls of +shrewd manipulators. They were bonded before they were constructed, and +often for more than the value of the completed road. Stocks at the best +only represented nominal values and were given as premiums to the +bondholders or promoters of the road. + +But the science of stock-watering did not reach its fullest development +until during the period of railroad consolidation. Fictitious values +were now created as often as a new consolidation took place. Watered +stocks and bonds were watered again and again, until they represented +little more than a purely imaginary capital upon the basis of which +dividends might be declared. Take the case of the New York Central and +Hudson River Railroad companies, which consolidated in 1869 with a +capital of $103,110,137.31. The former of these roads was organized in +1853 by the consolidation of ten smaller roads connecting the cities of +Albany and Buffalo. The capital stock of these companies amounted to +$20,799,800, of which $16,852,870 was claimed to have been paid in. +Their funded debt was $2,497,526. It is impossible at this day to +ascertain the original cost of all these roads, but it is certain that +the above sums represent about three times the amount actually expended +for their construction. + +One of the roads entering into the consolidation was the Utica and +Schenectady. It was 78 miles long and formed about one-fourth of the +consolidated line. It had the heaviest grading and rock-cutting, was the +best-equipped and undoubtedly the most expensive, in proportion to its +extent, of the ten roads out of which the New York Central was created. +The original cost of this line was $2,000,000. Bonds were never issued +by the company. The line was profitable from the very beginning, paid +regularly ten per cent. dividends,--the limit to which railroad +companies were then restricted,--and had a large surplus, which it +expended mainly for improvements. No assessment was ever made on the +stock beyond the $1,500,000 which was originally paid in by the +shareholders and upon which they had drawn regular and liberal +dividends. Taking the original cost of this line as a basis, it is but +fair to presume that the entire line from Albany to Buffalo, covering a +distance of 297 miles, did not cost to exceed $6,000,000. These roads, +however, entered into the consolidation with a capital stock of +$15,274,800 and a bonded indebtedness of $1,696,326. + +Estimating the cost of the branches upon the same basis upon which we +have estimated that of the main line, we shall find that the total +original cost of the consolidated lines cannot have exceeded $8,000,000. +The Mohawk Valley road was put in at $2,000,000 and the Syracuse and +Utica direct at $600,000, though the roads only existed on paper and did +not represent any value whatever. The Schenectady and Troy road, which +went into the consolidation with $650,000 stock and $90,000 bonds, had +been bought for less than $100,000 two months previous to the +consolidation. + +It will thus be seen that already nearly one-third of the stocks and +bonds of the consolidated companies was water. The consolidation +agreement fixed the capital stock of the New York Central at $23,085,600 +and its funded debt at $11,564,033.62, increasing the stock over +$2,000,000, and the bonded debt over $9,000,000. The latter was more +than quadrupled, and $8,000,000 worth of bonds were, under the name of +consolidation certificates, given as a present to the stockholders of +the new road. The capital stock of the New York Central grew steadily up +to the time of its consolidation with the Hudson River road, when it was +$28,795,000. All improvements made during this time were paid for out of +its surplus earnings, with the single exception of the Athens branch, +for which the company issued $2,000,000 of its stock. + +The gross earnings of the New York Central in 1854 were $5,000,000, and +its net earnings $2,830,000. In 1863 its gross earnings were in round +numbers $10,000,000, and in 1869 they reached $15,000,000. The dividends +paid during that year amounted to $4,300,000, and the interest to +$894,000. In view of the fact that the bonded indebtedness of the road +was from two to three million dollars more than the original cost, this +dividend of 15 per cent. upon a wholly fictitious capital must be +regarded as an unwarranted tribute levied upon the commerce of the +country. But we shall soon see that in railroad hydraulics, as well as +in other branches of human industry, success stimulates to still greater +energy. + +The Hudson River Railroad Company was organized in 1847. It extended +from New York City to East Albany and was 144 miles long. There are no +data extant upon which could be based a reliable estimate of its +original cost. Estimating it upon the basis of that of the Utica and +Schenectady, we should have to place it somewhat below $3,000,000. While +such an estimate may be too low, the amount of its funded indebtedness +in 1851, which was $5,640,000, probably more than covers the amount +actually expended in the construction of the road. In 1851 the capital +stock of the Hudson River road was $4,000,000. In 1853 the funded debt +had increased to $7,000,000, and in 1862 to $9,000,000. In 1869 the +bonded indebtedness had decreased to $4,309,000, but the capital stock +had grown to over $16,000,000. Between 1853 and 1869 the company +increased its stock and bonded indebtedness nearly $11,000,000, while +the assessments paid by its stock and bondholders during this time did +not exceed $1,000,000. Improvements were made, but these were chiefly +paid for out of the surplus earnings of the road. It has been shown by +experts that $6,640,000 is a high estimate of the actual original cost +of the Hudson River road to its stock-and bondholders, and that +securities to the amount of more than $13,000,000 represented surplus +earnings and water. At the time of the consolidation of the Hudson River +and New York Central railroads the capital stock of the two roads had +grown to $44,800,000. Under the consolidation agreement the stock was +fixed at $45,000,000. The new company also assumed all the bonded and +other indebtedness of both roads. If the consolidation manipulators had +paused here, the capital of the new company would have been somewhat +less than $60,000,000, or more than three times the cost of the +property. But the road was, under existing rates, capable of earning +dividends on a much larger capital, and this emergency was met by the +issuance of consolidation certificates to the amount of $45,000,000. The +total capital of the road was thus increased to and made to pay +dividends on over $103,000,000, while the total cost of the road and its +equipment, as claimed by the company in 1870, was less than $60,000,000, +their estimate being based upon assumed consolidation values and the +expenditures made from surplus earnings. During the same year the gross +earnings of the company were $22,363,320, and their net earnings +$8,295,240. In 1880 the gross earnings had increased to $33,175,913, +and the net earnings to $15,326,019. The company was able to declare in +that year 11.82 per cent. dividend on its $89,500,000 of fictitious +stock. In 1890 its gross earnings were $37,008,403, or $26,050 per mile, +while its total net earnings were $12,516,273. The gross earnings have +largely increased during the years 1891 and 1892. It is safe to say that +$2,000,000 per annum would pay very liberal interest and dividends on +the amount of money expended upon the construction of the New York +Central and Hudson River Railroad from the proceeds of its bonds and +stocks. By the creation of fictitious values the managers of the company +have attempted to impose an exorbitant tax upon the commerce and travel +of the country for all time to come. The Government guarantees an +inventor a monopoly only for a limited space of time, upon the +expiration of which his invention becomes the common property of the +people; but railroad managers endeavor to collect, under the protection +of our laws, an exorbitant royalty from our people forever. + +The case of the New York Central and Hudson River Railroad Company is +only one of the innumerable instances of stock watering in the history +of American railroads. Indeed, it can be shown that stock-watering +reached a still higher degree of development in the case of the Erie +road. It has been demonstrated that the actual original cost to the +stock-and bondholders of the New York Central Railroad Company, which +was, with its branch lines, 593 miles long, did not, including the +Athens branch, exceed $10,000,000. Its cost to its owners, in 1869, +including the bonuses, premiums, commissions and fictitious equalization +values of several transfers, was reported by them to be only +$37,600,000, or about $63,400 per mile. At about the same time the main +stem of the Erie Railway, extending from New York to Dunkirk, a distance +of 459 miles, was represented by a capital of $108,807,687, or $237,000 +per mile. Considering the inferiority of this road to the New York +Central, we are forced to the conclusion that nearly 85 per cent. of the +capital of the road represented water, or, in other words, that the +commerce of the United States was taxed to pay dividends on about +$90,000,000 of watered securities. In 1863 the Erie Railroad had +outstanding $11,437,500 of common stock. In 1864 this had been increased +to $15,693,000, in 1868 to $37,765,000, and in 1869 to $70,000,000. Not +one-tenth of this enormous increase of capital was ever expended on the +property of the road. The stock was sold at from 20 to 40 cents on the +dollar, and the proceeds disappeared in the hands of its managers. To +what extent this freebootery was carried will probably never be known. +An idea of the rottenness of the Erie management may be had from the +fact that the courts at one time ordered its president to restore to the +company $9,000,000 of diverted securities, which order was complied +with. Vast private fortunes were amassed by nearly all the men who +directed the affairs of the road, and the mismanagement became in time +so notorious that the legislature of the State of New York was appealed +to, to remove the directors of the road for the protection of its +stockholders, and to reduce the capital stock of the company to the +amount actually paid for it. This movement failed, however, because it +was opposed by the very stockholders whose interests were supposed to +have suffered by directorial mismanagement. They preferred to continue +to draw dividends on the face value of stocks which they had purchased +at 20 cents on the dollar. The capitalization of the company has since +been increased to $163,679,825, and it is by no means a secret among +those familiar with railroad values that the bonded indebtedness of the +Erie road represents alone many millions more than the total amount that +was ever invested in the property. + +The principal competitor for through traffic of the two companies whose +financial operations we have just reviewed is the Pennsylvania Central +Company. It has often been asserted by the managers and friends of this +company that its capital is free from water; but this is not true. In +1864 a dividend of $4,130,760 was made out of the surplus earnings of +the road. This dividend was payable in capital stock and was equal to 30 +per cent. of the then outstanding capital. Similar surplus dividends, +each equal to 5 per cent. of the company's outstanding stock, were +declared in 1867 and 1868. The people were thus taxed to pay dividends +on a capitalized surplus which had been derived from excessive charges +previously imposed on them. I shall not attempt here to determine +whether the capital represented by the Pennsylvania Railroad Company has +been honestly invested. A committee of Congress has expressed the +opinion that the capitalization of its main line exceeds the amount of +the actual cost of the property by more than eleven million dollars. +There is, however, a system of inflation practiced by the Pennsylvania +Railroad Company which is simply a new form of bond and stock watering. +More than one-half of the capital of this company has been invested in +the stocks and bonds of other corporations. In 1891 the amount so +invested was $154,319,240, and the income derived from it $4,852,181. +This does not only cause the stocks and bonds of certain companies to be +counted twice, but exacts a double tax from the commerce of the +country, interests and dividends upon the same capital being paid both +to the bond- and stockholders of the Pennsylvania Central and to the +bond-and stockholders of the roads in whose securities it has made +investments. The income of the company is thus swelled far beyond the +amount which the traffic reports indicate. It will be seen that, to +perpetuate extortionate rates, this process of manifolding securities +might be continued indefinitely. + +The cost to its stock-and bondholders of the Baltimore and Chicago line +of the Baltimore and Ohio Railroad, which has a length of 795 miles, was +estimated by the company's officers at about $57,000,000. The actual +cost of this road, owing to its expensive mountain grades, was probably +greater than that of any of the other through lines between the +sea-coast and Chicago, but there can be no doubt that the capitalization +of this road represents from one-half to one-third pure water. At the +time of the completion of this road to Chicago the surplus earnings of +the company, after the payment of interest and dividends, amounted to +over $29,000,000. This had been charged to "profit and loss" and used in +the construction of branch lines. Thus an amount equal to more than half +of the reported cost of this line had at the time of its completion been +returned to its owners in other railroad values. + +The Select Senate Committee on Transportation Routes to the Seaboard in +1874 estimated the excess of the capital over actual cost of the Erie +road, from New York to Dunkirk, at $68,807,000; that of the New York, +Lake Shore and Michigan Southern line to Chicago at $115,188,137, and +that of the Pennsylvania and Fort Wayne line to Chicago at $11,290,374. +If this estimate was correct the entire over-capitalization of these +lines, on which the commerce between the West and the East was forced to +pay a dividend of 8 and 10 per cent. per annum, was no less than +$195,000,000. The committee assumed the actual cost of these roads to be +$182,000,000, or about $78,000 per mile. They based their estimate upon +the cost of the main branch of the Baltimore and Ohio, as reported by +their officers, supposing it to represent the actual outlay made by its +stock-and bondholders. Various revelations which have since been made to +the public, as to the real cost of railway construction, justify the +belief that the estimated cost of $78,000 per mile for those roads is +far too high. Mr. Henry Poor, several years ago, estimated the average +cost of the roads of the United States at $30,000 a mile. Making +allowance on one hand for Mr. Poor's tendency to favor the railroad side +of the question, and on the other hand for the more expensive grades, +double tracks and better terminal facilities of these trunk lines, +$50,000 per mile may be considered a fair estimate of their average +cost. Upon this basis the total cost of the three lines in question +would amount to $116,450,000, and the excess of their capital over +actual cost would be the enormous sum of $261,000,000, or 325 per cent. +of their actual cost, and probably not less than 400 per cent. of the +original cost to their stock-and bondholders. The capital of these +companies has since been considerably increased, to enable their +managers to increase their dividends, and with it the tax levied upon +the commerce of the country. + +These are only a few of the many instances of stock watering that might +be mentioned. In fact, there are to-day very few railroads in the United +States that are entirely free from it. It is a notorious fact that the +stock of a large number of railroad companies represents little or no +value, having either been sold at a mere nominal price or been donated +as a premium or bonus to those who purchased a large amount of the +company's bonds. In recommending, in his December, 1891, annual message, +Government aid for the Nicaragua Canal, President Harrison said: "But if +its bonds are to be marketed at heavy discounts and every bond sold is +to be accompanied by a gift of stock, as has come to be expected by +investors in such enterprises, the traffic will be seriously burdened to +pay interest and dividends." It is not difficult to surmise to what +enterprises the President referred. It has for many years been a +well-settled principle among railroad incorporators that no larger +assessments should be made upon the stockholders than is necessary to +float the company's bonds. A company, for instance, is organized with a +capital stock of, say, $1,000,000. Five per cent. of this sum, or +$50,000, is paid into defray preliminary expenses. The road is then +bonded for perhaps $2,000,000, but as the bonds are sold for only 80 per +cent. of their face value and as the incorporators allow themselves 5 +per cent. for the negotiation of the bonds, only $1,500,000 is realized +for the construction of the road. The incorporators now vote to +themselves a contract to construct the road for $1,500,000 and at once +sublet it to a contractor who is ready and anxious to build the road for +$1,200,000. The incorporators thus realize $1,000,000 worth of stock, a +portion of which is unloaded upon unsophisticated investors, and +$300,000 in cash, at an outlay of $50,000; and the road, which cost +$1,200,000, is made to pay interest and dividends on a total capital of +$3,000,000, and this is subsequently watered indefinitely if the road +proves profitable or a consolidation with some other road justifies the +belief that its earning capacity might be increased. Nor is this an +overdrawn picture. On the contrary, instances might be cited where only +one-half of one per cent. of the company's stock was paid in by the +shareholders. + +In the days of inflation such transactions did not seem to seriously +affect railroad securities. Even when they were no longer a secret to +the public, stocks and bonds sold readily, because, owing to the large +earnings of the roads, this class of investments was unusually +productive. + +In 1868 the earnings of the railroads of Massachusetts averaged $15,400 +a mile, and were equal to 38 per cent. of the total reported cost of all +the lines of the State. The Chicago, Burlington and Quincy earned +$15,386 per mile in 1867, and paid a 15 per cent. dividend. Its stocks +were quoted 100 per cent. above par. In 1867 the Lake Shore Railroad +earned more than 50 per cent., and the Terre Haute and Indianapolis even +as much as 57.2 per cent. of the amount of its cost. Previous to the war +the inflation of railroad securities was, as a rule, confined to the +stock. Where roads were bonded for more than the cost of construction it +was, with but very few exceptions, done to make their capital to +correspond with their earning capacity, or rather to divert public +attention from the fact that the rates in force had outlived their +reasonableness. It was reserved to the Union Pacific and the Central +Pacific companies to bond their roads from the beginning to an amount +equal to twice their actual cost, or, in other words, to virtually +receive them as a present from the Federal Government, bond them for all +they were worth, and, in addition, issue stock to an amount largely in +excess of the cost of construction, and then try to earn interest and +dividends on the whole amount of securities issued. The history of +these companies forms so interesting and instructive a chapter in the +railroad annals of America that a short synopsis of it may not seem out +of place here. + +The charter of the Union Pacific Railroad Company was granted by +Congress on the first day of July, 1862. Shortly after the beginning of +the War of the Rebellion it was made to appear to the country that a +transcontinental road was a national necessity; that without it we could +not hope to retain long the Pacific Coast. It was also very plausibly +argued that the political benefits to be derived by the country from the +construction of such a road, as well as its great length and +extraordinary cost, made it the duty of the nation to aid liberally its +enterprising and patriotic promoters in the prosecution of their +gigantic task. In those stirring times few people were inclined to +question the motives of those who advocated what appeared to be +patriotic measures, or to be penurious in the expenditure of public +funds when the public weal seemed to demand such expenditure. + +The Union Pacific Railroad charter, which in substance was passed by +Congress as it had been drafted by the promoters of the enterprise, gave +to the new company the right of way through the public lands, and +authorized it to take, from the lands adjacent to the line of its road, +earth, stone, timber and other materials for its construction. It +further granted to the company every alternate section of land to the +amount of five alternate sections per mile on each side of its line, +excepting only those lands to which preemption or homestead claims +attached at the time when the line of the road should be definitely +fixed. In addition to these donations the United States issued to the +company subsidy bonds in an amount equal to $16,000 per mile for the +distance from the Missouri River to the eastern line of the Rocky +Mountains, $48,000 per mile for a distance of 150 miles through the +Rocky Mountains, and $32,000 per mile from the western base of the Rocky +Mountains to the terminus of the road. Similar franchises were at the +same time given to the Central Pacific Railroad Company, a corporation +which had previously been chartered by the State of California. Besides +its grant of right of way, land, timber, etc., this company received +subsidy bonds at the rate of $16,000 a mile for a distance of 7.18 miles +east of Sacramento, of $48,000 a mile for 150 miles through the Sierra +Nevada, and of $32,000 a mile for the distance from the eastern base of +that mountain range to its junction with the Union Pacific. The charters +of the two companies provided that, to secure the repayment to the +United States of the amount of those bonds, they should _ipso facto_ +constitute a first mortgage on the entire lines of the road, together +with their rolling stock, fixtures and other property. The franchises +and donations thus granted by Congress were most valuable; in fact, the +latter were alone sufficient to build and equip the roads. In spite, +however, of the liberal grants and in spite of the urgent necessity of +the roads in those years of national trial, both of these enterprises +made very slow progress. Their promoters were men of small means, and +the capitalists to whom they appealed for help failed to realize the +value of the franchises. No doubt when these men first engaged in their +cause they expected to encounter serious obstacles in Congress, +supposing that that august body would consider the proposed measure with +much deliberation and to act upon it with still more circumspection. +Their success greatly surprised them. They made the discovery that +members of Congress could be imposed upon as easily as private +citizens, and when they fully realized how readily their demands had +been granted, they were greatly provoked at themselves because they had +not asked for more. + +According to a story told by my old friend Mr. J. O. Crosby, an +experienced member of the brotherhood of tramps late one afternoon +chanced to stroll into the city of Alton. Having no visible means of +support, he was picked up by the police and brought before the Mayor to +give an account of himself and to be dealt with as that dignitary might +see fit. The tramp, a printer by profession, and by no means a tyro in +meeting such emergencies, so managed to impress the Mayor with his +superior accomplishments that the latter concluded it would be a good +investment, both for himself and the city over which he presided, to +offer the genial stranger a contribution to his traveling fund, upon the +condition that he would no longer than absolutely necessary molest the +city with his presence. He accordingly told the intercepted tourist that +while it had been for years the policy of the city and its officials to +entertain all tramps found within the limits of Alton for thirty days at +the city jail in exchange for a fair amount of labor, he would, in +consideration of the apparent fact that he was of better metal than the +average tramp, make an exception in his case, and would, even at the +risk of being censured for it by his constituents, hand over to him five +dollars from the municipal funds if he would agree to leave the city +early next morning. The tramp gladly accepted the proposition, +replenished his empty purse with the proffered bounty and withdrew from +the City Hall, to take a stroll through Main Street. The city seemed to +him as prosperous as the Mayor had shown himself liberal. It occurred to +the itinerant typographer that its treasury would not have been the +worse off for a ten-dollar levy, and he hastily returned to the Mayor's +office to plead for a larger donation. The Mayor, not disposed to argue +the question, handed him another five-dollar bill and improved the +opportunity to remind him of his previous promise and to give expression +to the hope that as a gentleman of honor he would now discharge his +obligation. The tramp fairly overwhelmed His Honor with assurances of +good faith and bade him an affectionate good-by. The next rising sun +found him on his onward journey. His route led through Alton on the +Hill, a portion of the city which he had not seen before. He viewed with +surprise the many fine residences and other evidences of opulence which +this part of the city contained. He passed on in a pensive mood until he +reached the summit of the hill, which commanded a fine view of the +entire city. Here he turned to cast a farewell glance over the town +ruled over by the most generous mayor that it had ever been his +privilege to meet. As he beheld before him the fine homes and beautiful +yards, and below in the valley the lofty church-steeples, the many +school-houses, the massive business blocks, the long and well-paved +streets and the spacious and shady parks, an expression of mingled +surprise and disappointment stole over his face. He thrice slapped his +wrinkled brow and then hurriedly retraced his steps down the hill. When +the chief magistrate of Alton came to his office that morning, he met +the irrepressible tramp anxiously waiting for him at the door. "Mr. +Mayor," said the wily extortioner, "I acted very hastily yesterday when +I accepted your second proposition. You have here a much larger town +than I ever supposed. I have been constrained to take our last agreement +into reconsideration, and I shall not leave this point until you add +another five dollars to your consideration. You can certainly better +afford to do that than to throw away thirty days' board and the ten +dollars which you have already paid me besides." + +The diplomacy of the Union Pacific and Central Pacific railway companies +was the same as that of the Alton tramp. They had found Congress as +generous as the tramp had found the Mayor of Alton, and now reproached +themselves for their modesty and resolved to bring the pliability of +Congress to a severer test. They again appeared before that body in 1864 +and asked that their charter be so amended as to grant to them ten +alternate sections instead of five on each side of the road, and also +all the iron and coal found within ten miles of their track, which had +previously been reserved by Congress. And in addition to this they asked +that they be authorized to issue their own mortgage bonds on their +respective roads to an amount equal to the bonds of the United States, +and that the lien of the United States bonds be made subordinate to the +lien created by the companies' bonds. By the act of Congress, July 2, +1864, all these demands were granted, and the two companies were thus +virtually presented with their roads and were at the same time given +permission to mortgage this gift of the people and divide the proceeds +among their shareholders, many of whom had received their stock chiefly +in consideration of their influence in and out of Congress. The +contribution of the United States to these companies on account of their +main lines has not been far from $80,000,000, of which over $52,000,000 +was paid in bonds, and the remainder in lands, which aggregated about +23,000,000 acres. The whole line from Council Bluffs to Sacramento is +1,780 miles long. It will thus be seen that the national contribution +was about $45,000 per mile, besides the right of way and all timber, +iron and coal found within ten miles of the road. There is no doubt that +this contribution was equal to, if it did not exceed, the actual cost of +the road. There has been an erroneous impression abroad which has +likened the Pacific road to those wonderful and very expensive lines +which cross the Andes and the Alps. Those who have not crossed the +continent can hardly believe that the construction of this line was +neither more difficult nor more expensive than that of any of the +numerous railroads crossing the mountain ranges of the East, but such is +the fact. + +Starting from Omaha, the Union Pacific follows for nearly 500 miles, or +almost half of its entire length, the valley of the Platte River. A +better route for a railroad cannot be found upon the western continent. +There are between Omaha and Cheyenne but three bridges worthy of the +name. The Platte Valley is almost straight, rising toward the west at a +nearly uniform rate of about 10 feet to the mile. Grading was +practically unnecessary, and the work of construction consisted of +little more than the laying of the ties and track. From the base of the +mountains at Cheyenne to their summit is a distance of about thirty-two +miles, the difference in altitude between the two points being less than +2,200 feet. The average grade is therefore about 68 feet to the mile, +and nowhere are the grades heavier than 80 feet to the mile. There are +heavier grades than these in the prairie State of Iowa, and the mountain +grades of a number of Eastern roads exceed those of the Union Pacific by +from 30 to 40 feet to the mile. The rise is, if not uniform, at least +gradual, and the construction of even this portion of the road required, +therefore, neither great engineering skill nor any unusual expenditure +of money. The road now crosses a plateau which extends almost to the +terminus of the Union Pacific at Ogden, and a very large portion of this +is as favorable for a roadbed as the average railroad territory of the +country. + +The route of the Central Pacific presented to the engineer no great +obstacles between Ogden and the State line of California, the only +elevation of any note to be surmounted being the Humboldt Mountains in +Nevada. Their highest point, Humboldt Wells, is 221 miles west of Ogden, +and has an elevation of 5,650 feet above the level of the sea, while +that of Ogden is 4,320 feet. Upon an average the grades of this portion +of the road do not differ from those found in the Mississippi Valley. +The portion of the Central Pacific Railroad which traverses the Sierra +Nevada is the most expensive of the whole line, but the cost of +construction did not, even on this division, exceed the amount +contributed for it by the Federal Government; for the statement is made +upon good authority that a few of the leading promoters of the road +built the first western section of twenty miles with their own capital, +of less than $200,000, and a loan from the city of Sacramento and Placer +County, amounting to $550,000, and then drew $848,000 Government +subsidy, or more than enough to build the second section and draw +another installment of the subsidy; and that they repeated the operation +until the whole line was completed. These men were in such haste to +realize the profits which their undertaking promised them that they did +not even take sufficient time to make a proper survey of their line. Had +they done so, a great saving, both in the construction and in the +subsequent operation of the road, might have been effected. It is now +well known that a route could have been found through the Sierra Nevada +Mountains, not far distant from the route chosen, which would have saved +800 feet in elevation and at least 25 per cent. in the expense of +grading. + +It is certainly safe to say that if less than forty thousand dollars a +mile was sufficient to construct the road through the Sierra Nevadas the +Federal contribution of $50,000,000 for the entire line, from Omaha to +San Francisco, left, after the completion, a respectable surplus, either +to the companies or those of their members who had the construction +contract, and that the $75,000,000 of capital stock and the $55,000,000 +of first mortgage bonds which the two companies issued were a gigantic +dividend to the stockholders, for which, practically, no consideration +was given. + +The companies might well have been satisfied with the Government's +generosity, but their success in imposing upon Congress stimulated their +greed. The act of 1864 provided that the charge for Government +transportation over these roads should be applied to the liquidation of +its bonds, and that after the completion of the lines five per cent. of +their net earnings should likewise be so applied. When the Secretary of +the Treasury, under the law, refused to pay them the amount earned by +Government transportation, and in addition to this demanded the five per +cent. of their net earnings in liquidation of their debt, the companies +applied to Congress to again amend their charters so as to relieve them +for the time being from any direct payment of either principal or +interest of the Government bonds, and to make it the duty of the +Secretary of the Treasury to pay to the companies in money one-half of +the compensation allowed to them by law for services performed for the +Government. And again Congress responded to their demands, granting +them, by a rider to the army appropriation bill, passed March 3, 1871, +all the relief asked for. Owing to the policy of the managers of the +Pacific line to pay as little of the interest on the Government subsidy +debt as is absolutely necessary to prevent foreclosure proceedings, the +unpaid interest has accumulated until it now almost equals the amount of +the original indebtedness. The last report of the Commissioner of +Railroads shows that the total indebtedness, principal and interest, to +the United States of the Pacific railroad companies, was $114,490,000 on +July 1, 1892. The Commissioner seems to be of the opinion that the Union +Pacific Company will not be able to pay the subsidy bonds at maturity, +and he urges that some step be taken in the matter by Congress, whether +it be to extend the loan, which will mature within the next six years, +or to sell the road. The managers of the Pacific roads and their friends +ask an extension of the Government subsidy bonds for fifty years, and a +reduction of interest from 6 to 2 per cent. If Congress continues to be +servile to these interests, the Pacific railroad lobby will secure just +such legislation as they demand. + +At the time the Pacific roads were built the people of the United States +had no adequate knowledge of the topography of the Territories, and the +promoters of the road for a while found it a difficult task to convince +capitalists that the investment would be a safe one. That they knew the +value of the projected road was shown by the contest between the Central +Pacific and the Union Pacific for mileage. For a distance of over 200 +miles the two companies graded roads side by side in contest for the +Government subsidy. + +The promoters were even disappointed in the cost of the roads, as Mr. +Sidney Dillon states in an article published in the August number of +_Scribner's Magazine_, 1892, in which he says: + + "At the end of 1867 the road was completed to the top of the + mountains and nearly half way to Salt Lake City. The cost of + building over the mountains was so much less than we had + expected that the construction company found itself with a + surplus from the proceeds of the subsidy bonds. This was + imprudently distributed in dividends." + +The United States Government could parallel to-day the line of either +road for less than the amount of its first mortgage bonds, and its +subsidy bonds are therefore nearly worthless. + +Mr. Clews, in his "Twenty-Eight Years in Wall Street," says: + + "After the Thurman bill had been sustained by the Supreme + Court Mr. Gould had a plan to build a road from Omaha to + Ogden, just outside the right of way of the Union Pacific, + and give that road back to the Government. It would give + others 'a chance to walk.' The Government tried to squeeze + more out of the turnip than was in it. For $15,000,000 a + road could be built where it had cost the Union Pacific + $75,000,000." + +It may be admitted that the Pacific roads, even at an extravagant cost, +have proved a good investment for the country, yet their history +reflects severely on the statesmanship of those members of Congress +whose duty it was to properly protect the interests of the nation at +that time. They were unequal to their task. + +The Great Northern Railway Company has just completed its road to the +Pacific Coast. Its line is very direct, and it has unusually light +curvature and low grades, which will enable it to be operated more +cheaply than any Pacific line yet constructed. Much of its route is +through a rich and productive country, insuring to it a heavy local +business. + +The following statistics concerning it are given in the _Railway Age_: + + Total mileage, December 18, 1890 2,850 + Average bonded debt per mile $18,636 75 + Average stock per mile 7,015 67 + Total 25,652 42 + Interest charges per mile 1,005 76 + Dividend charges per mile 420 94 + +A comparison of these figures with those corresponding of other +transcontinental lines is instructive, and is commended to Congressmen +who have to deal with the Union Pacific and Central Pacific questions. + +Stock and bond inflation, it may confidently be asserted, has created +from five to six thousand millions of dollars of fictitious railroad +capital. In 1890 the average liabilities of the railroads in the United +States, including the capital stock and the funded and unfunded debt, +were $63,600 per mile. According to Mr. Poor's estimate of the average +cost of American railroads per mile, more than 50 per cent. of this vast +sum is pure water. But, as has been stated before, Mr. Poor is partial +to the railroad interest, and his estimate of $30,000 a mile is too high +for the time at which it was made. Furthermore, railroad building has +since then been materially cheapened. Tens of thousands of miles of road +have been built in recent years that did not cost to exceed $10,000 a +mile. Very recently the Union Pacific Railroad Company proved, before +the Board of Equalization at Salt Lake City, by the testimony of +engineers, that the average cost per mile of the Utah Central line was +only $7,298.20, itemized as follows: + + Engineering $ 300 00 + Grading 5-ft. fill, 18,480 yds. 2,310 00 + Ties, 2,640, at 30 cts. 792 00 + Rails, 82 tons 1,845 00 + Splices 12 00 + Bolts 24 00 + Spikes 142 20 + Track-laying 600 00 + Bridges 200 00 + Station-building 100 00 + Fences 150 00 + Right of way 720 00 + --------- + $7,298 20 + +In a recent article Mr. C. Wood Davis states that "many auxiliary lines +have been built at costs ranging from $8,000 to $15,000 per mile, and +capitalized at two, three, four, and even five times their cost, as in +the case of the 107 miles of the Kansas Midland, costing, including a +small equipment, but $10,200 per mile, of which 30 per cent. was +furnished by the municipalities along its line. Yet, with construction +profits and other devices, this road shows a capitalization of $53,000 +per mile." + +And that "the Missouri Pacific line from Eldora to McPherson, Kansas, a +comparatively expensive prairie road, being located across the line of +drainage, cost much less than $10,000 per mile, as have thousands of +miles of other prairie roads." + +It is safe to say that $25,000 is a liberal estimate of the average cost +per mile of American roads to the stock-and bondholders, and that their +capitalization represents $38,000 of water per mile. The total net +earnings of the railroads of the country were $341,666,639 in 1890, and +$356,227,883 in 1891, upon an actual investment of only about +$4,250,000,000. This is a return of about 8-1/2 per cent. and shows the +force of Mr. Poor's statement that, if the water were squeezed out of +railroad securities, no better-paying investment could be found in the +country. + +We often see references to the fact that no dividends are paid upon a +large portion of railroad stocks, but there is no reason why dividends +should be paid upon many of them, as they represent no capital whatever +that has gone into the road. It is probable that not to exceed ten cents +on the dollar upon an average was originally paid for these stocks, and +the $80,000,000 distributed annually as dividends upon them does not +vary much from fifteen to twenty-five per cent. upon the amount actually +invested in them. + + + + +CHAPTER VII. + +COMBINATIONS. + + +It is the favorite argument of railroad men, and the writer must confess +that he himself formerly believed, that if all legal restraints were +removed from railroad business, the laws of trade would regulate it more +successfully and more satisfactorily, both to the railroad companies and +their patrons, than the wisest statutes could ever regulate it. To give +force to their argument, they cite the old Democratic maxim that that +State is governed best which is ruled the least. They also assert that +it is the province of the State to guarantee to each of its citizens +industrial freedom; to permit him to transact any legitimate business +according to his best judgment; to buy and to sell where and at what +price he pleases; in short, to earn without restriction the reward of +his intelligence and his industry. They further contend that under a +free government the law of supply and demand should be allowed free +sway, and that he who buys or sells transportation should not be +hampered in his transactions any more than the grocer and his customer. + +The reply to this is that, while the grocer is a natural person, the +railroad company is an artificial person, and that, while the business +of the former is purely private, that of the latter is quasi-public. The +grocer must rely solely upon his personal rights and private resources, +but the railroad company accepts from the State the franchises which +enable it to do business. And yet, if the public had any assurance that +the laws of trade would regulate both kinds of business alike, it is +not likely that the State would distinguish between the two. They claim +that their business is like other private business, and therefore they +should be let alone; that competition can be relied upon to correct +abuses; and where competition does actually exist they forget, and then +claim that their business is not like other private business, and they +should be allowed to make pools and combinations, because in their +business competition is ruinous. Experience has certainly demonstrated +that competition is only possible where combination is impossible. Where +the same commodity is supplied by a large number of individuals, there +is but little danger for the public from those who supply it, for an +agreement among many cannot easily be effected; and even if an +understanding could be reached, it would not long be satisfactory to all +parties. Disagreements would arise which would end in the dissolution of +the combination. Where, however, the number of competitors is small, +agreements can be easily effected and successfully maintained. + +It is doubtful whether there is at present any interest in the +commercial world which has a greater tendency to monopoly and +combination than the railroad interest. There are in the United States +some 40,000 railroad stations. Not more than 4,000 of these are +junctions of two or more roads. At 90 per cent. of these stations +shippers are therefore confined to one line of railroad, and are, in +absence of State regulation, compelled to pay for transportation +whatever price the companies may be disposed to charge, subject only to +such restrictions as the proximity of competing points may impose. If +competition obtained at all points where two or more roads meet, many +railroad companies could not afford to charge excessive rates at +non-competitive points along their lines of road, for such a policy +would slowly but surely drive a large volume of their legitimate +business to rival roads, to whose interest it would be to encourage by +every means in their power such diversion of traffic. Railroads early +recognized this fact and took steps to enable each line to control its +local business. The first combinations among railroad companies to +control prices at competitive points were rather crude; in fact, much +cruder than the first Granger legislation. They were simple agreements +among the various roads touching a common point to maintain certain +fixed rates. But while each road was anxious to have the rates agreed +upon maintained by all of its rivals, it cared but little about +maintaining its own good faith, and it improved every opportunity to get +business at reduced rates so long as it could reasonably hope to escape +detection. As soon as any of the competing roads, through the +falling-off of its business, became convinced that it was the victim of +overreaching rivals, it retaliated by offering still lower rates to +close-tongued shippers. This tricky rivalry would be continued until the +animosity engendered by it would lead to an open rupture, and what +railroad men are pleased to term a rate war would follow. As the +schedule rates had before been unreasonably high, so they became now +unreasonably low. Hostilities would be continued until all belligerents +became exhausted and manifested a disposition to negotiate a treaty of +peace. The former high rates would then be restored; the compact was +carried out for a short time, to be again violated and finally annulled. +These rate agreements were in vogue in New England before the War of the +Rebellion and gradually found their way to the Middle States and the +West. Wherever they were tried they were violated, until even among the +most unsophisticated of freight agents a rate agreement was looked upon +as a farce. + +The statement is often made by railroad managers that excesses in +railroad competition are the result of the peculiar conditions of their +business, which has heavy fixed charges on one hand and a fickle +patronage on the other; that the uncertainty of through business compels +them to rely upon the local business for such revenue as is necessary to +meet these fixed charges; and that, inasmuch as their trains _must_ run, +and any through freight hauled by them is so much business taken from +the enemy, they can better afford to take it at any price than to have +one of their competitors take it. + +It is difficult to see why this reasoning should not be applied to other +branches of business; for instance, to milling. The mill-owner, like the +railroad company, has heavy fixed charges. He has to earn the interest +on his capital, he has to keep his mill in repair, he now and then has +to meet the demands of the times and purchase improved appliances, and +he has to keep a certain number of employes, whether business is brisk +or slack. He might, therefore, if he saw fit to employ the logic of +railroad managers, earn revenue enough to meet his fixed charges from +the business which his regular customers give him, and then do any +business coming from beyond this circle at any price rather than +surrender it to a rival. + +It will readily be conceded that any enterprise conducted on such +principles could, at the best, flourish only temporarily, for it would +soon encounter difficulties from two sources. Its local customers, thus +discriminated against, would withdraw their patronage, while its +competitors, finding their territory encroached upon, would, in +self-defense, offer still better terms to the public to regain their +lost customers. Such ruinous competition, if long persisted in, must +necessarily cripple, if it does not bankrupt, a majority of those who +engage in it. It is fortunately as rare in industrial and commercial +circles as it is common among public carriers. + +This difference can easily be accounted for. Where there are a large +number of competitors the prices of the commodities supplied by them are +leveled down until they reach a point where they will afford only a +reasonable margin of profit, and beyond which they will cease to be +profitable, and will therefore cease to be supplied until the +equilibrium is again established. Where, however, the number of +competitors is small, the price of the commodities supplied by them +will, by agreement, for a time at least, be maintained at a point where +it affords considerable more than a reasonable profit. Here the large +gain presents to the various competitors such a temptation to outstrip +their rivals and increase their business at the expense of good faith, +that but few, if any, of them will, in the long run, resist it. The +tendency to underbid rivals will always be strong where profits are +large, and it may safely be asserted that efforts to maintain, through +combinations, excessive rates are the most fruitful source of ruinous +competition. + +In time railroad managers became convinced that, unless it was possible +to radically reform railroad ethics, rate agreements could never be +relied upon for the maintenance of excessive rates at competing points. +The combined roads found it an easy matter to agree upon excessive +rates, but were powerless to enforce them. Experience convinced their +managers that to make their tariffs effective it was necessary to +deprive individual roads of the power or the inducement to cut below the +agreed rates. Their ingenuity in time developed a system which promised +to remove from individual roads every temptation to take business at +less than schedule prices. This device consists in a division of +railroad business and is commonly called a pool. There are various ways +in which such a division is made. Either the traffic is divided among +the various companies meeting at a common point, or each road is allowed +to carry all freights that it may receive, and then the earnings of the +different roads are divided, each road being paid the actual cost of +such service as it has performed. There is still a third pooling +arrangement, consisting in a division of territory, but this has been +found less satisfactory and is now but rarely resorted to. + +It is said that the first regular pool organized in the United States +was the Chicago-Omaha pool, formed in 1870 by the Chicago, Burlington +and Quincy, the Chicago, Rock Island and Pacific, and the Chicago and +Northwestern railroad companies, then the only three lines connecting +the cities of Chicago and Omaha. This pool, which was subsequently +joined by other lines, made an equal division of the traffic, and was so +well organized that it lasted fourteen years "without a break." The +abuses practiced by the companies belonging to this pool were one of the +chief causes of the Granger movement in Iowa. It is indeed doubtful +whether any other railroad combination ever maintained itself longer or +pursued its ends with greater pertinacity than this pool. Another pool +of national notoriety was the Southern Railway and Steamship +Association, which was organized, though at first under a different +name, in the State of Georgia, in 1875. It was probably the first money +pool formed in the United States. Each member was awarded a certain +percentage of the total business between the various competitive points +along its line. If a company carried more than its share, it was +compelled to turn over the receipts from such additional traffic to its +rivals, which paid it a nominal price for carriage. This allowance was +always made so low that there was no inducement for any company to seek +to carry more than its allotment. The pool had its own executive, +legislative and judicial departments, and it enforced its decrees with +an iron hand. It maintained a strong centralized government, and +rebellious members had but little mercy to expect from it. It provided +that if any officer or representative of any company should authorize or +promise, directly or indirectly, any variation from established tariffs, +he should be discharged from the service, with the reason stated. The +strong sentiment which we to-day find in the South in favor of State +control of railways is the direct result of the many evils which this +powerful pool introduced into the railway business of that section of +the country. + +Other pools followed, as the Southwestern Association, organized in +1876, to control the traffic between Chicago and St. Louis, and the +Minnesota and the Colorado pools. Within a few years railroad pools +covered the whole country. All pursued the same object, viz., the +control of rates at competitive points, which enabled the companies to +maintain excessive schedule rates at local points. + +Between 1875 and 1880 the pooling system rapidly spread all over the +Union. Wherever competition promised to regulate rates by the +application of the law of supply and demand, the pool was resorted to as +the never-failing remedy to preserve dividends on watered stock. As long +as lake and canal navigation controlled the carriage of heavy freights +between Chicago and New York by means of rates so low that railroads +found it, or at least thought it, impossible to compete with them in the +transportation of agricultural products during the greater part of the +year, railroad pools between Chicago and New York could not be +successfully maintained. In 1873 the railroads transported only about 30 +per cent. of this kind of freight from the West to Eastern ports. + +Owing, however, to the rapid decrease of the cost of transportation, +railroad companies from this time on were enabled to encroach rapidly +upon the business of water routes, so that in 1876 they carried over 52 +per cent. of the entire volume of agricultural products that were moved +from the West to the East. As long as these products were carried almost +entirely by water from lake ports to the East, New York, as the terminus +of this route, enjoyed decided advantages over the other Atlantic ports. +When, however, the railroads commenced to successfully compete with the +water routes in the transportation of these commodities, a considerable +share of this business was diverted to Boston, Philadelphia and +Baltimore, and it soon became apparent that these ports, in some +respects, enjoyed advantages for the export trade not possessed by New +York. It was, therefore, not surprising that the business men of these +cities, together with the railroads terminating in them, made every +effort to come in for their share of the traffic which was drifting away +from New York. + +Competition between the New York Central and the Pennsylvania Railroad +for the Western through traffic dated back as far as 1869, the year in +which both systems secured, through consolidation with connecting roads, +through lines to Chicago. Rates fell in one year from $1.80 to 25 cents +per hundred pounds. After a time the managers of the two companies met, +and schedule rates were restored. Rates were, at least outwardly, +maintained until the Baltimore and Ohio and the Erie system entered +Chicago, and the Grand Trunk made connections with Milwaukee and other +lake points, and thus disturbed through rates. All efforts to maintain +the level of the old tariffs, through agreements, proved now fruitless, +for both the Baltimore and Ohio and the Grand Trunk found it to their +interest to pursue independent policies, and refused to have their hands +tied by an agreement with roads that were interested in continuing, if +possible, the commercial supremacy of New York. + +Rate skirmishing finally developed into open war in 1876, when +fourth-class rates between Chicago and the Atlantic fell as low as 16 +cents per hundred. This rate, however, was eclipsed in July, 1878, when +wheat was carried from Chicago to New York for 10 cents per hundred. The +existing conditions left no doubt in the minds of those familiar with +railroad tactics that this war was simply the precursor of a gigantic +combination between the trunk lines. An unsuccessful attempt to effect +such a combination had been made before. In 1874 the managers of the +Erie, Pennsylvania and New York Central met at Saratoga for the purpose +of devising means for the suppression of competition in the trunk line +traffic. This meeting, however, known in railroad history as the +Saratoga Conference, was the first step toward the organization of a +trunk line pool, although the conference did not lead to any immediate +results, the Grand Trunk and the Baltimore and Ohio refusing to be bound +by its decision. It was certainly no easy task to devise means to bring +about an effective and permanent combination among five large through +lines with greatly conflicting interests. + +So far pools had never failed to suppress competition wherever they were +organized. But in the past pools had, almost without exception, only +attempted to control rates between common points. They accomplished +their object by a division of the entire traffic or earnings from the +traffic between common points. The schedule rates remained the same for +all. But the traffic of the trunk lines brought a new factor into the +problem. Here the rival routes did not terminate at the same points. It +was contended by the Baltimore and Ohio that, whatever might be the +facilities of Baltimore for exporting agricultural products, that port +was at a disadvantage as compared with the more northern ports on +account of the longer voyage and higher ocean rates to Liverpool, and +that it could therefore not enter into a combination with the roads +leading directly to New York and Philadelphia upon equal terms, since +this would divert its legitimate share of the through business to those +ports. The Grand Trunk, on the other hand, refused to enter the +combination because, not having any direct Chicago connection, it feared +that the enforcement of pool rates would materially diminish the volume +of its business. As yet the railroad wiseacres did not seem to be equal +to the emergency, and matters drifted along in the old channel. The rate +war of 1876 gradually brought about an understanding among the +belligerents. The competing roads accepted the terms offered, and with +this a new principle entered into the science of pooling. Rates between +Chicago and Baltimore were fixed somewhat lower than those between +Chicago and Philadelphia, and in turn Philadelphia was allowed a small +advantage over New York. This concession was made to equalize the +difference in the ocean rates of the competing ports. These equalizing +or--to use railroad nomenclature--differential rates were subsequently +granted by pools to such roads as, on account of some disadvantage, +could not compete with other members of the pool on equal terms. Thus +the longest route was usually permitted to charge the lowest, and the +shortest route the highest rate. This practice is in conformity with the +principle of charging whatever the traffic will bear, but it is +certainly devoid of every consideration of justice and equity. If the +longer line can afford to carry freight at rates lower than schedule +prices, no further proof is needed under ordinary circumstances that the +regular schedule rates of the shorter line are exorbitant. + +The concession of differential rates settled, at least temporarily, the +difficulties that had arisen out of the east-bound traffic of the trunk +lines. This arrangement did not, however, in any way affect the traffic +moving in the opposite direction. The volume of west-bound freight is +very much larger at New York than at any other of the Atlantic ports. In +order to get its share of the business, each trunk line maintained an +office in New York. These offices eagerly solicited business for their +respective roads, and the freights which they received for +transportation to the West would be forwarded either directly or by a +circuitous route; but, the longer the route, the lower as a rule was the +compensation asked for the service. Under these circumstances +competition was brisk, and the profits realized were far from satisfying +the cupidity of the competing lines. It was apparent to their managers +that the competition in the west-bound traffic was similar to that +formerly existing between Chicago and Mississippi and Missouri River +points, which had promptly yielded to pools. The temporary adjustment of +the more perplexing questions which had arisen out of the east-bound +traffic now paved the way for a pooling arrangement for the west-bound +freight. The Southern Pool, under the management of Albert Fink, had +long attracted the attention of the trunk line managers. Its system of +dividing the traffic, of reporting to a central office and of hearing +and deciding complaints had enabled it to exert an almost absolute +control over its members, to compel them to make honest returns and to +prevent rupture and rebellion. It was believed that a pool of the trunk +lines could not be effective or permanent unless organized upon the +Southern basis and presided over by a trunk expert. Accordingly, when in +1877 an agreement for the pooling of the west-bound traffic was reached +by the trunk lines, Mr. Fink was tendered the position of pool +commissioner. Under the agreement reached the total tonnage of the +west-bound business was divided in such a way that the Erie and New York +Central roads each received 33 per cent., the Pennsylvania 25 per cent., +and the Baltimore and Ohio 9 per cent. of it. If any road received more +freight than was allotted to it by the pool, it delivered such surplus +to the pool, or rather to such a road as the pool commissioner +designated as not having received its allotment. The success of this +pool from a railroad point of view made the trunk lines anxious to +organize a similar pool for the whole east-bound traffic. It was +proposed to control by such a combination the rates on all the +east-bound traffic of the Northwest, by making Chicago the pooling +center, fixing for it a schedule of rates and making the rates of all +the railroad centers in the West and Northwest dependent upon it. The +combination was to comprise more than forty companies, controlling over +25,000 miles of road. The scheme was tried for three months in 1878, +but proved a failure, owing to the fact that nearly all of the many +diverging interests sought their own advantage. The Eastern and Western +trunk line pools were, through the efforts of their commissioner, +successfully maintained, though even their harmony was occasionally +marred by a short war precipitated by such members as would think +themselves entitled to larger shares of the spoils. But a readjustment +would invariably follow, and the expenditures of the war would be taxed +up to the public. + +After the failure of the gigantic Western pool which had been organized +under the protectorate of the trunk lines, the companies which had +composed it formed such local combinations as their individual interests +dictated. It is doubtful whether during the five years immediately +preceding the passage of the Interstate Commerce Law there was any +junction of two or more roads in the United States which, except during +the period of an occasional railroad war, had any competition in the +transportation business. As has been shown before, discriminations +without number were practiced between places and persons; goods were not +unfrequently carried at a loss; but the general public was, as a rule, +compelled to pay what the traffic would bear, or rather what the pooling +roads thought it could bear. + +It is claimed by railroad managers that pools are the only effective +contrivances for checking ruinous competition among railroad carriers, +and that they are therefore justifiable as a means of self-protection. +This might perhaps be a valid argument if any attack were made upon the +railroads which encroached upon their rights or endangered their +existence, but if railroad companies are disposed to cut each other's +throats, the public should not be made to pay the penalty of their +depravity. As long as schedule rates are unreasonably high, railroads +will be tempted to offer to certain shippers low secret rates; but as +soon as all rates have been leveled down to a point where they will +yield only a fair profit with good management, the inducement to cut +below them is largely taken away. Pools, far from being a remedy for the +evils of excessive competition, will in the end only aggravate the +disease which they attempt to cure. The high rates which they maintain +attract the attention of speculative men and lead to the construction of +rival roads. While the traffic remains the same, the proceeds must then +be divided among a larger number of carriers. Thus the construction of +unnecessary roads, which has often been the subject of bitter complaint +on the part of the older roads, is chargeable directly to their wrong +policies. + +One of the principal objections to industrial and commercial +combinations is that they paralyze trade. Competition stimulates every +competitor to offer the best at the lowest possible price. This +increases the demand for the commodity, and both the producer and the +consumer are in the end benefited by the operation of this law. On the +other hand, combinations, or, what is the same, monopolies, increase the +price, remove the stimulus to excellence, and reduce the demand, and +thereby affect injuriously the producer and consumer alike. Competition +in the railway service would mean an improved service and lower rates +and would speedily be followed by a large increase of business. + +Another serious objection to pooling is that it invariably leads to +periodic wars, which unsettle all business, and but too often introduce +into legitimate trade the element of chance. These wars give, moreover, +to designing railroad managers an opportunity to enrich themselves by +stock speculations at the expense of the stockholders, whose interests +they use as a football for the accomplishment of their selfish ends. +When rates are reduced to a right level, and are properly adjusted, and +are equal to all, even railroad men will find no necessity for pools. +The desire for such a combination is a desire to impose upon somebody, +or some locality, or the public at large. The proposition to give legal +sanction to pools, made by railroad managers, is preposterous; and even +a pool to be approved by the Interstate Commerce Commission is out of +the question, as it would cause the railroads to increase their efforts +to control the appointment of the commission. However honest it may look +on its face, however plausible may be the arguments produced in its +favor, it should not be permitted. + +There is no doubt but under the proposed pooling arrangement railroad +interests, watered stocks and all, would be cared for, but there is +every reason to believe that public interests would not be properly +protected. + +So long as servility by a member of the Interstate Commerce Commission +to railroad influences serves as a stepping-stone to a high position in +the employ of railroad combinations, with a salary of three or four +times that of an Interstate Commerce Commissioner, so long will it be +unsafe to permit such powers to be vested in that commission. + +Pooling by railroads should not be permitted, if permitted at all, so +long as representatives of speculative interests have a voice in their +management, and not until all fictitious valuations are altogether +banished from the equation, and until the roads are brought under +complete Government control. There is no more necessity for pools among +railroads than there is among merchants and manufacturers. The capital +actually invested in railroads is now receiving larger returns than +investments in other lines of business, and their incomes are increasing +from year to year. + +Every pooling combination of railroad companies for the maintenance of +rates is a violation of common law. From time immemorial the law has +stamped as a conspiracy any agreement between individuals to support +each other in an undertaking to injure public trade. The Interstate +Commerce Act reasserts this principle, and provides penalties for the +maintenance of such combinations among railroad companies. If, in spite +of this act, the evil still exists, it is no argument against the merits +of the law, but it does prove that the machinery provided for its +enforcement is insufficient. That railroad companies can be made to +respect the law there can be no doubt; but much cannot be accomplished +unless the people fully realize the magnitude of the undertaking and +vest the Government with sufficient power to cope with an organized +force whose total annual revenue is nearly three times as large as that +of the United States. The discussion of the question how this may be +done will be reserved for a subsequent chapter. + + + + +CHAPTER VIII. + +RAILROADS IN POLITICS. + + +The question might be asked how the railroad companies for many years in +succession have been able to prevent State control and pursue a policy +so detrimental to the best interests of the public. One might think that +in a republic where the people are the source of all power, and where +all officers are directly or indirectly selected by the people to carry +out their wishes and to administer the government in their interest, a +coterie of men bent on pecuniary gain would not be permitted to subvert +those principles of the common law and public economy which from time +immemorial have been the recognized anchors of the liberty of the +Anglo-Saxon race. + +The statement that under a free government it is possible for a few to +suppress the many might almost sound absurd to a monarchist, and yet is +it true that for the past twenty-five years the public affairs of this +country have been unduly controlled by a few hundred railroad managers. + +To perpetuate without molestation their unjust practices and prevent any +approach to an assertion of the principle of State control of railroad +transportation, railroad managers have secured, wherever possible, the +co-operation of public officials, and, in fact, of every semi-public and +private agency capable of affecting public opinion. Their great wealth +and power has made it possible for them to influence to a greater or +less extent every department of the National and State governments. +Their influence extends from the township assessor's office to the +national capital, from the publisher of the small cross-roads paper to +the editorial staff of the metropolitan daily. It is felt in every +caucus, in every nominating convention and at every election. Typical +railroad men draw no party lines, advocate no principles, and take +little interest in any but their own cause; they are, as Mr. Gould +expressed it, Democrats in Democratic and Republicans in Republican +districts. The large means at the command of railroad companies, their +favors, their vast armies of employes and attorneys and their almost +equally large force of special retainers are freely employed to carry +into execution their political designs, and the standard of ethics +recognized by railroad managers in these exploits is an exceedingly low +one. + +It is a settled principle of these men that, if they can prevent it, no +person not known to be friendly to their cause must be placed into any +public office where he might have an opportunity to aid or injure their +interests. The records of the various candidates of the principal +parties for city, county, State and national offices are therefore +carefully canvassed previous to the primaries, the most acceptable among +the candidates of each party are selected as the railroad candidates, +and the local representatives of the railroad interest in each party are +instructed to use all means in their power to secure their nomination. + +If none but candidates who are servile to the railroad interest are +nominated by the principal parties, the election is permitted to take +its own course, for, whichever side is successful, the railroad interest +is safe. If, however, there is reason to believe that a nominee is not +as devoted to their interests as the nominee of an opposing party, the +latter is sure to receive at the polls whatever support railroad +influence can give him. That a public official elected by the grace of a +railroad manager is but too apt to become a tool in his hands needs no +proof. Both gratitude and fear tie the average politician to the +powerful forces which can control his political destiny. + +The railroad manager, on the other hand, always kindly remembers his +officeholding friends as long as they are loyal and in a position to +serve him. Before the enactment of the Interstate Commerce Act there was +every year a wholesale distribution of railroad passes among public +officeholders and other prominent politicians. The pass was the token of +the continued good will of the railroad dignitaries as the withholding +of the "courtesy" was a certain indication of their displeasure. If the +officeholder had personal or political friends whom he desired to have +recognized, an intimation of this desire was generally sufficient to +have the pass privilege even extended to them. And yet these favors were +not bestowed indiscriminately. Thus the pass credit of a county official +was more limited than that of an officer of the State, and the latter +class were again rated according to their influence and rank. +Furthermore, while annual passes were thus freely distributed among one +class of officials, others could obtain them only by making special +application for them. Members of the legislature would not unfrequently +receive their supply of railroad passes before their certificates of +election were issued, but legislative committee clerks and employes in +the various departments of the State government were required to satisfy +the railroad authorities that they were in a position to aid or to +injure the railroad cause before their names were placed on the list of +persons "entitled to the courtesy". + +Of course the judiciary, as a coordinate branch of the government, could +not well be slighted. Indeed, previous to the enactment of the +Interstate Commerce Law, a judge would have regarded it an affront if he +had not been furnished with passes by the various companies operating +railroads in his district. It appears that the law has not entirely +corrected this abuse, for only about two years ago the Chicago _News_ +made the discovery that nearly every judge in the city of Chicago +traveled on passes. It is strange to what extent the pass often debased +the judiciary. It was not unfrequent for judges to solicit passes for +family and friends, and instances might be named where they demanded +them in a wholesale way. + +The impudent demands were usually honored by the railroad authorities, +who reasoned that they could better afford to bear the shameless +effrontery of the ermined extortioner than the damage which might result +to them from adverse decisions. + +A railroad pass, when presented by a public official or even by any +public man, is now, in nine cases out of ten, a certificate of dishonor +and a token of servility, and is so recognized by railroad officials. +What equivalent railroad companies expect for the pass "courtesy" is +well illustrated by the experience of an Iowa judge. This gentleman, who +had been on the bench for years and always had been favored with passes +by the various companies operating lines in his district, at the +beginning of a new year failed to receive the customary pass from a +leading road. Meeting its chief attorney, he took occasion to call his +attention to what he supposed to have been an oversight on the part of +the officer charged with the distribution of the passes. The attorney +seemed to take in the situation at once. "Judge," said he, "did you not +recently decide an important case against our company?" "And was my +decision," replied the Judge, "not in accordance with law as well as +with justice?" The attorney did not answer this question, but in the +course of a few days the Judge received the desired pass. A few months +later it again became the Judge's unpleasant duty to render a decision +adverse to the same company. This second act of judicial independence +was not forgiven, and the next time he presented his pass it was +unceremoniously taken up by the conductor in the presence of a large +number of passengers, and he was required to pay his fare. + +Employes, while engaged in the legitimate business of their companies, +should, of course, be transported free, but a great many persons receive +passes and are classed as employes who never render any legitimate +service for the company giving the pass, and by far the greater portion +of passes are not granted from pure motives, but are given for the +purpose of corrupting their holders. It arouses antagonism, because as a +rule passes are given to people who are fully able to pay their fare and +are denied to those who are least able to pay it. The passenger who pays +his fare and then finds that a large number of his fellow-passengers +travel on passes realizes that he is compelled to pay a higher fare that +others may be carried free. He feels that he is unjustly discriminated +against, and wonders why such discrimination is tolerated in a country +whose institutions are founded upon the very principle of equal rights +to all. A good anecdote is related which well illustrates this feeling. +A farmer and a lawyer occupied the same seat in a railroad car. When the +conductor came the farmer presented his ticket, and the lawyer a pass. +The farmer's features did not conceal his disgust when he discovered +that his seat-mate was a deadhead. The lawyer, trying to assuage the +indignation of the observing granger, said to him: "My friend, you +travel very cheaply on this road." "I think so myself," replied the +farmer, "considering the fact that I have to pay fare for both of us." + +But what must be a passenger's surprise when he finds that the judge who +to-morrow is to preside at the trial of a case in which the railroad +company is a party to-day accepts free transportation at its hands. A +judge may scorn the charge that he is influenced by a railroad pass, but +his fellow-passenger who has paid his fare cannot understand why the +railroad company should give passes to one class of people and refuse +them to others, if it does not consider one more than others to be in a +position to reciprocate its favors. + +In their endeavor to win over the courts, however, the railroads do by +no means confine their attention to the judges. They are well aware that +a biased jury is often more useful to them than a biased judge, and +efforts are made by them to contaminate juries, or at least prejudice +them in their favor. A prominent Iowa attorney, the legal and political +factotum of a large railroad corporation, for years made it a practice +to supply jurors with passes. In one instance, when it was shown in +court by the opposing counsel that all jurors in the case on trial had +accepted passes from the railroad company which was the defendant in the +case, the judge found himself compelled to discharge the whole jury. The +argument made by this counsel, in support of his motion that the jury be +discharged, was certainly to the point. He showed that in order to have +an equal chance for justice it would be necessary for his client to give +each juror at least fifty dollars to offset the bribes given to them by +the railroad company. + +That it has always been the policy of railroad managers to propitiate +the judiciary is a fact too generally known among public men to admit of +contradiction. If a judge owes his nomination or election to railroad +influences, railroad managers feel that they have in this a guarantee of +loyalty. If, however, he acquires the ermine in spite of railroad +opposition, every effort is made to conciliate the new dispenser of the +laws. The bestowal of unusual favors, flattery, simulated friendship and +a thousand other strategies are brought into requisition to capture the +wayward jurist. If he proves docile, if his decisions improve with time +and show a gradual appreciation of the particular sacredness of +corporate rights, the railroad manager will even forgive him his former +heresy and rally to his support in the future. But if he asserts his +convictions, if he attempts to discharge the duties of his responsible +office without fear or favor, if he can neither be corrupted nor +intimidated, all available railroad forces will be marshaled against him +in the future. + +It cannot be surprising that, under such circumstances, there always has +been a tendency among judges to be conservative and to give the +railroads the benefit of the doubt in their decisions. Judges well know +that railroad companies appeal almost invariably when the decision of a +lower court is adverse to them, but private citizens only in exceptional +cases. They also know that railroads never forgive adverse decisions, +whether right or wrong, while private citizens, as a rule, accept the +decision of the court as justice, and do not hold the judge responsible +for its being adverse to them. Our judiciary is, and probably always has +been, as incorruptible as the judiciary of any country in the world; but +our judges are made of no better material than our legislative or +executive officers. Weak men, in all stations, are influenced by wealth +and power, and weak judges can always be found who will be led or forced +from the path of duty so long as corrupt men are permitted to manage +railroads and to remain in possession of a power only inferior to that +of an autocratic ruler. + +The influence which railroads exert extends from the lowest to the +highest court of the land. Federal courts have more than once been +successfully appealed to to give legal sanction to the perpetuation of +gigantic frauds, or to frustrate attempts made by the individual States +to place restrictions upon roads operated within their respective +borders. Twenty years ago a Federal judge aided Mr. Gould in his +notorious Erie transactions, and in more recent years a Federal circuit +judge in the West threw the property of the Wabash Railroad Company, +upon the application of its own directors, into the hands of receivers +selected by its former managers without the knowledge or notice of its +creditors, and issued orders for the management of the property which +greatly discriminated in favor of certain bondholders and were so +manifestly unjust that Judge Gresham, before whom the case was +subsequently brought, did not hesitate to say to them that "the boldness +of this scheme to aid the purchasing committee, by denying equal right +to all bondholders secured by the same mortgages, is equaled only by its +injustice." At the same time one of the counsel for the dissenting +bondholders characterized these strange orders as "the highwayman's +clutch on our throat, the robber's demand, 'Your money or your life.'" + +The decision which the Supreme Court of the United States rendered in +the Granger cases in 1876, affirming the right of a State to control +railroad charges for the transportation of passengers and freight wholly +within the State, was a serious disappointment to railroad men, for it +was the first step toward wresting from them the power to arbitrarily +control the commerce of the country. Ever since that time it has been +their determined purpose to bring about, if possible, a reconstruction +of the Federal Supreme Court, in order to secure a reversal or +modification of the Granger decision. In the case of Peik vs. Chicago, +94th U. S., 176, the Supreme Court laid down the following broad +principle of law: "Where property has been clothed with the public +interest, the legislature may fix a limit to that which shall in law be +reasonable for its use. This limit binds the courts as well as the +people. If it has been improperly fixed, the legislature, not the +courts, must be appealed to for a change." In one of the Granger cases +the same court used the following language: "We know that this is a +power which may be abused, but that is no argument against its +existence. For protection against abuses by legislatures, the people +must resort to the polls." + +Fourteen years later, in the case of C. M. & St. P. R. Co. vs. Minn., +decided in October, 1890, the same court rendered a decision so +indefinite that the lawyers differed much in their opinions as to its +meaning, and it appears that the members of the court who made the +decision also differed in their opinions as to the meaning of the +decision; for Justice Bradley said in his dissenting opinion, in which +Justice Gray and Justice Lamar concurred, that the decision practically +overruled Munn vs. Illinois; but the same court, in a case entitled Budd +vs. New York, submitted in October, 1891, and decision rendered February +29, 1892, and opinion delivered by Justice Blatchford, in referring to +the Minnesota case, after quoting the above statement from Justice +Bradley, said: "But the opinion of the court did not say so, nor did it +refer to Munn vs. Illinois, and we are of opinion that the decision in +that case is, as will be hereafter shown, quite distinguishable from the +present case." + +It is thus apparent that this court has adhered to the decision in Munn +vs. Illinois, and to the doctrines announced in the opinion of the court +in that case, and those doctrines have since been repeatedly enforced in +the decisions of the courts of the States. + +Judge Brewer, whose zeal for the defense of corporate interests seems to +amount almost to a craze, dissented. He said: "I dissent from the +opinion and judgment in these cases. The main proposition upon which +they rest is, in my judgment, radically unsound. It is the doctrine of +Munn vs. Illinois reaffirmed. The paternal theory of government is to me +odious. Justice Field and Justice Brown concur with me in this dissent." + +It should be remembered that Justices Brewer and Brown were both +appointed to the Supreme bench by President Harrison. + +We have every reason to believe that, unless the people of the United +States are on the alert, as railroad managers always are, there is, with +further changes in the personnel of the court, danger of its deviating +from the sound principles of law laid down in its decision in the +Granger cases. Railroad attorneys have repeatedly been raised to seats +in the highest tribunal in the land. So great is the power of the +railroad interests, and so persistent are they in their demands, that, +unless a strong public sentiment records its protest, their candidates +for appointive offices are but too apt to be successful. Representatives +of the railroads sit in the Congress of the United States, others are +members of the national campaign committees of both of the great +political parties, others control the politics of the States, and their +influence reaches to the White House, whether its occupant is aware of +it or not. Other interests in the past have succeeded in securing the +appointment of biased men as judges of the Supreme Court who afterwards +could always be relied upon to render decisions in their favor. Will the +people profit by their experience, or will they be indifferent to the +danger which surrounds them, until nothing short of a political upheaval +can restore to them these rights of sovereignty, of which they have so +insidiously been deprived? + +Human gratitude is such that even high-minded men who, through the +influence of the railroad interest, have been placed upon the Federal +bench, find it impossible to divest themselves of all bias when called +upon to decide a case in which their benefactors are interested. Such is +the human mind that, when clouded by prejudice, it will forever be blind +to its own fault. Even the members of so high a tribunal as the +Electoral Commission which decided the presidential contest between +Hayes and Tilden could not divest themselves of their prejudices; each +one, Republican or Democrat, voted for the candidate of the party with +which he had cast his political fortune. + +Last January, in an address delivered before the New York State Bar +Association at Albany, Mr. Justice Brewer reminded his hearers that the +rights of the railroads "stand as secure in the eye and in the custody +of the law as the purposes of justice in the thought of God." And +further on they were told that "there are to-day $11,000,000,000 +invested in railroad property, whose owners in this country number less +than two million persons. Can it be that whether that immense sum shall +earn a dollar or bring the slightest recompense to those who have +invested perhaps their all in that business, and are thus aiding in the +development of the country, depends wholly upon the whim and greed of +that great majority of sixty millions who do not own a dollar? It may be +said that that majority will not be so foolish, selfish and cruel as to +strip that property of its earning capacity. I say that so long as +constitutional guarantees lift on American soil their buttresses and +bulwarks against wrong, and so long as the American judiciary breathes +the free air of courage, it cannot." + +Unfortunately judicial buttresses and bulwarks have not always been +lifted against wrong. Judge Taney, like Brewer, supposed that it was +left at his time for his court to preserve the peace and provide for the +safety of the nation; but history has shown that we cannot depend upon +that high tribunal for safety when it is controlled by weak or +inefficient men. + +When we consider what "that great majority" has done for this country in +the past, and is doing for it at the present time, and especially when +we contrast its sense of justice and right with the weakness and +inability of some of its public servants, does it not seem to be a +little presumptuous for them to assume that "the danger is from the +multitudes--the majority, with whom is the power," and that, were it not +for their superior wisdom and patriotic action, this great government of +the people, by the people and for the people would be a failure? + +Mr. Lincoln never feared "the whim and greed" of "that great majority," +but he had at all times implicit confidence in the great mass of the +people, and they in return had full confidence that no temptation of +wealth or power was sufficient to seduce his integrity. + +We cannot dismiss this subject without referring to a stratagem which +railroads have in the past repeatedly resorted to for the purpose of +removing from the bench judges of independent minds whom they found it +impossible to control. This stratagem consists of a well-disguised +bribe, by which a Federal judge is changed into a railroad attorney with +a princely salary. The railroad thus gets rid of an undesirable judge +and gains a desirable solicitor at a price at which they could well have +afforded to pension the judge. + +The following is a copy of a broker's circular letter sent to prominent +bankers of Iowa, and shows that even the Clerk of the United States +Court is not overlooked: + + "----, June 30th, 1892. + + "Mr. ----, + + "We offer, subject to sale at par and interest, note $2,500. + Date, July 5th, 1892. Time, six months; rate, 6 per cent. + Payable where desired. Maker, ---- Endorser, Judge ---- Mr. + ----, the maker, is clerk of the United States Circuit Court + at ---- Judge ---- the well known attorney of the ---- and + ---- Railway Co., of ----, stated to us to be worth $150,000 + to $200,000. Can you use it?" + +While railroad managers rely upon servile courts as a last resort to +defeat the will of the sovereign people, they are far from losing sight +of the importance of controlling the legislative branch of the +government. By preventing what they are pleased to call unfriendly +legislation they are more likely to prevent friction with public +opinion, and they avoid at the same time the risk of permanently +prejudicing their cause by an adverse opinion upon a constitutional +question which they may find it necessary to raise in order to nullify a +legislative act. There are three distinct means employed by them to +control legislative action. First, the election to legislative offices +of men who are, for some personal reason, adherents to the railroad +cause. Second, the delusion, or even corruption, of weak or unscrupulous +members of legislative bodies. Third, the employment of professional and +incidental lobbyists and the subsidizing of newspapers, or their +representatives, for the purpose of influencing members of legislative +bodies and their constituencies. + +There are probably in every legislative body a number of members who are +in some way or other connected with railroad corporations. No doubt, a +majority of these are personally irreproachable and even so high-minded +as to always postpone private for public interest; yet there are also +those whose political advancement was brought about by railroad managers +for the very purpose of having in the legislative body servile members +who could always be relied upon to serve their corporate masters. +Nevertheless, were railroad interests restricted to the votes of these +men for their support, the public would probably have no cause for alarm +on account of the presence of railroad representatives in legislative +bodies, but, as many other interests seek favorable legislation, +railroad men are often enabled to gain support for their cause by a +corrupt bargain for votes, and it is thus possible for them to double, +triple, and even quadruple, their original strength, by a policy of +reciprocity. + +As in Congress and State legislatures, so these representatives of the +railroads may be found in our city councils. The leaders of the +railroads in Congress and in the legislatures of the various States +usually rely upon discretion for obtaining their end, but railroad +aldermen with but few exceptions seek to demonstrate their loyalty to +the cause to which they are committed by a zealous advocacy of extreme +measures, and will not unfrequently even gain their end through the most +unscrupulous combinations. If their votes, together with such support as +they obtain by making trades, are not sufficient to carry out or defeat +a measure which the railroad interests may favor or oppose, even more +questionable means are employed to gain a sufficient number of votes to +command a majority. + +Outright bribery is probably the means least often employed by +corporations to carry their measures. While it may be true that the vote +of every weak and unscrupulous legislator is a subject of barter, money +is not often the compensation for which it is obtained. It is the policy +of the political corruption committees of corporations to ascertain the +weakness and wants of every man whose services they are likely to need, +and to attack him, if his surrender should be essential to their +victory, at his weakest point. Men with political ambition are +encouraged to aspire to preferment and are assured of corporate support +to bring it about. Briefless lawyers are promised corporate business or +salaried attorneyships. Those in financial straits are accommodated with +loans. Vain men are flattered and given newspaper notoriety. Others are +given passes for their families and their friends. Shippers are given +advantages in rates over their competitors; in fact, every legislator +disposed to barter his vote away receives for it compensation which +combines the maximum of desirability with the minimum of violence to his +self-respect. + +Those who attempt to influence or control legislative bodies in behalf +of interested parties are collectively called the lobby. As a rule, the +lobby consists of prominent politicians likely to have influence with +members of their own party; of men of good address and easy conscience, +familiar alike with the subject under consideration and legislative +procedure, and last, but not least, of confidential agents authorized +and prepared to enter into secret negotiations with venal members. The +lobby which represents the railroad companies at legislative sessions is +usually the largest, the most sagacious and the most unscrupulous of +all. Its work is systematic and thorough, its methods are unscrupulous +and its resources great. Yet all the members of a legislative body +cannot be bribed, either by money, or position, or favors. Some of them +will not vote for any proposed measure unless they can be convinced that +it is for the public welfare. These legislators, if their votes are +needed, are turned over to the persuasive eloquence of those members of +the lobby who, apparently, have come to the capital moved by a patriotic +impulse to set erring legislators right on public questions. Their +familiarity with public matters, their success in public life, their +high standing in political circles, their apparent disinterestedness and +their plausible arguments all combine to give them great influence over +new and inexperienced members. In extreme cases influential constituents +of doubtful members are sent for at the last moment to labor with their +representatives, and to assure them that the sentiment of their +districts is in favor of the measure advocated by the railroads. +Telegrams pour in upon the unsuspecting members. Petitions in favor of +the proposed measure are also hastily circulated among the more +unsophisticated constituents of members sensitive to public opinion, and +are then presented to them as an unmistakable indication of the popular +will, although the total number of signers forms a very small percentage +of the total number of voters of the districts in which these petitions +were circulated. A common method employed by the railroad lobby in Iowa +has been to arouse, by ingenious arguments, the prejudices of the people +of one part of the State against those of another, or of one class +against those of another class; for instance, the East against the West, +or that portion of the State the least supplied with railroad facilities +against that which is best supplied; or the river cities against the +interior cities; or the country people against the city people; or the +farmer against the merchant, and always artfully keeping in view the +opportunity to utilize one side or the other in their own interest. + +Another powerful reinforcement of the railroad lobby is not unfrequently +a subsidized press and its correspondents. The party organs at the +capital are especially selected to defend as sound measures, either from +a partisan or non-partisan standpoint, legislation of questionable +propriety desired by the railroads. When such measures are advocated by +party organs, partisan members, either from fear or prejudice, are apt +to "fall into line," and then to rely upon these organs to defend their +action. Editors, reporters and correspondents are even retained as +active lobbyists and give the railroad managers' cause the benefit of +their prestige. To such an extent has the abuse of the press been +carried that a considerable number of its unworthy representatives look +upon railroad subsidies as legitimate perquisites which they will exact +through blackmailing and other means of compulsion if they are not +offered. A case may be cited here to illustrate their mode of operation, +as well as the ethics of railroad lobbies. During one of the sessions of +the Iowa legislature a newspaper correspondent came in possession of +some information which reflected severely on the railroad lobby. He made +his information the subject of a spicy article and showed it to a +friend who stood close to the gentleman chiefly implicated, with the +remark that nothing but a hundred dollar bill would prevent the +transmission of the article by the evening mail to the paper which he +represented. Before sundown the stipulated price for the correspondent's +silence was paid, and an enemy was turned into a friend. + +Professor Bryce says of the American lobby system: "All legislative +bodies which control important pecuniary interests are as sure to have a +lobby as an army to have its camp followers. Where the body is, there +will the vultures be gathered together." To such an extent is the lobby +abuse carried that some large corporations select their regular +solicitors more for their qualifications as lobbyists than for their +legal lore. It is a common remark among lawyers that a great company in +Chicago pays a third-class lawyer, who has the reputation of being a +first-class lobbyist, an extravagant salary and calls him general +solicitor, while it relies upon other lawyers to attend to its important +legal business. The readiness of members of the bar to serve wealthy +corporations is fast bringing the legal profession of America into +disrepute abroad. The author just quoted, in speaking of its moral +standard, says: "But I am bound to add that some judicious American +observers hold that the last thirty years have witnessed a certain +decadence in the bar of the great cities. They say that the growth of +enormously rich and powerful corporations, willing to pay vast sums for +questionable services, has seduced the virtue of some counsel whose +eminence makes their example important, and that in a few States the +degradation of the bench has led to secret understandings between judges +and counsel for the perversion of justice." + +There are, of course, able and honorable attorneys employed by railroad +companies, but often railroad lawyers are selected more for their +political influence, tact and ingenuity than for legal ability, and, as +a rule, the political lawyer receives much better compensation for his +services than does the lawyer who attends strictly to legitimate legal +work. + +The danger from railroad corporations lies in their great wealth, +controlled by so few persons, and the want of publicity in their +business. Were they required to render accounts of their expenditures to +the public, legislative corruption funds would soon be numbered with the +defunct abuses of railroad corporations, and, with bribes wanting in the +balance of legislative equivalents, the representatives of the people +could be trusted to enact laws just alike to the corporations and the +public, while asserting the right of the people to control the public +highway and to make it subservient to the welfare of the many instead of +the enrichment of the few. A wise law regulating lobbies exists in +Massachusetts. Every lobbyist is required to register, as soon as he +appears at the Capitol, to state in whose interest and in what capacity +he attends the legislative session, to keep a faithful account of his +expenses and to file a copy of the same with the Secretary of State. +Were a similar law enacted and enforced by every State legislature, as +well as by Congress, the power of railroad lobbies would be curtailed. + +Railroad managers never do things by halves. Well realizing that it is +in the power of a fearless executive, by his veto, to render futile the +achievements of a costly lobby and to injure or benefit their interests +by pursuing an aggressive or conservative policy in the enforcement of +the laws, they never fail to make their influence felt in the selection +of a chief magistrate, either of the Nation or of an individual State. +No delegate, with their permission, ever attends a national convention, +Republican or Democratic, if he is not known to favor the selection of a +man as the presidential candidate of his party whose conservatism in all +matters pertaining to railroad interests is well established. At these +conventions the railroad companies are always represented, and their +representatives do not hesitate to inform the delegates that this or +that candidate is not acceptable to their corporations and cannot +receive their support at the polls. During the Chicago convention of +1888 the statement was openly made that two of the Western candidates +lost Eastern support because they were not acceptable to a prominent New +York delegate who had come to Chicago in a threefold capacity--that of a +delegate, a presidential possibility, and special representative of one +of the most powerful railroad interests in the country. This same man +appeared again last year at the Minneapolis convention as chief +organizer of the forces of a leading candidate. His counterpart was in +attendance at the Chicago convention looking after the same interests +there. + +It is the boast of prominent railroad men that their influence elected +President Garfield, and the statement has been made upon good authority +that "not until a few days before the election did the Garfield managers +feel secure," and that "when the secret history of that campaign comes +to be written it will be seen that Jay Gould had more influence upon the +election than Grant and Conkling." It cannot be said that railroad +managers, as a class, have often openly supported a presidential +candidate. This may be due to the fact that with the uncertainty which +has for years attended national politics they deem it the part of +discretion to pretend friendship for either party and then shout with +the victor. In conformity with this policy, a well-known New York +railroad millionaire has for years made large and secret contributions +to the campaign funds of both political parties. He thereby places both +parties under political obligations, and believes his interests safe, +whichever turn the political wheel may take. After the contest he is +usually the first to congratulate the successful candidate. In the +national campaign of 1884 this railroad king completely outwitted a +prominent Western politician and member of the Republican national +campaign committee who has always prided himself on his political +sagacity. This gentleman had taken it upon himself to enlist the rich +and powerful New Yorker in the Republican cause, and to obtain from him, +as a token of his sincerity, a large contribution to the Blaine campaign +fund. He succeeded, at least so far as the contribution was concerned; +but when the struggle was over and the opposition, in the exuberance of +joy over their victory, told tales out of school, he was not a little +chagrined to find that the managers of the Cleveland campaign had +received from the astute railroad millionaire a campaign contribution +twice as large as that which he had obtained from him. The diatribes +which for weeks after the election filled the columns of his paper +reflected in every line the injured pride of the outwitted general. + +Judging from the laxity with which the railroad laws have been enforced +in a considerable number of States, their executive departments are as +much under the influence of railroad managers as are the legislative +departments of others. This cannot be surprising to those who know how +often governors of States are nominated and elected through railroad +influences, and what efforts are made by corporations to humor servile +and to propitiate independent executives. The time is not far remote +when nearly every delegate to a State convention had free transportation +for the round trip. This transportation was furnished to delegates by +railroad managers through their local attorneys, or through favored +candidates and their confidants. It was only offered to those who were +supposed to be friendly to candidates approved by the railroad managers; +and as free passage was looked upon as the legitimate perquisite of a +delegate, but few persons could be induced to attend a State convention +and pay their fare. As a consequence, the railroad managers found it too +often an easy matter to dictate the nomination of candidates. + +Since the adoption of the Interstate Commerce Law convention passes, as +such, have largely disappeared; but many a prominent politician in going +to and returning from political conventions travels as a railroad +employe, though the only service which he renders to the railroad +companies consists in manipulating conventions in their favor. If all +the railroad candidates--and the companies usually take the precaution +to support more than one candidate--are defeated in the convention of +one party, and a railroad candidate is nominated by the other party, the +latter is certain to receive at the polls every vote which railroad and +allied corporate influence can command. + +One might suppose that an attempt would at least be made to hide from +the general public the interference of such a power with the politics of +a State; but railroad managers seem to rely for success as much upon +intimidating political parties as upon gaining the good will of +individual citizens. To influence party action, the boast has in recent +years repeatedly and boldly been made in Iowa that 30,000 railroad +employes would vote as a unit against any party or individual daring to +legislate or otherwise take official action against their demands, and +forgetting that, with the same means used in opposition to them, a few +hundred thousand farmers and business men could be easily organized to +oppose them. Unscrupulous employers often endeavor to control the votes +of their employes. This is particularly true of railroad companies, and +they use many ingenious plans to accomplish it. In the Northwest, and +especially in Iowa, they have for several years organized their employes +as a political force for the purpose of defeating such candidates for +State offices as were known to favor State control of the transportation +business. They have even paid the expenses of the organization, although +they have made every effort to make it appear as if the movement was a +voluntary one on the part of their employes. They are employing this +method in Texas and other States at the present time, in opposition to +the effort that is being made by the people to secure just and +reasonable treatment from the railroads. + +That the chief executive of a State should be influenced in the +discharge of his official duties by such favors as passes, the freedom +of the dining- and sleeping-car, by the free use of a special car, or +even a special train, one is loath to believe; yet it is a fact, and +especially during political campaigns, that such favors are frequently +offered to, and accepted by, the highest executive officers, and it is +equally true that many of these officers often connive at the continued +and defiant violations of law by railroad officials. While the men who +manage large railroad interests do not always possess that wisdom which +popular reverence attributes to them, they certainly possess great +cunning, and expend much of their artfulness in efforts to win over +scrupulous, and to render still more servile unscrupulous executives. +The general railroad diplomate never omits to pay homage to the man in +power, to flatter him, to impress him with the political influence of +his company, to intimate plainly that, as it has been in the past, so it +will be in the future its determined policy to reward its friends and to +punish its enemies. If the executive proves intractable, if he can +neither be flattered, nor coaxed, nor bribed into submission, he does +not hesitate to resort to intimidation to accomplish his purpose. This +is by no means a rare occurrence. There are few public men who, if +determined to do their duty, have not been subjected to railroad insult +and intimidation. The author may be permitted to give an instance from +his personal experience. Soon after his inauguration as Governor of Iowa +a general officer of one of the oldest and strongest Western railroads +called at his office and importuned him with unreasonable requests. When +he found that he had utterly failed to impress the author with his +arguments, he left abruptly, with the curt remark that these matters +could be settled on election day, and he emphasized his statement by +slamming the door behind him. + +A servile railroad press has always been ready to misrepresent and +malign executive officers who have refused to acknowledge any higher +authority than the law, the expressed public will and their own +conception of duty. This abuse has even been carried so far that the +editorial columns of leading dailies have been prostituted by the +insertion of malicious tirades written by railroad managers and railroad +attorneys; and the fact that public opinion has not been more seriously +influenced by these venal sheets must be solely attributed to the good +judgment and safe instinct of the masses of the people. + +However persistently railway organs deny it, it is a matter of general +notoriety that railway officials take an active part in political +campaigns. Hundreds of communications might be produced to show their +work in Iowa, but the following two letters, written by a prominent +railroad manager to an associate, will suffice for the purpose. It will +be noticed that one was written before and the other after election. +Comments upon their contents are unnecessary: + + "----, Iowa, Nov. 2nd, 1888. + + "DEAR SIR: I have just discovered this P. M. that the + Central Committee have sent electrotypes to all the + printing offices in the State of the State ticket, with + the names of the Railway Commissioners and Supreme Judge + in so small a space as to make it very difficult, if not + impossible, to write in the names. I am having slips made + with Commissioners' names and Judge written on them, and + they will be sent to all agents, not later than to-morrow, + to paste over the printed names on the ticket, and thus + beat this scheme. Have you seen any tickets yet? And what + do you think of this plan? + + "Yours truly, "----" + + "----, Iowa, Nov. 11, 1888. + + "DEAR SIR: Repeating the old and time-honored saying: + 'We have met the enemy and we are theirs.' The Democratic + Granger and the largely increased Republican vote was too + much for us. Many friends voted with the railway men, but + to no purpose. The comparison between Granger and Smyth + will tell more than anything else the strength of the + railway vote. But we are badly used up, and may as well + take our dose. + + "Yours truly, "----" + +While the result of this election was indeed a bad dose for speculating +railway managers, it is the opinion of the masses and of railway +stockholders, who are more interested in the general welfare of the +roads than in speculation in their stocks, that the dose was well +administered, and should be repeated whenever the necessity for it may +again arise. + +It is probably true that railroad managers have lost much of their +former influence in politics. As their means of corruption have become +generally known they have become less effective. The public is more on +the alert, and corrupt politicians often find themselves unable to carry +out their discreditable compacts. + +But it is unreasonable to expect the evil to cease until the cause is +removed. The trouble is inherent in the system, and the fault is there +more than in the men who manage the business, and not till the great +power exercised by them is restrained within proper limits will the evil +disappear. All this can be accomplished when there shall be established +a most thorough and efficient system of State and National control over +the railroad business of the whole country. + + + + +CHAPTER X. + +RAILROAD LITERATURE. + + +The cause of the railroad manager has never been without time-servers. +Not to speak of those newspaper editors who, for some consideration or +another, defend every policy and every practice inaugurated or approved +by railroad authorities, there has always been a school of literati who +felt it their duty to enlighten, from a railroad standpoint, their +fellow-men by book or pamphlet upon the transportation question, to +correct what they supposed to be false impressions, and to round up with +an apology or defense for the railroad manager, who is invariably +represented by them as the most abused and at the same time most +patriotic and most progressive man of the age. + +The benefits derived from the railroad are great. It has been an +important factor in the development of our country's resources and the +advancement of our civilization. Its value is fully appreciated, but +there is no reason why the men who have utilized the inventions of +Stephenson and others, and have grown rich by doing so, should be +eulogized any more than those who are ministering to the wants of the +public by the use of the Hoe printing press, McCormick's reaper, +Whitney's cotton gin, or any of the thousands of other modern +inventions. + +These authors doubtless are prompted by various motives. Some have been +educated in the railroad school and are therefore blind to railroad +evils. Others naturally worship plutocrats, because they hold the +opinion that capital is entitled to a larger reward than brains and +muscle, for the reason that the latter is more plentiful than the +former. + +But there is a third class of railroad authors, who, there is reason to +believe, enter the literary arena in defense of railroad evils not +solely for the love they bear the cause, but as the paid advocates of a +class of men who feel that their cause is in need of a strong defense at +the bar of public sentiment. It would be difficult to account in any +other way for the extravagant statements and one-sided arguments made by +this class of writers. Yet railroad literature has not confined itself +to the retrospective field. Its scope has grown with the significance of +its contributors. In more than one instance have men at the head of +large railroad corporations, influenced by temporary interest, become +the authors of documents containing assertions and prophecies highly +pathetic at the time, but subsequently shown to be so replete with +falsehoods and absurdities that few railroad managers would to-day be +willing to father them. Thus Alexander Mitchell, the late president of +the Chicago, Milwaukee and St. Paul Railroad Company, addressed on the +28th of April, 1874, shortly after the passage of the Wisconsin Granger +Law, a letter to Governor Taylor, containing the following passages: + + "That it [the Wisconsin law] has effectually destroyed all + future railroad enterprises, no one who is acquainted with + its effect in money centers will for a moment doubt.... The + whole amount received on the investment [Chicago, Milwaukee + and St. Paul Railroad] for interest and cash and stock + dividends, amounts to only six per cent. per annum of the + actual cost of the property. I submit to your Excellency, + and through you to the people of the State, whether this is + more than a fair and reasonable return for the capital + invested in these improvements. Is it not far below such + reasonable amount? The best and most careful economists + admit that no less than ten per cent. per annum should be + allowed on such investments.... The directors of this + company have at all times had a due regard to the interests + of the public, and a desire to furnish transportation at the + lowest possible figures, and, although not receiving a fair + and reasonable return on their investments, they have for + the last four years prior to 1873 steadily reduced their + rates of freight and passengers from year to year, as will + be seen from the following tables, showing the charge for + freight per mile, and the average per mile for passengers + for each year, from 1868 to 1873 inclusive: + + Charges per ton Average passenger rate + per mile--cents. per mile--cents. + + 1864 .04 + 1868 .03 40-100 .03 86-100 + 1869 .03 10-100 .03 92-100 + 1870 .02 82-109 .03 85-100 + 1871 .02 54-100 .03 75-100 + 1872 .02 43-100 .03 54-100 + 1873 .02 50-100 .03 42-100 + + "The law in question proposes to reduce our passenger rates + twenty-five per cent. and our freight rates about the same, + thus deducting from our present tariff about twenty-five per + cent. of our gross earnings.... This act, as we have seen, + proposes to take from us twenty-five per cent. of our + passenger and freight earnings, and the additional tax of + one per cent. of our gross earnings, all of which is + equivalent to taking from us twenty-six per cent. of our + gross earnings. Therefore, deducting this amount, equal to + twenty-six per cent. of our entire gross earnings, from + thirty-three per cent., our average net earnings on + business, would leave us only seven per cent. of our gross + earnings as the entire net earnings of the road, out of + which must be paid the interest on the bonds and the + dividends to our stockholders. It is therefore manifest that + this law will take from us over three-fourths of the net + income received under our present tariff.... The board of + directors have caused this act to be carefully examined and + considered by their own counsel, and by some of the most + eminent jurists in the land, and after such examination they + are unanimous in their opinion that it is unconstitutional + and void.... The board of directors are trustees of this + property, and are bound faithfully to discharge their trust, + and to the best of their ability to protect it from + spoliation and ruin. They have sought the advice of able + counsel, and, after mature consideration, believe it their + duty to disregard so much of said law as attempts + arbitrarily to fix rates of compensation for freight and + passengers.... Being fully conscious that the enforcement of + this law will ruin the property of the company, and feeling + assured of the correctness of the opinions of the eminent + counsel who have examined the question, the directors feel + compelled to disregard the provisions of the law so far as + it fixes a tariff of rates for the company, until the courts + have finally passed upon the question of its validity." + +The letter was at the time regarded by railroad men as a very strong +document, and the railroad journals were filled with lengthy editorials +in praise of the soundness of the doctrines and arguments which it +contained. The disinterested of the enlightened portion of the community +even then realized that the "eminent jurists" whom the company had +consulted were hired attorneys and greatly biased in their views as to +the constitutional rights of corporations, and that President Mitchell +on his part had painted by far too dark a picture of the situation. It +is now quite generally admitted that many of Mr. Mitchell's statements +were as false as his counsel's interpretation of the Constitution and +the law was erroneous. From the assertions made in this letter one is +led to infer that the then stock-and bondholders of the Milwaukee road +had paid in full every dollar of the capitalized value of the road, and +that they derived from their investment an income of only about six per +cent. on the money actually invested by them. The cost of the entire +Chicago and Milwaukee system in Wisconsin was stated in the letter as +being $38,000 per mile. It is not likely that this line of road ever +cost to exceed $25,000 a mile, or that those who then owned the road +paid much more than two-thirds of its actual cost for it. The road, as +the letter itself admits, was bought at sheriff's sale, and no mercy +whatever was shown to the farmers who had mortgaged their farms to aid +the railroad company in raising funds for the construction of its line. + +The letter contains other misstatements equally grave. Mr. A. B. +Stickney, the president of the Chicago, St. Paul and Kansas City +Railroad, in his recent excellent work, "The Railway Problem," reviews +Mr. Mitchell's letter as follows: + + "Mr. Mitchell states the average rate per mile in 1873 for + passengers at 3.42 cents. It was well understood that this + was an average rate received from those passengers who paid + anything, and that, had the average rate been obtained by + using as a divisor the total number of paying passengers + plus the number of those who rode free the average would + have been much below three cents, the price fixed by the + law, and consequently, if the company would collect the + legal rate from all alike and abolish the free list, its + revenues from the passenger business would be increased + rather than decreased. If the same test is applied to the + freight rates it becomes equally evident that this statute + did not reduce the rates in Wisconsin below the average rate + of 2.50 cents per ton per mile, which, according to Mr. + Mitchell's statement, was the average for the year 1873. For + proof, it may be stated that the law classified freight into + four general classes, to be designated as first, second, + third and fourth classes, and into seven special classes, to + be designated as D, E, F, G, H, I and J. The rates on the + four general classes were made the same as were 'charged + for carrying freights in said four general classes on said + railroads on the first day of June, 1873,' and the rate per + ton per mile was fixed at certain rates for the first + twenty-five miles, a less for the second twenty-five miles, + and a fixed rate per mile after, as follows: + + 1st 25 Miles 2nd 25 Miles. All Over 50 Miles. + + D 4-4/5 cents 3-1/5 cents 1 3/5 cents. + E Same as class above. + F 4 cents 2 cents 1 cent. + G 3-1/5 cents 2 cents 1 cent. + H 4 cents 2-4/5 cents 1-3/5 cents. + I 4-2/5 cents 2-2/5 cents 1-1/5 cents. + J 3-1/5 cents 2-2/5 cents 1 cent. + + "When it is considered, in connection with these figures, + that the four general classes were left by the legislature + under the same tariffs as had been enforced by the + companies, and, as a rule, first class is three times the + rate of class D, and third and fourth class materially + higher, the evidence seems conclusive that the rates fixed + by law would produce an average materially higher than the + average of the whole year, stated by Mr. Mitchell at 2-1/2 + cents. It seems also probable that, had the rates fixed by + this law been applied to the whole business of the line, the + interstate as well as the State traffic, it would still have + produced a larger average. The latter of course is the + proper test. There are little inaccuracies in the material + facts as stated by Mr. Mitchell which were pointed out at + once. For example: In his tabulated statement of passenger + earnings per mile, averaging the gross earnings from + transportation of passengers who paid any fare, and omitting + the large number who went free, the rate is stated at 3 + 42-100 cents per mile; then he says: 'The law in question + proposes to reduce our passenger rate twenty-five per + cent.,' which would have reduced the rate to 2.57 cents per + mile, while, the rate fixed by the law complained of was + three cents per mile. Then Mr. Mitchell proceeds: 'And our + freight rates about the same; thus deducting from our + present tariff about twenty-five per cent. of our gross + earnings.' It was immediately pointed out that the law only + applied to strictly State business; that is, to traffic + that originated and ended in the State of Wisconsin. All + other traffic was interstate commerce, and could not be + controlled by State legislation. The volume of business + which would be affected by the law would therefore be + comparatively small--estimated at not over ten per cent., of + the total traffic of the line. Hence, if the rates fixed by + the law were twenty-five per cent. less than the rates the + company had been in the habit of collecting (which was + denied), it could not possibly have 'deducted from its + present tariff' more than two and one-half per cent., + instead of twenty-five per cent. as stated by Mr. Mitchell. + + "It was claimed that the facts were, that the Chicago, + Milwaukee and St. Paul Company, in its efforts to bankrupt + the Lake Superior and Mississippi Company, had many of its + interstate rates so low that it had resulted in loss, and + that its other rates had been made unreasonably high in + order to recoup this loss, and that the State of Wisconsin + was compelled to pay a part of the expense of the + transportation of favored sections of the State of + Minnesota." + +All through the Granger contests the railways have weakened the force of +their arguments by their misrepresentation of facts and by their +extravagant predictions of ruin. The companies were continually +proclaiming: 'If this or that is done, it will ruin us; it will ruin the +State,' when, in fact, a road cannot be mentioned that has suffered from +State legislation. Nineteen years ago no railroad manager could have +written what Mr. Stickney writes to-day, and few railroad managers would +write to-day what Mr. Mitchell wrote then. And yet, such is the change +which public sentiment is undergoing upon these questions, that the +utterances of many of our present railroad authors will appear as absurd +a few years hence as Mr. Mitchell's letter of nineteen years ago appears +to us now. + +Many railroad attorneys have since been guilty of resorting to the +sophistry employed by President Mitchell in that strange letter which he +addressed to the Governor of Wisconsin. Even so distinguished a +gentleman as Hon. James W. McDill, now a member of the Interstate +Commerce Commission, made in 1888, as a member of a railroad lobby, the +following remarkable statements before the Railroad Committee of the +General Assembly of Iowa, in a speech opposing a proposed reduction of +the passenger rate of first-class roads from three to two cents per +mile: + + "The proposition, if confined to the first-class roads of + Iowa, proposes a one-third reduction of their revenues from + passenger business.... We have earned in Iowa by first-class + roads annually about $13,000,000, and a reduction of one + cent, or from a rate of three cents to two, will reduce + their revenues about $5,000,000 a year.... Thus it is seen + that it is proposed to take from the revenues of a part of + the railroads of Iowa, annually, almost as much as all the + railroads of Iowa have paid for taxes in nine years + ($6,549,505.84)." + +Mr. McDill was a member of the Iowa Railroad Commission for several +years. He may, therefore, be presumed to have known that the State of +Iowa could not, and did not propose to, regulate interstate traffic, and +that the thirteen million dollars railroad revenue to which he referred +was derived both from interstate and State traffic; that the latter was +only about one-fourth of the former, and that therefore the proposed +reduction on the basis of schedule rates would have cut down the net +revenue of the roads only about one million instead of five million +dollars. But Mr. McDill himself states that the average rate earned by +all the railroads of the United States was, for the year 1886, only +2.181 cents per passenger per mile. It certainly was not over 2-1/2 +cents per mile for the first-class roads of Iowa. Thus the proposed +reduction, instead of being one cent per mile, as stated by Mr. McDill, +was only one-half cent per mile; and it only applied to the local +business of the first-class roads. In other words, the bill under +consideration, had it been enacted into law, would have caused a +reduction of 20 per cent. on about 25 per cent. of the total revenue +from passenger business of the first-class roads, or of five per cent. +on their total income from passenger traffic in the State of Iowa. It +will be noticed that Mr. McDill in his calculation made no allowance +whatever for the increase of business which would have followed such a +reduction. The gain from this source would probably have greatly +exceeded the loss due to this small reduction in the fare. In the same +address Mr. McDill made many other equally fallacious statements. + +One of the most devoted advocates of the interests of railroad managers +is Marshall M. Kirkman. He is the author of a number of books and +pamphlets upon railway subjects, among them a pamphlet entitled "The +Relation of the Railroads of the United States to the People and the +Commercial and Financial Interests of the Country." + +Mr. Kirkman introduces his subject with the following rather remarkable +statement: + + "I shall show that while the railways of the United States + are designated as monopolies, they are not so in fact. + Accused of disregarding the interests of the community, I + will show that they are abnormally sensitive to their + obligations in this direction. While legislatures claim the + right to fix rates, I shall show that the abnormal + conditions under which the railway system has grown up and + its chaotic nature render the exercise of such a privilege + impossible. I will show that while it is assumed that rates + may be fixed arbitrarily, they must, on the contrary, be + based on natural causes, the competition of carriers, their + necessities and the rivalries of conflicting markets and + trade centers; conditions manifestly impossible to determine + or regulate in advance, and therefore beyond the control of + legislation.... While a division of business (by pooling) is + thought to be contrary to the interests of the people, I + shall show that it is the legitimate fruit of indiscriminate + railway building and offers the only escape from the + conditions such practice engenders. I shall show that, while + it is assumed that rates may be based progressively or + otherwise on distance, the enforcement of such a principle + would restrict the source of supply, and, in so far as this + was the case, render great markets or centers of industry + impossible." + +Speaking of the importance of the railroad, Mr. Kirkman says: +"Superseding every other form of inland conveyance, it determines the +location of business centers, and vitalizes by its presence, or blasts +by its absence." He contends that rigid and scrutinizing supervision +should be exercised by the Government over the location of railroads, +and that only such lines should be permitted to be built as afford +reasonable grounds for profitable enterprise. "It should be," he says, +"an axiom in our day that a government that permits or encourages the +construction of two railways where one would suffice is, to the extent +that it does this, a public nuisance." Mr. Kirkman here makes it the +duty of the Government to arbitrarily meddle with railroad affairs. He +would give the Government the power to determine when and where an +additional railroad is needed, and to prohibit the construction of any +new road that has not the Government sanction. The interests of a +thousand towns might suffer for want of adequate transportation +facilities, individuals and communities might be anxious to build their +own lines for the development of local resources, but all railroad +enterprise is doomed to a standstill until a conservative governmental +commission has been entirely satisfied that a prospected road will pay +and not deprive existing roads of any part of their revenue. There can +be no doubt that if such a policy were ever adopted in America, few +roads would be built without having first passed the ordeal of a legal +injunction, and many a prospected road, though greatly needed, would +remain unbuilt because its promoters would be discouraged by the delay +and cost of litigation. + +But while this author is perfectly willing to trust the Government with +the great responsibility of prohibiting the construction of proposed +roads, he is not willing to have it exercise the power to determine what +are reasonable rates. He tries to sustain his objection by the following +argument: "The fixing of rates upon a railroad is as delicate a process +as that of determining the pulse of a sick man. They cannot be +determined abstractly, or in advance of the wants of business, but must +be adjusted from hour to hour to conform to its fluctuations. Five +thousand men find active employment in the United States in connection +with the important duty of making rates. Each case requires particular +investigation and involves, in many instances, prolonged study and +research. The duty requires men of marked experience and capacity. They +and men like them are the silent, unseen power that moves great +enterprises of every nation. In the case of railroads we may enumerate +those having official positions, but the experts from whom the official +heads derive information and assistance cannot be classified. They +comprise a vast army of experienced and able men familiar with railway +traffic and quick to respond to its requirements. Such a body of men +could not be organized by a government, or, if organized, would rapidly +deteriorate under conditions so unfavorable for their support and +development. Whatever authority exercises the duty of fixing rates must +take up the subject in the same methodical way and, acting through +skilled agents, pursue its inquiries and determine its results with the +same experience, minute care and _conscientious regard_ for the +technical requirements of business that the railway companies observe. +No government can possess the facilities for perfecting so vast and +intricate an organization and at the same time render it responsive to +the public good. The labor is too great and the responsibility too +remote. It could not move with sufficient quickness to respond to the +actual requirements of trade, and too many restrictions would +necessarily govern its actions. For these and other equally important +reasons governments must always be satisfied to restrict their offices +in this direction." + +Speaking of the men who are commonly termed railroad magnates, Mr. +Kirkman says: "They alone possess the needed administrative ability that +the situation demands. They not only provide largely the capital, but +they discover the fields wherein it may be used most advantageously. +They are the advance guard of all great enterprises, the natural leaders +of men. They are an integral part of the country, a necessary and +valuable element, without which its natural resources would avail +little." This is a very strong statement in the face of the fact that +but very few of the class of men to whom Mr. Kirkman refers ever built a +line of road. They have usually found it more profitable to "gobble" +roads already built than to construct new lines. + +According to this author the public have no reason to complain of +railroads; on the contrary, the latter have always been the victims of +public persecution, and "every species of folly, every conceivable +device of malice, the impossible requirements of ignorance, the selfish +cunning of personal interests, the ravings of demagogues, the +disappointments, envies, prejudices and jealousies of mankind have each +in turn and in unison sought to injure the railway interest." + +But probably the most extravagant passage in the whole treatise is the +one referring to special rates, which he calls "the foundation and +buttress of business," without which it could not be carried on. He +expresses the opinion that without the continued and intelligent use of +such rates "our cities would soon be as destitute of manufactories as +one of the bridle paths of Afghanistan," and then continues: "The +special rate of carriers is like the delicate fluid that anoints and +lubricates the joints of the human body. It is an essential oil. Without +it the wheels of commerce would cease and we should quickly revert to +the period when the stage-coach and the overland teamster fixed the +limits of commerce and the stature of cities." + +The most recent and probably the most radical of Mr. Kirkman's books is +"Railway Rates and Government Control." It would lead us too far from +our subject to enter into a discussion of Mr. Kirkman's errors; in fact, +it might prove an endless task. Suffice it to say that in discussing his +subject he revels in such phrases as: "Subject too vast to be +comprehended." "Acts of agrarian legislation and foolish manifestations +of disappointment and hate." "The rabble will avail itself of every +excuse to pass laws that would, under other circumstances, be called +robberies." "Ignorance and demagogism." "Government interference, the +panacea of cranks and schemers." "Only understood by the few." "These +people are as sincere as they are ignorant." "Governments have no +commercial sense." "Those who condemn them are not so dishonest as +ignorant, and not so malicious as foolish." "Silly people." "Justice and +common honesty are systematically denied [the railroads]." "Legal means +of plundering them." "The intelligence and facilities of Government are +but one step above the barbarian." "Those who use railroads should pay +for them," etc., etc. + +Mr. Kirkman's argument is in substance: Rate-making is a difficult +subject. The people are too ignorant to understand it. Those who carry +on the Government are for the most part fools and demagogues, and are +utterly unfit to do justice to such a task. Railroad men are wise and +just, and neither the people nor the Government should meddle with the +railroad business. In order to place a true estimate upon Mr. Kirkman's +utterances, one should remember that he is a railroad employe as well as +the patentee and vendor of a number of railroad account forms which are +extensively used by railroad companies. + +The Chicago _Tribune_, in reviewing this last literary production of Mr. +Kirkman, says: + + "The great fault of Mr. Kirkman's statements is that they + are often so general in character as to be both true and + false at the same time.... He does not seem to comprehend + the nature of the railroad, or to perceive the danger of + allowing a railroad to exercise its powers uncontrolled. He + denies the State's right to interfere with any + discriminations which a railway corporation chooses to + adopt. He would allow railways to fix whatever charges they + please for long hauls and short hauls.... Mr. Kirkman does + not adduce a single fact in support of these remarkable + views. He simply says: 'Railroads cannot, if they would, + maintain any inequitable local tariff.' This is not + argument, it is simply assertion. Every one who has learned + the alphabet of this question knows that railways have been + exceedingly unjust wherever competition or the law did not + restrict their powers. If this were the proper place for it + we would give the author instances of this injustice by the + hundred, and almost any book on the subject refers to such + cases by the thousand.... When confronted with the facts + substantiating such charges the author answers the argument + by exclaiming: 'But how absurd! But how untrue! Our + commercial morals are equal to the highest in the world....' + Scarcely an assertion can be taken without qualification. + The author fairly revels in half-truths.... The book may + have its merits, but they are too modest to reveal + themselves." + +It is a failing of mankind to take for truth without further +investigation any assertion that has often been reiterated. Most people +are prone to believe that an assertion made by a thousand hearsay +witnesses is true, overlooking the possibility of their drawing from a +common false source. But it is surprising that an author like Prof. +Arthur T. Hadley should fall into such an error. In his otherwise +excellent work, "Railroad Transportation, Its History and Its Laws," Mr. +Hadley bases a number of his deductions upon false premises advanced by +railroad managers, and arrives at conclusions which appear strange when +their source is considered. In the chapter on railroad legislation +Professor Hadley says: "But a more powerful force than the authority of +the courts was working against the Granger system of regulation. The +laws of trade could not be violated with impunity. The effects were most +sharply felt in Wisconsin. The law reducing railroad rates to the basis +which competitive points enjoyed left nothing to pay fixed charges. In +the second year of its operation, no Wisconsin road paid a dividend; +only four paid interest on their bonds. Railroad construction had come +to a standstill. Even the facilities of existing roads could not be kept +up. Foreign capital refused to invest in Wisconsin; the development of +the State was sharply checked; the very men who had most favored the law +found themselves heavy losers.... By the time the Supreme Court +published the Granger decisions, the fight had been settled, not by +constitutional limitations, but by industrial ones." + +These statements are either utterly untrue or greatly misleading. Mr. +Hadley ought to know that the railroad companies in the Granger States +never complied with the letter, much less with the spirit of the law. +Whenever they made an apparent effort to live up to it they only did so +to make it odious. Rates were never reduced by the legislature to the +basis previously enjoyed by competitive points, but merely to the +average charge which had obtained before the passage of the law. As a +rule the railroad revenues increased. If any companies failed to earn +enough to pay fixed charges it was simply because they were determined +not to do so. A non-payment of dividends did not injure the managers, +but simply other stockholders of the road. A permanent establishment of +the principle of non-discrimination, on the other hand, would have +benefited stockholders, while prejudicing the speculative interest which +managers had in the roads. Railroad construction came, after the +financial panic of 1873, to a practical standstill throughout the United +States; and if the Granger States did not get their share of the very +small total increase during the five years following the panic, it was +due solely to a conspiracy on the part of the railroad managers to +misrepresent and pervert the legislation of these States. The laws, as +has already been stated, were finally repealed, not because the people +had tired of them or regarded them unwise or unjust, but because it was +hoped that the commissioner system would prove more efficient. It was +offered as a compromise measure and was accepted as such by the railroad +managers, who, in their eagerness to rid themselves of the restrictions +imposed by the Granger laws, gave every assurance of complete submission +to the requirements of the proposed legislation. + +Mr. Hadley even goes so far as to defend railroad pools. "Unluckily," he +says, "we place these combinations outside of the protection of the law, +and by giving them this precarious and almost illegal character we tempt +them to seek present gain, even at the sacrifice of their own future +interests. We regard them, and we let them regard themselves, as a means +of momentary profit and speculation, instead of recognizing them as +responsible public agencies of lasting influence and importance." We can +partially account for this author's defense of pooling when we are +informed that he accepts it as an axiom that "combination does not +produce arbitrary results any more than competition produces beneficent +ones." Referring to railroad profits, Mr. Hadley says: "The statement +that corporations make too much money is scarcely borne out by the +facts. The average return of the railroads of this country is only four +per cent., the bondholders receiving an average of four and a half per +cent., the stockholders of two and a half per cent. True, much of the +stock is water, not representing any capital actually expended; but, +even making allowance for this, it is hardly probable that the roads are +earning more than five per cent. on the total investment. This assumes +an average cost of $45,000 per mile, implying that about half of the +stock and one-sixth of the bonds are water." Mr. Hadley would probably +have come much nearer the truth if he had assumed three-fourths of the +stock and one-fourth of the bonds to be water. Even Mr. Poor, who +certainly cannot be accused by railroad men of being inimical to their +interests, places the average cost of the railroads of this country no +higher than at $30,000 per mile; and this estimate, it should be +remembered, includes the value of the large donations made to railroad +companies by the public. With a full understanding of all the +circumstances, Mr. Poor said of railroad investments several years ago +that if the water were taken out of them no class of investments in this +country would pay as well. In the face of this statement Mr. Hadley +would do well to revise his figures. + +We find, however, in Prof. Hadley's book also eminently sound views, +like the following: "If the object of a railroad manager is simply to +pay as large a dividend as possible for the current year, he can best do +it by squeezing his local tariff, of which he is sure, and securing +through traffic at the expense of other roads by specially low rates; +that is, by a policy of heavy discrimination. But the permanent effect +of such a policy is to destroy the local trade, which gives a road its +best and surest custom, and to build up a trade which can go by another +route whenever it pleases. The permanent effect of such a policy is +ruinous to the railroad as well as the local shipper." And he continues: +"By securing publicity of management you do much to prevent the +permanent interests of the railroads from being sacrificed to temporary +ones. By protecting the permanent interests of the public you enlist the +stockholders and the best class of railroad managers on the side of +sound policy." + +Edward Atkinson, in an essay entitled "The Railway, the Farmer and the +Public," endeavors to prove that the farmers have no cause for +complaining against the railroad, because rates of transportation have +been greatly reduced during the past twenty years. Speaking of the +reductions made in freight rates in the State of New York, he says: "Had +the rate of 1870 been charged on the tariff of 1883 the sum would have +been at 1.7016 cents on 9,286,216,628 tons, carried one mile, +$158,014,262; the actual charge was $83,464,919, making a difference of +$74,549,343 saved on one year's traffic on the lines reported in New +York." It either did not occur to Mr. Atkinson, or, if it did occur to +him, he failed to mention it, that these freight reductions were forced +upon the railroads chiefly by water competition, and that if the +railroad companies had not saved these seventy-four million dollars for +the people, the canal lines, always subject to competition, would have +saved a large part of it. With equal propriety might it be said that the +railroads, by meeting canal competition, saved for themselves in the +year mentioned a goodly share of their gross earnings. Such reasoning is +absurd, and it is high time that the bubble of an argument so often used +by railroad advocates be pricked. As Mr. Atkinson has introduced the +farmer, let us apply his rule to him. There was a time when the farmer +sold his corn for a dollar a bushel. To-day he sells it for thirty +cents. He therefore saves to the people of this country, on +2,000,000,000 bushels, the enormous sum of $1,400,000,000. There is +scarcely an industry in existence to which this argument does not apply +with equal force. Mr. Atkinson virtually admits that railroads charge +all the traffic will bear when he says: "The charge which can be put +upon the wheat of Dakota or Iowa for moving it to market is fixed by the +price at which East Indian wheat can be sold in Market Lane." He is +opposed to the Interstate Commerce Law, which he regards as "obnoxious +measures of national interference and futile attempts to control this +great work." He would rely chiefly upon the publicity of accounts made +by railway officers, as secured by the private publication of Poor's +Railway Manual, for all needed regulation, but concedes the +establishment of a figurehead commission, concluding his remarks upon +the subject as follows: "A commission which may bring public opinion to +bear upon railway corporations may well be established, and there the +work of the legislator may well cease." When we consider the powerful +agencies employed by railroads to create public sentiment in their favor +we can well understand the inefficiency of such a milk-and-water method +of control. + +One of the most radical books ever published at the instigation of +railroad managers appeared in 1888, under the title "The People and the +Railways." Its author is Appleton Morgan, who attempts to "allay the +animosity towards the railway interests" as shown in Mr. James F. +Hudson's book, "The Railways and the Republic." The means which Mr. +Morgan chooses are not well calculated to accomplish his purpose, for +the masses of the people prefer in such a controversy arguments to +ridicule and sarcasm, weapons of literary warfare to which this author +resorts altogether too freely. Mr. Morgan's opinion as to the benefits +of centralized wealth and trade combinations differs greatly from that +held by the great majority of the American people. He says: "The fact, +the truth is, that (however it may be in other countries) the +accumulation of wealth and centralization of commerce in great +combinations has never, in the United States, been a source of +oppression or of poverty to the non-capitalist or wage-worker." There is +scarcely an evil in railroad management which Mr. Morgan does not +defend. Pools, construction companies, rebates, discriminations and +over-capitalization all find favor in Mr. Morgan's eye. "Rebates and +discriminations," he says, "are neither peculiar to railways nor +dangerous to the 'Republic.' They are as necessary and as harmless to +the farmer as is the chromo which the seamstress or the shop girl gets +with her quarter-pound of tea from the small tea merchant, and no more +dangerous to the latter than are the aforesaid chromos to the small +recipients." Pools and combinations receive an unusually large share of +Mr. Morgan's attention. A few selections from his effusions in their +favor may be given here, viz.: + +"These pools are the legitimate and necessary results of the +rechartering over and over again of railway companies to transact +business between the same points by paralleling each other. So long as +the people in their legislatures will thus charter parallel lines +serving identical points--thus dividing territory they once granted +entire--it is not exactly clear how they can complain if the lines built +(by money invested, if not on the good faith of the people, at least in +reliance upon an undivided business) combine to save themselves from +bankruptcy." And again: "Against the inequality of their own rates and +the hardship of the long and short haul (in other words, against the +discrimination of nature and of physical laws) no less than against the +peril of bankruptcy and the consequent speculative tendency of their +stocks (after which may come the wrecking, the watering, and the vast +individual fortunes), the railways of this republic have endeavored, by +establishment of pool commissions, to defend both the public and +themselves.... The honest administration of railways for all interests, +the payment of their fixed charges, the solvency of their securities, +the faithful and valuable performance of their duties as carriers, can +be conserved in but one way--by living tariffs, such as the pools once +guaranteed." + +In the following passage this author denies to the State the right to +regulate rates: "Granting that they [the railroads] must carry freights +for the public in such a way as not to injure either the public or the +freight in the carrying, most emphatically (it seems to me) it does not +follow that they must add to the value of the freights they carry by +charging only such rates as the public or the owners of the freight +insist on." + +But Mr. Morgan's indignation rises to the highest pitch in his +discussion of the Interstate Commerce Act. He fears that it will cause +the downfall of our liberties and sees in the background the Venetian +Bridge of Sighs and the French Bastille. He asks: "Why should for any +public reasons--for any reason of public safety--the Interstate Commerce +Law have come to stay?" He then berates the act as follows: "To begin +with, the present act abounds in punishments for and prohibitions +against an industry chartered by the people, but nowhere extends to that +industry a morsel of approval or protection. It bristles with penalties, +legal, equitable, penal, and as for contempt, against railway companies, +but nowhere alludes to any possible case in which a railway company +might, by accident, be in the right, and the patron, customer, passenger +or shipper in the wrong.... The constitutions of civilized nations, for +the last few centuries at least, have provided that not even guilt +should be punished except by due process of law, and have uniformly +refused to set even that due process in motion except upon a complaint +of grievance. But the Interstate Commerce Law denies the one and does +away with the necessity for the other. That statute provides that the +commission it creates shall proceed 'in such manner and by such means as +it shall deem proper,' or 'on its own motion,' and that 'no complaint +shall at any time be dismissed because of the absence of direct damage +to the complainant.' Even the Venetian council often provided for a +certain and described hole in the wall through which the anonymous +bringers of charges should thrust their accusations. Even the court of +star chamber was known to dismiss inquisitions when it found that no +wrong had been done. But the statute of interstate commerce appears to +issue _lettres de cachet_ against anything in the shape of a railway +company--to scatter them broadcast, and to invite any one who happens to +have leisure to fill them out, by inserting the name of a railway +company. It says to the bystander: 'Drop us a postal card, or mention to +any of our commissioners, or to a mutual friend, the name of any railway +company of which you may have heard, and so give us jurisdiction to +inquire if that company may have by chance omitted to dot an i or cross +a t in its ledgers, or whether any one of its hundreds of thousands of +agents--in the rush of a day's business, or in a shipper's hurry to +catch a train--may have named a rate not on the schedule then being +prepared at headquarters, or charged a sixpence less than some other +agent 250 miles down the line may have accepted a week ago for what +might turn out to be a fraction more mileage service in the same general +direction. No particular form is necessary. Drop in to luncheon with our +commission any day between twelve and one, and mention the name of a +railway company. The railway company may have done you no damage, nor +grieved you in any way; just mention the railroad, and we will take +jurisdiction of its private (or quasi-public) affairs. Or, if you don't +happen to have time to mention it, we will take jurisdiction anyhow, 'of +our own motion,' of any railway company whose name we find in the +Official Gazette. It really does not matter which; any one will do." +This is a fair example of the literature on the Interstate Commerce Law +paid for by railroad men. + +Mr. Stickney, although a railroad president, takes an entirely different +view of the situation. He considers the law inadequate to bring about +the reforms needed. He says: "This enormous business is now in the +control of several hundred petty chieftains, who are practically +independent sovereigns, exercising functions and prerogatives in +defiance of the laws, and practically denying their amenability to the +laws of the country. If the Government would seek to bring them to terms +and compel them to recognize and obey the laws, it must use the means +necessary to accomplish the end. It must have executive officers +sufficient in number as well as armed with an adequate power and dignity +to command their respect.... The power conferred upon them [the +Interstate Commerce Commission] to enforce their judicial orders is the +power 'to scold.' The penalties of the law which the courts are in power +to impose are certainly severe, but the law has been operated for about +four years without any convictions, and yet no well-informed person is +ignorant of the fact that the law has not been obeyed. The president of +a large system is said to have remarked that 'if all who had offended +against the law were convicted there would not be jails enough in the +United States to hold them.' It is evident that the Government has not +provided adequate machinery for enforcing the law." + +Mr. Stickney is correct in his statement that adequate machinery for +enforcement of the law has not been provided, but he does not give +sufficient credit to the law or the commission. While much work remains +to be done, much progress has been made. + +He is of the opinion that the public welfare would be furthered if the +National Government assumed the sole control of railroads. He gives his +reasons for the change which he proposes, as follows: + + "There are many reasons besides these in the interest of + uniformity which make it desirable to transfer the entire + control of this important matter to the regulation of the + Nation. First, because of its constitution and more extended + sessions, Congress is able to consider the subject with + greater deliberation, and therefore with more intelligence, + than can a legislature composed of members who, as a rule, + hold their office for but one short session of about sixty + days' duration. There would also be removed from local + legislation a fruitful source of corruption, which is + gradually sapping the foundations of public morality.... In + the second place, the problem of regulating railway tolls + and managing railways is essentially and practically + indivisible, by State lines or otherwise, and therefore it + is not clear but that whenever the question may come before + the courts it may be held that the authority of Congress to + deal with interstate traffic carries with it, as a necessary + and inseparable part of the subject, to regulate the traffic + which is now assumed to be controlled by the several States. + The courts have held that the States have authority to + regulate strictly State traffic in the absence of + Congressional action, but their decisions do not preclude + the doctrine that Congress may have exclusive jurisdiction + whenever it may choose to exercise the authority. There is a + line of reasoning which would lead to that conclusion. It + may be that many will not care to follow the lead of the + writer as to the measure of aggregate net revenue which + railway companies are entitled to collect in tolls, but it + is evident that before the tolls can be intelligently + determined some measure of such aggregate revenue must be + ascertained. The question would then arise, what proportion + must be levied upon State and interstate traffic + respectively? If the State should refuse to levy its share + (and how could such share be ascertained?), then more than + its share would have to be levied on interstate traffic, and + thus the State by indirection would be able to do what the + Constitution prohibits. Of course, when the Constitution was + adopted railways and railway traffic were unknown. But it + was a similar question which brought the thirteen original + States together into one nation, under the present + Constitution. At least the first movement toward amending + the original Articles of Confederation was to give Congress + enlarged power over the subject of commerce." + +In reply to this it may be said that it will be an unfortunate day for +the States when they surrender the power to control their home affairs. +Differences between State and interstate rates could easily be adjusted +by the National and State commissions and by the courts. It certainly +ought not to be difficult for such tribunals to see that a rate which is +made higher or lower, as it may be for State or interstate traffic, is +wrong. + +Mr. Stickney has fallen into the error common to railroad men in +believing that lower rates of transportation will not prevail in the +future. There are many reasons why it is probable that they will be +lower. Present rates are highly profitable on well located lines. +Labor-saving inventions will increase, and roads will be built and +operated more cheaply. Lines will be located with lower grades, lighter +curvature and more directness. Business will increase largely, and the +ratio of expenses will decrease. Steel will be improved in quality and +will be substituted for iron. A heavier rail and more permanent roadway +will be used. Rates of interest will rule lower, and there will be much +more economy in superintending. Extravagant salaries to favorites will +be reduced, and sinecures and parasites will be cut off from the +payrolls. Lower wages are inevitable as our population becomes more +dense. + +A very interesting and instructive author upon railroad subjects is +Charles Francis Adams, Jr., ex-president of the Union Pacific Railroad +and formerly a member of the Board of Railroad Commissioners of the +State of Massachusetts. After twenty years' constant association with +railroad men, Mr. Adams should certainly know the character of his +quondam colleagues. In his book, "Railroads, Their Origin and Problems," +he says of them: "Lawlessness and violence among themselves [_i. e._, +the various railroad systems], the continual effort of each member to +protect itself and to secure the advantage over others, have, as they +usually do, bred a general spirit of distrust, bad faith and cunning, +until railroad officials have become hardly better than a race of +horse-jockeys on a large scale. There are notable exceptions to this +statement, but, taken as a whole, the tone among them is indisputably +low. There is none of that steady confidence in each other, that easy +good faith, that _esprit du corps_, upon which alone system and order +can rest. On the contrary, the leading idea in the mind of the active +railroad agent is that some one is always cheating him, or that he is +never getting his share in something. If he enters into an agreement, +his life is passed in watching the other parties to it, lest by some +cunning device they keep it in form and break it in spirit. Peace is +with him always a condition of semi-warfare, while honor for its own +sake and good faith apart from self-interest are, in a business point of +view, symptoms of youth and a defective education." And again, in an +address delivered before the Commercial Club of Boston in December, +1888, Mr. Adams expressed his opinion concerning the average railroad +manager of to-day as follows: "That the general railroad situation of +the country is at present unsatisfactory is apparent. Stockholders are +complaining; directors are bewildered; bankers are frightened. Yet that +the Interstate Commerce Act is in the main responsible for all these +results, remains to be proved. In my opinion, the difficulty is far more +deep-seated and radical. In plain words, it does not lie in any act of +legislation, State or National; and it does lie in the covetousness, +want of good faith and low moral tone of those in whose hands the +management of the railroad system now is; in a word, in the absence +among men of any high standard of commercial honor. These are strong +words, and yet, as the result of a personal experience stretching over +nearly twenty years, I make bold to say they are not so strong as the +occasion would justify. The railroad system of this country, especially +of the regions west of Chicago, is to-day managed on principles +which--unless a change of heart occurs, and that soon--must inevitably +lead to financial disaster of the most serious kind. There is among the +lines composing that system an utter disregard of those fundamental +ideas of truth, fair play and fair dealing which lies at the foundation, +not only of the Christian faith, but of civilization itself. With them +there is but one rule--that, many years ago, put by Wordsworth into the +mouth of Rob Roy: + + "'The simple rule, the good old plan, + That he shall take who has the power, + And he shall keep who can.'" + +As regards the causes of the Granger movement, Mr. Adams says, in the +work above mentioned: "That it [the Granger episode] did not originate +without cause has already been pointed out. It is quite safe to go +further, and to say that the movement was a necessary one, and through +its results has made a solution of the railroad problem possible in this +country. At the time that movement took shape the railroad corporations +were in fact rapidly assuming a position which could not be tolerated. +Corporations, owning and operating the highways of commerce, claimed for +themselves a species of immunity from the control of the law-making +power. When laws were passed with a view to their regulation they +received them in a way which was at once arrogant and singularly +injudicious. The officers entrusted with the execution of those laws +they contemptuously ignored. Sheltering themselves behind the Dartmouth +College decision, they practically undertook to set even public opinion +at defiance. Indeed, there can be no doubt that those representing these +corporations had at this juncture not only become fully educated up to +the idea that the gross inequalities and ruinous discriminations to +which in their business they were accustomed were necessary incidents to +it which afforded no just ground of complaint to any one, but they also +thought that any attempt to rectify them was a gross outrage on the +elementary principles both of common sense and of constitutional law. In +other words, they had thoroughly got it into their heads that they, as +common carriers, were in no way bound to afford equal facilities to all, +and, indeed, that it was in the last degree absurd and unreasonable to +expect them to do so. The Granger method was probably as good a method +of approaching men in this frame of mind as could have been devised." + +Speaking of the educational value of railroad competition, Mr. Adams +says: "Undoubtedly the fierce struggles between rival corporations +which marked the history of railroad development, both here and in +England, were very prominent factors in the work of forcing the systems +of the two countries up to their present degree of efficiency. Railroad +competition has been a great educator for railroad men. It has not only +taught them how much they could do, but also how very cheaply they could +do it. Under the strong stimulus of rivalry they have done not only what +they declared were impossibilities, but what they really believed to be +such." + +Mr. Adams has, from his long association with railroad managers, imbibed +one heresy which is in strange discord with the general soundness of his +opinions. He holds that the railroad system was left to develop upon a +false basis, inasmuch as the American people relied for protecting the +community from abuses upon general laws authorizing the freest possible +railroad construction everywhere and by any one. It can therefore not be +surprising that Mr. Adams is an advocate of the legalized pool. He is of +the opinion that secret combinations among railroads, inasmuch as they +always have existed, always will exist as long as the railroad system +continues as it now is. Hence he proposes to legalize a practice which +the law cannot prevent, and by so doing to enable the railroads to +confederate themselves in a manner which shall be at once both public +and responsible. The reply might be made that there are many other +conspiracies which the law cannot always prevent, but that this is no +reason why conspiracies should be legalized. If pools and other railroad +abuses had, since the beginning of the railroad era, been treated as +crimes and misdemeanors, and punished as such by the imposition of heavy +fines, few people would to-day be ready to offer apologies for them. If +the time shall ever come when pools must be legalized it will be time +for railroad control equivalent to Government ownership. + +Among the more recent writers upon railroad subjects is W. D. Dabney, +late chairman of the Committee on Railways and Internal Navigation in +the Legislature of Virginia. Mr. Dabney favors State control, and is, on +the whole, friendly to the Interstate Commerce Act. He sees danger in +the pool, but inclines to the belief that the public benefit derived +from the pooling system outweighs the danger of public detriment from +its existence. The following is his chief argument for a legalized pool: +"Perhaps, so long as railroad companies continue to enjoy an absolute +monopoly of transportation over their own lines, so that free +competition is restricted in its operation to a comparatively few +favored points, it may be worthy of serious consideration whether it +would not be better to legalize than to prohibit pooling, taking care to +put the whole matter under strict public supervision and control. The +companies would then be left comparatively free to bring their local +rates into something like harmony with the long-distance rates, and +should they fail to do so where the needs of the local community and +their revenues make it proper to be done, then it is the function of +public regulation to compel it to be done." + +Of the Interstate Commerce Act Mr. Dabney says: "The legislation +recently enacted by Congress for the regulation of commerce by railway +is the result of more careful and intelligent deliberation perhaps than +any other measure of similar character, and it is not unlikely that the +legislation of many of the States will sooner or later be conformed to +it." + +He speaks at some length of the drift toward railroad centralization. A +few extracts from this passage may be here given: "That the tendency +towards the unification and consolidation of different and competitive +lines has been decidedly increased by the anti-pooling and the long and +short haul sections of the Interstate Commerce Law can hardly be +doubted.... The modern device of the 'trust' as a means of unifying +industrial interests and eliminating competition had not yet been +applied in the field of railroad transportation.... The scheme of trust +here briefly outlined would probably require for its successful +operation the concurrence of the entire stockholding interest of each +company embraced in it; and herein, it seems likely, will be found the +chief difficulty in perfecting such a scheme. Should it ever be +perfected, a far more stringent public supervision and control of the +railroad transportation of the country will be demanded." + +Another author, Charles Whitney Baker, associate editor of the +_Engineering News_, suggests in his book, "Monopolies and the People," a +plan for the reorganization of our railroad system, to remedy the evils +of monopoly which are at present connected with railroad management. The +following quotation from his work outlines the system proposed: "Let the +Government acquire the title of the franchise, permanent way and real +estate of all the railway lines in the country. Let a few corporations +be organized under Government auspices, and let each, by the terms of +its charter, receive a perpetual lease of all the railway lines built, +or to be built, within a given territory. Let the territory of each of +these corporations be so large, and so planned with regard to its +neighbors, that there shall be, so far as possible, no competition +between them. For instance, one corporation would operate all the lines +south of the Ohio and east of the Mississippi River; another all lines +east of the Hudson and of Lake Champlain, etc. Let the terms of rental +of these lines be about 3-1/4 per cent. on the road's actual 'present +cost' (the sum of money it would cost to rebuild it entirely at present +prices of material and labor), less a due allowance for depreciation. +The corporations would be obliged to keep the property in as good +condition as when received, and would own absolutely all their +rolling-stock, machinery, etc." The proposed reform measures, it must be +admitted, are very good in theory, but their practical application is +unfortunately entirely out of the question under our system of +government. + +Mr. John M. Bonham is the author of a recent work entitled "Railway +Secrecy and Trusts." This writer, upon the whole, takes advanced ground +in dealing with the question of railroad reform. He deems the present +interstate legislation inadequate to correct all the graver railroad +evils, expressing his views upon this subject as follows: + + "Railway construction continues to increase in the United + States with immense rapidity. Concurrent with this increase, + and notwithstanding all the efforts that have been made at + restraint, the aggressions upon political and industrial + rights increase also. Nor is it likely that without more + rigorous control than is now exercised these aggressions + will be any less active than they are to-day. It is coming + to be pretty generally realized that the Interstate Commerce + legislation has not fulfilled the expectation of its + friends. But this is a frequent trait of tentative + legislation. It is not reasonable to expect that the first + efforts to solve a problem the factors of which are so + hidden and complex will be followed by complete success." + +Concerning the changes needed to make Government regulation in the +United States more effective, he says: + + "A reform which would deal with an elaborate system of evil + cannot, therefore, be confined to treating consequences, + the separate instances of the system. There must be a power + which can go behind these and grapple with causes. There + must, therefore, be something more than a court. There must + be a commission, a department of government which will + provide organized supervision and inspection against which + the quasi-public corporation can claim no privacy as + inviolable. Such a department must be clothed with the power + to ascertain precisely where and how the evils of the + present methods originate, and when these are ascertained it + must be able to apply the remedy at the source of evil. The + remedial force must be of a preventive kind." + +A few grave misstatements of historical facts greatly mar Mr. Bonham's +book. He makes, for instance, the following statement: + + "Following this came restrictive legislation, which, in some + instances, was so unreasonable as to make any railway + management impossible. Some of the Granger legislation, and + especially that of Iowa, was of this character, as were also + some of the earlier efforts to secure Congressional + legislation." + +It was left to Mr. Bonham to discover that legislation ever made +railroad management impossible in Iowa. The General Assembly of Iowa +passed at two different times railroad laws that were greatly obnoxious +to railroad managers. In 1874 it passed a maximum tariff act which, at +the urgent solicitation of the railroad forces, was repealed four years +later; and in 1888 it passed an act containing the principles of the +Interstate Commerce Act and in addition authorizing the Board of +Railroad Commissioners to fix _prima facie_ rates. Strange as it may +seem to Mr. Bonham and other people inclined to believe without +investigation the statements of railroad men, the earnings of the Iowa +roads greatly increased immediately after the enactment of the so-called +Granger laws in 1874, as the following table will show: + + Year. Miles of Railroad. Gross Receipts. + + 1871 2,850 $12,395,826 + 1872 3,642 14,534,408 + 1873 3,728 15,430,619 + 1874 3,765 15,568,907 + 1875 3,823 18,422,587 + 1876 3,938 17,221,032 + 1877 4,075 20,714,496 + 1878 4,157 21,294,275 + +When the Granger law was repealed in 1878, the railroads were earning +$1,000 per mile more than they were earning when the law was enacted. +The present railroad law, which was passed in 1888, and has also been +the subject of extreme criticism on the part of railroad organs, has had +the same beneficial effect. The law, owing to the obstacles thrown in +its way by the railroad managers, did not become operative until 1889. +From July 1st, 1889, to June 30th, 1892, the gross railroad earnings of +the Iowa roads, which for three years had been at a standstill, +increased and were over $7,000,000 more in 1892 than they had been any +year previous to 1889, as will be seen from the table below: + + Gross Railroad Earnings in Iowa. + + 1886-87 $37,539,730 + 1887-88 37,295,586 + 1888-89 37,469,276 + 1889-90 41,318,133 + 1890-91 43,102,399 + 1891-92 44,540,000 + +The net earnings per mile of the Iowa roads were $1,421.91 in the year +1888-89, and $1,821.37 the year following. The total net earnings of all +Iowa roads during the year ending June 30th, 1891, were $14,463,106, +against $11,861,310 during the year ending June 30th, 1889, and were +still greater for the year ending June 30, 1892. No further vindication +of the Iowa law is necessary. These figures show plainly that the +lowering and equalizing of the rates not only increased the roads' +business and income, but also their net earnings. And it must be +remembered that the reports showing these facts were made by the +railroad companies and were certainly not made with any intention of +prejudicing the cause of the railroad manager. + +James F. Hudson, the author of "The Railways and the Republic," is a +very exhaustive and instructive writer upon the subject of railroad +abuses. His material is well selected, and the subject ably presented. +To the assertion of railroad managers, that railroad regulation +injuriously affects the value of railroad property, he makes the +following reply: + + "Suppose that it were true, as these jurists and writers + claim, that by the assertion of the public right to regulate + the railways the value of their property is decreased, are + there no other property rights involved? Do railway + investments form the only property in the land which + requires the protection of the law? Are we to understand + these judgments and their indorsers to mean that because + railroad property will depreciate if certain principles of + justice prevail, therefore justice is to be set aside for + the benefit of railway property? If the magnitude of + interests involved is to be of weight in deciding such + questions, let us put against 'the hundreds of millions' of + railway property on the one side the thousands of millions + of private property on the other. Railway regulation, + according to a writer in the _Princeton Review_, is + 'confiscation of railroad property;' but this puts wholly + out of the question the idea of private property which is + rendered possible by leaving unchecked the power of the + railways over commerce and manufactures through the + manipulation of freight rates. Of the two parties in + interest the shippers represent far greater property + interests than the carriers, although the latter, by their + organization, are more powerful. I have yet to hear of a + single case where restrictive railway legislation has + seriously damaged the honest valuation of any railway. I + have yet to learn of any seriously proposed scheme of + regulation that has proposed to cut down railway profits + below a fair dividend on capital actually invested. But the + entire Nation knows of one notorious case in which the + discriminating policy of the leading railways of the country + has resulted in the wholesale confiscation of private + property for the benefit of a favored corporation." + +Concerning the inconsistency presented by the plea of railroad managers +for a legalized pool, Mr. Hudson says: + + "It has been argued for years that the subject is so + delicate and vast that it must not be touched by legislation + in the public interest. To protect the rights of the + ordinary shipper against the favorite of the railway would + so hamper the operations of trade, it has been repeated + times without number, as to take away the independence of + the railways and destroy the freedom of competition. Yet, + after years of argument that Government has no + constitutional power to interfere with the railways, and of + demonstration that all such interference must be ill-advised + and injurious, the railway logic comes to the surprising + climax of appealing to legislation for the aid of the law in + upholding their efforts to prevent competition." + +Mr. Hudson maintains that if the pool were legalized it would only be a +means of swelling railroad earnings. He says: + + "If the pool would maintain equitable rates its success + might be desired, but what guarantee is there that the + complete establishment of its power would make such rates? + Its very character, the functions of the men who control its + policy, and its avowed object of swelling the earnings of + railways by artificial methods, forbid such an expectation. + Make the success of the pool absolute, so that it can work + without fear of competition, and its rates will be uniform, + but of such a character that their uniformity will be a + public grievance and burden.... A grave effect of this + policy, though not easily calculable, is the ability it + gives to railway officials to control the prices of stocks, + and the temptation to enhance their fortunes by so doing.... + It is a heavy indictment against the pooling system that it + gives power to avaricious and unscrupulous men in railway + management to enrich themselves at the cost of shareholders + and investors, both by forming combinations and by exciting + disputes or ruptures in them." + +The question whether the common law does not protect the public +sufficiently is well answered by Mr. Hudson as follows: + + "The common law is sufficient in theory, but it has failed + in practice.... In practice, legal remedies against railway + injustice can be applied to the courts only by fighting the + railways at such disadvantages that the ordinary business + man will never undertake it except in desperate cases. Every + advantage of strength and position is with the railways.... + This [the railroad] power has kept courts in its pay; it + defies the principles of common law and nullifies the + constitutional provisions of a dozen States; it has many + representatives in Congress and unnumbered seats in the + State legislatures. No ordinary body of men can permanently + resist it." + +But the remedy which Mr. Hudson proposes for the correction of railroad +evils is one of doubtful efficacy. It is this: + + "Legislation should restore the character of public highways + to the railways by securing to all persons the right to run + trains over their track under proper regulations, and by + defining the distinction between the proprietorship and + maintenance of the railway and the business of common + carriers." + +While it is admitted that the opening of the railroads to the free use +of competing carriers is not necessarily impractical from a technical +point of view, it cannot be admitted that the proposed remedy would cure +the evil. There would certainly be nothing to hinder carrying companies +forming a trust which might prove more dangerous to the interests of +shippers than are to-day the combinations of the railroad companies. + +Mr. Hudson devotes a chapter to the railroad power in politics, and +shows how corporations, through their wealth, have secured the greatest +and most responsible offices in the executive, legislative and judiciary +departments of the Government. Speaking of their influence in the +Supreme Court of the United States, he says: + + "The assertion that Jay Gould paid $100,000 to the + Republican campaign fund in 1880, in return for which Judge + Stanley Mathews was nominated to the Supreme Bench, is + denied as a political slander; but the fact remains that + this brilliant advocate of the railway theories of law has + been placed in the high tribunal, and that his presence + there together with Justice Field, long a judicial advocate + of the corporations, is expected to protect the railways in + future against such constructions of law as the Granger + decisions." + +An English writer, Mr. J.S. Jeans, presents, in his "Railway Problems," +a great deal that is of interest to American readers. The statistical +data of his work are especially interesting. We learn that the United +Kingdom has nearly twenty railroad employes per mile of road operated, +to less than five in the United States, and that the average number of +employes per L1,000 ($4,850) of gross earnings is on the railroads of +the United Kingdom 5.4 to only about half as many in the United States. +We further learn that the average earnings per train mile in America are +over 25 per cent. higher than they are in the United Kingdom, and exceed +those of most European countries. + +Of the remarkable increase in number and the profitableness of the +third-class passenger traffic in England Mr. Jeans says: + + "There has hitherto been a great lack of knowledge in this + country as to the extent to which the different classes of + passenger traffic yield adequate profit to the railroad + companies. English passenger traffic differs from that of + most other countries in this respect, that the chief + companies attach third-class carriages to almost every + train. The accommodation provided for third-class passengers + in England is also much superior to what is found in other + countries where there is the same distinction of classes. + The effect of those two distinguishing features of the + English railway system is that third-class carriages are + much more and first-class carriages much less utilized than + in other countries. The tendency appears to be towards an + increasing use of third-class, and a decreasing use of + first-class vehicles. But, all the same, the leading English + lines continue to provide a large proportion of first-class + accommodation in every train, and it is no unusual thing to + find the third-class carriages of express trains absolutely + full, while first-class carriages are almost empty. The + natural result is that third-class travel is a source of + profit, while first-class travel is not.... So far as + passenger traffic is a source of net profit, that profit is + contributed by the third-class. The total receipts from + passenger traffic in England and Wales amounted in 1885 to + L21,968,000. But if the average receipts per carriage over + the whole had been the same as in the case of the Midland + first-class vehicles, namely, L330, the total receipts from + passenger traffic would only have been about nine millions. + It is not necessary to be an expert in order to see that + traffic so conducted must be attended with a very serious + loss." + +Of the stock-watering of American railroad companies Mr. Jeans says: + + "It seldom happens that in the United States the cost of a + railway and its equivalent corresponds, as it ought to, to + the total capital expenditure. There is no country in the + world where the business of watering stocks is better + understood or carried out more systematically and on so + large a scale. For this reason there is liable to be a great + deal of error entertained in reference to the natural cost + of American lines." + +There are many financial journals that are so closely identified with +the speculative interests of the country, and many railway papers that +depend so largely upon railway men for support, that railway managers +are never without a medium through which they can present their views to +the public. A systematic and concerted effort is also constantly made by +the railroads to pervert the press of the country at large. The great +city papers generally yield to their influences and enlist in their +service, and yet there are notable exceptions to this. + +In speaking of the extravagant sums which the railroads paid to the +great dailies, ostensibly for advertising, but in fact for their good +will and other services, a railroad superintendent recently said that it +was an infamous outrage, and yet it was the best investment of money +that his company could make. The country papers have shown more +integrity in maintaining their independence, but the railroads are not +without their organs among them. It is not unfrequent to find some of +them defending railroad abuses with all the apparent zeal of a Wall +Street organ, and a glance at their columns often reminds one of Mr. +Lincoln's story of the Irishman and the pig. Mr. Lincoln defended an +Irishman against the charge of stealing a pig. After the testimony was +taken in court, Mr. Lincoln called his client aside and told him that +the testimony was so strong against him, and that the case was so clear, +that it was impossible for him to escape conviction, and he advised him +to plead guilty and throw himself on the mercy of the court. "No, Mr. +Lincoln," said Patrick, "you go back and make one of your great speeches +and swing your long arms and talk loud to the jury, and you will win +the case." Mr. Lincoln, in accordance with that disposition to +accommodate so strongly characteristic of him, did as he was directed by +his client, and to his great surprise the jury promptly brought in a +verdict of not guilty. After it was all over, Mr. Lincoln said: "Now, +Patrick, tell me why that jury acquitted you. I know that you stole the +pig, and my speech had nothing to do in securing your acquittal." +Patrick replied: "And sure, Mr. Lincoln, every one of those jurymen ate +a piece of the pig." + + + + +CHAPTER X. + +RAILROAD LITERATURE--CONTINUED. + + +Railroad questions have become of such general interest that their +discussion has become a prominent factor of magazine literature. It is a +significant fact that these contributors are usually railroad men, and +under these circumstances an unbiased discussion of the questions at +issue is indeed a rare occurrence. It is but too frequently the sole +object of the contributor, and not unfrequently even of the publisher, +to create a public sentiment in favor of the unjust demands of railroad +managers. + +During the last few years systematic efforts have been made by the +railroad interests to influence public opinion against the Interstate +Commerce Law and restrictive State legislation through the leading +magazines of the country. Mr. Sidney Dillon, president of the Union +Pacific Railroad, in an article which appeared in the April (1891) +number of the _North American Review_, under the title "The West and the +Railroads," endeavors to show that the West is indebted to the railroad +managers for nearly all of the blessings which its people enjoy, and +that therefore railroad legislation in the West is a symptom of rank +ingratitude. He prefaces his argument with the remark that the elder +portions of our commonwealth have already forgotten, and the younger +portions do not comprehend or appreciate, that but for the railroads +what we now style the Great West would be, except in the valley of the +Mississippi, an unknown and unproductive wilderness. He then argues +that, inasmuch as the railroads carry the wheat of Dakota and Minnesota +to the sea-coast, and bring those sections of our community into direct +relation with hungry and opulent Liverpool, the world should "thank the +railway for the opportunity to buy wheat, but none the less should the +West thank the railway for the opportunity to sell wheat." It does not +seem to occur to Mr. Dillon that the railway might, with equal +propriety, thank the world in general, and the Great West in particular, +for its opportunity to carry wheat. + +We are also told that the railway has reclaimed from nature immense +tracts of land that were worthless except as to their possibilities, +which once seemed too vague and remote to be considered and are to-day +valuable; that it has changed the character of the soil as well as the +climate of the West, and we are almost given to understand that in many +respects it has assumed the functions of Providence. Mr. Dillon +generously admits, however, that railways have not been built from +philanthropic motives and that we find among railroad promoters and +contractors men of large fortunes. He then proceeds to reprimand the +States west of the Mississippi for their "ungrateful" legislation, +which, he says, interferes with the business of the railway, even to the +minutest detail, and always to its detriment. Such legislation +exasperates Mr. Dillon the more because it originated in States "which +happened to be the communities that owe their birth, existence and +prosperity to these very railways." Mr. Dillon then gives vent to his +wrath by the use of such terms as impertinence, ignorance and +demagogism. He holds that legislative enactments as to the rights and +liabilities of railway corporations are useless, "because the common law +has long since established these as pertaining to common carriers, and +the courts are open to redress all real grievances of the citizen." Upon +this theory we might as well dispense with the legislative department of +the Government, for there is no relation in the community to which the +principles of the common law can not be applied. Besides this, Mr. +Dillon entirely ignores the fact that the railway company is not only a +common carrier, but the keeper of the highway, and as such is subject to +Government control as much as the turnpike tollgate keeper or the +collector of customs. "Then as to prices." Mr. Dillon continues: "These +will always be taken care of by the great law of competition, which +obtains wherever any human service is to be performed for a pecuniary +consideration. That any railway, anywhere in a republic, should be a +monopoly, is not a supposable case." + +Like the rest of railway men, Mr. Dillon excels in painting dark +pictures of railroad catastrophes. A sample production of his art is +here presented: + + "One of the greatest dangers to the community in a republic + is this: that it is in the power of reckless, misguided or + designing men to procure the passage of statutes that are + ostensibly for the public interest and that may lead to + enormous injuries. Let us imagine for a moment that all + railways in the United States were at once annihilated. Such + a catastrophe is not, in itself, inconceivable; the + imagination can grasp it, but no imagination can picture the + infinite sufferings that would at once result to every man, + woman and child in the entire country. Now, every step taken + to impede or cripple the business and progress of our + railways is a step towards just such a catastrophe, and + therefore a destructive tendency." + +Mr. Dillon, losing sight of all other interests, did not think that his +nonsensical mode of reasoning would apply equally well to them. Let us, +for instance, imagine for a moment that all of the farms of the United +States were at once annihilated. Can the imagination picture the +infinite sufferings that would at once result to every man, woman and +child in the whole country? Now, is not any step taken to impede or +cripple the business of farming a step towards just such a catastrophe, +and therefore of a destructive tendency? Mr. Dillon then avails himself +of an opportunity to give the people of the United States some +gratuitous advice when he says: + + "We do not arrogate superior wisdom or intelligence to + ourselves when we suggest to the people of the United + States, and especially that portion of the country where + railroads have been the subject of what we consider to be + excessive legislation, that the rational mode of treating + any form of human industry that has for its object the + performance of desired and lawful service is to let it + alone, and that the railway is no exception to this + principle." + +This is the very plea that Jefferson Davis made when he kindled the +flame of treason. + + * * * * * + +In the March, 1891, number of the _Forum_, Mr. W. M. Acworth discusses, +under the title "Railways under Government Control," the working of the +railway systems of the different nations. He holds that the management +of railroads which are the property of the State is, as a rule, greatly +inferior to the management of those roads which are the property of +private trading corporations; he assigns to the railway experts of +England and America the first places among the railway experts of the +world, and appears to attribute all the good in the railroad management +of these countries to the absence of State interference, and all the +evil in the management of the railroads of other countries to the fact +that such interference exists. He says of the railroads of England and +the United States: + + "In speed and accommodation, in the energy which pushes + railways into remote districts, and in the skill which + creates a traffic where no traffic existed before, they + stand to-day in the front rank, as they have stood for the + last half century. To say that they are very far from + perfect is nothing; it is only to say that they are worked + by human agency. Their worst enemies will scarcely deny that + they are at least alive; so long as there is life there may + be growth, and we may hope to see them outgrow the faults of + their youth. The charge made against State railway systems + is that they are incapable of vigorous life. The old adage + which proclaimed that 'necessity is the mother of invention' + has been re-stated of late years as the law of the survival + of the fittest in the struggle for existence. If the + doctrine is true, the State railway system, relieved from + the necessity of struggle, must cease to be fit and will + fail to survive." + +While it is not intended to enter here into a defense of a State railway +system, it may justly be questioned whether "the State railway system, +relieved from the necessity of struggle, must cease to be fit and will +fail to survive." The growth of the State system in Europe is in itself +a sufficient refutation of Mr. Acworth's theory. The mail service has +for several hundred years been a monopoly of the government; but, while +it is far from being perfect, it remains to be demonstrated that private +enterprise could give to the public a better service in the long run. + +Mr. Acworth is an Englishman who in former years wrote many bitter +things concerning the abuses which he then thought he saw in the +management of the railroads of his native country, which, according to +his own statement, are, besides those of the United States, the only +roads in the world for whose regulation competition has been relied upon +in the past. Mr. Acworth has become a convert to the _laissez faire_ +theory of dealing with railroads and now evinces an unusual, but perhaps +pardonable, zeal in the defense of his new position. In the preface to +his book, "The Railways of England," he says upon the subject: + + "I have published before now not a few criticisms (which + were meant to be scathing) on English railways anonymously. + I find myself using, under my own name, the language of + almost unvarying panegyric. This is partly to be explained + by the plan of the book, which professes to set before the + reader those points on each line which best merit + description--its excellencies, therefore, rather than its + defects. Much more, however, is it due to a change of + opinion in the writer.... I have found in so many cases that + a satisfactory reply existed to my former criticisms, that I + have perhaps assumed that such an answer would be + forthcoming in all; and if I have taken up too much the + position of an apologist, where I should have been content + to be merely an observer, let me plead as my excuse that I + am only displaying the traditional zeal of the new-made + convert." + +Prof. Hadley, of whose work, "Railroad Transportation, its History and +its Law," mention has been made above, contributed an article to the +April, 1891, number of the _Forum_, under the title "Railway Passenger +Rates." He endeavors to show that the high passenger rates of American +railroads are due solely to superior service. He says: + + "Continental Europe pays two-thirds as much as America or + England and gets an inferior article. India pays still less + and gets still less. The difference is seen both in quality + and quantity of service. In India express trains rarely run + at a greater speed than 25 miles an hour. In Germany and + France their speed ranges from 25 to 35 miles an hour, and + only in exceptional instances is more than 40 miles an hour. + In the United States and in England the maximum speed rises + as high as 50, or, in exceptional instances, 60 miles an + hour. With regard to the comfort of the cars in different + countries, there is more room for difference of opinion; + but there can be no doubt that the average traveler in the + United States, or even in the English third-class car, fares + better than he would in the corresponding class on + continental railroads, and infinitely better than the bulk + of travelers in British India." + +It may be admitted that upon the whole the speed of American and English +railroads is greater than that of continental roads, yet the difference +is much less than Mr. Hadley would make us believe. The fast trains of +the Berlin and Hamburg Railroad, according to Roell's "Railroad +Encyclopedia," make the distance of 179 miles in three hours and +forty-four minutes. The average speed is therefore 48 miles an hour. +There are but few lines in the United States whose regular express +trains run at a greater speed. The express trains of the Berlin and +Brunswick line make 45-1/2 miles an hour. Trains are run on the Vienna +and Buda-Pesth Railway at the rate of 42 miles an hour and on the Paris +and Calais Railway at a rate of over 40 miles an hour. Official reports +give the average speed of express trains in Northern Germany as 32.2 +miles per hour, which is considerably more than the average speed of our +Western trains, upon which the rates charged are twice as high as those +charged by German roads. The average speed of the express trains in +England was 35.7 miles per hour in 1890, in the Netherlands 30.7 miles, +in France 30 miles, in Denmark and Southern Germany 28.8 miles and in +Austria 27.8 miles per hour. Accurate statistics showing the average +speed in America are not in existence, but it may well be questioned +whether the difference between the speed of American and European trains +is sufficient to justify upon that score any essential difference in the +rates. Mr. Hadley's statement that the average traveler in the United +States, or even in the English third class, fares better than he would +in the corresponding class on continental railroads, is far too sweeping +to be true. It is certain that the Belgian, German, Austrian or French +second-class coupes are much to be preferred to the smoking and emigrant +cars which in America are made to take their places. + +To prove that much more work is demanded of American railroads than of +European railroads, Mr. Hadley presents the following table: + + Annual Train + Miles run Service per + by Trains head of + Countries. Population. annually. Population. + + United States (1889) 61,000,000 724,000.000 12 + Great Britain (1889) 38,000,000 303,000,000 8 + Germany (1889) 48,000,000 181,000,000 3-3/4 + France (1888) 38,000,000 145,000,000 3-3/4 + Austria-Hungary (1887) 40,000,000 66,000,000 1-2/3 + India (1889) 200,000,000 51,000,000 0-1/4 + +And he adds: "These figures are for passenger trains and freight trains +together, as some countries do not give statistics of the two +separately; but the general results would be nearly the same if +passenger trains alone could be considered. The figures show that, for +every man, woman and child, a train is run twelve miles annually in the +United States, in Great Britain eight miles, in Germany or France a +little less than four miles, in Austria not much more than a mile and a +half, and in British India less than a quarter of a mile." + +This statement, even if correct, is certainly misleading. No allowance +is made for the greater distances and the greater average haul in +America, and none for our bulky raw products, which require more car +room than the manufactured goods predominating as freight in Europe. + +If Mr. Hadley's statement of miles run by trains annually is used in +connection with Mr. Poor's statement showing the length, for 1889, of +the railroads of the countries given in the above table, it can be shown +that the average number of trains run annually per mile is considerably +less here than in Europe: + + Length of Average Number + Railroad Miles run of Trains + in miles by Trains per mile per + Countries. (1889). annually. annum. + + United States 161,396 724,000,000 4,485 + Great Britain 19,930 303,000,000 15,203 + Germany 25,360 181,000,000 7,137 + France 21,910 145,000,000 6,618 + Austria-Hungary 15,990 66,000,000 4,127 + +It is seen that while the average number of trains run per mile per +annum is only 4,485 in the United States, it is 6,618 in France, 7,137 +in Germany, and 15,203 in Great Britain. In Austria-Hungary it is +somewhat less than here. It is not claimed that this is in every respect +a fair argument; but it is at least as fair as Mr. Hadley's. As has been +stated before, the average earnings per train mile are larger in the +United States than in most nations, and, excepting Sweden, railway +capital has the highest gross earnings of any nation in the world; and +when Mr. Hadley bases his argument in favor of higher rates for American +railroads than for those of Europe upon the claim that the latter secure +larger train loads, he simply reasons from false premises. + +Mr. Hadley then continues: + + "But why cannot our railroad men, with our present train + service, secure larger loads by making lower rates, and give + us cheap service as well as plenty of it? Why cannot we + secure two good things instead of one? For two reasons: + First, because it is not certain that low rates will be + followed by greatly increased travel; second, because such + increased travel would not be so economical to handle in + America as it is in Europe. It is wrong to assume that, + because reductions of charges in Europe have increased travel + enormously, they would have a proportionate effect in America + and a corresponding advantage in American railroad economy. + It is a somewhat significant fact that second-class trains at + reduced rates have been extremely successful in Europe and + not at all so in America. Other things being equal, the + American public would be glad to have its travel at lower + fares; but it cares more for comfort and speed, and for being + able to travel at its own times, than for a slight difference + in charge. The assumption so frequently made, that a + reduction in fares would cause an enormous increase in travel + in this country, is for the most part a pure assumption, not + borne out by the facts." + +The great increase in business which has everywhere followed reductions +in postage rates, telegraph rates and street-car fares, as well as +railroad rates, sufficiently refutes the assertion that it is not +certain that low rates would be followed by greatly increased travel. If +the second class has not been as successful here as in Europe this is +solely due to the fact that the American railroad companies have +systematically discouraged second-class travel by forcing passengers +into filthy and over-crowded cars. The statement that increased travel +would not be so economical to handle in America as in Europe scarcely +needs a reply. If, as Prof. Hadley says, the American public demand more +frequent trains than the people of Europe, and if these frequent trains +are not at present profitable to our railroad companies, it would seem +to be plainly to their interest to hold out every inducement to the +public to increase travel and thus fill their trains. + +Mr. Hadley does not aid his argument when, referring to the Hungarian +zone system, he says: "The importance of the zone system in Austria and +in Hungary lies in the fact that its adoption was accompanied by a great +reduction in rates. The unit rate for slow, third-class trains, which +had previously been nearly a cent and a half a mile, was reduced to less +than one cent.... The use of railroads under the new system, though +vastly greater than it was before, is vastly less than that of a +well-managed American road at American rates." Mr. Hadley inadvertently +presents here one of the very best reasons why our passenger rates +should be reduced. + +The fact is, railroad men are opposed, and always have been opposed, to +reduction of rates, and to all progressive movements that require +increased expenditures or threaten to temporarily reduce their revenues. +When the introduction of the zone system was first advocated in Hungary +it was opposed by just such men and just such arguments. + +No one can contradict the following facts, viz.: That the average cost +of European roads is much greater than that of American roads; that the +number of railroad employes per mile is much greater there than here; +that much larger sums are expended for repairing and improving the +roads, and that therefore the lives of passengers are much safer in +Europe than in America; and that the average speed and corresponding +accommodations of European trains, and especially those of England, +Germany, France and Austria-Hungary, compare quite favorably with the +average speed and corresponding accommodations of our roads. It is, +under these circumstances, absurd to claim that the higher prices +charged by American roads are due to the greater cost of service. + +Mr. Hadley's labors as a railroad author have, it seems, greatly +increased his corporation bias. In an address which he delivered before +the American Bankers' Association at New Orleans in November, 1891, upon +the subject of "Recent Railroad Legislation and its Effects upon the +Finances of the Country," he made a number of assertions which ill +comport with the fairness of a public statistician or the wisdom of a +Yale professor. After a few introductory remarks, Prof. Hadley made the +following statement: + +"Every one knows that railroad property has fallen in value since the +passage of the Interstate Commerce Act four years and a half ago; few +have made any accurate estimate of the amount of that fall. Let us take +the stock of the leading railroad systems centering in Chicago as a +type. Here we find an aggregate shrinkage of over $60,000,000, or more +than one-quarter of the par value of the stocks. + + Par Value. Price. Shrinkage. + Apr. 4, Nov. 4, + 1887. 1891. + C., M. & St. P. $30,904,261 93 75 $5,560,000 + " " Preferred 21,555,900 122 119 647,000 + C. & N. W. 31,365,900 121 116 1,568,000 + " " Preferred 22,325,454 148 139 2,009,000 + C., R. I. & P. 41,960,000 126 82 18,462,000 + C., B. & Q. 77,540,500 140 98 32,567,000 + ----------- ---------- + Total. $225,651,000 $60,815,000" + +The table shows that fifty-one million of these sixty million dollars +are the shrinkage of the Chicago, Rock Island and Pacific and the +Chicago, Burlington and Quincy stocks. It is surprising that Prof. +Hadley should be ignorant of the real causes of this depreciation, which +are known to nearly every Granger in the West. In 1887 the Chicago, Rock +Island and Pacific Railroad Company owned 1,121 miles of road, only 172 +of which were outside of the States of Illinois and Iowa. In 1891 the +same company owned 2,725 miles of road, with 1,776 miles outside of +Illinois and Iowa and scattered through Missouri, Kansas, Nebraska, +Colorado, Indian Territory and Oklahoma. In Kansas alone the Rock Island +system grew from two miles in 1887 to 1,059 miles in 1891. In other +words, to a little over a thousand miles of _good_ road the company's +managers added nearly 2,000 miles of poor road and a proportionate +amount of new stock, and the depreciation in the company's stock which +followed was no greater than one should have expected under such +circumstances. The managers of the Rock Island and the promoters of +these new lines found the transactions to their advantage, while the +original stockholders of the company had to bear the imposition, as +hundreds of thousands of railroad stockholders had done before them. But +neither the law of Congress nor that of any State was to blame for this +depreciation of the Rock Island stock. + +Since 1891, railroad stocks have advanced on an average at least twenty +per cent., and during the last sixty days have declined about +twenty-five per cent., although there has been no essential change in +interstate or State legislation. It is certainly as fair to call the +advance the ultimate result of restrictive railroad legislation as to +attribute to that legislation the shrinkage above referred to. Extensive +speculations similar to those just mentioned were, during the same +period, indulged in by the managers of the C., B. & Q. Railroad Company +and its protege, the C., B. & N., who, in addition to this, greatly +injured their road in 1888 by the unjust provocation of the engineers' +strike. So destructive were this strike and its consequences to the +company's business that it is difficult to account for the motives of +those who provoked and stubbornly prolonged it except upon the theory +that it played an important role in their stock manipulations. + +But the recent legislation of a considerable number of States has, in +Prof. Hadley's opinion, been still more detrimental to railroad +interests than that of Congress. He says; + + "In the second place, the legislatures of several States, + stimulated by the example of Congress, hastened to pass in + imitation, of the Interstate Commerce Act, laws which, in + many instances, went far beyond their model in point of + stringency. Examples are furnished by the statutes of Iowa, + Maryland, Minnesota and South Carolina in 1887-88; of + Florida in 1888-89, and of no less than thirteen States in + 1889-90, viz.: Georgia, Iowa, Kentucky, Massachusetts, + Mississippi, New Hampshire, New Jersey, North Dakota, Ohio, + Rhode Island, South Dakota, Virginia, Wyoming; as well as by + the recently adopted Constitution of Kentucky. The + legislation of 1890-91 shows a slight reaction against the + movement of the three years previous. + + "In two respects the State legislatures went quite beyond + the scope of the Interstate Commerce Act. They tried to + prescribe safety appliances to the operating department, and + rates to the traffic department. Of the first of these + groups little need be said, except that as a rule they have + failed to accomplish any great progress toward the result in + view, and have in some instances actually hindered such + progress. The attempt at prescribing rates was more serious. + It involved a return to the methods of the Granger + legislation, fifteen years earlier, which had operated so + disastrously upon the railroads and the public alike. The + system of commissioners with powers to make schedules which + should be at least _prima facie_ evidence of reasonable + rates had, during the intervening period, never been wholly + abandoned; but the powers thus conferred had been sparingly + exercised. It was either left unused, as was generally the + case in the North from 1877 to 1887, or the schedule rates + were put so high as not to interfere with good railroad + economy, of which examples are seen in Georgia and other + parts of the South. But from the year 1887 onward there was + a pressure upon the Commissioners to make schedules, and to + make them low; and lest these boards should not be able to + reflect the popular feeling directly enough, they were, in + some instances, no longer to be appointed by the Governor, + but elected by popular vote. The law which was most severely + applied and attracted most public attention was that of + Iowa.... The agitation against the railroads has many points + in common with the land agitation in Ireland. Absentee + ownership is at the bottom of the trouble in either case. + Property is owned in one place and used in another, and the + users, not satisfied with the conditions of use, insist on + taking the business direction into their own hands. They + claim the right to fix rates in Iowa for the same general + reasons by which they claim the right to fix rents in + Ireland." + +It must be presumed that Mr. Hadley is ignorant of the fact that under +the Iowa Commissioners' tariff the gross earnings of the Iowa railroads +increased $7,000,000, or more than 17 per cent., in about three years, +and their net revenue increased in proportion. Never have the railroads +or the people of Iowa enjoyed a healthier prosperity than they do at +present. It is true that the State of Iowa denies to the railroad +companies the right to charge what they please; but this claim does not +prevent them from doing justice to the absentee owner of railroad +property. That absentee owners of property are disposed to take undue +advantage of those who use it is illustrated in the very case which Mr. +Hadley cites. So flagrant was the injustice done by the English landlord +to the Irish tenant that the English Parliament was constrained to +interfere and correct it. + +Mr. Hadley says further: + + "It is seen in Iowa to-day, where, as a result of radical + legislation with regard to rates, railroad construction has + almost entirely ceased, the average for the years 1888-90 + being less than fifty miles." + +Now Professor Hadley hails from the State of Connecticut, where +railroads are permitted to make their own tariffs and where legislators +are supposed not to be hostile to them. According to Poor's Manual, that +State had 1,004.02 miles of railroad in 1888, and just 2.52 miles more +in 1891, while Iowa had 8,364 miles in 1888, 8,436 in 1891, and 8,505 +miles on January 1, 1893. Will Mr. Hadley please explain why railroad +construction has ceased in Connecticut? Iowa has one mile of railroad +for every 227 inhabitants, and Connecticut has one for every 741 +inhabitants, although the per capita valuation is $473 in the latter, +and only $273 in the former State. Nor have other Eastern States done +much better than Connecticut. During the three years 1888-1891 there +were built 74 miles of railroad in New Hampshire, 50 in Vermont, 23 in +Massachusetts and 9 in Rhode Island. Iowa has an area of 56,000 square +miles and a population of 1,911,896, an assessed valuation of +$520,000,000; New England has an area of 66,400 square miles, a +population of 4,700,745, and an assessed valuation of $3,500,000,000. +Yet Iowa has 1,576 miles of railroad more than all the New England +States together. She has a railroad net as close as that of the Empire +State, having one mile of road to about 6-1/2 miles of territory, +although the population of that State is three times as dense as hers. +Nevertheless, railroad construction is at present active in Iowa, +several lines of road are in the process of construction at the present +writing, and there is every indication of still greater activity in the +near future. The _Railway Age_ of March 17, 1893, in a detailed list of +new lines projected or under construction in the United States, gives +for Connecticut only 32 miles, while it gives for Iowa 930 miles. + +Mr. Hadley continues: + + "It is seen to some extent in the Northwest as a whole. At + the close of the year 1887 the States included by Henry V. + Poor in the Central, Northern and Northwestern groups had + 25,040 miles of road, while those of the South Atlantic, + Gulf and Mississippi Valley had but 24,567. To-day this + relation is reversed: the Northwest has but 27,294 miles, + while the South has 30,696." + +Had Mr. Hadley taken the pains to look up the population of these groups +he would have found that the "South" is fully three times as populous as +the "Northwest," and that therefore his figures prove nothing beyond the +fact that at the present rate of gain the railroad facilities of the +South will in a quarter of a century be equal to those of the Northwest +to-day. + +But the argument is weak in another respect. The State in the Southern +group that made by far the greatest gain in railroad mileage during the +period mentioned by Mr. Hadley is Georgia, which gained about 1,000 +miles in three years, yet that State prescribed rates for railroad +companies six years before Iowa did, and has for many years exerted a +more thorough control over her railroads than perhaps any other State in +the Union. The smallest increase is in West Virginia, which during the +period given gained an average of only 69 miles per annum; and yet in +West Virginia railroads charge their own rates and usually have their +own way. + +Finally Prof. Hadley says: + + "Where are we to find the limit to such unwise action? The + United States Supreme Court can do something and has shown a + disposition to do something. In the Minnesota cases it + repudiated the doctrine of uncontrolled rights on the part + of the legislature to make rates, as emphatically as it + repudiated the doctrine of uncontrolled rights on the part + of agents of the corporation in the Granger cases, twelve + years before." + +It is evident that Mr. Hadley is as much mistaken in his interpretation +of the decision of the court as he has been in his other assertions, as +will be seen from the following extract from Judge Blatchford's opinion +in Budd vs. New York, in which he says, "The main question involved is +whether this court will adhere to its decision in Munn vs. Illinois." + +The court first quoted from the opinion of Judge Andrew of the Court of +Appeals of New York, as follows: "The opinion further said that the +criticism to which the case of Munn vs. Illinois had been subjected +proceeded mainly upon a limited and strict construction and definition +of the police power; that there was little reason, under our system of +government, for placing a close and narrow interpretation on the police +power, or restricting its scope so as to hamper the legislative power in +dealing with the varying necessities of society and the new +circumstances as they arise calling for legislative intervention in the +public interest; and that no serious invasion of constitutional +guarantees by the legislature could withstand for a long time the +searching influence of public opinion, which was sure to come sooner or +later to the side of law, order and justice, however it might have been +swayed for a time by passion or prejudice or whatever aberrations might +have marked its course." + +Judge Blatchford then said: "We regard these views, which we have +referred to as announced by the Court of Appeals of New York, so far as +they support the validity of the statute in question, as sound and +just.... We must regard the principle maintained in Munn vs. Illinois as +firmly established." + +General Horace Porter has made a contribution to the railway rate +literature by an article which appeared in the December, 1891, number +of the _North American Review_. Unfortunately many of the General's +statements are either false or misleading. Thus, in a table which he +presents for the purpose of comparing the passenger rates of Europe with +those of the United States, he gives the regular first-class schedule +rates for the United Kingdom, France and Germany and the average +earnings per passenger per mile for this country. That this is an unfair +comparison needs no further argument, especially when it is remembered +that in Europe from 85 to 90 per cent, of all passengers are carried in +the third class at a regular rate averaging about 1-1/2 cents per mile, +and that considerable reductions are made for excursion, commutation and +return tickets. + +But General Porter says concerning American rates: + + "When we take into consideration the excursion and the + commutation rates, we find first-class passengers carried as + low as half a cent a mile." + +Now the question arises whether American railway companies carry +passengers at such rates with or without loss to themselves. If they are +carried at a loss, an injustice is done to the regular passengers, whose +fare must not only make up the loss, but yield a larger profit than +would otherwise be necessary. If, on the other hand, a rate of half a +cent a mile can be made remunerative, there is certainly no justice in +maintaining rates five and six times as large on well-patronized lines. +General Porter places stress upon our superior accommodations in the way +of lighting, ventilation, ice-water, lavatories, and free carriage of +baggage, etc., and then adds: + + "In this connection we must also recollect that the cost of + fuel, wages and all construction materials is considerably + higher here than in Europe, while the population from which + the railways derive their support is much more sparse; the + United States having 166,000 miles of railway with a + population of 63,000,000, while Europe has only 135,000 + miles with a population of 335,000,000." + +We grant the point which the General makes on ventilation, ice-water, +etc.; but, to make the comparison a fair one, he should also have +referred to the much greater cost of European roads, to their much +greater number of employes per mile, to the much shorter haul, to the +higher price of their fuel, to the superiority of their roadbed and the +greater security of their passengers. Moreover, whether the railroads of +a country are profitable or not cannot be ascertained by merely +comparing miles of road with square miles of territory and number of +inhabitants. British India has a population of 275,000,000 and only +about 16,000 miles of railroad, and yet her roads are scarcely as +profitable as our own. China has 3,000,000 and Asia has about 4,000,000 +people to every mile of railroad, but so far their railroads have proved +no bonanza. The question is not how many people there are to each mile +of railroad, but rather to what extent the railroad is used by the +people. The amount of freight carried annually by the railways of the +United States is about 680,000,000 tons, or 85,000,000,000 ton miles, +and the number of passengers carried is about 535,000,000, representing +an aggregate of travel of nearly 13,000,000,000 miles. This shows an +average of 1,300 tons of freight carried one mile, and 200 miles +traveled annually for each inhabitant of the nation, and a greater use +of railway facilities than that of any other country in the world. The +income of the railroads per capita is $17 in the United States, $11 in +the United Kingdom, $5 in Germany, $4 in France, and still less in +Italy, Austria and Russia. The average freight haul is 63 miles in +Europe and 120 miles in the United States; the average passenger haul 15 +miles in Europe and 24 miles in the United States. It has already been +shown that the average earnings per train mile are also larger here than +there. Roell's Encyclopedia of Railroads for 1892 shows that in France +the average rate for all traffic for the year 1888 was for passengers +1.45 cents per mile, and for freight 1.14 cents per ton per kilometer, +and that the nation had also received by way of free or reduced rates on +Government business during that year benefits to the amount of +$59,000,000. Large reductions have been made during the past year in +passenger rates. + +The General indulges in making the stereotyped railroad charge that "the +legislatures of several of the States have enacted laws to effect a +reduction of rates, the literal obedience to some of which would amount +to the practical confiscation of railway property." + +The General or any of his friends cannot name a road that was ever +confiscated by legislation, or even seriously injured. It is a fact that +the very legislation of which railroad managers so bitterly complain has +had a beneficial influence on railroad earnings. Thus, in Iowa, where, +according to the testimony of railroad men, Grangerism has reigned +supreme during the past few years, railroad earnings increased between +1889 and 1892 from $37,000,000 to $44,000,000, or more than 18 per cent. +Still better results could have been secured if the railroad managers +had been in sympathy with the law. There is no doubt that they would +gladly suffer, or rather have their companies suffer, a loss of revenue, +if this would lead to a repeal of the laws and restore to them the power +to manipulate rates for their own purposes. + +But the General comes to the main point of his article when he +complains against "the unreasonable requirements and restrictions of the +Interstate Commerce Law." He says: + + "Principal among these are what is known as the 'long and + short haul clause,' which prohibits railway companies from + receiving any greater compensation in the aggregate for a + shorter than for a longer haul over the same line in the + same direction, the shorter being included within the longer + distance; and the anti-pooling clause, which prevents + railway companies from entering into any agreement with each + other for an apportionment of joint earnings." + +If we carefully examine the railroad literature of the last four years, +we find that it has concentrated its efforts toward the creation of +public sentiment in favor of the repeal of these two clauses of the +Interstate Commerce Law. Railroad men are well aware of the fact that, +with these two clauses stricken out, the Interstate Commerce Law would +be practically valueless, and in clamoring for their repeal they evince +a persistency worthy of a better cause. The practices which these +clauses aim to prohibit cannot be defended upon any consideration of +justice and equity, and it is folly to expect the American people to +sacrifice their convictions of right to the selfish interest of a +comparatively small number of persons interested in the manipulation of +railroad stocks. + +The July, 1891, number of the _Forum_ contains an article on the +operation of the Interstate Commerce Law from the pen of Aldace F. +Walker, formerly a member of the Interstate Commerce Commission, and now +commissioner of the Western Traffic Association. Mr. Walker evidently +belongs to the old school of railroad men, who have not yet accepted the +Granger decision. Referring to it, he says: + + "This decision was not unanimous, and the reasoning + presented was not so convincing as to command universal + acceptance. It was at once challenged by the corporations, + and has been from time to time attacked in the same + tribunal; it has not yet been withdrawn, but it has been + materially modified, notably in a case from Minnesota, + decided in 1890, when it was established that there is a + limit beyond which the State cannot go in reducing railway + rates, which limit would be passed in case a State should + attempt to deprive a corporation of its property, without + due process of law, by fixing rates too low to permit of a + fair remuneration for its use. A large debatable ground yet + remains open, with a possibility that the position of the + railway in Federal jurisprudence may eventually be radically + modified." + +The passage quoted clearly indicates that railroad men expect better +things of the court in the future, but Mr. Walker is much mistaken in +supposing the court materially modified the Granger decision, as will be +seen by referring to the case of Budd vs. the State of New York, decided +in February, 1892, by the same court. + +Mr. Walker, unlike Mr. Depew, candidly admits the former universality of +the evil of discrimination. He says: + + "In order to secure traffic, a railway official felt called + upon to underbid his rival. He gave the shipper a private + rate, a rebate, a free pass--anything in the shape of a + concession or a favor. The land was honeycombed with special + arrangements of innumerable forms, all secret, because + otherwise they would have been useless, and all forced upon + the carriers by the exigencies of unbridled competition. + Many shippers became wealthy from such gains. Others were + envious of like success. At last the public sense of justice + demanded a reform." + +And Mr. Walker's candor rises to a still higher pitch when he admits +that the ingenuity of railroad managers has found ways to evade the +Interstate Commerce Law. The following passage from the Commissioner's +article will, no doubt, be a great surprise to such law-abiding and +confiding managers as Mr. Depew: + + "There was nothing in the law specifically forbidding the + payment of 'commissions,' and it was found that the routing + of business might be secured by a slight expenditure of that + nature to a shipper's friend. Other kindred devices were + suggested, some new, some old; the payment of rent, clerk + hire, dock charges, elevator fees, drayage, the allowance of + exaggerated claims, free transportation within some single + State--a hundred ingenious forms of evading the plain + requirements of the law were said to be in use. The + demoralization was not by any means confined to the minor + roads. Shippers were ready to give information to other + lines concerning concessions which were offered them, and to + state the sum required to control their patronage. A freight + agent, thus appealed to, at first perhaps might let the + business go, but when the matter became more serious and he + saw one large shipper after another seeking a less desirable + route, he was very apt to throw up his hands and fall in + with the procession." + +Mr. Walker is very severe on the Interstate Commerce Act, which, he +says, might in its present form "well be entitled, 'An act to promote +railway bankruptcies and consolidations by driving weak roads out of +competitive business.'" To remedy the evil which, in his opinion, the +act causes, he favors the granting of differentials by the stronger to +the weaker roads. Such a device is simply a species of pool under a less +offensive name. Its manifest object is to maintain rates through a +conspiracy of rival railroads. Mr. Walker admits this when he says: + + "It operates in practice to affect a distribution of the + traffic somewhat roughly, giving rise to frequent + dissensions and bickerings over the 'differentials' which + are allowed; but after all it has enabled the trunk lines + usually to secure a better maintenance of tariff rates and a + better observance of the provisions of the law against + private rebates and discriminations than has been + attainable in other sections of the country where different + conditions make such an arrangement impracticable. It + vividly illustrates, however, the necessity of some plan by + which common business may be divided." + +This problem, which apparently causes so much perplexity to railroad +managers, would soon be solved if railroad abuses were done away with. +So long as these abuses exist and rates are maintained by artificial +means there will be bickering and strife for business which legitimately +belongs to others. Mr. Walker then bewails the proscription of the pool, +saying: + + "It may be stated without fear of contradiction that if the + carriers had been left free to make arrangements among + themselves upon which each line might rely for eventually + receiving in some form a fair share of competitive traffic, + the temptation for secret rate-cutting would have been in + great measure removed and the country would have been spared + most of the traffic disturbances and illegitimate + contrivances for buying business which have since been + periodically rife." + +This argument amounts to this, that, rather than place a law upon our +statute books which reckless railroad managers might be strongly tempted +to violate, they should be permitted to combine and control the highways +and levy _ad libitum_ upon the commerce of the country. It is a most +preposterous proposition. + +The article especially condemns the long and short haul clause of the +law. That this clause is injurious to the commerce of the country is, +however, not obvious from his reasoning. Mr. Walker makes the statement +that this clause of the law "has removed from many jobbing centers +important advantages which they previously had, and has enabled interior +communities, formerly of little apparent consequence, to deal directly +with distant markets." If he means by this that this feature of the law +has equalized shipping throughout the country, he is doubtless right. If +he wishes us to infer, however, that it prevents the railroad companies +from doing substantial justice to all, he presumes altogether too much +upon the credulity of his readers. + +Another article from the same author appeared under the title +"Unregulated Competition Self-destructive," in the December, 1891, +number of the same periodical. He commences his article with an inquiry +into the pedigree and merit of the time-honored proverb, "Competition is +the life of trade," and arrives at the conclusion that the phrase is +fatherless and insignificant. He says: + + "'Competition is the life of trade;' 'Competition is the + death of trade;' one phrase is as true as the other. For all + that appears, it was a toss-up which of the two should + become current as the expression of the general thought." + +It is its general recognition that gives a truth a proverb's currency. +Mr. Walker sneers at a disagreeable proverb because, like the majority +of his colleagues, he holds the masses in contempt. He gives his +estimate of popular intelligence in the following words: + + "Unfortunately most men do not think worthily, or do not + think at all; they are ruled by phrases, and they catch the + crude ideas of others as they fly." + +Mr. Walker's whole argument is one in favor of the legalization of the +pool, though he carefully avoids the word which grates so harshly on the +American ear. He makes the broad statement, without offering the least +proof in support of it, that measures have been everywhere adopted "to +subdue and ameliorate the evil results of inordinate and excessive +competitive strife," and then he asks: + + "Has not the time come for a reversal of the legislative + attitude? Would it not be well for Congress, State + legislatures and the judiciary to cease their futile + attempts to maintain unqualified freedom of competition, and + substitute therefore a recognition of the right of every + industry to combine under proper supervision, and to make + agreements for the maintenance of just and reasonable + prices, the prevention of the enormous wastage consequent + upon warlike conditions, and the preservation of existing + institutions through the years to come?" + +Mr. Walker then proceeds to make the bold prediction that revolution and +anarchy will follow if the demands of the railroad corporations are not +complied with, saying: + + "Unless this course is adopted a social convulsion may + fairly be apprehended, forced by the universal and necessary + repudiation of existing laws and rules of decision, and by + the general formation of combinations without their pale." + +This is a strange threat indeed, and unworthy of a man who has held as +great a public trust as Mr. Walker has. The article also contains the +statement that combinations do not extinguish competition. "They +regulate it," says Mr. Walker, "with more or less efficiency, and they +often go so far as to suspend its operation in respect to one or more +important features of the strife; for example, the price paid or the +time consumed. But as long as the employer or the purchaser has a +choice, so long there is competition." Here is a sample of Mr. Walker's +irony, for the choice which the shipper has under the pool is simply +Hobson's choice. + +Mr. Walker has also an article in the August, 1892, number of the +_Forum_, the substance of which is to show that organizations among +railroad companies, like the Western Traffic Association, are necessary +for the purpose of restraining competition among them. He holds that +such competition as exists in almost all other lines of business "is +radically vicious to all interests, however pleasant and desirable it +may seem to self-styled anti-monopolists," and that "it is a calamity +not only to the owners of the roads, but to the public also." + +According to his statement, the Traffic Association is simply a little +innocent and inoffensive organization whose duty it is only to maintain +rates, and he sees nothing wrong in allowing a few representatives of +corporations to meet in secret and discuss, scheme and levy such a tax +upon the commerce of this country as may suit their convenience; and he +regrets that their attempts are "hampered by legislation which forbids +the formation of pools." In other words, he proposes to have the case in +court decided by a jury made up entirely of the parties at interest in +the case. This piece of effrontery is about on a par with the average +argument of this class of pleaders. + +Suppose we apply the same rule to other classes. Take the farmers, for +instance. Let them have an organization for the purpose of maintaining +rates, with their representatives meeting in secret and fixing the price +of their produce and asking the Government to enforce their orders, +pools and edicts, so as to afford them relief from selling corn at ten +cents per bushel, beef and pork at a dollar and a half per hundred, and +hay at two dollars per ton, and their other produce at proportionate +rates. Who would condemn such an organization more severely than the +advocates of the Traffic Association? They never find terms sufficiently +expressive with which to condemn the Farmers' Alliance and other kindred +associations, which are organized solely for the purpose of lawfully +correcting existing abuses and of forming a wholesome public sentiment. + +It is evident that some progress is being made upon this question, as +Mr. Walker admits that "the fortunes which have been made are seen to +have been the result of dealings in stocks and in titles, the +consequences of which, if involving wrong, are rightly charged against +the lax legislation which has made such operations possible." "Every +person seeking for the services of a common carrier is entitled to know +that he is charged no more than his neighbor who obtains the same +service under the same conditions." "The theory that any unjust +discrimination or unjust preference or advantage in respect to +individuals, communities or descriptions of traffic must be suppressed +by the State, has become firmly lodged in legislation." This improvement +in the sentiment of railroad men is gratifying. + +This gentleman, as has already been stated, was for several years a +member of the Interstate Commerce Commission, a board created by +Congress for the special purpose of enforcing the law which he so +unreservedly condemns. No doubt Mr. Walker performed the duties of his +office as he understood them; but if he held then the views which he +holds now, his work must have been a hindrance rather than a help to the +commission. + +Among financial journals, so many of which are devoted to the support of +vicious and demoralizing methods, and are ever ready to defend whatever +is bad in corporation management, it is refreshing to find occasionally +one that exposes abuses and favors the earning of legitimate dividends, +and it is a pleasure to quote the following from the June number, 1892, +of the _Banker's Magazine_: + + "There are two widely differing theories concerning the + management of railroads in this country; one theory is that + profits should be acquired from fluctuations in the stock, + and the other is that the profits should be acquired in the + old-fashioned way, by performing a useful service and + receiving a reward therefor, to be divided among the + stockholders in the way of a dividend. These two theories + are so different in their practical operation that they give + rise to the most diverse consequences. Of course, many + railroads are not dividend-earning, and with these the + profits to the managers and those who are allied with them + must come from stock fluctuations and from whatever sucking + arrangements can be devised whereby their vitality or + sustenance can be acquired by the favored few who are in + control. Unfortunately, there are many railroads in this + condition, the history of which is too well known to require + description. Once in control, the way is easy to retain it + and to make money by a thousand devices which ingenious and + unscrupulous managers are constantly planning and putting + into operation. + + "The consequences of the other theory are as different, both + to the corporate property and to the public, as can be + imagined. When a railroad is properly managed and earning + dividends, a policy of development is adopted, having for + its end the natural expansion of the property in harmony + with the growth of the country, the needs of business and + the desires of the people. The fruits of such a policy may + not be apparent at once, but they inevitably come, and, when + they are reaped, are enjoyed and appreciated by all. Only by + such a policy can our roads ever become great, commanding + the confidence of the people, and fulfilling their highest + uses; in short, only by such a policy can a railroad be + brought to a high degree of perfection. + + "The difference is clearly seen by contrasting a road of + this character with one that is run by the Wall Street + method for stock-jobbing purposes. By this method dividends + are not regarded as of so much consequence to investors as + an instrument or argument for affecting the value of the + stock. In other words, if a dividend is earned and paid at + all, it is chiefly as an instrument or agency for + stock-jobbing purposes, and not because the road is managed + primarily for this purpose. Furthermore, dividends, too + often, are disregarded altogether, as well as any policy of + permanent improvement or of general development. The + cardinal idea always is, how can the road be maintained and + manipulated so as to cause the largest variations in the + stock and the most money for the managers? + + "Too many managers, as is well known, have made great sums + for themselves and built additions long in advance of their + means, and have seriously crippled their corporations by so + doing. But they have made fortunes for themselves. What the + great majority of mankind consider is the immediate present, + and not the future. + + "It is undoubtedly a hard thing for those who are conducting + their corporations in an honest and able manner, for the + benefit of their owners, to keep still while their enemies + are pounding them and glorifying those who are managing + their corporations for personal and corrupt ends; but all + cheap and false practices must finally lead to disaster. We + hear a great deal of this kind of thing nowadays. One of the + evil effects of speculation and newspaper reading is, that + people have got in the way of not thinking much for + themselves; of regarding as truth whatever is printed, and + of not opening their eyes wide enough to discover the + shallowness of the reasonings and falsehoods that are put + forth at the behests of speculators, or of those who are + managing corporations for speculative purposes. The American + people have had an amazing experience in losses from + following advice thus plentifully and freely given; + nevertheless, there seem to be persons left who are willing + to listen and fall into the old ways and be trapped, as so + many others have been in the past. There is a considerable + class, having means and nothing to do, who perhaps might + just as well lose their money in poker, railroad or grain + speculation as in any other way, for this furnishes about + the only source of amusement to them; but, after all, there + is no reason why railroads should be managed so exclusively + for the amusement of this class. The time is coming, and + probably is not far off, when they will get enough of it; + and railroad investors will conclude that dividends for + themselves are better than profits for speculators; and when + they do, all stock-jobbing managers will be consigned to the + limbo which is their proper destination." + +This magazine is edited by Mr. Albert S. Bolles, author of several +excellent financial works. We are much indebted to him for the sound +banking system which we now have, and which has contributed so largely +to the unexampled prosperity which this country has enjoyed for the last +thirty years. + +Our national banking system illustrates well how service able the +corporation may be to a people when its use is restricted by wholesome +laws to the performance of its proper functions. + +The old United States Bank was organized for practically the same +purposes as our present national banks, but for lack of proper +restrictions its use was soon perverted to ignoble purposes. The bank +managers showed so much partiality in the distribution of their favors +and accommodations, and meddled in politics to such an extent, that the +people became disgusted with it, and a renewal of its charter was +refused. + +Mr. Clay clearly saw how dangerous a great money power might become to +our country, and, in opposing the extension of the bank's charter, said: + + "The power to charter companies is one of the most exalted + attributes of sovereignty. In the exercise of this gigantic + power we have seen an East India Company created, which is + in itself a sovereignty, which has subverted empires and set + up new dynasties, and has not only made war, but war against + its legitimate sovereign! Under the influence of this power + we have seen rise a South Sea Company, and a Mississippi + Company, that distracted and convulsed all Europe, and + menaced a total overthrow of all credit and confidence, and + universal bankruptcy." + +Can we afford to ignore the lessons of history? + +Mr. Henry Clews makes some spicy and pertinent observations on railroad +men's methods in an article which recently appeared in the _Railway +Age_. Mr. Clews seems to have but little confidence in the average +railroad director. He advises stockholders to exercise constant +vigilance and defensive conservatism, "lest they become the instruments +by which unscrupulous and crafty directors work out schemes that are in +reality nothing but frauds or robbery." And then he adds: + + "In estimating corporate acts we must never forget that, + while the best of men will bear watching as to their + individual dealings with others, they need to be doubly + watched when they sit around a corporation board and vote as + to transactions in respect of which none of them can be + called to personal account. Temptations attack with enormous + force when the gains are prospectively great and the risk of + penalty inappreciable or non-existent." + +Mr. Clews also tells us how roads are wrecked by their boards of +directors. "In one case," he says, "the stock of a leading railway, +which in 1880 sold at 174, in 1884 sold at 22-1/2, and in 1885 at 22. +This vast shrinkage of value was not owing to panic or to stringency of +money, nor did it arise from a diminution of traffic on the original +line; but it was because consolidation had been pushed to an extreme by +the directors of the corporation, so much so that the entire system +yielded no dividends; a fleet and useful animal had been loaded down +with dead wood and rubbish till he could scarcely crawl; barren acres +had been added to an originally fruitful farm until the whole estate +could hardly pay taxes; a mass of rotten apples had been thrown into the +measure with sound fruit, and buyers refused the whole as a mere heap +of corruption. And it was generally believed that the men who +perpetrated this mischief under the names of 'construction,' 'requisite +consolidation,' 'absorption of necessary branches,' etc., had made a +great deal of money by it and had not made it honestly. But it was all +done pursuant to legal forms and by boards of directors, so that the +defrauded stockholders were without remedy." + +Mr. Clews then gives us a more detailed account of the way in which +branch roads are built and absorbed, viz.: + + "Given a useful, well constructed, dividend-paying road, a + body of people with some capital and political influence, + aided by some of the directors of this prosperous line; + construct a branch road to some outside point; the more + important such point the better, but that is of small + consequence. The road gets itself built; it is bonded for + more than it cost, and it cost twice as much as it ought, + since the constructors were all together in the ring and + have favored each other. Then the capital stock is fixed at + so much, and this is mostly distributed among the + constructors. The road then, swelled to a fictitious price + of three or four to one, and not worth anything to start + with, is ripe for absorption and consolidation. Its + directors and those of the main line meet, confer and vote + the measure through. They all profit by it, more or less, + but their profits are enormously in excess of the trifling + losses due to the shrinkage of values of the shares of the + main line. A director of the main line may perhaps lose + $20,000 on a thousand shares, but what is this when compared + to a gain of hundreds of thousands in his holdings of the + branch road, whose liabilities are assumed by his victimized + corporation? And such a director would not be equal to the + demands of his covetousness if he had not sold thousands of + shares short, in anticipation of the fall which the + transactions of himself and his associates were inevitably + bound to produce." + +Mr. Clews concludes his article with the following passage: + + "The profits realized on the speculative constructions are + enormous and have constituted the chief source of the + phenomenal fortunes piled up by our railroad millionaires + within the last twenty years. It is no exaggeration to + characterize these transactions as direct frauds upon the + public. They may not be such in a sense recognized by the + law, for legislation has strangely neglected to provide + against their perpetration; but morally they are nothing + less, for they are essentially deceptive and unjust, and + involve an oppressive taxation of the public at large for + the benefit of a few individuals who have given no + equivalent for what they get. The result of this system is + that, on the average, the railroads of the country are + capitalized at probably fully 50 per cent. in excess of + their actual cost. The managers of the roads claim the right + to earn dividends upon this fictitious capital, and it is + their constant effort to accomplish that object. So far as + they succeed they exercise an utterly unjust taxation upon + the public by exacting a compensation in excess of a fair + return upon the capital actually invested. This unjust + exaction amounts to a direct charge and burden on the trade + of the country which limits the ability of the American + producer and merchant to compete with those of foreign + nations and checks the development of our vast natural + resources. In a country of 'magnificent distances' like ours + the cost of transportation is one of the foremost factors + affecting the capacity for progress; and the artificial + enhancement of freight and passenger rates due to this false + capitalization has been a far more serious bar to our + material development than public opinion has yet realized. + The hundreds of millions of wealth so suddenly accumulated + by our railroad monarchs is the measure of this iniquitous + taxation, this perverted distribution of wealth. This + creation of a powerful aristocracy of wealth, which + originated in a diseased system of finance, must ultimately + become a source of very serious social and political + disorder. The descendants of the mushroom millionaires of + the present generation will consolidate into a broad and + almost omnipotent money power, whose sympathies and + influence will conflict with our political institutions at + every point of contact. They will exercise a vast control + over the larger organizations and movements of capital; + monopolies will seek protection under their wing, and by the + ascendancy which wealth always confers they will steadily + broaden their grasp upon the legislation, the banking and + commerce of the nation." + +These are strong words, but they come from a man whose thirty years' +experience in Wall Street enables him to speak intelligently upon this +subject and who certainly cannot be accused of being prejudiced against +railroad men or corporate investments. In a recent number of his _Weekly +Financial Review_ Mr. Clews said of the railroad stock market: + + "Judgment passes for little in estimating the future of many + securities, for the market is almost wholly under the + control of comparatively few persons, whose operations must + inevitably influence the value of thousands of millions of + stocks and bonds. Never in the history of Wall Street was + the value of such an enormous aggregation of securities so + absolutely under the control of so small a circle as at this + time. Such a state of affairs cannot be considered + satisfactory; hence not only is speculation likely to be + unhealthily stimulated, but the future of these combinations + gives birth to a variety of uncertainties which, while they + may elevate prices, will certainly not add to their + stability." + +If the silly claim of railroad men, that Western people do not invest in +railroad securities on account of their unprofitableness, needed any +answer, the above words would furnish it. + +The May, 1893, number of the _North American Review_ contains an article +entitled "A Railway Party in Politics," by Mr. H. P. Robinson, editor of +the _Railway Age_. Mr. Robinson belongs to that class of reformers who +can see but one side of a question, and only a short-sighted view of +that. He is as zealous as a new convert, and is expert, in the ward +politician's way, in defense of the worst abuses practiced by railway +men. He says: + + "That the right to 'regulate' the railways, which is vested + in the State, has now been carried in the West to a point + not only beyond the bounds of justice, but beyond its + constitutional limits, and that it would soon be impossible + for any railway company in the West to keep out of + bankruptcy unless some vigorous and concerted action were + taken to arouse public opinion, and to compel a modification + of the present policy. + + "It is easy to see how much strength such a party, if + formed, would possess. According to the reports of the + Interstate Commerce Commission there were in the immediate + employ of the railways of the United States a year and a + half ago 749,301 men, all or nearly all voters, which number + has now, it may be assumed, been increased to about 800,000. + There are, in addition, about one million and a quarter + shareholders in the railway properties of the country; and + in other trades and industries immediately dependent upon + the railways for their support there are estimated to be + engaged, as principals or employes, over one million voters + more. These three classes united would give at once a massed + voting strength of some three millions of voters. There are + also, in the smaller towns especially, and at points where + railway shops are located, all over the country, a number of + persons, small tradesmen, boarding-house keepers, etc., who + are dependent for their livelihood on the patronage of + railway employes, and whose vote could unquestionably be + cast in harmony with any concerted employes' movement. + Moreover, unlike most new parties, this party would be at no + loss for the sinews of war or for the means of organization. + The men whom it would include form even now almost a + disciplined army. With them co-operation is already a habit. + While the financial backing and the commercial and physical + strength of which the party would find itself possessed from + its birth would be practically unlimited.... + + "For the present it seems to them better to believe that the + people--those people who are not railway men--are acting now + only in ignorance, and that as soon as they see the truth + they will, by their own instinctive sense of justice, + re-mould their opinions and their policy without political + coercion. + + "At the same time there has already come into existence in + some of the Western States a movement which has its + significance and its practical influence. This is what is + called the Railway Employes' Club movement. It started in + Minnesota, at a small meeting of railway employes held in + Minneapolis in 1888. From that meeting the movement grew, + and made a certain feeble effort, not entirely unsuccessful, + to influence the State election in the fall of that year. By + the State election of 1890 the movement had grown and was + better organized, and the Employes' Club did exercise + considerable influence in the election of certain of the + State officers and certain members of the State legislature + in that year. + + "From Minnesota the movement spread to Iowa, and there is no + contradiction of the fact that the railway employes' vote + was one of the strongest forces in the State election of the + fall of 1891. It also overflowed into Kansas, Nebraska, + Missouri and Texas. Had the election of last November been + normal it is probable that the effect of the Railway + Employes' Club vote would have been as visible in two or + three of those States then as it had been in Iowa in the + preceding year. But in the deluge which occurred all trace + of the smaller streams and currents was obliterated. Had the + members of the clubs not taken the precaution to do + considerable work in the local nominating conventions of + both parties they would be compelled to confess that their + campaign of 1892 was a failure.... + + "So far the clubs have admitted and will admit of no + negotiations with the State committees of other parties. + They hold their own meetings and decide for themselves that + such and such a candidate is inimical to their interests as + railway employes, and such and such a man is their friend. + Then they go to the polls and vote--voting in the main + their normal party ticket, scratching only a man here and a + man there, their attention being chiefly centered upon + members of the boards of railroad commissioners and of the + State legislatures. + + "In Minnesota in 1890 their weight was thrown chiefly in + favor of Republicans. In Iowa in 1891 it was given to + Democrats. In all States the men whom they oppose are those + who have made themselves conspicuous as 'Granger' and + anti-railway politicians. The keynote of the movement and + the one plank in the platform of the clubs is that the + extreme anti-railroad legislation of late years has reduced + the earnings of the companies to a point at which they are + unable any longer to keep full forces on their payrolls or + to pay such wages as they should, and that by this + legislation the railway employes are necessarily the + immediate sufferers.... + + "A railway party is therefore already in existence.... And + moreover, though accidentally only, it is working forcibly + in behalf of railway interests as a whole.... + + "Meanwhile Mr. A. F. Walker, the chairman of the Joint + Committee of the Trunk Line and Central Traffic + Associations, prophesies that if things go on as they are + going now, before long 'the managers of the railways will be + chiefly receivers.' In the year 1891 receivers were + appointed for twenty-six companies in the United States, + representing $84,479,000 of capital, and twenty-one + companies, with 3,223 miles of road, with a capitalization + of $186,000,000, were sold under foreclosure. + + "It is doubtful whether the result which Mr. Walker + foretells would be regarded as a calamity by the 'uninformed + public opinion of the West.' That Minnesota railroad + commissioner was quite sure of the public applause before he + made his classic declaration that he proposed to 'shake the + railroads over hell' before he had done with them, and the + Governor of Iowa, who announced that he did not care if + 'every d--d railroad in the State went into bankruptcy' + before the expiration of his term of office, knew that the + sentiment would have the sympathies of his constituents. + This attitude of the Western mind is, of course, largely + explained by the fact that the people of the West do not as + a rule own railway securities. In two States (the only two + in the West in which, so far as I am aware, the figures have + been compiled) out of 27,645 stockholders in the lines + within the State borders only 359 are residents of the + States. If the other 27,286 were also residents of these + States (that is to say, if 27,286 of the present residents + were also stockholders in the railways), it is probable that + the ferocity of the public opinion in these States against + railways would be materially modified." + +It is evident that Mr. Robinson has not been as successful in organizing +small tradesmen, boarding-house keepers, employes and shareholders into +a new party as he contemplated, notwithstanding "it was at no loss for +the sinews of war." + +He attempts to show that this movement originated with the employes, but +it is too well known that the employes who organized the movement were +under pay of the railroad companies and received their instructions from +the railroad managers. The statement which Mr. Robinson attributes to +the Governor of Iowa undoubtedly originated in the mind of one who is +laboring to modify the ferocity of "the uninformed public opinion of the +West." No Governor of Iowa ever made any such statement, nor ever +entertained any such sentiment. It is a sheer fabrication. + +There are a number of standard text-books of law which are indispensable +to the student of railroad questions desiring to go back to first +principles. Only a few of them can be mentioned here. + +I. F. Redfield, in his "Law of Railways," says concerning the necessity +for railroad supervision: + + "Railways being a species of highway, and in practice + monopolizing the entire traffic, both of travel and + transportation, in the country, it is just and necessary and + indispensable to the public security that a strict + legislative control over the subject should be constantly + exercised." + +Regarding the original character of the railway as a common highway, +Redfield says: + + "The Railways Clauses Consolidation Act provides, in detail, + for the use of railways by all persons who may choose to put + carriages thereon, upon the payment of the tolls demandable, + subject to the provisions of the statute and the regulations + of the company. The view originally taken of railways in + England evidently was to treat them as a common highway, + open to all who might choose to put carriages thereon. But + in practice it is found necessary for the safety of the + traffic that it should be exclusively under the control of + the company, and hence no use is, in fact, made of the + railway by others." + +As to the questionable financial expedients so frequently resorted to in +building American railways, this author says: + + "This is not the place, nor are we disposed, to read a + homily upon the wisdom of legislative grants, or the + moralities of moneyed speculations in stocks on the exchange + or elsewhere. But it would seem that legislation upon this + subject should be conducted with sufficient deliberation and + firmness so as not to invest such incorporations with such + unlimited powers as to operate as a net to catch the unwary, + or as a gulf in which to bury out of sight the most + disastrous results to private fortunes, which has justly + rendered American investments, taken as a whole, a reproach + wherever the name has traveled." + +The opinion is expressed in this work that under certain circumstances +railroad securities should be aided by State credit, and is supported by +the following argument: + + "Here we have no national funded stock in convenient sums + for small investment, and which, being sure, is really a + great blessing to the mass of those who wish to invest + moderate sums as a protection against age or calamity. In + those countries where such opportunities exist, it removes + all temptation to invest small sums in these enterprises, + which, however necessary for the public, such small owners + can but poorly afford to aid in carrying forward, and which + consequently should in justice either be guaranteed or owned + by the State, or at all events aided by State credit, when + they become indispensable for the public convenience." + +Upon the subject of eminent domain Redfield says: + + "That railways are but improved highways, and are of such + public use as to justify the exercise of the right of + eminent domain, by the sovereign, in their construction, is + now almost universally conceded." + +Kent says in his "Commentaries on American Law": + + "The right of eminent domain, or inherent sovereign power, + gives to the legislature the control of private property for + public uses, _and for public uses only_.... So, lands + adjoining New York canals were made liable to be assumed for + the public use, so far as was necessary for the great object + of the canals.... In these and other instances which might + be enumerated, the interest of the public is deemed + paramount to that of any private individual; and yet, even + here, the constitutions of the United States and of most of + the States of the Union have imposed a great and valuable + check upon the exercise of legislative power, by declaring + that private property should not be taken for public use + without just compensation.... It undoubtedly must rest, as a + general rule, in the wisdom of the legislature to determine + when public uses require the assumption of private property; + but if they should take it for a purpose not of a public + nature, as if the legislature should take the property of A + and give it to B, or if they should vacate a grant of + property, or of a franchise, under the pretext of some + public use or service, such cases would be gross abuses of + their discretion, and fraudulent attacks on private right, + and the law would clearly be unconstitutional and void." + +Concerning the construction of corporate powers Kent lays down the +following rule: + + "The modern doctrine is to consider corporations as having + such powers as are specifically granted by the act of + incorporation, or as are necessary for the purpose of + carrying into effect the powers expressly granted, and as + having no other. The Supreme Court of the United States + declared this obvious doctrine, and it has been repeated in + the decisions of the State courts. No rule of law comes with + a more reasonable application, considering how lavishly + charter privileges have been granted. As corporations are + the mere creatures of law, established for special purposes, + and derive all their powers from the acts creating them, it + is perfectly just and proper that they should be obliged + strictly to show their authority for the business they + assume, and be confined in their operations to the mode and + manner and subject matter prescribed." + +As to the duties of common carriers he says: + + "As they hold themselves to the world as common carriers for + a reasonable compensation, they assume to do and are bound + to do what is required of them in the course of their + employment, if they have the requisite convenience to carry + and are offered a reasonable and customary price; and if + they refuse without just ground, they are liable to an + action." + +Judge Cooley, in his very able work, "Constitutional Limitations," +refers to the so-called vested rights of corporations and the abuse +growing out of them as follows: + + "It is under the protection of the decision in the Dartmouth + College case that the most enormous and threatening powers + in our country have been created, some of the great and + wealthy corporations actually having greater influence in + the country at large, and upon the legislation of the + country, than the States to which they owe their corporate + existence. Every privilege granted or right conferred--no + matter by what means or on what pretense--being made + inviolable by the Constitution, the Government is + frequently found stripped of its authority in very important + particulars, by unwise, careless or corrupt legislation; and + a clause of the Federal Constitution whose purpose was to + preclude the repudiation of debts and just contracts + protects and perpetuates the evil." + +The late President Garfield, in one of his legislative speeches, called +attention to the fact that Chief Justice Marshall pronounced the +decision in the Dartmouth College case ten years before the steam +railway was born, and then said: + + "I have ventured to criticise the judicial application of + the Dartmouth College case, and I venture the further + opinion that some features of that decision, as applied to + the railway and similar corporations, must give way under + the new elements which time has added to the problem." + +Charles Fisk Beach, Jr., in his recent work entitled "Commentaries on +the Law of Private Corporations," well defines what constitutes +dedication to a public use. He says: + + "Whenever any person pursues a public calling and sustains + such relations to the public that the people must of + necessity deal with him, and are under a moral duress to + submit to his terms if he is unrestrained by law, then, in + order to prevent extortion and an abuse of his position, the + price he may charge for his services may be regulated by + law. When private property is affected with a public + interest it ceases to be _juris privati_ only. This was said + by Lord Chief Justice Hale more than three hundred years ago + in his treatise _De Portibus Maris_, and has been accepted + without objection as an essential element in the law of + property ever since." + +Treating of the fiduciary position of directors and officers of +corporations, the same author says: + + "The directors, officers and agents of a corporation are + held to the general rule of law resting 'upon our great + moral obligation to refrain from placing ourselves in + relations which ordinarily excite a conflict between + self-interest and integrity.' The directors and officers + are the agents of the company, and while acting in that + capacity for it cannot deal with themselves to the detriment + of the corporation. All contracts of that character are + voidable at the option of the corporation." + +And further he says: + + "A director whose personal interests are adverse to those of + the corporation has no right to act as a director. As soon + as he finds he has personal interests which are in conflict + with those of the company he ought to resign." + +T. Carl Spelling, in his treatise on "The Law of Private Corporations," +says of pooling arrangements: + + "Courts long ago exercised jurisdiction to regulate rates of + _quasi_ public corporations, and on the same principle will + refuse to enforce pooling contracts between railroad and gas + companies. Such contracts are void as against public + policy.... There is substantial harmony between the English + and American definitions of monopoly, the two countries + agreeing that contracts entered into by and between two or + more corporations, the necessary result of whose performance + will crush and destroy competition, are illegal." + +Upon the subject of eminent domain Mr. Spelling remarks: + + "That the legislature may thus select any agency it sees fit + for the exercise of eminent domain, and also that it may + determine what purposes shall be deemed public, are + propositions too deeply rooted in the jurisprudence of this + country to admit now of doubt or discussion. Making an + application of this doctrine to railway operations, + conceding it to be settled that these facilities for travel + and commerce are a public necessity, if the legislature, + reflecting the public sentiment, decide that the general + benefit is better promoted by their construction through + individuals or corporations than by the State itself, it + would clearly be pressing a constitutional maxim to an + absurd extreme if it were to be held that the public + necessity should be only provided for in the way which is + least consistent with the public interest.... The power of + eminent domain being an inherent element of sovereignty, it + cannot be divested out of the State or abridged by contract + or treaty so as to bind future legislatures. Nor can the + right be divested by private contract." + +Concerning State control of corporations the same author says: + + "The subordination of all private interests to the purposes + of government, subject only to the condition that the object + to be accomplished shall be one in which the public has an + interest, is no longer an open question. In its general + bearing this principle is too well settled and uniformly + recognized--underlying the adjudications by courts of all + cases involving constitutional provisions--to require more + than a mere statement." + +And again he says: + + "Nor is it longer necessary to seek a justification of the + common practice of regulating the rates of charges and + general management of railroads on the ground that they have + received valuable franchises of a public nature and had + important powers of sovereign character conferred upon them. + That may be an important political consideration, and as + such may strengthen the argument in favor of the right; but + the right itself rests upon firmer ground, and upon other + considerations than that of pecuniary consideration derived + from the State. The State may regulate their business, not + because they are corporations, nor yet because they are + corporations of a particular kind, but because they, like + the individuals of which they are composed, are subject to + the laws which say that when one devotes his property to a + use in which the public has an interest, he in effect grants + to the public an interest in that use, and must submit to be + controlled by the public for the common good to the extent + of the interest he has thus created." + + + + +CHAPTER XI. + +RAILROADS AND RAILROAD LEGISLATION IN IOWA. + + +The first survey for a railroad in the State of Iowa was made in the +fall of 1852. The proposed road had its initial point at Davenport and +followed a westerly course. It was practically an extension of the +Chicago and Rock Island Railroad, which was then being built between +Chicago and the Mississippi River. On the 22d day of December, 1852, the +Mississippi and Missouri Railroad Company was formed, its object being +to build, maintain and operate a railroad from Davenport to Council +Bluffs. The articles of association were acknowledged before John F. +Dillon, notary public, and filed for record in the office of the +Recorder of Scott County, on the 26th of January, 1853, and in the +office of the Secretary of State on the first day of February following. +In 1853 the Mississippi and Missouri Railroad Company entered into an +agreement with the Railroad Bridge Company of Illinois for the +construction and maintenance of a bridge over the Mississippi at Rock +Island. The work was commenced in the fall of that year, and the bridge +was completed on April 21, 1856, it being then the only bridge spanning +the Mississippi River. The first division of the Mississippi and +Missouri Railroad, extending from Davenport to Iowa City, was completed +on the first of January, 1856, and was formally opened two days later. A +branch line to Muscatine was completed shortly thereafter. On the first +day of July the State of Iowa had in all sixty-seven miles of railroad, +bonded at $14,925 a mile, which at that time probably represented the +total cost of construction. The earnings of these sixty-seven miles of +road during the six months following July 1, 1856, amounted to $184,193, +or $2,749 per mile, which was equal to an annual income of about $5,500 +per mile. + +On the 15th of May, 1856, Congress granted to the State of Iowa certain +lands for the purpose of "aiding in the construction of railroads from +Burlington, on the Mississippi River, to a point on the Missouri River +near the mouth of the Platte River; from the city of Davenport, Iowa, by +way of Iowa City and Fort Des Moines, to Council Bluffs; from Lyons City +northwesterly to a point of intersection with the main line of the Iowa +Central Air Line Railroad near Maquoketa, thence on said line running as +near as practical to the forty-second parallel across the State; and +from the city of Dubuque to the Missouri River near Sioux City." The +grant comprised the alternate sections designated by odd numbers and +lying within six miles from each of the proposed roads. Provision was +also made for indemnity for all lands covered by the grant which were +already sold or otherwise disposed of. + +The wisdom of the land-grant policy has been questioned. When these +grants were made it was believed by many that railroads would not and +could not be built in the West without such aid. While others did not +share this opinion, they at least supposed that land grants would +greatly stimulate railroad enterprise and lead to the early construction +of the lines thus favored. + +The land grant of the Mississippi and Missouri Railroad was a mere +donation for that part of the line which was already completed at the +time the grant was made; and the extension of this line, as well as the +construction of the other lines to which the grant applied, was not +made as fast as had been anticipated. The price of all Government lands +lying outside of the land-grant belts was $1.25 per acre. To reimburse +the public treasury for the loss resulting from these grants, the price +of lands situated within the land-grant belts was advanced to $2.50 per +acre, practically compelling the purchasers of the even-numbered +sections of land, instead of the Government, to make the donation to the +railroads, it being supposed that the benefits resulting to those +regions from the immediate construction of railroads would +correspondingly enhance the value of the alternate sections of land +reserved by the Government. Designing men soon saw the advantages which +the situation offered. They combined with their friends to organize +companies for the construction of the land-grant roads, built a small +portion of the proposed line, to hold the grant, and then awaited +further developments, or rather the settlement of the country beyond. +There are those who believe that the doubling of the price of Government +land within the belt of the proposed land-grant roads greatly retarded +immigration and with it the construction of roads. They hold that, had +no grant whatever been made to any railroad company and had equal +competition in railroad construction been permitted, the Iowa through +lines, instead of following, would have led, the tide of immigration. + +It has been seen that in 1856 the Mississippi and Missouri Railroad was +completed as far as Iowa City. On the second day of June of that year +its Board of Directors asked the Governor of the State to convene the +General Assembly in extra session, to consider the disposition which +should be made of the recent Congressional grant. This urgency might +lead one to suppose that the company was anxious to extend its line at +the earliest opportunity. The General Assembly was convened, and the +land given to the State by Congress for the purpose of aiding in the +construction of a railroad from Davenport to Council Bluffs was given to +the Mississippi and Missouri Railroad Company. The act was approved by +the Governor on July 14, 1856, and three days later the company +"assented to and accepted the grant." It then executed mortgage after +mortgage, and built a branch line through quite a populous territory, +from Muscatine to Washington, but the main line made very slow progress. +In 1865 the bonded debt of the company amounted to $6,851,754, although +the line was completed only to Kellogg, in Jasper County, about forty +miles east of Des Moines. In spite of the fact that the cost of +operating the road had from the beginning varied but little from 60 per +cent. of its gross receipts, its president, in a circular letter to the +stock-and bondholders, dated October 20th, 1865, made the statement that +the company was "driven to the necessity of selling the road or +reorganizing." In 1866 suit was brought in the Circuit Court of the +United States for the District of Iowa for the foreclosure of the +company's mortgages, and a decree of foreclosure was entered on the 11th +day of May of that year. The property was sold on the 9th day of July +following at Davenport, and was purchased by the Chicago, Rock Island +and Pacific Railroad Company, which was incorporated in this State a few +weeks previous to the sale, for the purpose of acquiring the railroads +built by the Mississippi and Missouri Railroad Company with all its +appurtenant property, "and all the rights, privileges and franchises +granted by the act of Congress of May 15th, 1856, to the State of Iowa, +and by the State of Iowa granted to the said Mississippi and Missouri +Railroad Company, and when so acquired to maintain and operate the said +railroad." It is a significant fact that all the corporators of the new +company, except one, were directors of the bankrupt company. On the 20th +of August, 1866, the Chicago, Rock Island and Pacific Company of the +State of Iowa consolidated with the Chicago, Rock Island and Pacific +Railroad Company of Illinois, and conveyed all its property, powers and +franchises to the consolidated company. The validity of the +consolidation was questioned by a large number of stock-and bondholders, +and the courts were appealed to to issue injunctions restraining the +consolidated company from extending its line or expending any money +obtained through the sale of its securities. In this predicament the +company turned to the Iowa legislature for protection. Anxious to secure +the early completion of the road, the Twelfth General Assembly, by an +act approved February 11th, 1868, recognized the consolidated company, +and resumed and granted to it "all right or interest" which the State +had in the lands previously granted to the Mississippi and Missouri +Railroad Company. The act expressly provided, however, that the Chicago, +Rock Island and Pacific Railway Company should "at all times be subject +to such rules, regulations and rates of tariff for transportation of +freight and passengers as may from time to time be enacted and provided +for by the General Assembly of the State of Iowa," and that if the +company should neglect to comply with any of the requirements of the +act, it should forfeit to the State all its franchises and corporate +rights acquired by or under the laws of the State, and all lands granted +to aid in the construction of its road. The line was completed to +Council Bluffs in June, 1869. + +The lands in aid of the construction of a railroad running across the +State, as nearly as practicable along the forty-second parallel, were +granted by the General Assembly to the Iowa Central Air Line on the 14th +of July, 1856, but as this company failed to fulfill the conditions of +its grant, it was, on the 17th of March, 1860, transferred to the Cedar +Rapids and Missouri River Railroad Company. This company completed the +road to Marshalltown in 1862, to Nevada in 1864, to Boone in 1865, and +to Council Bluffs in the fall of 1867. + +The Burlington and Missouri River road reached the Missouri River but a +few months later. Ten years after this company had received its grant, +its line had only been completed as far as Albia, in Monroe County. In +1867 the road was built little more than half across the State. But it +managed not to be far behind its two rivals on the north in reaching the +Missouri River. + +At first sight it might seem as if these companies had all at once +become awake to their obligations. When it is remembered, however, that +in 1869 the junction of the Union Pacific and Central Pacific railroads +was effected, and thus a continuous line across the continent formed, +the conclusion lies near that the haste with which the three Iowa +land-grant roads were completed was simply the result of a strife for +the large amount of through business which the completion of the Pacific +route promised to bring to them. + +No such inducement existed for the Dubuque and Sioux City Company, and +twelve years after receiving its grant it had not yet built half of its +line. In his message to the Twelfth General Assembly, delivered January +14, 1868, Governor Stone said: "Under the provisions of the act adopted +by the General Assembly, at its extra session (in July, 1856), this (the +Dubuque and Sioux City) company became the beneficiary of the grant +designed to secure the construction of a railroad leading from Dubuque +to Sioux City, and this valuable donation was accepted from the State, +with all the terms and conditions imposed. A large portion of this grant +has already been absorbed by the company, in various ways, by pretended +sales and incumbrances. This road has been constructed to Iowa Falls, a +distance of 143 miles from Dubuque, but I am unable to discover any +reliable evidence of earnest intention on the part of this company to +construct the line to its terminal point on the Missouri River." + +The Governor further recommended that the General Assembly pass an act +resuming the control over these lands. At about the same time an +agreement was effected between the Iowa Falls and Sioux City Railroad +Company (which was organized in the fall of 1867) and the Dubuque and +Sioux City Railroad Company, by which the latter transferred to the +former its land grant for the unfinished portion of the Dubuque and +Sioux City road. This agreement was confirmed by the General Assembly, +through an act approved April 7, 1868. The road was completed to Fort +Dodge in August, 1869, and to Sioux City a year or two later. The entire +line was then leased to the Illinois Central. + +The land grant to this line of road embraced over 1,000,000 acres of the +finest lands of the State. We can appreciate the magnitude of this +donation when we consider that, had these lands been sold at only $8 per +acre, the proceeds would have paid the whole expense of building and +equipping the road from Dubuque to Sioux City. The lands granted to the +C., R. I. & P. R. R. were sold at an average price of over $8 per acre, +and those of the B. & M. at over $12 per acre. + +Among the other important land grants is that made to the McGregor +Western Railroad Company. This company was the successor of the +McGregor, St. Peters and Missouri River Railroad Company, which was +organized in 1857 for the purpose of constructing a railroad from +McGregor to the Missouri River. The construction of the road was +commenced in 1857 at McGregor. Large local subscriptions were taken +along the proposed line, the writer being one of the subscribers. Work +was continued the next year until much of the heavy grading had been +done, when the road was allowed to go through the process of +foreclosure, like many other roads built in the West at that time. The +old stock was completely wiped out, and new owners came into possession +of the property, reorganizing under the name of the McGregor Western +Railway Company. Nearly all the early investments of Iowa people were +thus confiscated by the same class of men who now cry out loudly against +confiscatory measures. By an act of Congress approved May 12, 1864, the +State of Iowa was granted, for the use and benefit of the McGregor +Western Railroad Company, every alternate section of land designated by +odd numbers for ten sections in width on each side of the proposed road. +The act contained the condition that in the event of the failure of said +McGregor Western Railroad Company to build twenty miles of said road +during each and every year from the date of its acceptance of the grant +the State might resume the grant and so dispose of it as to secure the +completion of the road in question. The McGregor Western Railroad +Company failing to comply with the conditions of the grant, the General +Assembly on the 27th day of February, 1868, resumed the lands and on the +31st day of March of the same year regranted them to the McGregor and +Sioux City Railway Company. The act specially provided that the company +accepting the grant "shall at all times be subject to such rules, +regulations and rates of tariff for the transportation of freight and +passengers as may from time to time be enacted and provided for by the +General Assembly of the State of Iowa, and further subject to the +conditions, limitations, restrictions and provisions contained in this +act and in the acts of Congress granting said lands to the State of +Iowa." It also contained the condition that at least twenty miles of +road should be built by the company every year and that the whole road +should be completed to the intersection of the then proposed railway +from Sioux City to the Minnesota State line by the first day of +December, 1875. + +The McGregor and Sioux City Railway Company also failing to comply with +the terms of the grant, the lands were again resumed by the General +Assembly on March 15th, 1876, and regranted to the McGregor and Missouri +River Railroad Company upon the condition that it complete the road to +the intersection of the Sioux City and St. Paul Railroad on or before +the first day of December, 1877. + +But the State found itself again disappointed, and two years later the +General Assembly for the third and last time resumed its grant and then +conferred it upon the Chicago, Milwaukee and St. Paul Railway Company +upon the express conditions that it complete the road to Spencer on or +before the first day of January, 1879, and to Sheldon within a year +thereafter, and that the road should at all times be subject to State +control. The road was completed to Sheldon without delay, and on the +30th of November, 1878, the Governor of the State certified to the +Secretary of the Interior that the Chicago, Milwaukee and St. Paul +Railway Company had completed its road from Algona to Sheldon in +compliance with the conditions of the original grant and the laws of the +State. + +It thus took over twenty years to complete this road. Ten years after +its construction had commenced it had only reached Calmar in Winneshiek +County. In 1869 the road was completed to Clear Lake and in 1870 to +Algona. This point remained its terminus until it passed into the hands +of the Chicago, Milwaukee and St. Paul Railway Company. + +The State of Iowa has not derived that benefit from the large land +grants made to its railroads which her people had a right to expect. In +spite of these grants roads were built only when there was reason to +believe that they would be immediately profitable to their owners. The +land grants enriched the promoters of these enterprises much more than +they did the State in whose interest the grants were presumed to be +made. As a rule they enabled scheming men to hold the selected territory +until a railroad through it promised to be a safe and profitable +investment, and to avoid the payment of taxes on their millions of acres +of land, which in the meantime became very valuable. Other roads were +built at an early day without Government aid. They were pushed forward +by the current of immigration until the threatened competition of roads +favored by these grants checked their progress. The Chicago, Iowa and +Nebraska road may be cited as a fair illustration. It was projected on +the 26th of January, 1856, in the town of Clinton, to be built from +Clinton to the Missouri River via Cedar Rapids. It was opened to De Witt +in 1858 and completed to Cedar Rapids the following year. The road was +82-1/2 miles long and was built entirely with private means, receiving +neither legislative aid nor local subsidy. It is more than probable +that this road would at an early day have been completed to the Missouri +River, had it not feared the rivalry of the subsidized Cedar Rapids and +Missouri road. + +The total number of acres of land granted by Congress to aid the +construction of Iowa roads is 4,069,942. A fair idea of the value of +these lands may be obtained from the fact that the Chicago, Rock Island +and Pacific Railroad Company sold over half a million acres of its lands +at an average of $8.68 per acre, and the Chicago Burlington and Quincy +sold nearly 350,000 acres at an average of $12.17 per acre. + +But land grants form only a small part of the public and private +donations which have been made to Iowa roads. Including the railroad +taxes voted by counties, townships and municipalities, the grants of +rights of way and depot sites and public and private gifts in money, +these roads have received subsidies amounting to more than $50,000,000, +or enough to build 40 per cent. of all the roads of the State. There is +no doubt that the contributions of the public toward the construction of +the railroads of Iowa is several times as large as the actual +contributions of their stockholders for that purpose. + +The people of Iowa were from the first very favorably disposed towards +railroads. Every inducement was held out to railroad builders to come +here and help to multiply the tracks for the iron horse. They came and +brought with them many abuses which since the first introduction of +railroads had gradually been developed in other States. + +The contrast between the old and the new mode of transportation was so +great, and the public appreciated so highly the superior conveniences +afforded by the latter, that for years the abuses practiced by the early +railroads were scarcely noticed, or, if they did attract the attention +of the public, they appeared more like necessary features of the new +system of transportation than like abuses. The evil gradually increased, +but for years no attempt was made to check its growth. The railroad +managers construed this failure of the people to interfere with, or even +protest against, their unjust practices as a quasi-sanction of their +course, and soon claimed to do by right what they had formerly done by +sufferance. The evils increased until the patience of the people finally +became exhausted. + +While the State thus for years dealt very leniently with the railroad +companies, the laws of Iowa had from the beginning of railroad building +emphasized the principle of State control. This principle was asserted +in the very first railroad act ever passed in the State. Section 14 of +chapter I. of the acts of the extra session of the Fifth General +Assembly, regranting to the various railroad companies the lands granted +to the State by Congress for railroad purposes, provides that "railroad +companies accepting the provisions of this act shall at all times be +subject to such rules and regulations as may from time to time be +enacted and provided for by the General Assembly of Iowa...." In 1866 an +attempt was made in the General Assembly to regulate rates, but the +Attorney-General, to whom the question of constitutionality was +submitted, held in his opinion that it was not in the power of the +legislature to prescribe rates for railroad companies. This opinion +provoked much indignation among the people of the State, and led to the +expression of a sound public opinion by legislative acts which could not +be misunderstood. + +When the Twelfth General Assembly (in 1868) regranted to the Chicago, +Rock Island and Pacific Railroad Company the lands originally granted +to the Mississippi and Missouri Company, it only did so upon the +condition that "said railroad company, accepting the provisions of this +act, shall at all times be subject to such rules, regulations and rates +of tariff for transportation of freight and passengers as may from time +to time be enacted and provided for by the General Assembly of the State +of Iowa...." The same restricting clause, known as the Doud Amendment, +was added to all other land grant acts passed by the Twelfth and +subsequent General Assemblies, and the various companies willingly and +gladly accepted it. + +The abuses of which the people of Iowa complained were far from being +confined to their State. They were practiced throughout the Northwest, +and the demand for reform was as loud in Minnesota, Wisconsin and +Illinois as it was in Iowa. In 1871 laws were passed in Illinois and +Minnesota fixing maximum charges for the transportation of freight and +passengers and prohibiting discriminations. The railroads claimed that a +State did not have the right to prescribe rates and refused to be bound +by these laws. Instead of modifying their policy, they became daily more +arrogant. Discriminations which had before been practiced under the veil +of secrecy, or which had been defended by railroad managers as +exceptions to the general rule made necessary by a peculiar combination +of circumstances wholly beyond their control, were now openly and +defiantly practiced by several of the larger roads. The Chicago, +Milwaukee and St. Paul Railroad Company, in its effort to annihilate a +rival, went so far as to openly announce to the public its intention to +entirely disregard distance as a factor in rate-making. It gradually +became the general rule to wage war against rivals at competitive +points and to "recoup" by charging excessive rates at non-competitive +points. Every encouragement was thus given by the railroads to the +Granger movement, which spread in less than two years over the whole +Northwest. + +In the fall of 1873 Iowa elected a Granger legislature, like Minnesota, +Wisconsin and Illinois. The wildest predictions were made by railroad +men as to the extremes to which the Granger legislature would go, but it +confined itself to enacting a law establishing an official +classification and fixing maximum rates for all railroad companies. The +law was approved March 23, 1874, and went into effect on the 4th of July +following. This law in no case compelled companies to carry freight at a +lower rate than they had voluntarily carried it in the past. Many of the +rates in force at the time of the passage of the act were considerably +lower than the corresponding maximum rates fixed by the legislature. The +average rates fixed by the law were higher than the rates at which the +railroads had previously carried a large portion of corresponding +freight. The revenues of the road were not even curtailed by this law; +on the contrary, by equalizing rates, _i. e._, by leveling up the rates +given to favored places and favored individuals and leveling down the +exorbitant rates exacted from the public at non-competitive points, the +railroad companies were enabled to effect an increase in their total +revenue. + +The Granger law remained in force until 1878. Its constitutionality was +tested by the railroad companies in the Supreme Court of the United +States, but this high tribunal held that rate-making was a legislative +and not a judicial function, that it was within the province of the +State legislature to prescribe rates for the transportation of +passengers and freight wholly within the State, and that for protection +against abuses by legislatures the people must resort to the polls, and +not to the courts. + +The Granger laws have been and are still severely criticised by those +opposed to the principle of State control and by the ignorant. It is +nevertheless true that those laws were moderate, just and reasonably +well adapted to remedy the evils of which the public complained. It has +been the policy of most railroad men to attack them as crude, intensely +radical and socialistic. The obloquy heaped upon them was the work of +designing men who desired to continue their impositions upon the people. +Mr. Charles Francis Adams, however, admits that the Granger method was +probably as good a method as could have been devised of approaching men +who had thoroughly got it into their heads that they, as common +carriers, were in no way bound to afford equal facilities to all, and, +indeed, that it was in the last degree absurd and unreasonable to expect +them to do so. + +The Iowa law was imperfect in detail, and yet its enactment proved one +of the greatest legislative achievements in the history of the State. It +demonstrated to the people their ability to correct by earnestness and +perseverance the most far-reaching public abuses and led to an emphatic +judicial declaration of the common-law principle that railroads are +highways and as such are subject to any legislative control which may be +deemed necessary for the public welfare. + +Defeated in the courts, the railroad managers now endeavored to make +odious the new law which deprived them of the power to manipulate +railroad interests to their personal advantage. By complying with only +part of its letter and none of its spirit, they contrived to create +hardships for certain interests and localities. Instead of charging in +all cases reasonable rates, as the spirit of the law demanded, they +would frequently charge the maximum rates permitted under the law, and +when they by this practice succeeded in damaging certain interests, they +would point to the Granger law as the source of all existing railroad +evils. So, likewise, when they were asked by their patrons to reduce a +high rate, they would plead the legislative schedule in excuse of their +failure to comply with the request. When the legislature of 1878 +convened, the railroad managers appeared before it and pleaded +submissively for a repeal of the Granger law and the establishment of a +commissioner system. They claimed that they were ready and willing to +submit to all reasonable regulation, but that a maximum tariff law was +prejudicial both to the best interests of the roads and those of the +public. They further asserted that the people had grown tired of this +manner of regulating railroad charges and earnestly desired a change of +policy; that the interference of the State with the railroad business +had injuriously affected certain industrial interests and had greatly +retarded railroad construction by driving capital and promoters of +railroad enterprises from the State. These statements would indeed have +argued strongly in favor of a repeal of the law if they had been based +on facts. There had been, however, no expression of public +dissatisfaction during the campaign preceding the session of the General +Assembly. There were doubtless individuals and even communities to whom +the law had been made so odious that they felt they had but little to +lose by a change, but the masses of the people believed that the law was +based upon just principles and desired its perfection rather than its +repeal. As to the claim that railroad construction had been checked by +hostile legislation, statistics prove that during the five years +following the great panic of 1873 Iowa fared no worse in this respect +than her sister States east, west or south. + +The arguments produced by the railroad managers no doubt influenced some +members of the General Assembly; by far the greater number of them, +however, realised that the failure of the law to bring the expected +relief was not due so much to its own imperfections as to the absence of +a power to enforce it. The writer, with others, was convinced that a +strong and conscientious commission would be a much more potent agency +to secure reasonable rates for the shipper than a maximum tariff law +without proper provisions for its efficient enforcement; they, in short, +preferred a commission without a tariff law to a tariff law without a +commission. The question became the subject of many animated debates in +both houses of the General Assembly, but the commissioner system at last +prevailed. The act establishing a Board of Railroad Commissioners, and +defining their duties, was approved on the 23rd of March, 1878, and went +into force a few days later. The act empowered the commission to +exercise a general supervision over all railroads operated in the State, +to inquire into any neglect or violation of the laws of the State by any +railroad corporation or its officers or employes, to examine the books +and documents of any corporation, to investigate complaints of shippers +that unreasonable charges had been made by railroad companies, and to +modify any charge which they might deem unreasonable. It was also made +the commissioners' duty to make an annual report to the Governor +disclosing the working of the railroad system in the State, the officers +of each company being required to make annual returns to the board for +this purpose. + +Though the enactment of this law was a surprise to the people, they +accepted it in good cheer, and determined to give it an honest trial. +The law was extensive in its scope and stringent for that time, and, if +strictly enforced in letter and in spirit, promised to be, and would +have been, entirely sufficient for the thorough control of railroad +corporations. + +Nevertheless, in the course of time it became apparent that either the +law had not lodged sufficient authority in the commission or the +commission did not make use of the authority which the law had given +them. In spite of the commission, the railroad companies maintained +pools and charged extortionate and discriminating rates, in direct +violation of the law. It is true the commissioners righted many a wrong. +In investigating the complaints of shippers against railroad companies +they often rendered valuable services to those who had neither the means +nor the inclination to prosecute their rights in the courts of law; but +as they held that they could only pass upon individual charges, and did +not have the power to revise the companies' tariffs, the companies were +virtually in a position to become guilty of more extortions in one day +than the commission could investigate in a year. Moreover, the railroad +company might be ordered by the commission to return an overcharge to a +certain shipper, but this did not prevent it from continuing the +excessive charge. If the overcharged shipper again wanted relief it was +his privilege to again apply to the commission, and to continue this +tedious process until either his or the commissioners' patience became +exhausted. The people soon found that the new system of control was +almost as inadequate as that which it had displaced. Some attributed the +weakness of the commission to its personnel, others to the law. There +is no doubt that the commission might have accomplished more than it +did. + +It was hoped by some that as the commission gained in experience it +would gain in influence, and that railroad evils would gradually +diminish. But they were disappointed in their expectations. Every year +seemed to add to the grievances of the public. Success greatly +emboldened the railway companies. Discriminations seemed to increase in +number and gravity. At many points in the western part of the State +freight rates to Chicago were from 50 to 75 per cent. higher than from +points in Kansas and Nebraska. A car of wheat hauled only across the +State paid twice as much freight as another hauled twice the distance +from its point of origin to Chicago. Minnesota flour was hauled a +distance of 300 miles for a less rate than Iowa flour was carried 100 +miles. Certain merchants received from the railroad companies a discount +of 50 per cent. on all their freights and were thus enabled to undersell +all their competitors. The rate on coal in carload lots from Cleveland, +Lucas County, to Glenwood was $1.80 per ton, and from the same point to +Council Bluffs only $1.25, although the latter was about thirty miles +longer haul. Innumerable cases of this kind could be cited. There was +not a town or interest in the State that did not feel the influence of +these unjust practices. Many of the rates complained against, it is +true, were beyond the direct control of the State commission, but there +was an impression among well-informed shippers that if the commission +had the power to fix local rates and exercised it judiciously, the +railroad companies would soon find it to their interest to be as +reasonable in making through rates for Iowans as they expected the +commission, to be in prescribing local tariffs. + +The demand of the people for more equitable rates and a more thorough +control of the railroad business increased from year to year. Repeated +attempts were made in the General Assembly to secure the passage of an +act looking to that end, but, owing to shrewd manipulations on the part +of the railroad lobby, every attempt was defeated. There always was, of +course, a large number of members who represented districts not well +supplied with railroad facilities. These, as a rule, honestly opposed +restrictive legislation, believing that such legislation would check +building, and that, on the other hand, competition could be relied upon +to correct abuses. Of those members who had less positive convictions +many were retained as railroad attorneys and were thus made serviceable +to the companies. Other members with political ambition were nattered or +intimidated into subjection, and bribes in disguise, such as passes and +special rates, were not unfrequently resorted to to strengthen the +railroad following in both houses of the General Assembly. + +Railroad corruption did not pause here. It is a notorious fact that +large sums of money were paid to venal papers of both parties in +consideration of an agreement on their part to defend transportation +abuses and exert their influence against progressive railroad +legislation. The vilest means were often resorted to by these sheets to +obtain their end. Public men who had the courage to avow their +opposition to existing railroad abuses or to favor a more perfect system +of State control of railways were misrepresented, ridiculed, traduced +and denounced as demagogues and socialists by hypocritical editors, who +prostituted their political influence as long as they enjoyed railroad +stipends, and who at intervals became converts to the cause of the +people for the purpose of extorting from the railroad companies a new +and increased subsidy. But truth can not long be suppressed. The masses +of the people may be imposed upon for a time, but even the shrewdest +rogue will eventually be compelled to surrender. In time even rather +unsophisticated voters learned to place a true estimate upon the motives +of the editors, whose policy, as one of them expressed it in the +author's presence, was "controlled by the counting-room." + +Railroad politicians gradually lost their influence, and the symptoms of +public discontent greatly increased. In the political campaign of 1887 +State control of railroads became one of the main issues. Both of the +great political parties in their platforms had declared themselves very +emphatically in favor of such legislation as would bring railroad +corporations under complete State control, and with very few exceptions +the various legislative districts had nominated only such men as +candidates for legislative offices as were known to be in thorough +accord with the masses of the people upon the railroad question. + +The election resulted in an even more complete defeat of the railroad +forces than had been generally anticipated. Yet no hasty step was taken +when the General Assembly convened. A large number of bills +contemplating railroad reforms in various ways were introduced, but the +material presented was carefully sifted by the railroad committees and a +committee bill was framed which incorporated the best features of them +all. The committees listened patiently for weeks to the arguments of the +representatives of both the railroads and the shippers. + +Never before had so formidable a railroad lobby assembled at the State +Capitol. The danger signal had been raised, and not only were the great +political manipulators of the State called into requisition, but experts +from adjoining States joined them in besieging the legislature. The +dogs of war were let loose from all quarters. A legion of hirelings were +zealous to show their servility and loyalty to their lords. The daily +and weekly papers of the State in the service of railroad companies +teemed with arguments from the pens of railroad attorneys, and their +columns were profusely supplemented with editorials copied from +prominent corporation papers like the New York _Tribune_, New York +_Times_, New York _World_, Albany _Evening Argus_, Boston _Advertiser_, +and others from various parts of the country. + +These papers, attempting to disguise the motives that prompted them to +come to the defense of the Wall Street interest, affected the position +of disinterested and impartial observers. They condemned the proposed +measures as wild and socialistic, and they painted in dark colors the +disasters to railroad property, the injustice to its owners, and +misfortunes to the people of Iowa, that would follow their adoption. +Especially did they bewail the losses that would fall upon the widows +and orphans who had confidingly invested all of their hard earnings in +this property. + +They never uttered a word of condemnation, but entirely ignored or +defended the abuses by which the stockholders were robbed at one end of +the line and the patrons were imposed on at the other. + +Many of these papers were notified that their statements were altogether +erroneous, but they would not admit a line to their columns in relation +to the matter that indicated any other disposition than complete +subserviency to the interests of Wall Street. + +There were, however, an unusual number of strong men in this General +Assembly, and this extraordinary display of railroad forces only tended +to impress more strongly upon them the necessity of curbing the railroad +power, and their best energies were concentrated upon the subject, with +a firm determination to deal with it in a manner dictated by reason and +experience. + +So well did the bill which was finally adopted by the committee reflect +the general sentiment of the members of the General Assembly that not a +single vote was cast against it in either house upon its final passage. +Since the adjustment of business under this law, there has been less +friction between the people and the railroads than before for thirty +years, and so satisfactory has it proved to all that no one, not even a +railroad man, has to this day asked the legislature to repeal the law or +any part of it. The act contains no new principle of railroad control. +By far the greater part of its provisions were taken from the old law. +Nearly every one of its features may be found either in the Interstate +Commerce Act or upon the statute books of other States. It provides that +charges must be reasonable and just, that no undue preference or +advantage shall be given to any railroad patron, and that equal +facilities for interchange of traffic shall be given to all roads; it +prohibits pooling, a greater charge for a shorter than longer haul, the +shorter or any portion of it being included in the longer, and +discrimination against any shipping point. It requires that schedules of +rates and fares shall be printed and kept for public inspection, and +that no advance shall be made in rates or fares once established except +after ten days' public notice; and it empowers the Board of Railroad +Commissioners to make and revise schedules for railroads, the rates +contained in such schedules to be received and held in all suits as +_prima facie_ reasonable maximum rates. The act further provides +penalties and means of enforcement. + +It must not be supposed that by the passage of this act the legislature +disclaimed the right to fix absolute rates; it simply chose this +expedient because in the present tentative stage of rate regulation it +seemed most efficient. + +There has been much misunderstanding concerning the Iowa law. Many +suppose that the Iowa commissioners have power to make confiscatory +rates for the railroads, while in fact they can only name maximum rates +which shall be deemed and taken in all courts of the State as _prima +facie_ evidence that they are reasonable and just maximum rates until +the railroads show that they are not. They are at liberty to go into +court any day and show this, if they are able. They are, however, +careful not to undertake it, for no one knows better than they do that +the rates fixed by the commissioners are liberal for the railroads. + +There are nine States, besides Iowa, in which the power to fix rates has +been conferred upon railroad commissioners. This feature of the law was +therefore far from being a novel one, yet no provision of the act was, +previous to its passage, so furiously opposed, or subsequent to it so +stubbornly resisted as this. Railroad managers realized that a surrender +of the right to make their own rates was virtually a surrender of the +power to practice abuses. + +Soon after the passage of the law the commissioners commenced the work +of preparing schedules of the rates for the roads. They endeavored to do +justice to both the railroad companies and their patrons by affording a +fair compensation to the former and at the same time giving relief to +the depressed interests represented by the latter. Their rates were not +as low as the special rates that had at various times been granted to +favorite shippers, but were a fair average of the various rates in vogue +at the time. While the schedule was under consideration, the railroad +managers were given frequent hearings, in which they endeavored to +impress their views upon the commissioners and to obtain many important +concessions, which they urged as essential to the welfare of the +railroad interests. Their views guided the commission to such an extent +that it was generally supposed that the schedule as finally adopted +would be accepted by the railroad companies without protest. + +The schedule of the Iowa commission has been sharply criticised by Mr. +Stickney in his "Railway Problem." He finds in it inconsistencies and +confusion, due, as he charges, to faulty mathematics. But it is claimed +by the commission, and Mr. Stickney should know, that whenever +mathematics were ignored in the construction of the schedule it was done +at the earnest and persistent solicitation of the railroad managers, +who, it seems, were more interested in maintaining their interstate +rates than in the consistency of the Iowa schedule. + +The rates were published, as required by law, and June 28, 1888, was +fixed as the day on which they were to take effect. A few days previous +to this date the companies asked that the taking effect of the new +tariff be postponed a week. When this request was granted by the +chairman of the commission, the railroad managers took advantage of the +courtesy by enjoining the commissioners in the Federal court from +enforcing it. + +Several months later the commissioners modified their schedule by the +adoption of the Western Classification. Again the railroad managers +asked the court for an injunction, but this time met with a refusal. + +After many suits for penalties had been instituted against them, and +many more threatened, they adopted the new schedule, but endeavored to +inaugurate a policy of retaliation by reducing their train service and +discharging a large number of employes, and in many ingenious ways +continued their seditious course with a determination characteristic of +a band of insurrectionists. But the impetus which railroad traffic +received under the operation of the commissioners' schedule was such +that they soon found it necessary to restore to the service its former +efficiency. + +The Railroad Commissioners' report shows that while the number of +employes was 24,642, and their yearly compensation was $14,212,500 in +1889, in 1892 there were 30,492 employes, and their yearly compensation +$18,070,915. + +The increase in both the gross and net earnings of Iowa lines has been +remarkable, as shown in the following table gathered from the +commissioners' reports: + + Gross Earnings, Net Earnings, + Year. Total. Total. Per Mile. + + 1888-89 $37,369,276 $11,861,310 $1,421 + 1889-90 41,318,133 12,798,430 1,522 + 1890-91 43,102,399 14,463,106 1,720 + 1891-92 44,540,000 14,945,000 1,777 + +It was claimed by railroad men that the effect of Iowa legislation would +be particularly disastrous to her local roads, which had no opportunity +to make up on through business the losses incurred in the local traffic. +The Burlington, Cedar Rapids and Northern was particularly cited as a +line which would have to go into bankruptcy under the new law. Its +earnings commenced to increase, however, immediately after the adoption +of the commissioners' schedule, and at the end of the first year they +were large enough to change this line from a Class "C" to a Class "B" +road. They continued to increase, and in 1891 its gross earnings on +substantially the same mileage were 36 per cent, and its net earnings 64 +per cent. larger than they had been in 1888. The increase continued and +enabled the company to make a dividend to its stockholders February 1, +1893, it being the first dividend ever made by the company. It is a good +illustration of what the Iowa law has done for weak railroads. It has +again changed class and is now a Class "A" road. + +It is seen that the fears, or rather the pretended fears of the railroad +managers, that the legislature of Iowa would bankrupt her railroads, +were entirely groundless. As a result of the law railroads have been +able to increase their gross earnings as well as their profits. They +have been enabled to give employment to a larger number of men, and +there has been no occasion for them to carry out the dishonest threat to +decrease the wages of their employes. Had it not been for their +increased earnings in Iowa, the losses recently sustained in other +States by several of the through lines would have made it impossible for +them to declare the dividends which they did. + +Under her beneficial railroad policy Iowa has prospered wonderfully, and +her railroads have been more prosperous than when they were allowed to +have their own way. The commissioners' tariff has made jobbing and +manufacturing profitable where it was unprofitable before. It has added +to our industries and our commerce, and has made new business for the +people as well as the railroads. It has contributed to the increase in +the value of our farms and factories and their products, and the time +will come when wise railroad managers, like the majority of former +slaveholders of the South, would not resurrect the past if they could. +In fact, honorable managers now acknowledge that they would not if they +could. + +The railroad companies are at present making a systematic effort to +weaken the Iowa commission, but if they should succeed in doing so, the +people, under our system of electing the commissioners, can readily +correct the evil. + +Other States have much experience similar to that of Iowa. Nebraska has +just adopted a maximum tariff law for the control of her roads. It will, +of course, be resisted by the railroad managers of that State. + +The State of Texas is not so productive in proportion, but is much +greater in extent than Iowa, and upon the whole resembles it much in its +prominent characteristics. Both are thrifty, progressive States, with no +large commercial or manufacturing centers where their people can easily +organize to protect their financial interests. + +The people of Texas endured patiently the abuses so prevalent in +railroad management until a few years since they enacted a railroad law +similar to that of Iowa. The Wall Street managers of the Texas railroads +are at the present time using all of their familiar methods to influence +the people of that State to repeal their law. The following letter +serves to show the spirit with which they are approached: + + + "23 BROAD STREET, + NEW YORK, November 30, 1891. + + James B. Simpson, Esq., Dallas, Tex. + + "DEAR SIR: Yours of the 26th is received and contents + carefully noted. Very likely you have valuable franchises, + or what would be valuable in almost any other state than + Texas; but while there are many places in Texas where we + would like to build some railroads--mostly short ones--we + cannot do anything so long as the disposition exists that + now seems to in Texas; that is, to do all the harm they + can do this kind of property, and I think my views are + shared by all people who have money to invest. No one is + disposed to create property which, after being created, is + not to be controlled by its ownership. Of course, we all + expect to be subject to the police regulations and to pay + the taxes of any State even as other property, but whenever + anything is done beyond that it checks this kind of + improvement, and where it approaches so near confiscation as + the sentiment of Texas tends it entirely prevents capital + from being invested. + + "I think there is no road in Texas that is to-day earning + its operating and fixed charges. Every road, I think, has + been or is in the hands of a receiver, excepting our great + east and west line, which is supported by business going + entirely through the State, which business could also be + sent another way, and would be so sent, excepting that we + believe the people of Texas will some time take a sober + second thought and treat the railroads as they do other + kinds of property. When that time comes I shall be ready to + talk to you about your franchises, if it comes in my day, + and I believe it will, as I think no other people are + suffering from an unwise policy persistently pursued as are + the people of your State. + + "Yours truly, + C. P. HUNTINGTON." + + "Now, in the name of all the gods at once, + Upon what meat doth this our Caesar feed, + That he hath grown so great?" + +It was but a few years ago when this Mr. Huntington was keeping a small +retail store in the city of Sacramento, and he exhibited then no greater +ability, except perhaps that he was a little more venturesome, than +thousands of others engaged in the same occupation; subsequently he +engaged, with several others, in the Central Pacific Railroad scheme, +and received from the bounties of our generous Government as his share +of the profits in that enterprise several million dollars, which sum has +ever since been continually swelled by the exercise of a power scarcely +inferior to the power of taxing the property of the Pacific Coast. He +has been so successful for years in manipulating Congressmen and State +legislatures and shaping the policies of States that he now considers it +impertinent and short-sighted for a people to take steps to limit his +levies upon them. It is to be hoped that the boycotting and intimidating +methods resorted to will have no more effect upon the people of that +State than they had on the people of Iowa. + +Iowa is the queen among the States of the Union. No other State has so +little waste land or is so productive. Her annual output of staple +products amounts to hundreds of millions of dollars in value. Her people +are intelligent, progressive and just. None are governed more by the +precepts of the golden rule, or are more disposed to render unto Caesar +the things that are Caesar's. She can well be proud of the progress she +has made in State control of railroads. Let no backward step be taken. + + + + +CHAPTER XII. + +THE INTERSTATE COMMERCE ACT. + + +The Constitution of the United States was adopted nearly fifty years +before the locomotive made its appearance. Had the steam railroad been +in existence in 1787 and been as important an agency of commerce as it +is to-day, there is every reason to believe that the railroad question +would have received the special attention of the framers of that +instrument. It is a well-known fact that the "new and more perfect +government" had its origin in the necessities of commerce, and while the +future exigencies of trade were beyond the reach of the most speculative +mind, the provisions of the Constitution relating to the subject of +interstate commerce were made broad and far-reaching. Section 8 of +Article I. of the Constitution provides that "the Congress shall have +power ... to regulate commerce with foreign nations, and among the +several States, and with the Indian tribes ... and to make all laws +which shall be necessary and proper for carrying into execution the +foregoing powers and all other powers vested by this Constitution in the +Government of the United States, or in any department or officer +thereof." + +If any doubt ever existed as to the import of the phrase "to regulate +commerce," it has been entirely removed by the decisions of the Supreme +Court. In the Passenger cases, 7 Howard, 416, the court said: + + "Commerce consists in selling the superfluity; in purchasing + articles of necessity, as well productions as manufactures; + in buying from one nation and selling to another, or _in + transporting the merchandise_ from the seller to the buyer + to gain the freight." + +And again, in the Philadelphia and Reading Railroad vs. Pennsylvania, +the Supreme Court said: + + "Beyond all question the transportation of freights or of + the subjects of commerce for the purpose of exchange or sale + is a constituent of commerce itself. This has never been + doubted, and probably the transportation of articles of + trade from one State to another was the prominent idea in + the minds of the framers of the Constitution when to + Congress was committed the power to regulate commerce among + the several States.... It would be absurd to suppose that + the transmission of the subjects of trade from the seller to + the buyer, or from the place of production to market, was + not contemplated, for without that there could be no + consummated trade with foreign nations or among the States." + +Chief Justice Marshall, in Gibbons vs. Ogden, 9 Wheaten, 196, construed +the words "power to regulate" as follows: + + "This power, like all others vested in Congress, is complete + in itself, may be exercised to its utmost extent, and + acknowledges no limitations other than are prescribed in the + Constitution." + +It is a strange fact that during the first eighty years of the +Government's existence Congress did not exert its power to regulate the +conduct of common carriers engaged in interstate transportation. The +first act regulating such carriers was passed in July, 1866. It +authorized railroad companies chartered by the States to carry +passengers, freights, etc., "on their way from any State to another +State, and to receive compensation therefor, and to connect with roads +of other States so as to form continuous lines for transportation of the +same to the place of destination." The passage of this act, it should be +remembered, was urged by the railroad companies themselves. Seven years +later an act was passed providing that "no railway within the United +States, whose road forms any part of a line or road over which cattle, +sheep, swine or other animals shall be conveyed from one State to +another, or the owners or masters of steam, sailing or other vessels +carrying or transporting cattle, sheep or swine or other animals from +one State to another, shall confine the same in cars, boats or vessels +of any description for a longer period than twenty-eight consecutive +hours, without unloading the same for water, rest and feeding, for a +period of at least five consecutive hours, unless prevented from so +unloading by storm or accidental causes." + +Every violation of this act was made punishable by a penalty of from +$100 to $500. + +Though Congress had asserted the right to regulate commerce among the +States, it had made previous to 1873 very limited use of that power. In +the midst of the Granger movement the Senate of the United States passed +on the 26th day of March, 1873, the following resolution: + + "_Resolved_, That the Select Committee on Transportation + Routes to the Seaboard be authorized to sit at such places + as they may designate during the recess, and to investigate + and report upon the subject of transportation between the + interior and the seaboard; that they have power to employ a + clerk and stenographer, and to send for persons and + papers...." + +The committee, under the chairmanship of Mr. Windom, discharged their +duty with great fidelity, and submitted their report to the Senate +during its next regular session. They declared that the defects and +abuses of the then existing systems of transportation were insufficient +facilities, unfair discrimination and extortionate charges. As the +principal causes of such excessive rates they assigned stock watering, +capitalization of surplus earnings, construction rings, general +extravagance and corruption in railway management, and combinations and +consolidations of railway companies. The committee were of the opinion +that the promotion of competition would not permanently remedy the +existing evils, and laid it down as a general rule that competition +among railways ends in combination and in enhanced rates. As expedient +and practical remedies for the existing evils they recommended the +following measures: + +1. Direct Congressional regulation of railway transportation, under the +power to regulate commerce among the several States. + +2. Indirect regulation and promotion of competition, through the agency +of one or more lines of railway, to be owned and controlled by the +Government. + +3. The improvement of natural water-ways and the construction of +artificial channels of water communication. + +The report was accepted and considered, but there the matter rested, so +far as the practical results were concerned. + +In 1878 Mr. John H. Reagan, of Texas, introduced in the House of +Representatives a bill for an act to regulate railroad companies engaged +in interstate commerce. This may be said to have been the first real +interstate commerce bill before Congress. It was a progressive, thorough +and well-planned measure, but failed to receive the approval of Congress +because a majority of its members considered it too radical a measure. +The bill contained many of the provisions of the present Interstate +Commerce Act, including the anti-pooling and the long and short haul +clauses; but instead of creating a commission it lodged in the courts, +both State and Federal, the power to enforce the law. + +Other bills were introduced from year to year, but during a period of +nine years none of them drew sufficient votes to make it a law. Congress +may be said to have been divided into three camps upon the railroad +question, viz.: those who favored the system of regulation proposed by +Mr. Reagan, those who favored the commissioner system and those who were +opposed to every mode of Federal regulation of interstate commerce. In +the meantime, the inactivity of Congress caused considerable +restlessness among the people, and the demand for action became louder +every year. The issue entered into politics, and a number of Western +Congressmen owed their failure to be re-elected to their indifference or +enmity to Federal railroad legislation. + +On March 21st, 1885, under authority of a resolution adopted by the +Senate of the United States, the President of the Senate appointed a +select committee to investigate and report upon the subject of the +regulation of the transportation of freight and passengers between the +several States by railroad and water routes. Senator Cullom, of +Illinois, became its chairman. The committee examined a large number of +witnesses, including railroad managers and shippers, addressed letters +to the railroad commissioners of the several States, to boards of trade, +chambers of commerce, State boards of agriculture, Patrons of Husbandry, +Farmers' Alliances, etc., and made every effort to obtain the opinions +of those who had given special attention to the transportation problem. + +The report of the committee was submitted to the Senate on January 18, +1886. Concerning the abuses of railroad transportation it differed but +little from that of the Windom committee. The report declared publicity +to be the best remedy for unjust discrimination and recommended that +the posting of rates and public notice of all changes in tariffs be +required. It also recommended that a greater charge for a shorter than a +longer haul be made presumptive evidence of an unjust discrimination, +and that a national commission be established for the enforcement of any +laws that might be passed for the regulation of interstate commerce. +Upon the question of pooling the report stated: + + "The committee does not deem it prudent to recommend the + prohibition of pooling, which has been urged by many + shippers, or the legalization of pooling compacts, as has + been suggested by many railroad officials and by others who + have studied the question.... The majority of the committee + are not disposed to endanger the success of the methods of + regulation proposed for the prevention of unjust + discrimination by recommending the prohibition of pooling, + but prefer to leave that subject for investigation by a + commission when the effects of the legislation herein + suggested shall have been developed and made apparent." + +The report was accompanied by a bill representing "the substantially +unanimous judgment of the committee as to the regulations which are +believed to be expedient and necessary for the government and control of +the carriers engaged in interstate traffic." + +The bill was before Congress for more than a year, receiving several +important amendments before its final passage in both houses. It was +approved by the President on the 4th day of February, 1887, and took +effect sixty days after its passage, except as to the provisions +relating to the appointment and organization of an Interstate Commerce +Commission, which took effect at once. + +The act contains twenty-four sections, but is by no means cumbersome. It +is, in many respects, the most important piece of legislation that has +been had in Congress for the past twenty years. It applies to common +carriers engaged in the transportation of passengers or property wholly +by railroad, or partly by railroad and partly by water, when both are +used, under a common control, management or arrangement, for a +continuous carriage or shipment from one State or Territory of the +United States, or the District of Columbia, to any other State or +Territory in the United States or the District of Columbia, or from any +place in the United States to an adjacent foreign country, or from any +place in the United States through a foreign country to any other place +in the United States. It prohibits unjust and unreasonable charges, +special rates, rebates, drawbacks, undue or unreasonable preferences, +advantages, prejudices and disadvantages, as well as all discriminations +between connecting lines. It makes unlawful a less charge for a longer +than for a shorter haul over the same line, in the same direction, the +shorter being included within the longer distance, except when specially +authorized by the Interstate Commerce Commission. It prohibits pools, +requires schedules of freight rates and passenger fares to be kept in +all depots and stations, permits no advance in the rates, fares and +charges once established, except after ten days' public notice, and +makes it unlawful for common carriers to charge either more or less than +schedule rates. + +It also requires them to file copies of all schedules, traffic contracts +and joint schedules with the Interstate Commerce Commission, as well as +to make them public when directed by the commission, and prohibits +combinations to prevent the carriage of freight from being continuous +from the place of shipment to the place of destination. It makes common +carriers liable for all damages to persons injured by violations of the +act, and specially provides that any court before which such a damage +suit may be pending may compel any director, officer, receiver, trustee +or agent of the defendant company to appear and testify in the case, and +that the claim that any such testimony or evidence may tend to criminate +the person giving such evidence shall not excuse such witness from +testifying, but that such evidence or testimony shall not be used +against such person on the trial of any criminal proceeding. It likewise +subjects such officers and employes of a railroad company as may be +guilty of aiding or abetting in violations of the act to fines not +exceeding $5,000 for each offense. + +These provisions are covered by the first ten sections of the act. +Section 11 establishes the Interstate Commerce Commission, to be +composed of five commissioners appointed by the President by and with +the advice and consent of the Senate. It provides that the commissioners +first appointed shall continue in office for the term of two, three, +four, five and six years, respectively, from the first of January, 1887, +the term of each to be designated by the President, and that their +successors shall be appointed for terms of six years, except that any +person chosen to fill a vacancy shall be appointed only for the +unexpired term of the commissioner whom he shall succeed. No more than +three commissioners may be appointed from the same political party, and +the President has the power to remove any commissioner for inefficiency, +neglect of duty or malfeasance in office. Authority is given to the +commission to inquire into the management of the business of all common +carriers subject to the provisions of the act and to require the +attendance of witnesses and to invoke the aid of any court of the United +States for that purpose. + +Section 13 authorizes any person, firm, corporation or association, any +mercantile, agricultural or manufacturing society, any body politic or +municipal organization to file complaints against any common carrier +subject to the provisions of the act, with the commission, whose duty it +is made to forward a statement of the charges to such common carrier and +call upon him to satisfy the complaint or answer the same in writing, +and to investigate the matters complained of, if the complaint is not +satisfied. The commission is also charged with the duty of making such +investigations at the request of State or territorial railroad +commissions and may even institute them at its own motion. Section 14 +requires the commission to make a report in writing of any investigation +it may make and to enter it of record and furnish copies of it to the +complainant and the common carrier complained of. Section 15 makes it +the commissioners' duty, when it is found that any law cognizable by it +has been violated by a common carrier, to serve notice on such carrier +to desist from such violation and to make reparation for an injury found +to have been done. If any lawful order or requirement of the commission +is disobeyed by a common carrier, it becomes their duty and is lawful +for any company or person interested in such order to apply by petition +to the Circuit Court of the United States sitting in equity in the +judicial district in which the common carrier complained of has its +principal office, and the court has power to hear and determine the +matter speedily and without the formal pleadings and proceedings +applicable to ordinary suits, and to restrain the common carrier from +continuing such violation or disobedience. It is further provided by +this section that on such hearings the report of the commission shall be +accepted as _prima facie_ evidence. + +Section 17 regulates the proceedings of the commission. A majority +constitute a quorum for the transaction of business. The commission may +from time to time make or amend rules for the regulation of proceedings +before it. Any party may appear before it and be heard in person or by +attorney, and every vote or official act of the commission must be +entered of record and its proceedings made public upon the request of +either party interested. + +Section 19 provides that the principal office of the commission shall be +in Washington, but that for the convenience of the public it may hold +special sessions in any part of the United States. + +Section 20 authorizes the commission to require annual reports from all +common carriers subject to the provisions of the act, to fix the time +and prescribe the manner in which such reports shall be made, and to +require from such carriers specific answers to all questions upon which +the commission may need information. + +Section 21 excepts from the operation of the act the carriage of +property for the United States, State or municipal governments, or for +charitable purposes, or for fairs and expositions; also the issuance of +mileage, excursion and commutation tickets, the giving of reduced rates +to ministers of religion, the free carriage by a railroad company of its +own officers and employes, and the exchanging of passes or tickets among +the principal officers of railroad companies. + +The sections not noticed are of minor importance, relating to annual +reports, salaries, appropriations of funds, etc. + +The act was amended on March 2, 1889, but the amendments made did not +materially affect its principal provisions. + +When the law was passed its friends well realized that its success would +greatly depend on the character of the commissioners whom it was +incumbent upon the President to appoint. It was feared that if the +railroad influence should control these appointments, the power to +suspend the long and short haul clause would be the chief and perhaps +the only power exercised by the commission. There was great danger that +the office of Interstate Commerce Commissioner might become a sinecure +for servile railroad lawyers, as similar State officers had been before, +and that a public trust might be turned into an additional corporation +agency for evil. The selection of the commissioners, and especially that +of Judge T. M. Cooley, of Michigan, was greatly to the credit of +President Cleveland. A man of unquestionable integrity, an eminent +jurist and close student of railroad affairs, Judge Cooley was +particularly well qualified for the office of chairman of the Interstate +Commerce Commission, which he occupied for nearly five years with signal +fitness, and from which he only retired to the sincere regret of the +American people. Under Judge Cooley's leadership the commission has been +more than a purely executive board. It was under the Constitution not in +the power of Congress to clothe the Interstate Commerce Commission with +full judicial authority without giving its members, like other Federal +judges, tenure for life, instead of a term of years. The inherent force +of the commission's decisions in its interpretation of the law made them +in many cases virtually the equivalent of judicial rulings. + +A few of the most important decisions of the commission may be mentioned +here. Construing the long and short haul clause, they held that, in case +of complaint for violating this section of the act, "the burden of proof +is on the carrier to justify any departure from the general rule +described by the statute, by showing that the circumstances and +conditions are substantially dissimilar." They also decided that "when a +greater charge in the aggregate is made for the transportation of +passengers or the like kind of property for a shorter than a longer +distance over the same line in the same direction, the shorter being +included in the longer distance, it is not sufficient justification +therefor that the traffic which is subjected to such greater charge is +way or local traffic and that which is given the more favorable rates is +not; and that it is not "sufficient justification for such greater +charge that the short-haul traffic is more expensive to the carrier, +unless when the circumstances are such as to make it exceptionally +excessive, or the long-haul traffic exceptionally inexpensive, the +difference being extraordinary and susceptible of definite proof; nor +that the lesser charge on the longer haul has for its motive the +encouragement of manufactures or some other branch of industry, nor that +it is designed to build up business or trade centers." + +Upon the question of publicity of the railroad business the commission +held that, as the books of the defendant carriers, as to rates charged, +facilities furnished and general movements of freight, are in the nature +of semi-public records, the officers and agents of defendant carriers +ought to give promptly to a complainant any statement of facts called +for, if such statement may probably have importance on the hearing. + +Judge Brewer's opinion as to what constitutes a reasonable rate was +evidently not shared by Judge Cooley and his colleagues, for in the case +of the New Orleans Cotton Exchange vs. the Cincinnati, New Orleans and +Pacific Railway Company the commission decided that the fact that a +road earns but little more than operating expenses cannot be made to +justify grossly excessive rates, and that "wherever there are more roads +than the business at fair rates will remunerate, they must rely upon +future earnings for the return of investments and profits." In another +case the commission hold that "in fixing reasonable rates the +requirements of operating expenses, bonded debt, fixed charges and +dividend on capital stock from the total traffic are all to be +considered, but the claim that any particular rate is to be measured by +these as a fixed standard, below which the rate may not lawfully be +reduced, is one rightly subject to some qualifications, one of which is +that the obligations must be actual and in good faith." + +The rules governing the proper construction of classification sheets +which the commission has laid down are founded upon common sense and +justice. They say: + + "A classification sheet is put before the public for general + information; it is supposed to be expressed in plain terms + so that the ordinary business man can understand it and, in + connection with the rate sheets, determine for himself what + he can be lawfully charged for transportation. The persons + who prepare the classification have no more authority to + construe it than anybody else, and they must leave it to + speak for itself." + +In defining what is legitimate traffic the commission made the following +decision: + + "The transportation of traffic under circumstances and + conditions that force a low rate for its carriage or an + abandonment of the business, but which affords some revenue + above the cost of its movement, and works no material + injustice to other patrons of a carrier, is to be deemed + legitimate competition. When, however, its carriage is at a + loss and imposes a burden on like traffic at other points + and on other traffic, it is to be deemed destructive and + illegitimate competition." + +It has been shown in a former chapter that the weaker oil refiners have +been discriminated against by the railroads, which permitted the +Standard Oil Company to use their own tank cars in the shipment of oil +and charge its competitors excessive rates for like shipments in +barrels. Complaint being made of this discrimination, the commission +held that it is properly the business of a carrier by railroad to supply +rolling stock for the freight he offers or proposes to carry, and that +"if the diversities and peculiarities of traffic are such that this is +not always practical, and the consignor is allowed to supply it for +himself, the carrier must not allow its own deficiencies in this +particular to be made the means of putting at unreasonable disadvantage +those who may use in the same traffic all the facilities which it +supplies." + +A most important ruling of the commission is that relating to the pass +abuse. Complaint was made that the Boston and Maine Railroad Company +issued in the States of Maine, New Hampshire, Vermont and Massachusetts +free passes to certain classes of persons, among them "gentlemen long +eminent in the public service, higher officials of the States, prominent +officials of the United States, members of the legislative railroad +committees of the above named States, and persons whose good will was +claimed to be important to the defendant." The commission decided that +such a discrimination is unwarranted, that a carrier is bound to charge +equally to all persons, regardless of their relative individual standing +in the community, and that the words "under substantially similar +circumstances and conditions" relate to the nature and character of the +service rendered by the carrier, and not to the official, social or +business position of the passenger. + +It is a notorious fact that the practice of issuing free passes to +public officials and other influential persons has been more or less +indulged in by nearly every railroad in the country up to the present +time. It is to be hoped that this ruling of the commission will be +enforced in such a manner as to put an end to this intolerable abuse. + +The Interstate Commerce Commission has been equally efficient in its +administrative capacity. From the very first it called attention to the +great advantage of having one classification of freight throughout the +country, and it has since labored diligently to unify the various +classifications in use. As the commission in this undertaking is only +armed with the armor of moral suasion, it is a difficult task; but there +is little doubt that the accomplishment of this great reform is only a +question of a few years. Iniquities in classifications and rates are +constantly pointed out by the commission and corrected by the companies. +Moreover, the annual reports of the commission, not to mention its very +excellent statistical data, diffuse much useful information and dispel +many delusions. Thus the fourth annual report of the commission says: + + "A stranger to the law might infer, from some public + addresses and pamphlets which have assumed to discuss this + subject, that the railroad companies were prohibited from + carrying the necessities of life over long distances at very + low rates, unless their rates on other subjects of + transportation for shorter distances were made to + correspond. Indeed, instances have been pointed out in which + it was said that certain articles of commerce could not now + be transported for long distances, because, by reason of + this provision, they would not bear the charges that must + under compulsion of law be imposed upon them. Among such + instances has been mentioned the granite industry of New + England, as to which it has been said that valuable + manufactories have ceased to be profitable because it has + now become impossible for the proprietors to obtain from + the railroad companies the nominal rates for the + transportation of their products which they formerly + enjoyed, since it is now, by the long and short haul clause, + made criminal for the companies to give such rates. + + "A complaint of this nature is not to be met by argument, + because it is baseless in point of fact. The instance + mentioned may safely be assumed to be chosen rather from + regard to the need of an attack upon the law than from any + belief in the justice of its application. The prohibition of + the fourth section, so far as concerns this article of + commerce, or any other that can be named, will have no + application whatever until it is made to appear that + elsewhere upon the lines of the road conveying it there is + property of the same kind, for transportation by the same + carriers in the same direction, upon which the carriers are + disposed to making greater charges in the aggregate for the + shorter hauls. + + "The wheat of the extreme West, it is also said, can no + longer have the nominal rates which were formerly made for + transportation to the seaboard, but this assertion is also + without point or applicability, unless it is shown that the + carriers are not only disposed to give such rates, but + propose to make up for the consequent losses to themselves + by the imposition of greater charges in the aggregate for + the carriage of the like grain when offered for carriage by + growers in the States nearer the seaboard. Nominal rates + impartially made as between shippers of like articles in the + same direction and under like circumstances and conditions + are as admissible now as they ever were." + +The same report contains a rather pointed reply to Judge Brewer's ruling +in the Iowa rate cases, viz., that, "where the rates prescribed will not +pay some compensation to the owners, then it is the duty of the courts +to interfere and protect the companies from such rates," and that +compensation implies three things: "Payment of cost of service, interest +on bonds and then some dividends." The commission reviews this stupid +rule as follows: + + "The effort has sometimes been made to indicate a rule which + must constitute the minimum of reduction in all cases, and + it has been said that rates must not be made so low that the + carriers would be left unable to pay interest on their + obligations and something by way of dividend to + stockholders, after maintaining the road in proper condition + and paying all running expenses. This comes nearer to a + suggestion of a rule of law for these cases than any other + that has come to the knowledge of the commission. But it is + so far from being a rule of law, that it is not even a rule + of policy, or a practical rule to which any name can be + given, and to which the carriers themselves or the public + authorities can conform their action. In the first place, + when we take into consideration the question of the + condition of roads and of equipment, the proper improvements + to be made, the new conveniences and appliances to be + considered and made use of, if deemed desirable, and the + innumerable questions that are involved in the matter of + running expenses, it is very obvious that there can be no + standard of expenses which the court can act upon and apply, + but that the whole field is one of judgment in the exercise + of a reasonable discretion by the managing powers or by the + public authorities in reviewing their action. It is to be + borne in mind that there are many roads in the country that + never have been and in all probability never will be able to + pay their obligations and to pay dividends, even the + slightest, to their stockholders.... If the rule suggested + is a correct one, and must be adhered to by the public + authorities, then it is entirely impossible that those who + operate these roads can prescribe excessive charges, since + it is impossible to fix any rates that would bring their + revenues up to the point of enabling them to pay any + dividends.... But the rule suggested would also be one under + which those roads would be entitled to charge the most + which, instead of being built with the money of the + stockholders themselves, had been constructed with money + borrowed; the larger the debt the higher being the rates + that would be legal. If a road were out of debt so that it + had no bonds to provide for, it must content itself with + such rates as would pay some dividend to its stockholders. + If the road were in debt, though it perhaps served the same + communities, it might be entitled to charge rates 50, or + possibly 100 per cent higher.... But over and beyond all + this the attempt to apply the rule suggested would be + absolutely futile for the reason that the rates prescribed + for one road would necessarily affect all others that either + directly or indirectly came in competition with it." + +It is no exaggeration to say that the annual reports of the commission +stand unexcelled as dauntless, clear, concise and instructive public +documents. It may also be asserted that whatever success has so far +attended the Interstate Commerce Law, that success is in a great measure +due to the tact, courage and ability of the men who, in the past, have +been the guiding spirits of the commission. + +Efforts will be made by railroad managers in the future, as they have +been made in the past, to weaken the commission by securing the +appointment of men servile to the railroad interest as members of that +body. + +Mr. Depew says that "all railroad men are politicians, and active ones." +This is true as to manipulating managers and will continue to be so just +as long as we allow such extraordinary powers to be exercised by them. +The saloon men are politicians, and active ones. There is not a city or +town in this broad land that is not in danger of falling under their +sway unless their offensive efforts are resisted. The old United States +Bank managers were politicians, and active ones. They perverted the +trust reposed in their hands to such an extent that the indignation of +the people was aroused, and under the lead of a stern old patriot the +bank was swept out of existence. Shall we restrain corporation +management within proper limits and make corporations serve the public +welfare, or shall we let the abuses go on until the people, under the +lead of another Jackson, demand emphatically the application of some +remedy, for better or for worse? Perhaps Government ownership, perhaps +something else. Nations, like individuals, should profit by the +experience of the past. + +The Interstate Commerce Commission, in their sixth annual report, say, +concerning the Interstate Commerce Law: + + "It was scarcely possible that it should be so complete and + comprehensive at the outset as to require no alteration or + amendment. Those who are familiar with the practices which + obtained prior to the passage of this law, and contrast them + with the methods and conditions now existing, will accord to + the present statute great influence in the direction of + necessary reforms and a high degree of usefulness in + promoting the public interest. + + "Whoever will candidly examine the reports of the commission + from year to year, and thus become acquainted with the work + which has been done and is now going on, will have no doubt + of the potential value of this enactment in correcting + public sentiment, restraining public injustice and enforcing + the principle of reasonable charges and equal treatment. + Imperfections and weaknesses which could not be anticipated + at the time of its passage have since been disclosed by the + effort to give it effective administration. The test of + experience, so far from condemning the policy of public + regulation, has established, its importance and intensified + its necessity. The very respects in which the existing law + has failed to meet public expectation point out the + advantages and demonstrate the utility of Government + supervision.... + + "Of this much we are convinced: The public demand for + Government regulation and the necessity for legal + protection against the encroachments of railroad + corporations have not been diminished by the experience of + the last six years. The act to regulate commerce was not + framed to meet a temporary emergency, nor in obedience to a + transient and spasmodic sentiment. The people will not + tolerate a return to the injustice and wrong-doing which + inevitably occurs when no correction is undertaken and no + regulation attempted. The evils of unrestricted management + will not be permanently endured, and legal remedies will + continue to be sought until they are amply provided. The + present statute, however crude and inadequate in many + respects, was the constitutional exercise of most important + powers and the legislative expression of a great and + wholesome principle. Its fundamental and pervading purpose + is to secure equality of treatment. It assumes that the + railroads are engaged in a public service, and requires that + service to be impartially performed. It asserts the right of + every citizen to use the agencies which the carrier provides + on equal terms with all his fellows, and finds an invasion + of that right in every unauthorized exemption from charges + commonly imposed. + + "The railroad is justly regarded as a public facility which + every person may enjoy at pleasure, a common right to which + all are admitted and from which none are excluded. The + essence of this right is equality, and its enjoyment can be + complete only when it is secured on like conditions by all + who desire its benefits. The railroad exists by virtue of + authority proceeding from the State, and thus differs in its + essential nature from every form of private enterprise. The + carrier is invested with extraordinary powers, which are + delegated by the sovereign, and thereby performs a + governmental function. The favoritism, partiality and + exactions which the law was designed to prevent resulted, in + large measure, from a general misapprehension of the nature + of transportation and its vital relation to commercial and + industrial progress. So far from being a private possession, + it differs from every species of property, and is in no + sense a commodity. Its office is peculiar, for it is + essentially public. The railroad, therefore, can rightfully + do nothing which the State itself might not do if it + performed this public service through its own agents instead + of delegating it to corporations which it has created. The + large shipper is entitled to no advantage over his smaller + rival in respect of rates or accommodations, for the + compensation exacted in every case should be measured by the + same standard. To allow any exceptions to this fundamental + rule is to subvert the principle upon which free + institutions depend and substitute arbitrary caprice for + equality of right. + + "The spirit of the law is opposed to usages so long + continued and so familiar that their unjust and demoralizing + character has not been clearly perceived, but it is a long + step towards such regulation of the agencies of + transportation as will make them equally available to all + without discrimination between individuals or communities. + It can hardly be the fault of those who are charged with its + administration if the beneficial aims of this statute have + not been fully attained and compliance with its provisions + not completely secured. A better understanding of its + purpose and an educated public sentiment, aided by the + needful amendments which experience suggests, will fully + vindicate the policy of Congress in undertaking to bring the + great transportation interests of the country into general + harmony with its requirements. + + "It affords us gratification to add that many railroad + managers of the highest standing now concede the necessity + for Government regulation, and avow themselves in favor of + such further enactments as will make that regulation + effective." + + + + +CHAPTER XIII. + +THE RATE QUESTION. + + +Railroad managers frequently make the assertion that the average freight +rates charged in the United States are lower than those usually charged +in European countries and that this fact is in itself sufficient proof +that they are too low. A comparison of the transportation problem of +Europe with our own will show this argument to be fallacious. + +While from $25,000 to $30,000 a mile is a very liberal estimate of the +average cost of American roads, the average cost of European railroads, +owing to their expensive rights of way, substantial road-beds and heavy +grades, is probably not less than $75,000 per mile. British railway +companies have laid out for the purchase of land, for right of way and +depot accommodations an amount about equal to the entire average cost of +American roads for the same number of miles. + +For instance, the Southeastern Company paid $20,000; the Manchester and +Leeds Company, $30,750, and the London, Birmingham and Great Western, +$31,500 per mile. The first Eastern Counties line paid even $60,000 per +mile for land through an agricultural district. As nearly as can be +ascertained, the average cost of the right of way of railroads was over +$20,000 for the United Kingdom. In Belgium the average cost of the right +of way was $11,000. It was lower, however, in the other countries of the +European continent. + +The topography of the country through which the English railways are +built is such as necessitated enormous expenses for heavy embankments, +cuttings, viaducts, tunnels and bridges, and in some cases increased the +cost of the roads to fabulous sums. The Lancashire and Yorkshire Railway +actually cost $260,000 per mile for the whole of its 403 miles. European +roads have been built in a much more permanent manner and have terminal +facilities whose cost is far beyond any sum paid for such purposes in +this country. In Great Britain, moreover, the expenses of contests and +of procuring charters have been very great and have probably averaged +$3,000 per mile. + +English railway men charge Americans with having indulged in +stock-watering to a greater extent than any other people in the world. +This is probably true, yet the English have not been dull students of +this art, and they are far from free of having indulged in this luxury. +Much of their railroad stock was issued in a wasteful manner and +represents no actual investment, and it is safe to say that from 30 to +40 per cent. of their present railroad capitalization is water. + +If upon the above basis both European and American railroads are to +yield an interest of 4-1/2 per cent. on the actual investment, the +former will have to earn at least $2,250 per mile more than the latter, +and this difference equals about 50 per cent. of the average operating +expenses of American roads per mile. Labor is cheaper across the +Atlantic, but this difference is more than equalized by the employment +of a much larger number of men per mile, as the following table will +show: + + Countries. No. of men employed Average wages Wages paid + per mile. per annum. per mile. + + United Kingdom 18 $335 $6,000 + Belgium 22 210 4,620 + Russia 15 240 3,600 + Germany 14 250 3,500 + France 14 220 3,080 + United States 5 555 2,625 + +The London and Northwestern Railway is 1,793 miles long and has over +55,000 employes, or over 30 per mile. The Lancashire and Yorkshire +Company employs over 42 per mile. + +The train men of Europe work less hours and earn less per capita for +their employers than do the train men of this country. The average +annual gross earnings per employe on sixteen of the leading lines of +Great Britain, as shown by Mr. Jeans, appear to be $975 against $1,600 +on fifteen leading lines of the United States, while the average net +earnings per employe are $465 on the British lines against $720 on the +American lines; making a difference in favor of this country of 70 per +cent. in gross earnings and 53 per cent. in net earnings. If American +labor is more expensive, it is also more efficient than labor is +elsewhere. + +It must also be considered that the average haul in Europe is much less +than the average haul in the United States. It has always been +maintained by the railroad companies, and very justly, too, that the +terminal charges are as important a factor of freight rates as is the +cost of carriage. The terminal charges are the same for a +twenty-five-mile haul as for a thousand-mile haul; they form a +comparatively large part of the total charges for the former and a very +small part of the total charges for the latter. It is therefore +manifestly unjust to compare the rates per ton per mile of Europe with +those of the United States without making due allowance for the +difference in the length of their average hauls. All other things being +equal, a fair comparison between the freight rates of different +countries should be based upon hauls of equal length. + +There is another consideration which should not be lost sight of. The +commodities in the United States which contribute principally to the +long haul are raw products. The universally low rates of these +commodities greatly lower the general average. In Europe, on the other +hand, manufactured goods predominate as long-haul freight, and based +upon increased risk and increased cost of carriage, considerably swell +the general average of freight charges. The railroads of the United +States also do more business per train mile than those of any other +country excepting perhaps Austria, Russia and India. This should +certainly enable them to do business for less than it is done by +transatlantic lines. + +In addition to all this, a number of European countries, particularly +France, require their railroads to perform large services, such as the +carrying of the mails and the transportation of the officers and +employes of the Government, gratuitously, and to carry soldiers at +reduced rates. + +Another factor in the equation should be considered. European roads are +built, equipped and all permanent improvements wholly made at the +expense of the stock- and bondholders, while in this country they are +partially constructed at the expense of the patrons of the road. In the +former case the capitalization of the road represents what has been paid +by the stock- and bondholders, and in the latter, not only what they +have paid, but large contributions paid from the income of the road and +from public and private donations. + +It will thus be seen that railroad rates ought to be lower, and even +much lower, here than in Europe. If it _is_ true that the average rate +per ton per mile is lower in America than across the Atlantic, this is +chiefly due to the fact that water transportation has forced down +through (or long-haul) rates and has thus lowered the general average. +This reduction was by no means made voluntarily by the railway +companies, but was forced upon them. Where in the United States water +does not exist, as in local traffic, rates are usually much higher than +in Europe. + +The reduction in freight rates was brought about by a number of +inventions which greatly lowered the cost of both the construction and +the operation of railways. Through the introduction of the steam shovel, +of the wheel-scraper, of improved rock-drills, and of other labor-saving +machines, as well as by a general improvement in the methods of grading, +the cost of grading has been reduced from 25 to 50 per cent., and +railroad bridges are now built at one-third of their former cost. Owing +to Bessemer's great invention, steel rails can at the present time be +bought for one-half of what iron rails cost ten or fifteen years ago, +and about one-third of the cost twenty years ago. According to David A. +Wells, the author of "Recent Economic Changes," the annual producing +capacity of a Bessemer converter was increased fourfold between 1873 and +1886, and four men can now make a given product of steel in the same +time and with less cost of material than it took ten men ten years ago +to accomplish. A ton of steel can now be made with 5,000 pounds of coal, +while it required twice that quantity in 1868. When it is considered +that rails and tires made of steel last three times as long as those +made of iron, permit greater speed, carry a much larger weight, and +require less repairs, the importance to the railroad interests of the +improvements made in the manufacture of steel can hardly be +overestimated. Similar reductions have been made in the car and machine +shops. An average train to-day probably costs no more than one-half as +much as it did twenty years ago. Mr. Wells, in the work just mentioned, +says: + + "In 1870-'71 one of the leading railroads of the + Northwestern United States built 126 miles, which, with some + tunneling, was bonded for about $40,000 per mile. The same + road could now (1889) be constructed, with the payment of + higher wages to laborers of all classes, for about $20,000 + per mile." + +A great saving has also been made in the consumption of coal. Under +favorable circumstances a loaded freight car can now be propelled a mile +with one pound of coal. A similar economy of fuel has, through the +improvement of their engines, been effected in ocean steamers. The +invention of the compound engine has reduced the expense of running +about one-half, while it has doubled the room left for the cargo. The +statement has recently been made that a piece of coal half as large as a +walnut, when burned in the compound engine of a modern steamboat, drives +a ton of food and its proportion of the ship one mile on its way to a +foreign port. + +Furthermore, the invention of the air-brake has materially reduced the +number of train men formerly necessary to safely manage a train, just as +the introduction of steam-hoisting and other machines, both upon docks +and vessels, has greatly decreased the number of men employed upon the +mercantile marine. + +There is certainly much similarity between the railroad and the +steamboat as agencies of transportation. Whatever fuel and labor-saving +causes operate on one must necessarily operate upon the other. When we, +therefore, find that the ocean rates are only from one-third to +one-fourth of what they were thirty years ago, we are justly surprised +to see railroad rates maintained as high as they are. Operating expenses +have been greatly reduced and passenger travel has largely increased +during the past twenty years, but reductions corresponding in the +passenger rates of the United States have not been made. + +It is, nevertheless, no easy matter always to determine what are +reasonable rates. It is easier to tell what rates are unreasonable. +Rates are unreasonable that bring an income in excess of sufficient to +keep the road in proper condition, to pay operating expenses, including +taxes and a fair rate of interest on the amount, not including +donations, actually invested in the road. The patrons of a road should +not be taxed to pay interest on their own donations, or on public +donations, to the road, as the donations were made for the benefit of +the public, and not for the benefit of private individuals. A rate which +may appear reasonable to the carrier is apt to be regarded as too high +by the shipper; and, again, one that seems reasonable to the shipper is +denounced as too low by the railroad man. Each is tempted to consult +only his own interests and to disregard the just claims of the other +side. Thus, while the shipper will claim that his rates ought to be low +enough to enable him to compete with other shippers more advantageously +located than he is, the railroad manager will demand a rate which would +enable him to declare high dividends on largely fictitious values. The +owners of roads which were built merely for purposes of speculation or +blackmailing insist on being permitted to charge exorbitant rates to +bring up their earnings to the level of those roads for whose +construction there was a legitimate demand. + +It is a settled principle of common law that all rates must be +reasonable, but no uniform rule has as yet been adopted by which the +question of reasonableness is to be determined. The doctrine laid down +by Judge Brewer, that "where the rates prescribed will not pay some +compensation to the owners, then it is the duty of the courts to +interfere and protect the companies from such rates," and that +"compensation implies three things: cost of service, interest on bonds, +and then some dividends," is absurd. A question is never settled until +it is settled right, and this rule is certainly open to very serious +objections. A road may be bonded for several times its cost or its real +value, it may be managed with such recklessness or extravagance that its +operating expenses may be twice what they would be under a careful and +economical management, yet under this rule the shipper must pay the +premium which bond-watering and bad management command. The general +enforcement of such a rule would place the public at the mercy of +scheming railroad manipulators. No matter to what extent the business of +a road may increase, a reduction of rates can always be prevented by the +issue of new bonds and the doubling of the already lordly salaries of +its managers. Again, under the operation of this rule a road which +entirely suffices to do the business between two points may be +paralleled by another and the public be compelled to pay excessive rates +to maintain both. It might be said that the public cannot be forced to +patronize any road, that if it would not withdraw its patronage from the +old line, the new line would soon become bankrupt, and that in such an +event its owners, and not the public, would be the sufferers. This +argument may be met by the statement that, aside from the fact that +concerted action among a large number of people can never be secured, +few roads rely for their support solely upon local business, and that +any loss which the older road sustains from encroachments by its rival +upon its through traffic it is compelled to make up by raising its rates +upon its local business. It is the almost inevitable consequence when +one road is paralleled by another that the business which was +previously done by one road will be nearly equally divided between the +two, and under the rule laid down by Judge Brewer the public will be +called upon to pay the operating expenses and the interest on the bonds +of both, together with such dividends on the stock as the financiering +ability of their managers may secure. The better judgment seems to be +that to determine what are reasonable rates is not a question for +judicial adjudication. + +The Interstate Commerce Commission, in their fourth annual report, +assert that "there can be no standard of expense which the courts can +act upon and apply, but that the whole field is one of judgment in the +exercise of a reasonable discretion by the managing powers, or by the +public authorities in reviewing their action." Their views upon this +subject are still more definitely stated in the following words +contained in the same report: + + "An attempt is made to give authority to the courts to + interfere by the suggestion that property or charter + contract rights, or both, are involved in the matter of + fixing rates, and therefore that it is not possible the + conclusions of administrative boards should be final. This + is an endeavor, by the mere use of words, to confer + jurisdiction upon the courts where the substance is + altogether wanting. Property or contract rights are involved + in these cases precisely as they are in numerous other cases + of the exercise of power under the police authority of the + State, either by the State itself or by its municipalities." + +These views cannot fail to commend themselves to any unprejudiced mind. +It is a well-established fact that all officials will, if permitted, +extend their jurisdiction, and judges are no exception to the rule. It +was therefore but natural that the courts should attempt to solve the +problem of railroad rates. + +The attempt so far has been fruitless, nor will it be otherwise as long +as the courts persist in approaching with abstract legal maxims a +question which, above all things, requires the light of experience and +the exercise of sound discretion. The question of railroad rates will +never be satisfactorily settled until it is definitely referred to +expert administrative State and National boards empowered and prepared +to meet the many contingencies that will always arise in the +transportation business. + +It is not difficult to account for the inability of the courts to +properly adjudicate the question of reasonable rates. The legislature, +or a board to which it has delegated its power, prescribes for a +railroad company a classification and tariff. The company claims that +the rates so fixed are unreasonably low and applies to the courts for +redress. + +Now, if the rates were based upon the cost of service only, it might, +perhaps, be possible for a court to determine whether the prescribed +rates are adequate or not. But even in such a case the question would +arise whether the capitalization and the operating expenses of the road +are not excessive, and its determination would require expert knowledge +and sound discretion rather than legal lore. However, since the cost of +service is not the only, and with railroad men not even an essential, +factor in rate-making, it is evident that the rates upon single +commodities can not be reviewed upon their individual merits, but the +tariff must, in the judicial determination of the question whether it is +reasonable or not, be viewed as a whole. But as it is impossible to +foretell what effect a readjusted tariff would have on the revenues of a +road, even courts are forced to admit that an actual trial of the tariff +is necessary to establish its merits or demerits. + +If the complaining company were as anxious to give the new tariff a fair +trial as it usually is to demonstrate to the satisfaction of the court +that it is devoid of every principle of justice, such a test might be +accepted by the public as a reliable basis of judicial procedure. But +railroad managers are not only striving to perpetuate their own high +rates, but to show to the public that freight tariffs not emanating from +a railroad company's office are of necessity crude and unjust to the +carrier. They know that if they should succeed in convincing the public +that administrative boards are incapable of dealing with that question, +they might for years to come be left in undisputed possession of the +power to make their own rates. This is certainly for the railroad +manager a prize worth contending for, and no sacrifice is too great for +him to make when there is any hope of ultimate victory. Being absolutely +uncontrolled in his action, he finds it an easy matter, by temporarily +diverting business from his line, by the increase of operating expenses +and by repressing growing industries, and in many other ways, to curtail +the business of his road and diminish its revenues. He can court losses +in a thousand different ways discernible neither to the courts nor the +general public. In short, it is in the power of any railroad manager to +manipulate such a trial in his own interest, and, if determined, to +obtain a verdict against any tariff not of his own making. This policy +was pursued by several Iowa roads subsequent to Judge Brewer's decision +that the alleged unreasonableness of the Iowa commissioners' tariff must +be established by an actual trial, and was persevered in until the suit +was withdrawn. + +But even if the competency of the courts to properly determine such +questions were admitted, there would still exist one serious objection +to their jurisdiction. Courts necessarily move slowly, while all +differences arising between the public and the railways, and especially +those concerning rates of transportation, require prompt and decisive +action. There are no fixed conditions in commerce. It is a kaleidoscope +constantly presenting new phases. Competition at home and abroad, tariff +duties, the condition of the crops and a thousand other influences +affect it and may require a prompt readjustment of the tariff. So long +as railroad companies are permitted to resort to injunctions and effect +other delays rendered possible through the machinery of the courts, to +prevent for years the enforcement of tariffs prescribed by +administrative authorities, so long will the public be at their mercy. +So long as they have nothing to lose and everything to gain by a +judicial contest, it will be their policy to delay through the courts +the enforcement of any tariff, whether prescribed by legislature or by +an authorized commission, that falls below their standard. It is not to +be understood that the acts of railroad commissioners should never be +subject to a judicial view. If such boards clearly exceed their +authority or are otherwise guilty of maladministration, if they violate +constitutional rights, then railroad companies, if injured by their +acts, should be permitted to seek redress in the courts; but they should +not be permitted to nullify an official tariff by legal maneuvers. It is +clearly not within the province of the courts to make rates or to lay +down rules to be followed by those to whom the law has delegated the +power to make them, nor should the courts aid the railroads in any +attempt to nullify an official tariff that has been legally promulgated. +A tariff prepared by sworn and disinterested officials is more likely to +be just than one prepared by interested railroad men, and railroad +companies should be compelled to adopt it and continue it in use until +it is amended or revoked by legal authority. + +Individual shippers are powerless as against strong corporations. +Railroads apply to the courts for what they are pleased to term redress, +and in the meantime refuse with impunity to accept an official tariff; +but the shipper has no protection: he must pay their rates or go out of +business. What reason can be assigned why the weaker should thus be +discriminated against? A promulgation of a tariff prepared by a +commission is equivalent to a declaration on the part of these officials +that the rates or some of the rates charged by the railroads are +unreasonably high. The railroad, in applying to the courts for +protection, claims that the tariff prescribed by the commission is +unreasonably low. Both tariffs are therefore impeached, one being that +of an interested private company, the other that of a disinterested +public board. It is evident that, even if the people should see fit to +give the courts jurisdiction in such controversies, one of these tariffs +must temporarily prevail pending the decision of the court, and sound +public policy and justice to the patrons of the road certainly require +that the official tariff be recognized by the courts and made to be +respected by the railroad company until it is proved to be unreasonable +and is set aside by lawful authority. + +It is claimed by railroad men that they should be allowed to make their +own tariffs because rate-making is so intricate a subject that none but +railroad experts can do it justice. If this were so the courts would be +even less competent to review a schedule of rates than a State or +National commission would be to make one. Courts cannot be expected to +have expert knowledge in all matters that are likely to be brought +before them. They must rely upon the testimony of expert witnesses +whenever technical questions are involved in the determination of cases. +The identical sources of information from which courts draw are +accessible, or may be made accessible, to a commission, which has the +additional advantage that its members may be selected with special +reference to their fitness for the duties which they will be called upon +to perform and are expected to devote their whole time to the settlement +of questions arising in the transportation business. Such a commission +can practically be made a court with jurisdiction over all matters +connected with railroad business. The railroad manager, no doubt, is +thoroughly familiar with the wants and desires of his company; but it +may fairly be presumed that he is less familiar with the needs of the +public than a railroad commission whose members are in constant +communication with the people, patiently listen to the complaints of +shippers, court and receive suggestions as to needed changes in +classification and rates, and study the relative advantages of the +different sections and different interests of the State or the country +as regards transportation. A railroad freight agent, on the contrary, is +disposed to think that shippers ought to be satisfied with any rate +lower than those charged fifty years ago for carting or other crude +methods of transportation. He regards their views and suggestions as +chimerical and not worthy of any notice, and does not even hesitate to +inform them that rate-making is a branch of the railroad business wholly +beyond their comprehension, and ought not to be meddled with or even +inquired into by the public. The general freight agent is the employe of +a company which rates his usefulness solely by his ability to constantly +increase its revenues, and he invariably proceeds upon the theory that +the best tariff is that which comes nearest imposing upon each commodity +offered for carriage the maximum transportation tax that it will bear. A +man who entertains such opinions cannot be supposed to be able to do +justice to the shipper, and should not be permitted to act as arbitrator +in rate controversies between the public and the company whose employe +and advocate he is. Nor have we any reason to hope for a change in the +present tariff policy of railroads. History has sufficiently +demonstrated the fact that reforms must come from without. As long as +human nature remains as it is, railroad officials will, if permitted, +arrange tariffs in the interest of the men who give them employment, for +if they did otherwise their services would soon be dispensed with. A +freight tariff should be in the nature of a contract between the carrier +and the shipper, and the assent of both parties ought to be essential to +its validity. But as it is impracticable for all the parties interested +to meet for the purpose of effecting an agreement, the power to make +rates has in several States wisely been conferred upon railroad +commissioners, and there is a strong tendency in others to adopt the +same policy. Such boards have every opportunity to obtain any +information needed for the efficient and faithful discharge of their +duties. They can hear the representatives of the railroads as well as +those of the shippers, investigate carefully disputed points, summon +experts and witnesses, and obtain official information relating to +classifications and rates from every State in the Union, and, if +necessary, from every quarter of the civilized world. The assertion may +safely be made that, with experience, a commission acquires more expert +knowledge relating to the business of rate-making than a railroad +manager. If there is any mystery connected with the business of +rate-making which has so far been in the sole possession of railroad +men, it is to their interest to initiate the commissioners into their +profound secrets. It will be their privilege to enlighten the +commissioners as to the actual cost of their respective lines, the cost +of every branch of the railway service, and as to a thousand other +matters which the public has both a desire and a right to know. If, +after a schedule of rates has been prepared, and before it is +promulgated, railroad men can suggest any improvement in it, they should +have the privilege to do so; or if, after giving it a fair trial, they +should be prepared to show that any rate is unreasonably low and +injurious to them, their complaint should be carefully investigated, +and, if found well grounded, the wrong should at once be righted. + +But the same privileges should be extended to shippers. Their rights and +their welfare should be guarded as sacredly as those of the railroad +companies. They should have the same opportunity to examine a proposed +schedule before its promulgation and protest against any feature of it +which they may regard prejudicial to their interests, and their +statements should receive the same consideration as is accorded to those +of representatives of the railroad companies. So, likewise, when +shippers prove to the satisfaction of the commission that a rate has +outlived its reasonableness, their complaints should at once be +investigated, and if their cause is found to be a just one, the tariff +should be so amended as to give them relief. + +The labors of a board of railroad commissioners are onerous, and their +responsibility is great. No uniform rule can be laid down for their +guidance in the fixing of rates, yet there are a few fundamental +principles which should always be adhered to. The cost of service +should invariably be an important factor of a rate. Railroads should not +be compelled to carry any commodity for less than the actual cost of +moving it, nor should rates be fixed greatly in excess of such cost of +service. The carload should be the unit of wholesale shipments. Since it +costs the railroad company as much to move ten carloads of freight which +belong to one shipper as it costs to move ten carloads belonging to ten +shippers, no advantage beyond the general carload rate should be given +to the large shipper. The difference in the rates between shipments in +less than carload lots ought to be determined solely by the difference +in the cost of carriage and handling. Where shipments are made in +carload lots, the loading and unloading is usually done by the shipper +and consignee, cars are loaded to their full capacity, and no loading or +unloading of shipments at intermediate points is necessary. It is +therefore but just that the consignor and consignee should have the +benefit of the reduced cost of such shipments. Raw materials, and +especially coal and lumber and kindred articles, the transportation of +which requires neither an expensive rolling stock nor warehouse +accommodations nor speedy movement, and in which the risk of loss or +damage is insignificant, should be carried at the lowest rate possible. +Such a policy will tend to foster other interests, which will develop +business for the road and will build up remote sections of the country, +and will often enable railroads to carry large quantities of these +commodities at times when they would otherwise be nearly idle. There +should be a uniform classification throughout the country, based upon +considerations of justice and equity instead of railroad tradition. Such +articles should be classed together as resemble each other as concerns +bulk, weight and risk, or what is virtually the same, cost of carrying +and handling. It may be safely assumed that a rate which has been made +and used by railroad companies is remunerative. If it is claimed by +railroad men that it is not, the burden of proof should rest upon them. +A rate may also be considered remunerative to a road if other lines +similarly situated have voluntarily adopted it. A schedule finally must +be considered reasonable if it enables the company for which it is +prescribed to earn under efficient and economical management sufficient +to maintain its road in proper condition and a fair rate of interest +upon a fair valuation of its road. Property is never worth more than +what it can be duplicated for, and railroad property is no exception to +the rule. If there has been a depreciation in the property of a company, +it should not demand dividends upon values which no longer exist. Nor +can the same returns be conceded to railroad property as to private +capital. Its investment is permanent and well secured, if it is honestly +and intelligently made; and its dividends are net returns after the +payment of all expenses, including taxes, cost of management and +maintenance. The three per cent. bonds of the United States Government +find a ready sale at prices above par. Were there less speculation and +more honesty and stability in railroad management, railroad securities +yielding a revenue of from 2-1/2 to 4 per cent. on the actual investment +would be eagerly sought after by conservative capitalists. + +Rate-making requires honesty of purpose, intelligence and discretion, +qualities as likely to be found among the servants of the people as +among those of corporations. A commission may err, but its errors are +not likely to prove as detrimental to the railroad companies as the +extortionate and discriminating rates imposed by railroad managers have +proved to the interests of the public. Railroad managers acknowledge no +obligation except that of earning dividends for their companies, while +the members of a railroad commission, on the contrary, are responsible +for their acts to the people, with us the source of all government and +all power. To question the justice and sincerity of the people, or to +deny the efficacy of such a control, is to deny the wisdom of popular +government. + +Railroads might be permitted to reduce their rates below the official +tariff, but they should be required to give at least thirty days' notice +of such a change, to enable shippers to prepare for it. The companies +should not be permitted, however, to raise rates again without obtaining +the commissioners' consent and giving at least two months' notice of the +proposed advance. Sudden fluctuations in rates are a fruitful source of +disaster in those branches of business in which the cost of +transportation forms an important factor in the price of commodities, +and are as unjust and unwarrantable as would be fluctuations in import +duties. As long as they are tolerated there can be no reliable basis for +business calculations or contracts. There is little doubt that, were +such regulations enforced, railroad wars, so demoralizing to the +business of the country, would soon belong to the things of the past, +and a far-reaching assurance of future welfare would be given to the +commercial, manufacturing and all other legitimate interests of the +country. It should always be kept in view by the rate-making power that +the railroad company, like the gas company, the water company and the +street car company, is acting in the capacity of a public agent, and the +rate of compensation should be fixed by public authority. + + + + +CHAPTER XIV. + +REMEDIES. + + +The railroad in America is still in its infancy, both as regards extent +of mileage and methods of operation. In 1860 the United States had in +round numbers 30,000 miles of road; in 1870 this number had increased to +53,000; in 1880 to 93,000, and in 1890 to 167,000. It will thus be seen +that the average increase during each of those three decades was nearly +80 per cent. Should this rate of increase continue during the next three +decades there would be in the present territory of the United States a +little over three hundred thousand miles in 1900, 550,000 miles in 1910 +and close to one million miles in 1920, or about one mile of road for +every three miles of territory. It is not likely that the rate of +increase of the past will continue in the future; but even if this +should be reduced from 80 to 40 per cent. it would be less than +fifty-five years when the railroad mileage of the United States would +reach the million point. + +Even this might seem an extravagant estimate, but it must be remembered +that there are already a number of States in the Union with a railroad +mileage closely approaching this proportion. The District of Columbia +has one mile of road for every 3.39 square miles of territory, New +Jersey for every 3.79, Massachusetts for every 3.96, and Connecticut for +every 4.96 square miles. Ohio, Pennsylvania, Rhode Island and Illinois +follow with one mile of railroad for every 5.14, 5.20, 5.57 and 5.59 +square miles of territory, respectively, and Indiana, New York, Delaware +and Iowa are not far behind them. + +It should also be borne in mind that many of the through lines have +double, some triple, and some even quadruple tracks, which, if taken +into the account, would increase the mileage much more; and still +railroad construction in most of these States is far from being at a +standstill. The United States will eventually be able to sustain a +closer net of railways than any country in Europe, and we may rest +assured that the time will come when the fertile prairie States of the +Northwest will have a mile of railroad for every square mile of +territory. + +In view of the future magnitude of the transportation interest the +importance of placing its control and management early upon sound +principles should not be under-estimated. Abuses crept into railroad +management in the past, not because the men who controlled it were +necessarily worse than men engaged in other pursuits, but because the +States failed to provide adequate legislation for the control of this +new social and commercial force, and the license enjoyed by railroad men +gradually turned into serious evils what seemed at first only harmless +practices. It cannot be denied, however, that the absence of restraint +in time attracted to the business unscrupulous men whose sharp practices +frequently forced their colleagues of better conscience to do what their +sense of honor and justice condemned. These evils and abuses have +increased with the growth of the railroad system, and nothing short of +the sovereign power can now correct them. It is incumbent upon the state +not only to correct the evils of the past, but to base legislative +control of railroads upon principles so wise and so broad as to endure +for ages, permitting the unlimited growth of the system and at the same +time insuring commercial liberty and prosperity to the generations to +come. + +As it is always easier to tear down than to build up, so it is likewise +easier to point out evils than it is to provide proper remedies for +their cure. Almost any one can criticise existing conditions, but it +requires wise and constructive statesmanship to propose practical +measures which will bring about desired improvement. The apparent +magnitude of the work of correcting the evils and abuses connected with +the transportation business, many of which have been in vogue for more +than a generation, has discouraged many from seriously undertaking it. +And yet we shall find the problem by no means a difficult one, if we +properly analyze it and go to the root of the evil. Prof. Bryce, in his +work "The American Commonwealth," refers to the fact that the people of +this country have been equal to the task of solving the gravest problems +which have been presented to them, and we need have no doubt of their +ability to solve the railroad problem. Railroad regulation does not +require the adoption of any new principle of law. If the common law is +rightly applied and provision is made for its strict and systematic +enforcement, it will meet every condition that is likely to arise in the +transportation business. It should always be remembered that the +railroad is an improved highway, and the principal reason for which it +is built is to accommodate the people and promote their welfare, and not +to serve the selfish ends of a few individuals, and that private +companies were permitted to build and operate it only because the State +believed that the public interests could best be served in this way. + +It is one of the duties of the State to facilitate transportation by +establishing highways. These highways may be built by the State directly +or through municipalities or even private corporations. Thus, under +authority derived from the State, cities lay out, construct and +maintain streets within their limits. But these streets become public +and are always subject to State control. The same rule applies to +turnpikes and ferries. Although the State transfers to an individual or +a company its right to maintain a ferry or to build and maintain a +turnpike, and to compensate itself for its outlay by the collection of +tolls, the ferry and turnpike nevertheless remain highways, subject to +the control of the State. + +The railroad partakes of two natures, that of a highway and that of a +common carrier. Railroad companies therefore enjoy the privileges and +assume the duties of both. The State justly exercises in behalf of such +companies the right of eminent domain, _i. e._, the right of the +sovereign to apply private property to public use; but it cannot +rightfully appropriate private property for private use, even if legal +compensation were to be made for it. It is only upon the theory that +railroads are highways, constructed for the public good and subject to +public control, that the State has authorized railroad companies to take +private property for their own use by paying for it a reasonable +compensation. A railroad may even take possession of and intersect a +public road for the purpose of carrying on its functions. But while the +sovereign may exercise the right of eminent domain, it cannot delegate +it to any individual or number of individuals, except to its agents, +performing its functions and being bound to comply with any rule which +may be prescribed for the public good. Under the common law the +individual is entitled to as full use of the railroad as he is of the +common highway. If he is not allowed to put on his own vehicle, this +restriction is simply due to the fact that the people believe that the +business can be done most safely, most economically and most +efficiently by one company or a limited number of companies operating +the road for a reasonable compensation. Nor does this restriction differ +materially from that which the law has placed upon the use of the common +road. Without legislative sanction no one has a right to put upon it a +team of elephants or a locomotive and train of cars, or other strange +motors, and thereby obstruct the public travel. These restrictions might +be removed by the legislative power, and there is also no doubt that +under the common law the State has the right to permit the independent +use of the railroad track by any person having motive power and cars +adapted to it. The persons and freight transported on the railroad are +taxed to maintain it, while in the case of the common road this tax is +placed upon the people and the adjoining property. How to collect the +tax necessary to sustain the road is simply a question of public policy, +and it cannot be collected in any case except with the expressed +permission of the State. If a company is permitted by the State to +operate a railroad it should only be permitted to collect such tolls as +are just and reasonable, and what is just and reasonable should be +determined by the sovereign State, and not by the operating company. The +railroads of the United States collect from our people in round numbers +a transportation tax of eleven hundred million dollars annually. This +tax is equal to a levy of $17 per head, or $85 per family; it is about +as large as all our other taxes combined. In the State of Iowa it +amounts to about $22 per head, or $110 per family, and is two and +one-half times as large as all the State, county, school and municipal +taxes collected within her borders. + +When we consider how thoroughly other public charges are hedged about, +by careful restrictions and limitations, and with what caution the +amount to be collected is fixed after thorough public discussion, by +agents of the people selected by them to serve only for short periods, +and that those who collect and disburse the funds are under oath and +bonds for a faithful performance of their duty, is it not preposterous +to permit agents appointed by a few interested persons, and often +serving for a long term of years, without any responsibility to the +public, to fix the rate of this tax, and to collect and disburse the +immense sums levied for the support of these highways without any +supervision or restraint? + +The Government might as well lease the post-office, waterways and the +collection of import duties to the highest bidder and permit the lessees +to reimburse themselves by the collection of such tolls as they might +see fit, without any governmental restraint whatever, their franchises +enabling the operating companies to tax each individual, each locality +and each letter, parcel or article as they saw fit. How long would the +people of this country endure such a condition of things? The collection +of taxes has been farmed out, but not by any civilized nation in modern +times. History shows that this system of taxation has always been +productive of the gravest abuses, and prejudicial to the public welfare. +As has already been shown, the railroad is an improved highway, and the +railroad company in operating it is doing a public business and not a +private business, and therefore it should be governed by rules +applicable to public business, and not such as are applicable to private +business. It is admitted by all that for the services which it performs +the operating company should receive a reasonable compensation; but to +say what a reasonable compensation is, how it shall be collected, and to +prescribe rules regulating the business of the public carrier, is +solely the right and the duty of the State. The people have never +permitted the rate of any other public charge to be fixed by the +beneficiary. Why, then, should privileges be conceded to one beneficiary +which are denied to all others? + +The assertion is often made by railroad managers that railroad +transportation is a private business as much as any other branch of +commerce. It is not likely that these same managers would wish to have +their argument carried to its logical conclusion, for, should the courts +at any time take their view, they would be under the necessity of +declaring null and void all their charters, which were granted to them +upon the assumption that the railroad was a highway operated under the +authority and control of the State by private companies for the public +good. If, on the other hand, railroad managers are, for their own +protection, forced to recognize the public character of railroads, they +can no longer question the right of the State to so control their +business as the public good may demand. And this shows the absurdity of +the claim often made by railroad managers, that, as long as the rates +charged by them are reasonable, the State has no right to interfere with +their business, or, in other words, that they may discriminate between +individuals and localities, and that they may legally practice a +thousand other abuses as long as individual shippers find it beyond +their power to prove that they have been charged exorbitant rates. + +Charles Fisk Beach, Jr., in his "Commentaries on the Law of Private +Corporations," lays it down as a general principle of law that "whenever +any person pursues a public calling and sustains such relations to the +public that the people must of necessity deal with him, and are under a +moral duress to submit to his terms if he is unrestrained by law, then, +in order to prevent extortion and an abuse of his position, the price he +may charge for his services may be regulated by law." And applying this +principle to common carriers, and especially railroads, this author +says: + + "The sovereign has always assumed peculiar control over + common carriers as conducting a business in which the public + has an interest, and in the case of railway carriers an + additional basis of governmental control is grounded in the + extraordinary franchise of eminent domain conferred upon + these companies. For corporations engaged in carrying goods + for hire as common carriers have no right to discriminate in + freight rates in favor of one shipper, even when necessary + to secure his custom, if the discriminating rate will tend + to create a monopoly by excluding from their proper markets + the products of the competitors of the favored shipper." + +If railroads had no obligations or advantages beyond those of other +common carriers, such as stage lines and steamship companies, their +discriminations might be less objectionable, but, as keepers of the +toll-gates of the public highways, they are no more at liberty to +regulate their own business regardless of the public welfare than were +their predecessors, the toll-collectors stationed along the public +turnpikes and canals. As such public tax-collectors they are bound to +give equal treatment to all persons and places. + +Although the business of constructing and keeping in repair the turnpike +roads was, as a rule, left to private persons, and the promoters of such +enterprises were permitted to reimburse themselves for their outlay by +the collection of tolls, their schedules of tolls were prescribed by the +State and their business was placed under the supervision of public +officers, whose duty it was to see that neither extortion nor +discrimination was practiced in the collection of these tolls, and that +the private management of a public business did not become the source of +abuse. The State thus insisted upon exercising a restraining influence +over the business of turnpike companies because it realized the danger +of entrusting the management of a semi-public business to companies +organized solely for private gain, with officers responsible only to +their stockholders, who, under ordinary circumstances, could be relied +upon to measure the usefulness of an employe by his ability to +contribute to the increase of the annual dividends. It will scarcely be +claimed, even by railroad men, that since the days of turnpikes and +stage-coaches corporations have become more unselfish and their officers +less servile. The temptations have increased, while human frailty +remains the same. + +Of course, if we consult the railroad managers as to the best policy to +be adopted for the future control of railroad companies, we shall be +informed that we have already gone too far in railroad legislation, that +nearly all the present evils of transportation of which the public and +the railroad companies complain may be traced to legislative +restrictions, and especially to certain features of the Interstate +Commerce Act. They reluctantly admit that this act has been instrumental +for good inasmuch as it has corrected some of the abuses that formerly +existed, but they insist that several of its provisions are too radical +and do infinitely more harm than good, both to the railroad companies +and the people; that these obnoxious provisions ought to be repealed, +and that under such restrictions as would still remain railroad +companies ought to be permitted to manage their own business. If we +inquire what modification of the Interstate Commerce Act the railroads +desire, we find that if the act were amended in conformity with their +wishes there would be little of it left that is of value. But the +features which are specially obnoxious to them are the long and short +haul and the anti-pooling clauses. They even go so far as to demand that +the Government should not only permit pooling, but should use its strong +arm to enforce all pooling contracts which railroad companies might see +fit to enter into. This means, in other words, that the Government +should enforce an agreement to restrict competition, which is made in +direct violation of the common law, and aid the companies in maintaining +such rates as they see fit to establish. If the railroad manager is +cross-examined and forced to confess the truth, he will have to admit +that what he really desires is freedom from all restraint, or, if public +opinion will not tolerate this, then only law enough in letter to +satisfy a public clamor and permit him to violate its spirit, and to +then trust to him and the future to bring it into disrepute and cause +its repeal. + +Some shrewd managers have recently expressed a willingness to submit +their pooling arrangements to a public commission for approval, before +they should go into effect. This is objectionable on the ground that +they would then, more even than before, endeavor to control the making +of the commission. It is far safer to absolutely prohibit pooling and +all devices used as a substitute for it. No necessity for pooling +exists, and no good reason can be given why it should be permitted +unless complete government control is established. + +State control of railroad transportation is as essential to the welfare +of the companies as it is to that of the public. The history of the past +twenty years has shown that railroad companies are utterly unable to +regulate their relations with each other. They either cannot arrive at +an understanding, and then the stronger companies resort to hostilities +to bring the weaker ones to their terms; or, when an agreement has been +reached among them, they find themselves unable to enforce it. Anarchy +then reigns supreme, until finally a truce is patched up, to be again +followed by evasions, defiance and "war." The nature of the railroad +business is in fact such that, in the absence of strict State control, +it is impossible for a conscientious manager to retain the business to +which his road is naturally entitled, and do full justice to both the +patrons and the stockholders of his road. Efforts have been made again +and again by railroad companies to regulate their affairs and adjust +their difficulties by resorting to pools, agreements, associations and +combinations, formed with all the ingenuity of which men are capable, +and supported by penalties and fines; but the unscrupulous railroad +manager has always found a way to violate or subvert the agreement. +There is a disposition among railroad companies to arrogate all the +powers of sovereignty. They want to make their own laws, impose fines +and declare war, and often go even so far as to openly defy the power of +the State that has given them their existence. + +When railroad managers are shorn of the power to practice abuses, they +are at the same time deprived of the many advantages they now have to +speculate in railroad securities and enrich themselves at the expense of +the public and of other railroad stockholders. The great fortunes of +this country have been amassed within a few years, and chiefly from +manipulations of railroad property. If the people permit these practices +to go on without restraint but a few years more, the property of the +nation will be largely under the control of a few bold adventurers. The +great fortunes of Europe which it has required centuries to accumulate +are already outstripped by the "self-made" millionaires of this country. +However persistently railroad managers may assure the people that abuses +in the transportation business have been reduced to a minimum and that +more stringent legislation will be an evil, it is a fact that many of +the graver railroad abuses are still practiced and that much more +reformation is needed in railroad management, or in railroad +supervision, or in both, to make the railroad what it was designed to +be, a highway operated for the public and open to all upon equal and +equitable terms. + +The virtual ruler of the United States is public opinion. It is the +power that controls the legislative as well as the executive and +judicial departments of the Government. Enactments of legislatures and +of Congress and decisions of the courts, even of the Supreme Court of +the United States, not in harmony with an intelligent and determined +public opinion, cannot endure, and executives not in accord with the +masses of the people cannot long retain public confidence or official +authority. + +Under these circumstances no reform movement has any prospect of success +unless it is supported by public opinion. It should therefore be the +principal endeavor of all advocates of railroad reform to create public +opinion in favor of the measures proposed by them. With an intelligent +public on the alert, the Government may be relied upon to pursue a +healthy and progressive railroad policy. Unfortunately, there are times +when public opinion upon great questions is dormant, while pecuniary +interests, like the force of gravity, never suspend their action. To +arouse the masses at such times, we must rely largely upon an honest, +independent and courageous press, not influenced by gift or patronage. + +Many plans have been proposed for a better control of railroads. Some of +these are merely theoretical; others have been tried in part, and a few +have been tried in their entirety, but under circumstances radically +different from those surrounding us. A system which may be well adapted +to a monarchy with a centralization of governmental powers would +probably prove a failure here, when brought in contact with the +principles of dual sovereignty and local rule. Unless a revolution +should change our system of government, a dual system of railroad +control will always be necessary in the United States; for it is not at +all likely that the individual States will ever voluntarily give up +their right to regulate commerce carried on within their respective +borders. On the other hand, the common welfare requires that the +commerce which is carried on between the States should not be hampered +by local interference, but should be regulated only by Congress. Our +experience as a nation has shown that such a quality of sovereignty is +not inconsistent with strength or efficiency, nor need it be productive +of rivalry or friction. The fact that a certain mode of railroad +management has been successful elsewhere is not sufficient proof that it +would be successful here, nor is the fact that it has not been +successful elsewhere sufficient proof that it would not be successful +here. The more the conditions which exist here resemble those under +which it was tested, the greater is the probability that it can be +adapted to our circumstances. Independent thought and action is an +essential element of progress, yet it is the part of wisdom to profit by +the speculation and experience of others. + +The following are the principal methods that have been tried or proposed +for the control and management of railroads: + +_1. Publicity of the railroad business._ + +It is held by some that the secrecy with which railroad business is at +present transacted is the source of all evils. It is contended that if +railroads were required to report to the public every item of income and +expenditure, discrimination and extortion, as well as bribery and +corrupt subsidizing, would soon cease. If the companies were compelled +to render an account of all receipts, special rates and drawbacks could +not safely be granted by railroad managers, or, if granted, would soon +lose their charm for recipients, for it would be but a short time until +others would demand and even exact the same privileges. An attorney +would, as a member of the legislature, be slow to accept a retaining fee +if the amount of such fee were made known to his constituents. +Publishers would hesitate to apply for railroad subsidies if the +companies were compelled to render periodically an itemized account of +such expenditures, and railroad companies would, under similar +circumstances, hesitate to pay subsidies, for the subsidized journal +would soon be without patrons. If the items annually expended upon +railroad lobbies were reported, these lobbies would soon be frowned, or +even hissed, out of legislative halls. There can be no doubt that full +and complete publicity in railroad business would correct a large number +of existing abuses, and it should therefore be insisted upon as one of +the first and essential features of railroad reform. It is questionable, +however, whether railroad managers are so sensitive to public opinion +that publicity could be relied upon as a cure for all railroad evils. To +what extent it is desirable to supplement publicity by other measures +of State control will be considered hereafter. + +It will, of course, be urged by railroad managers that the State has no +right to pry into the privacy of their business and that they should be +guaranteed the same protection against intrusion that is enjoyed by +other branches of business. To this we must reply that not even banks or +insurance companies are permitted to conduct their business as private, +and that controlling the highway and levying a transportation tax upon +every article of commerce passing over it is essentially public business +and unquestionably subject to public control. Every citizen is as much +interested in it as he is in the transactions of the custom-house, or of +the public treasury, and any transaction of a railroad manager that +shuns public inspection can be set down as a public evil and should be +suppressed. It may safely be laid down as a general rule that the +refusal of a railroad company to give publicity to its transactions is +presumptive evidence of wrong. The people are not alone interested in +such publicity. Stockholders have likewise a right to be protected +against the sinister manipulations of dishonest managers, and publicity +furnishes them the best guarantee of honest management. + +Stockholders should attend the meetings of their companies and should +obtain full knowledge of the management of their affairs. If they will +make thorough examination and get at bottom facts the chances are that +contracts will be found with owners of patents, white lines, blue lines, +refrigerator car lines, coal companies, ferry companies, manufacturing +companies, packing companies and other kindred organizations, by which +hundreds of millions of dollars are diverted from the treasuries of the +railroad companies to the pockets of influential persons connected with +the management of the roads. + +It has recently come to light that the officers of a Pennsylvania +railroad company, during fifteen years, by some means of secret rebates +and other allowances, have taken about $100,000,000 out of the treasury +of the company and distributed it as largesses to about half a dozen +iron and steel establishments. + +This is a method of getting wealthy at the expense of others not unknown +to many another great fortune accumulated in the last twenty years. +Railroad discriminations have been a fruitful source of those gross +inequalities in wealth distribution which now agitate society and call +people's parties and the like into existence. The modern millionaire +appears to be an entirely natural creation. Perhaps this money taken in +special rates from the Pennsylvania railroad's treasury, or, rather, +from the pockets of the road's other patrons, and of the men who may +have sought, without special rates, to compete with the favored ones in +their business, only to be crushed in financial ruin, will be spent in a +praiseworthy way, in accord with the principles of "the gospel of +wealth." What we need now is the gospel of distribution of facilities +for the accumulation of wealth, as well as the gospel of distribution of +great fortunes. + +Whether inspired by a bull or a bear interest or neither, all will +concede the ability of Mr. Henry Clews to picture the evils of railroad +management; and his lack of generosity in accrediting ability or honesty +to legislators who are called upon to provide remedies for the wrongs +that he so well depicts will not deter me from indorsing the following +statement made by him in a magazine article which is pertinent to this +discussion: + + "One great difficulty that present railroad legislators have + to contend with is the evil methods of railroad building and + extension. A great deal of the mileage of the last two years + has been premature, and doubtless for speculative purposes. + Most of it has been constructed, however, by old companies + who had good credit to float bonds and could raise all the + money required. Hence there has been but little financial + embarrassment arising from the too rapid construction. But + people are beginning to find out that a great deal of this + building has been in the interest of speculative directors + and their friends, who, for a mere song, had bought up + barren lands considered worthless because there was no means + of transportation. But these lands soon become immensely + valuable for sites of villages, towns and cities. The + construction companies, by which these roads were generally + built, raised the cost to the highest possible figures, in + order, I fear, to make dividends for the construction + stockholders. It is noteworthy that the directors connected + with these construction schemes have been exceedingly + prosperous, while the stockholders of the roads have grown + poor in an inverse ratio. The dividends of the latter have + disappeared. The new mileage, much of which, I apprehend, + has been made on this principle, was about twenty-one + thousand miles, which is greater than the entire mileage of + Great Britain. There should be additions to the Interstate + Law, or a special law regulating the methods of construction + companies, which are probably doing more to demoralize the + railroad system--and doing it very insidiously, too--than + any other factor connected with these great arteries of the + country's prosperity. + + "Legislative reform is greatly needed in the matter of + railroad reports, especially for the safety of investors, + and to prevent speculative abuses among railroad officials + and their friends and favorites. There should be statements + issued annually, or perhaps more frequently, upon the truth + of which everybody might rely. These should be sworn + statements, and should bear the signatures of at least three + of the directors. These directors should be required to + call to their aid expert accountants, and should have placed + at their disposal all the books of the company or + corporation and all the other papers necessary to verify the + accuracy of their report. The correctness of the statement, + when issued, would then be a foregone conclusion, and an + investor in London, Paris or Berlin could buy or sell on his + own judgment, an experiment which, under existing + arrangements, might prove very costly. It is proverbial that + a railroad statement now is defective in the most essential + particulars, and, to put it mildly, usually covers a + multitude of sins. According to one plan approved by + railroad companies, the statement published to-day, for + instance, is made to show a surplus of many millions, but + there is nothing said about an open construction account to + which the surplus is debtor. On this favorable showing (with + this _suppressio veri_) the stock goes up and the insiders + quickly unload upon the investment public. The following + statement, which comes out six months later, shows that the + surplus has been used to settle the construction + indebtedness. The surplus has disappeared; consequently the + stock suffers a serious decline. Those who bought on the + strength of the large surplus sell out, on being informed of + its distribution. Then the inside sharks come forward again + and purchase at reduced prices, probably at a depreciation + of from ten to fifteen points or more, and keep their stock + until the next periodical appearance of the bogus surplus. + Thus the insiders grow rich, while the outsiders become + poor. The only remedy for this abuse is a sworn statement at + regular intervals, and if the directors should commit + perjury they would render themselves liable to State prison. + If a few of them should be tempted to fall into the trap, + and be made examples of in this way, nothing would do more + to work a speedy reform in this contemptible method of + book-keeping. + + "I would also suggest a change in the character of the + directors. Those usually chosen for this office now are men + who have vast interests of their own, more than sufficient + to absorb their entire time and thoughts. They are selected + mainly on account of their high-sounding names, to give + tone to the corporation and solidify its credit, in order + that the lambs of speculation may have proper objects in + whom confidence can be reposed and no questions asked. The + management of the affairs of the corporation is frequently + intrusted to one man, who runs the business to suit his own + individual interests." + +We can appreciate the force of the above remarks when we consider that +last year seventy-five companies realized a gross income of +$846,888,000, which is equal to about 80 per cent. of the total income +received by all of the railroads of the United States. + +_2. Free competition upon all railroads._ + +Mr. Hudson, in his excellent work, "The Railways and the Republic," +recommends the following remedy: + + "Legislation should restore the character of public highways + to the railways, by securing to all persons the right to run + trains over their tracks upon proper regulations, and by + defining the distinction between the proprietorship and + maintenance of the railway and the business of common + carriers." + +Mr. Hudson proposes to leave the track in the possession of its present +owners, but to permit any individual or company to run, upon the payment +of a fixed toll, trains and cars over it, under the control of a +train-dispatcher stationed at a central point. This train-dispatcher is +to be notified by telegraph of the movement of each train, and is to +give his orders to the officers in charge of each train, as to what +points they are to go, where to pass one train and where to wait for +another. Each transportation company is to own, load and forward its own +trains; it is to be required to run its regular train on schedule time +or to have it follow another train as an extra. They are to be liable to +their shippers as well as to the railway company for all damages caused +by their neglect, while the railroad company is to be held responsible +for the condition of its track. It will not be necessary to go into the +details of Mr. Hudson's plan. Suffice it to say that he proposes to +establish free competition in the railway business by making the use of +the railway track as free as that of the turnpike or canal, subject only +to such control on the part of the public train-dispatcher as the +paramount considerations of speed and safety may require. + +The adoption of Mr. Hudson's plan would simply be a return to the first +principle of railroad transportation. It has already been shown that the +first English charters permitted the public to use their own vehicles +and motive power upon the railroad track, but that shippers and +independent carriers could not avail themselves of these provisions of +the early charters because it was in the power of the railroad companies +to make their tolls prohibitory. There is but little question as to the +practicability of Mr. Hudson's plan from a purely technical standpoint, +and its adoption might be advisable if it should be demonstrated that a +monopoly of the track is inconsistent with the operation of the railways +for the public good. It is seriously doubted, however, whether such +ideal competition as Mr. Hudson desires to bring about could be secured +except at the expense of true economy. Concentration, or, rather, +consolidation in the railroad business has, under proper legal +restriction, always resulted in a saving of operating expenses, and +usually in a reduction of rates. Any step in the opposite direction, +whatever other merits it may possess, is in the end not likely to give +lower rates. If it is a settled principle that railroads are only +entitled to a fair compensation for their services, it must be evident +that what would be a fair compensation for the same or similar services +to a large, well-organized, well-regulated and well-managed company +cannot be sufficient compensation to an individual carrier or a small +company, whose expenses will always be comparatively larger than those +of its better-equipped rival. Monopoly and extortion need not +necessarily be synonymous. In fact, States and municipalities in their +public works often prefer monopoly to competition as the cheaper of the +two. Nevertheless, should it ever be found that monopolies cannot be +reconciled with justice and economy, a return to the first principles of +railroading may become advisable. + +_3. State ownership and management._ + +A number of European states, notably Prussia, France and Belgium, as +well as Australia, British India and the British colonies in Southern +Africa, have adopted government ownership of railroads. The motives +which led to this step in the various countries differ greatly. While in +Europe military and political considerations predominated, in Africa and +Australia it was more the want of private capital and energy which led +the government to engage in railroad enterprises. There has in most of +these states been a desire to avoid the evils usually connected with +private management. The experiment of state ownership and management of +railroads has been longest tried in Belgium, and with the best results. +With an excellent service the rates of the Belgian state roads are the +lowest in Europe. Their first-class passenger tariffs are, next to the +zone tariff recently adopted on the state roads of Hungary, the lowest +in the world, and are, for the same distance, lower than those of +American roads. In Prussia the state service, upon the whole, is also +superior to that of private companies, and is probably equal to the +public demand. In France the government only owns and operates less +important lines, but furnishes upon these a more efficient and cheaper +service than private companies would either be able or disposed to +furnish. The oft-repeated statement of those opposed to government +regulation to the contrary notwithstanding, government ownership and +management of railroads is a decided success in Europe, Mr. Jeans says +of state railroads: + + "Notwithstanding the superior financial result, the lines + worked by the state are those kept in the best order, and + the working of which gives the greatest satisfaction to the + commercial world and the public in general as regards + regularity of conveyance, cheapness of transit and the + comfort of travelers." + +It is difficult to see how any unbiased person can travel on any of the +state roads of Europe without coming to the same conclusion. State +management offers certainly some decided advantages to the public. Above +all, the business of the roads is not conducted for the pecuniary +advantage of a few, but for the common good. Commerce is not arbitrarily +disturbed to aid unscrupulous managers in their stock speculations. New +lines are not built for speculative purposes, but for the development of +the country. Rates are based more upon the cost of service than upon +what the traffic will bear, and the ultimate object of the state's +policy is not high profits, but a healthy growth of the country's +commerce, while the sole aim of a private company is to get the largest +revenue possible. The permanent way of the state road is kept in better +condition, the public safety and convenience being paramount +considerations. Rates are stable and uniform, instead of being +changeable and discriminating, and all persons and places are as equal +before the railroad tax collector as before the law. It may be laid down +as a general rule that under private management of railroads efforts +will be made to secure the highest rates possible, while it is the aim +of the Government to grant the lowest rates possible. Mr. Jeans proves +by statistics that the cost of maintenance of way is generally higher on +the state lines, and that traffic expenses are higher on the lines of +private companies. In commenting upon this difference he says: + + "It might easily be contended, and even proved beyond all + doubt, that the first characteristic is a result of the + better condition in which the state keeps the permanent way; + and, so far as this is the case, the public convenience, + safety and general advantage are promoted. + + "The highest range of traffic expenses on companies' lines + undoubtedly argues greater laxity of management, since, as + we have already shown, this is one of the most elastic of + items, and may be either very high or very low, according as + economy or extravagance is the prevailing system.... The + experience of Continental Europe points unmistakably to the + exercise of greater economy in state management." + +Judge Dillon, of the United States Court, in his order appointing Hon. +J. B. Grinnell receiver for the Central Railroad of Iowa, in 1876, said: + + "The railroads in the hands of the court--and in the circuit + there are eight or ten--have all been run with less expense, + and have made more money, than when they were operated by + the companies; and we hope and believe under your + supervision that this road will prove no exception, and that + the property will be worth more at the end of the + litigation." + +Upon Mr. Grinnell's resignation, after nearly three years of service, +Judge Grant said, in asking for the discharge of his bondsmen: + + "I concur entirely in the opinion of the State commissioners + that he has very much improved the condition of the road, + and he left it in far superior condition to that in which he + received it." + +Yet Government ownership and management of railroads also has its +drawbacks. It is claimed by some that such management is more expensive +than that of lines owned by private companies. It has already been shown +that the permanent way is kept in better condition by the state than by +private corporations. In Russia, Germany, Austria-Hungary, France and +Italy the state expends from 15 to 30 per cent. more for the maintenance +of the permanent way than the private companies. It is perhaps also true +that the rank and file of railroad employes fare, on an average, better +under government than they do under private management; but, as an +offset to this, it should be remembered that quite a saving is effected +by the state in the salary account of general officers. The people will +not consent to pay the manager of a railroad line a salary six times as +large as that of a cabinet officer, and provide at the same time +sinecures for his sons, brothers, nephews and cousins. + +It is furthermore claimed that, as government is organized, it cannot, +all other things being equal, respond to the demands of commerce as +promptly as private companies. This feature, however, may be an +advantage to the country at large rather than a detriment. But the +strongest argument that can be produced against state ownership of +railroads is that under a democratic form of government it might exert a +demoralizing influence in politics. The 1,700 railroad companies of the +United States have at present an army of about 800,000 employes. This +number is constantly increasing, and it is more than probable that +before the end of the present century it will have reached a million. +When it is considered what importance is at present attached to the +political influence of a hundred thousand Federal officers, it is not +surprising that conservative citizens should hesitate to add to the +ranks of these officeholders a six or seven times larger force. +Dangerous as the railroad influence now is in politics, it would be ten +times more dangerous if under a system of Government management +considerations of self-interest should induce a million railroad +employes to act as a political unit and political parties should vie +with each other in bidding for the railroad vote. Could our civil +service ever be so organized as to divest it entirely of political +power, state management of railroads might still offer the best solution +of the railroad problem. + +Mr. T. B. Blackstone, president of the Chicago and Alton Railroad +Company, has recently created somewhat of a surprise by declaring in +favor of Government ownership of railroads. That Mr. Blackstone's +programme will eventually receive the approval of a large number of his +colleagues there can be but little doubt. With the people wide-awake +upon this subject, the opportunities for railroad speculation are +lessening, and the scheme to early unload the railroads of the country +on the Government at a highly inflated value speaks well for the +financial farsightedness of its author. Mr. Blackstone proposes to have +railroad stockholders do here what the former owners of the telegraph +did in Great Britain, _i. e._, dispose of their property to the +Government, at a price representing several times its original cost or +even several times the cost of duplication. + +Mr. C. Wood Davis, formerly general freight and passenger agent of one +of the leading roads east from Chicago, is one of the best informed and +clearest-headed writers upon the railroad question. He has, after much +experience and long study, been converted to the advocacy of national +ownership as a solution of the railroad problem. In a recent article +published by the Arena Publishing Company, entitled "Should the Nation +own the Railways?" he presents the objections and advantages of national +ownership. He says: + + "The objections to national ownership are many, that most + frequently advanced, and having the most force, being the + possibility that, by reason of its control of a vastly + increased number of civil servants, the party in possession + of the Federal administration at the time such ownership was + assumed would be able to perpetuate its power + indefinitely.... This objection would seem to be well taken, + and indicates serious and far-reaching results unless some + way can be devised to neutralize the political power of such + a vast addition to the official army.... In the military + service we have a body of men that exerts little or no + political power, as the moment a citizen enters the army he + divests himself of political functions; and it is not + hazardous to say that 700,000 capable and efficient men can + be found who, for the sake of employment, to be continued so + long as they are capable and well behaved, will forego the + right to take part in political affairs. If a sufficient + number of such men can be found, this objection would, by + proper legislation, be divested of all its force.... + + "2. That there would be constant political pressure to make + places for the strikers of the party in power, thus adding a + vast number of useless men to the force, and rendering it + progressively more difficult to effect a change in the + political complexion of the administration. + + "That this objection has much less force than is claimed is + clear from the conduct of the postal department, which is + unquestionably a political adjunct of the administration; + yet but few useless men are employed, while its conduct of + the mail service is a model of efficiency after which the + corporate-managed railways might well pattern. Moreover, if + the railways are put under non-partisan control, this + objection will lose nearly, if not quite, all its force. + + "3. That the service would be less efficient and cost more + than with continued corporate ownership. This appears to be + bare assertion, as from the very nature of the case there + can be no data outside those furnished by the + government-owned railways of the British colonies, and such + data negative these assertions; and the advocates of + national ownership are justified in asserting that such + ownership would materially lessen the cost, as any expert + can readily point out many ways in which the enormous costs + of corporate management would be lessened. With those + familiar with present methods, and not interested in their + perpetuation, this objection has no force whatever. + + "4. That with constant political pressure unnecessary lines + would be built for political ends. This is also bare + assertion, although it is not impossible that such results + would follow; yet such has not been the case in the British + colonies where the governments have had control of + construction.... + + "5. That, with the amount of red tape that will be in use, + it will be impossible to secure the building of needed + lines. While such objection is inconsistent with the fourth, + it may have some force, but as the greater part of the + country is already provided with all the railways that will + be needed for a generation, it is not a very serious + objection even if it is as difficult as asserted to procure + the building of the new lines. It is not probable, however, + that the Government would refuse to build any line that + would clearly subserve public, convenience, the conduct of + the postal service negativing such a supposition.... + + "6. That lines built by the Government would cost much more + than if built by corporations. Possibly this would be true, + but they would be much better built and cost far less for + maintenance and betterments, and would represent no more + than actual cost; and such lines as the Kansas Midland, + costing but $10,200 per mile, would not, as now, be + capitalized at $53,024 per mile, nor would the president of + the Union Pacific (as does Sidney Dillon, in the _North + American Review_ for April) say that "a citizen, simply as + a citizen, commits an impertinence when he questions the + right of a corporation to capitalize its properties at any + sum whatever," as then there would be no Sidney Dillons who + would be presidents of corporations, pretending to own + railways built wholly from Government moneys and lands, and + who have never invested a dollar in the construction of a + property which they have now capitalized at the modest sum + of $106,000 per mile.... + + "7. That they are incapable of as progressive improvement as + are corporate-owned ones, and will not keep pace with the + progress of the nation in other respects; and in his _Forum_ + article Mr. Acworth lays great stress upon this phase of the + question and argues that as a result the service would be + far less satisfactory. + + "There may be force in this objection, but the evidence + points to an opposite conclusion. When the nation owns the + railways trains will run into union depots, the equipment + will become uniform and of the best character, and so + sufficient that the traffic in no part of the country would + have to wait while the worthless locomotives of some + bankrupt corporation were being patched up, nor would there + be the present difficulties in obtaining freight cars + growing out of the poverty of corporations which have been + plundered by the manipulators, and improvements would not be + hindered by the diverse ideas of the managers of various + lines in relation to the adoption of devices intended to + render life more secure or to add to the public + convenience.... Existing evidence all negatives Mr. + Acworth's postulate that "state railway systems are + incapable of vigorous life." + + "8. An objection to national ownership which the writer has + not seen advanced is that States, counties, cities, + townships and school districts would lose some $27,000,000 + of revenue derived from taxes upon railways. While this + would be a serious loss to some communities, there would be + compensating advantages for the public, as the cost of + transportation could be lessened in like measure. + + "Many believe stringent laws, enforced by commissions + having judicial power, will serve the desired end, and the + writer was long hopeful of the efficacy of regulation by + State and National commissions; but close observation of + their endeavors and of the constant efforts--too often + successful--of the corporations to place their tools on such + commissions, and to evade all laws and regulations, have + convinced him that such control is and must continue to be + ineffective and that the only hope of just and impartial + treatment for railway users is to exercise the 'right of + eminent domain,' condemn the railways, and pay their owners + what it would cost to duplicate them; and in this connection + it may be well to state what valuations some of the + corporations place upon their properties. + + "Some years since the Santa Fe filed in the counties on its + line a statement showing that at the then price of labor and + materials--rails were double the present price--their road + could be duplicated for $9,685 per mile, and, the materials + being much worn, the actual cash value of the road did not + exceed $7,725 per mile. + + "In 1885 the superintendent of the St. Louis and Iron + Mountain Railway, before the Arkansas State Board of + Assessors, swore that he could duplicate such a railway for + $11,000 per mile, and yet Mr. Gould has managed to float its + securities, notwithstanding a capitalization of five times + that amount." + +Among the advantages to be derived from Government ownership he names +the following: + + "First would be the stability and practical uniformity of + rates, now impossible, as they are subject to change by + hundreds of officials, and are often made for the purpose of + enriching such officials.... + + "It would place the rate-making power in one body, with no + inducement to act otherwise than fairly and impartially, and + this would simplify the whole business and relegate an army + of traffic managers, general freight agents, soliciting + agents, brokers, scalpers and hordes of traffic association + officials to more useful callings, while relieving the + honest user of the railway of intolerable burdens. + + "Under corporate control, railways and their officials have + taken possession of the majority of mines which furnish the + fuel so necessary to domestic and industrial life, and there + are few coal fields where they do not fix the price at which + so essential an article shall be sold, and the whole nation + is thus forced to pay undue tribute. + + "Controlling rates and the distribution of cars, railway + officials have driven nearly all the mine owners, who have + not railways or railway officials for partners, to the wall. + + "With the Government operating the railways, discriminations + would cease, as would individual and local oppression; and + we may be sure that an instant and absolute divorce would be + decreed between railways and their officials on one side, + and commercial enterprises of every name and kind on the + other. + + "The failure to furnish equipment to do the business of the + tributary country promptly is one of the greater evils of + corporate administration, enabling officials to practice + most injurious and oppressive forms of discrimination, and + is one that neither Federal nor State commission pays much + attention to. With national ownership a sufficiency of cars + would be provided. On many roads the funds that should have + been devoted to furnishing the needed equipment, and which + the corporations contracted to provide when they accepted + their charters, have been divided as construction profits, + or, as in the case of the Santa Fe, Union Pacific, and many + others, diverted to the payment of unearned dividends, while + the public suffers from this failure to comply with charter + obligations. + + "There would be such an adjustment of rates that traffic + would take the natural short route, and not, as under + corporate management, be sent around by the way of Robin + Hood's barn, when it might reach its destination by a route + but two-thirds as long, and thus save the unnecessary tax to + which the industries of the country are subjected. That + traffic can be sent by these roundabout routes at the same + or less rates than is charged by the shorter ones is _prima + facie_ evidence that rates are too high. + + "There would be a great reduction in the number of men + employed in towns entered by more than one line. For + instance, take a town where there are three or more + railways, and we find three or more full-fledged staffs, + three or more expensive up-town freight and ticket offices, + three or more separate sets of all kinds of officials and + employes, and three or more separate depots and yards to be + maintained. Under Government control these staffs--except in + very large cities--would be reduced to one, and all trains + would run into one centrally located depot; freight and + passengers be transferred without present cost, annoyance + and friction, and public convenience and comfort subserved, + and added to in manner and degree almost inconceivable. + + "The great number of expensive attorneys now employed, with + all the attendant corruption with the fountains of justice, + could be dispensed with, and there would be no corporations + to take from the bench the best legal minds, by offering + three or four times the Federal salary.... + + "Every citizen riding would pay fare, adding immensely to + the revenues. Few have any conception of the proportion who + travel free, and half a century's experience renders it + doubtful if the evil--so much greater than ever was the + franking privilege--can be eliminated otherwise than by + national ownership. From the experience of the writer, as an + auditor of railway accounts, and as an executive officer + issuing passes, he is able to say that fully ten per cent. + travel free, the result being that the great mass of railway + users are yearly mulcted some thirty millions of dollars for + the benefit of the favored minority; hence it is evident + that if all were required to pay for railway services as + they are for mail services, the rates might be reduced ten + per cent, or more, and the corporate revenues be no less, + and the operating expenses no more. In no other + country--unless it be under the same system in Canada--are + nine-tenths of the people taxed to pay the traveling + expenses of the other tenth. By what right do the + corporations tax the public that members of Congress, + legislators, judges and other court officials and their + families may ride free? Why is it that when a legislature + is in session passes are as plentiful as leaves in the + forest in autumn?... + + "The corporations have ineffectually wrestled with the + commission evil, and any number of agreements have been + entered into to do away with it; but it is so thoroughly + entrenched, and so many officials have an interest in its + perpetuation, that they are utterly powerless in the + presence of a system which imposes great and needless + burdens upon their patrons, but which will die the day the + Government takes possession of the railways, as then there + will be no corporations ready to pay for the diversion of + traffic. + + "As a rule, American railways pay the highest salaries in + the world for those engaged in directing business + operations, but such salaries are not paid because + transcendent talents are necessary to conduct the ordinary + operations of railway administration, but for the purpose of + checkmating the chicanery of corporate competitors. In other + words, these exceptionally high salaries are paid for the + purpose, and because their recipients are believed to have + the ability to hold up their end in unscrupulous corporate + warfare where, as one railway president expressed it, 'the + greatest liar comes out ahead....' + + "Government control will enable railway users to dispense + with the services of such high-priced umpires as Mr. Aldace + F. Walker, as well as of all the other officials of + sixty-eight traffic associations, fruitlessly laboring to + prevent each of five hundred corporations from getting the + start of its fellows, and trying to prevent each of the five + hundred from absorbing an undue share of the traffic. It + appears that each of these costly peace-making attachments + has an average of seven corporations to watch.... + + "With National ownership the expenditures involved in the + maintenance of traffic associations would be saved and + railway users relieved of a tax that, judging from the + reports of a limited number of corporations of their + contribution towards the support of such organizations, must + annually amount to between $4,000,000 and $5,000,000. + + "Of the six hundred corporations operating railways, + probably five hundred maintain costly general offices, + where president, secretary and treasurer pass the time + surrounded by an expensive staff. The majority of such + offices are off the lines of the respective corporations, in + the larger cities, where high rents are paid and great + expenses entailed, that proper attention may be given to + bolstering or depressing the price of the corporation's + shares, as the management may be long or short of the + market. So far as the utility of the railways is concerned, + as instruments of anything but speculation such offices and + officers might as well be located in the moon, and their + cost saved to the public.... + + "Railways spend enormous sums in advertising, the most of + which National ownership would save, as it would be no more + necessary to advertise the advantages of any particular line + than it is to advertise the advantages of any given mail + route.... A still greater expense is involved in the + maintenance of freight and passenger offices off the + respective lines, for the purpose of securing a portion of + competitive traffic. In this way vast sums are expended in + the payment of rents and the salaries of hordes of agents, + solicitors, clerks, etc., etc.... + + "Under Government control discriminations against localities + would cease, whereas now localities are discriminated + against because managers are interested in real estate + elsewhere, or are interested in diverting traffic in certain + directions.... + + "Another, and an incalculable benefit, which would result + from National ownership, would be the relief of State and + National legislation from the pressure and corrupting + practices of railway corporations, which constitute one of + the greatest dangers to which republican institutions can be + subjected. This alone renders the nationalization of the + railways most desirable, and at the same time would have the + effect of emancipating a large part of the press from a + galling thraldom to the corporations.... + + "Estimated net annual saving to the public which would + result from Government control: + + From consolidation of depots and staffs $20,000,000 + From exclusive use of shortest routes 25,000,000 + In attorneys' fees and legal expenses 12,000,000 + From the abrogation of the pass evil 30,000,000 + From the abrogation of the commission evil 20,000,000 + By dispensing with high-priced managers + and staffs 4,000,000 + By disbanding traffic associations 4,000,000 + By dispensing with presidents, etc 25,000,000 + By abolishing all but local offices, + solicitors, etc. 15,000,000 + Of five-sevenths of the advertising account 5,000,000 + ----------- + Total savings by reason of better administration $160,000,000 + + "It would appear that, after yearly setting aside + $50,000,000 as a sinking fund, there are the best reasons + for believing that the cost of the railway service would be + some $310,000,000 less than under corporate management. + + "That $6,000,000,000 is much more than it would cost to + duplicate existing railways will not be questioned by the + disinterested familiar with late reductions in the cost of + construction, and that such a valuation is excessive is + manifest from the fact that it is much more than the market + value of all the railway bonds and shares in existence." + +The above quotations from Mr. Davis' article hardly do it justice, and +it should be read in full to appreciate its full force. Many of the +predictions and estimates are undoubtedly in the main correct, yet upon +the whole it must be admitted that it is a rather rosy and too hopeful +view to take of Government ownership of our railroads. + +_4. State ownership with private management._ + +This is a compromise between a public and a private system of railway +ownership and management. It is claimed by the advocates of this system +that if the Government would acquire by purchase or through condemnation +proceedings all of the railroads of the country, pay for them by issuing +its bonds, and then lease the various lines to the highest responsible +bidders, prescribing a schedule and rules of management, most of the +benefits resulting from state ownership of railroads could be secured +while nearly all its disadvantages would be avoided. It is proposed to +purchase railroads at their actual value and to issue in payment bonds +bearing the same rate of interest as other Government securities. This +would deprive managers of every opportunity to manipulate the railroad +business for purposes of stock speculation. It would also reduce the +fixed charges of our railroads at least 50 per cent., the benefits of +which reduction the public would chiefly share. The acquisition of the +railroads by the Government would, moreover, afford the conservative +capitalist a safe and permanent investment, which, with the gradual +disappearance of our war debt, might become a national desideratum. + +It is proposed by the advocates of this system that the Government fix +rates of transportation for a certain period, to be reviewed at the end +of that period upon an agreed basis. The operating companies would be +required to keep their roads in repair and give sufficient bonds for the +faithful performance of their contracts. If found guilty of persistent +violations of the terms of their leases or of such laws as Congress +might enact for their control, their bonds and leases might be declared +forfeited. A new Government department or bureau would have to be +established and charged with the duty of exercising the same control +over railroads which the Government now exercises over national banks, +and in addition to this complete publicity of the service would have to +be relied upon to prevent the introduction of abuses. + +There are at least two valid objections that can be urged against the +adoption of such a system. Responsible companies could not be induced to +lease a line for a valid consideration unless their rates were +definitely fixed for a series of years. Such a course might, however, +in time result in great hardship to the commerce of the country, as the +great and unavoidable difference in the rates of the various railroad +lines of the country would give to the commercial interests of some +sections decided advantages over those of others. Besides this it would +be very difficult to compel the different companies to keep the lines +leased by them in repair. Controversies would constantly arise between +the officers charged with the supervision of the roads and the operating +companies, which could be ultimately determined only by the courts, +causing to the Government loss, or at least delay in the adjustments. + +_5. National control._ + +Mr. A. B. Stickney, in his work, "The Railway Problem," holds that in +the interest of uniformity it is desirable to transfer the entire +control of railroads to the National Government. He assigns two reasons +for the proposed change; one being that Congress would consider the +subject of railroad control with more intelligence and greater +deliberation; the other, that "the problem of regulating railway tolls +and of managing railways is essentially and practically indivisible by +the State lines or otherwise," and that the authority of Congress to +deal with interstate traffic carries with it the right to regulate the +traffic which is now assumed to be controlled by the several States. + +It must be admitted that it is a difficult matter to draw the line of +demarcation between National and State control, and that Congressional +regulation of railways would remedy many evils which now affect our +transportation system; yet there is reason to believe that the proposed +change would in the end be productive of more evil than good. It is an +essentially American maxim that the home government only should be +trusted with the administration of home affairs. The people of each +State know best their local needs, and it is safe to say that for a +generation or two no serious effort will be made to amend the Federal +Constitution in this respect or to secure from the courts an +interpretation of the interstate commerce clause greatly differing from +that which now obtains. + +It is thus seen that nearly all the methods of railroad management which +we have discussed are, at the present time at least, more or less +impracticable on account of the radical changes which they would +necessitate. It is not likely that for many years to come the American +people could be induced to try any extensive experiments in state +ownership of railroads; nor is it any more likely that the present +generation will undertake the difficult task of separating the ownership +of railroads from their operation. + +A nation is, like the individual, inclined to follow beaten tracks. It +finds it, as a rule, easier to improve these tracks than to abandon them +and mark out a new course. Any proposition made for the improvement of +our system of railroad transportation is in the same proportion likely +to receive the approval of the masses in which it makes use of existing +conditions. It will, therefore, be my aim, in making suggestions as to a +more efficient control of this modern highway, to retain whatever good +features the present system possesses, and to only propose such changes +as may seem essential to restore to the railroad the character of a +highway. + +As has been indicated above, any system of railway regulation, to be +applicable to our circumstances, must recognize the dual sovereignty of +Nation and State. The great majority of our railroad corporations were +originally created by the State, and are only responsible to the State +as long as they do not engage in interstate commerce. Even foreign +corporations must submit to all police regulations of the State in which +they may do business, and as long as the American Constitution remains +intact the individual States will, and should, assert their right to +regulate local traffic and to exercise police supervision over all +railroads crossing their boundaries. + +All power should be kept as closely to the people as is consistent with +efficiency in the public service. It may even be questioned whether +entire transfer to the Federal Government of the supervisory powers now +exercised by the States in railroad affairs would tend to correct +existing railroad evils more speedily or more effectually than they can +be corrected through the agency of local rule. The conditions, and +therefore the wants, of the different States differ so greatly that +general legislation must always fail when it attempts to regulate +matters of merely local concern. + +The means employed by the State for the regulation of the roads under +its jurisdiction should be such as are least likely to lead to a +conflict with Federal authority, and experience has shown that the +authority of the General Government and that of an individual State over +a railroad company, which is incorporated under the laws of the latter, +but is engaged in interstate commerce, may be so harmonized as to avoid +conflicts between the two sovereignties without any great sacrifice of +power on the part of either. Judge Cooley said recently in reference to +regulation by National and State commissions: + + "There is no good reason in the nature of things why the + conformity should not be complete and perfect. It is + remarkable that up to this time there has been so little--I + will not say of conflict, but even of diversity of action + between the National and State commissions. Indeed, I recall + no instance at this time when anything done by the one has + seemed to me to afford just ground for complaint by the + other. This may justly be attributed to the fact that there + has been no purpose on the part of either to do any act that + could afford ground for just complaint on the part of + managers of the business regulated and no desire to do + anything else than to apply rules of right and equality for + the protection of the general public. The aim of all + regulation ought to be justice, and when it is apparent that + this is the purpose of the several commissions, the railroad + managers of the country may more reasonably be expected to + cooperate with them much more generally than they do now. If + these managers were to come generally and heartily into more + full and complete recognition of the rules of right and + justice that the law undertakes to lay down for the + performance of their duties in their management of the great + interests they represent, there cannot be the least doubt + that the general result would be, not only that their + service to the public would be more useful than it is now, + but that the revenues derived from their business would be + materially increased through the cutting off of many of the + drains upon them, which now, while affecting injuriously the + returns they can make to their stockholders, at the same + time have the effect of prejudicing the mind of the general + public against railroad management to an extent quite beyond + what is generally understood by those who suffer from it. + The prejudice is inevitable, and not at all unreasonable + when it is seen, as it very often is, that these drains + result from an unjust discrimination against the public or + some portion thereof, that they are of a character that + ought to need no law and no criminal or other penalties to + put them under the ban of condemnation in every office of + railroad management. + + "I take the liberty of adding one more thought: that the + more perfect is railroad legislation, the less we shall hear + of transportation by rail being made a Government function, + the General Government making purchase of all the roads and + entering upon a course which will lead we know not where or + into what disasters." + +There has been during the past twenty years a tendency in a majority of +the States to place the local control of railroads in the hands of +executive boards, usually styled "railroad commissioners." Previous to +this period the various States relied solely upon legislation for the +regulation of the transportation business, but in time they became +convinced that such laws were inoperative for the want of an enforcing +power. It was found that the individual shipper was unable to cope with +a powerful company and usually would rather suffer wrong than to enter +into a contest which nearly always resulted in great pecuniary loss to +him. On the other hand, it was apparent that if the claim of the +individual were pressed by a railroad commission, even though such a +body had but limited powers, it would, under ordinary circumstances, be +honored, provided it was meritorious; and if the commission was +compelled to enforce a demand through the courts, it would have the +support of the State to poise the wealth and power of the corporation. + +The term "railroad commissioner" in the United States is nearly as old +as the railroad itself; but the first officials bearing that title were +merely successors to the turnpike commissioners of yore; their duties +consisted chiefly in supervising, passing or reporting upon the +construction and condition of the highway. + +The first railroad commission, in the present acceptation of the term, +was created in the State of Massachusetts, in 1869. The commission +consisted of three persons, whose principal duty was to "make an annual +report to the General Court, including such statements, facts and +explanations as will disclose the actual working of the system of +railroad transportation in its bearing upon the business and prosperity +of the commonwealth, and such suggestions as to its general railroad +policy, or any part thereof, or the condition, affairs or conduct of any +railroad corporation, as may seem to it appropriate." This board also +had the general supervision of all railroads and power to examine the +same. It was required to give notice in writing to any railroad +corporation which, in its judgment, was guilty of any violation of the +railroad laws of the State; and if such company continued the violation, +after such notice, it became the duty of the commission to present the +facts to the Attorney-General. It was further made the duty of the board +to examine, from time to time, the books and accounts of all railroads, +to see that they were kept in a uniform manner, and upon the system +prescribed by the board. It was also required to investigate the cause +of any accident on a railroad resulting in loss of life. These being the +principal duties of the board, its powers were very limited; but its +personnel supplied the power which the law had withheld. The success of +this commission exceeded even the expectations of the advocates of the +system, who, in view of the limited powers of the commission, had +anticipated but meager results. + +To quiet the Granger movement the railroads favored and finally secured +the adoption of the commissioner system in the West, and South, in which +sections it attained its highest development. It was soon found that a +commission after the Massachusetts model, when composed of men less +competent or less disposed to do their duty, was liable to dwindle into +a statistical board or even become a pliant tool in the hands of the +railroads. Furthermore, the conditions in Massachusetts, where railroad +owners and railroad patrons lived side by side and were in many +instances even identical, differed materially from those found in the +West and South, where railroad patrons were made to pay excessive rates, +to produce liberal dividends on fictitious stocks for non-resident +stockholders. Here a conflict between the railroads and such commissions +as were determined to do their duty became often unavoidable. Railroad +companies were as a rule disposed to disregard the recommendation of a +commission to reduce exorbitant rates. This led in those States which +suffered most from unjust tariffs to a popular demand to endow the +commission with the power to fix _prima facie_ rates. While the number +of States which have taken this step is at present still limited, public +opinion in its favor is growing throughout the nation, and a general +adoption of this policy is probably only a question of time. There is +every reason for believing that a commission vested with the right to +fix local rates, to require full and complete reports from railroad +companies, and to make proper regulations for their control, aided by +penal legislation to compel compliance with their orders, will be a +sufficient aid to the State in exercising such control over the +companies operating lines within its borders as its dignity and the +welfare of its people demand. + +Viewing the question from a national point of view, we find that, owing +to the great and constantly increasing importance of interstate traffic, +improved Federal agencies for railroad control are a pressing need. +While much has been accomplished by the Interstate Commerce Act, much +yet remains to be done. Violations of the act are still far too +frequent, and they have been encouraged by unfriendly decisions by some +of the inferior Federal courts. + +It must be admitted that nearly all the evils connected with interstate +transportation could soon be remedied were it not for the difficulties +which the Interstate Commerce Commission encounters in the enforcement +of the law. On the one hand it is not possible with the machinery at +present provided to detect and prove a considerable part of the +violations of which railroad managers are daily guilty; and on the other +hand, if these violations are brought to light, there would not, +according to the testimony of a prominent railroad man, be courts enough +in the country to try the violators. Besides this, such is the +artfulness of railroad managers that in a majority of cases it would be +impossible to reach the guilty party, and subordinates would have to +answer for the transgressions of their superiors. + +To provide adequate machinery for the supervision of the transportation +business, a national bureau of commerce and transportation should be +established. As its chief a director-general of railroads should be +appointed by the President, on the recommendation of the Secretary of +the Interior, by and with the advice and consent of the Senate. This +officer should hold his office for a term of at least six years, unless +sooner removed by the President, upon reasons to be communicated by him +to the Senate. He should not be interested either directly or indirectly +in railroad securities. The Interstate Commerce Commission should be +continued as an advisory board. It should upon the whole retain its +present functions and should be consulted by the director-general in all +matters requiring expert investigation. A number of divisions or +sub-bureaus should be established, and each should be entrusted, under +the supervision of the director-general, with such duties as may be +deemed necessary to secure the greatest efficiency. + +There should be a division charged with the duty of carefully examining +and compiling the detailed reports which the various companies should by +law be required to make to the bureau. An inspection service should also +be established, similar to that now maintained by the Treasury and +Post-office Departments. Its officers should be empowered to enter all +railroad offices and examine the companies' books, board trains and +employ other legal means to detect violations of the railroad law and +report them to the chief of the bureau. + +Railroad companies might be permitted to make interstate rates, but all +schedules should be submitted to the bureau for approval or revision. +Legal provision should be made against every sort of speculation in +railroad stocks on the part of railroad officers, who should, in +addition, be prohibited from sharing in the profits of favorite rates, +as at present. All executive officers and directors of railroad +companies should, like officers of national banks, be required to +qualify by taking an oath of office, and should be held to strict +accountability for their official acts. Officers of railroad companies +should not be allowed to receive and use proxies at stockholders' +meetings. + +The director-general should have the power, when he has proof that a +railroad manager is persistently violating the law, to remove him and to +appoint a receiver to take charge of the road until its owners can make +provision and furnish sufficient guarantee for a more responsible +management. Such a procedure would not be without analogy in the sphere +of Federal authority. The Comptroller of the Currency is authorized by +law to remove the derelict officials of a national bank and place its +business in charge of a receiver. The beneficial effect of this +provision is evinced in the extreme rareness of such a step. When +railroad managers are held responsible for their own official acts, as +well as for those of their subordinates, and when all railroad +transgressions are visited upon their source in such a manner as to be +remembered by the stings of disgrace and of a blighted career, +unfaithful railroad managers will be extremely rare. + +The plan here outlined is of course capable of being greatly improved. +Experience only is a reliable guide as to the merits of the various +details of such a system of control. What is needed above all things is +a beginning, the establishment of the principle of complete control of +railroad transportation by the State and the Nation. When this step is +once taken, the friends of railroad reform may safely trust to time for +the solution of the subordinate questions of this important problem. + +By thorough State and Federal supervision of the railroad business many +of the present abuses can be prevented. But the temptations of railroad +managers to violate the law will continue to exist as long as the +speculative element is permitted to remain in railroad securities. To +remove the fountain-head of the evil eventually, the way should +gradually be paved for a change in railroad organization and ownership +which would also greatly increase the responsibility and efficiency of +railroad management. In the beginning of the railroad era, nearly all, +and not unfrequently all the capital needed for the construction of a +new line was supposed to be furnished by the company's stockholders. But +as it often happened that the cost of construction considerably exceeded +the original estimate, the State authorized railroad companies to +mortgage their property for the purpose of raising the money necessary +to complete the road. In time this provision of the law was taken +advantage of by speculative stockholders to such an extent that roads +were often bonded for the full amount necessary to construct them, and +even for more, while the stock was issued simply as a bonus to the +promoters and the bondholders of the road. But as the bonds and shares +scarcely ever remain in the same hands, such a condition was eventually +brought about that roads were controlled by those who had little or +nothing invested in the enterprise, and their real owners were deprived +of all influence in their management, retaining only the right to +foreclose their mortgages when things came to the worst. It is evident +that men who have only a speculative interest in property cannot have +the same concern for its permanent value and prosperity as those who +hold it as a permanent investment. Many of the railroad abuses of the +past had their origin in the law permitting the bonding of railroad +property. Were it desirable to make a property for the sole use and +convenience of speculators and gamblers, a better scheme could hardly be +devised than the present system of our railroad organizations. Were +railroad companies organized like national banks, were each shareholder +required to pay the full amount of the face value of his shares, and +were mortgaging railroad property entirely prohibited, it is not likely +that the proportion of bankrupted railroads would be any larger than +that of bankrupted banks. Few, if any, railroads would be built for +purely speculative or blackmailing purposes. + +Capital is naturally conservative, and speculation is only invited where +the chances of gain are greatly out of proportion to the capital +invested. Were the principle of ownership which applies to national +banks and other well regulated corporations also applied to the +railroads, and were bonds entirely abolished, only such persons would +by the shareholders be placed in charge of their property as could give +to them the best assurance of honest and conservative management. Such a +change would greatly increase public confidence in, and the value of, +railroad securities, and would eventually place them above bank stock as +desirable investments. With the great fluctuations which under present +circumstances obtain in railroad stocks, these securities are regarded +as unsafe and unsatisfactory investments by conservative people. During +a period of less than twelve months in 1891 and 1892 the stock of the +Atchison, Topeka and Santa Fe fluctuated from 28-1/2 to 43-1/2, or 53 +per cent.; that of the Chesapeake and Ohio from 15-1/4 to 25-7/8, or 70 +per cent.; of the Chicago and Northwestern from 101 to 118, or 17 per +cent.; of the Chicago, Saint Paul, Minneapolis and Omaha from 20-1/2 to +38-1/2, or 88 per cent.; of the Chicago, Milwaukee and St. Paul from +48-3/4 to 78-1/2, or 61 per cent.; of the Iowa Central from 6-1/2 to 13, +or 100 per cent. + +If we look over the stock quotations of the past ten or twelve years we +find still greater fluctuations. The following table, taken from the +_United States Investor_, shows the range of prices of a few of the +principal stocks during this period: + + Name. Lowest. Highest. + + Central Pacific 26-1/2 (1888) 102-7/8 (1881) + Chesapeake and Ohio 1 (1888) 33-7/8 (1881) + Erie 9-1/4 (1885) 52-7/8 (1881) + Illinois Central 79-1/4 (1879) 150-1/2 (1882) + Lake Erie and Western 1-3/8 (1885) 65-3/4 (1881) + Michigan Central 46-1/2 (1885) 130-1/8 (1880) + New Jersey Central 31 (1885) 131 (1889) + New York Central 81-3/4 (1885) 155-3/8 (1880) + Northern Pacific 14 (1884) 54-3/8 (1882) + Rock Island 63-3/8 (1891) 204 (1880) + C., M. & St. P. 34-3/8 (1879) 129-1/4 (1881) + Texas and Pacific 5-1/2 (1884) 73-5/8 (1881) + Wabash 2 (1885) 60 (1881) + Atchison and Topeka 23-3/4 (1890) 152-1/2 (1880) + Chicago, Burlington and + Quincy 75-7/8 (1891) 182-1/2 (1881) + N. Y. & N. E. 9 (1884) 86 (1881) + Wisconsin Central 2 (1880) 39 (1881) + Union Pacific 28 (1884) 131 (1881) + +And such fluctuations have always been rather the rule than the +exception. It is a gross outrage upon the investing public to let this +state of affairs continue. It should be corrected without delay. + +How many high officials in charge of railroad property will under these +circumstances resist the temptation to speculate in the stock of their +companies, and, so long as it is permitted, how many will resist the +temptation to adopt such policies in the government of their roads as +will cause such fluctuations? It is a common report that it is not an +unfrequent occurrence for Senators and members of Congress to receive +information from railway officials that enables them to raise their +campaign funds by speculation in Wall Street. + +Mr. Henry C. Adams, statistician of the Interstate Commerce Commission, +says in his third annual report: + + "It certainly appears ... that the motive for ownership in + railroad stock is quite different from the ordinary motives + which lead men to invest in corporate enterprises, thus + presenting an additional proof that railways are a business + not subject to ordinary business rules." + +There is no safer business in the world than railroad transportation; +there is none that has less elements of uncertainty; none whose returns +in the aggregate are less varying. Every other business in the country, +whether prospering or struggling, pays tribute to it. It rests on a cash +basis, and suffers probably less from hard times than any business of +its magnitude. Both the merchant and the manufacturer run large risks in +doing business largely on a credit basis. The farmer sows in the spring, +harvests in the fall, and often cannot realize on his products until +winter; but the railroad company always receives its pay as soon as its +work is done, and not unfrequently even before it is done. Statistics +show that railroad revenues are, in the aggregate, remarkably uniform, +and there is no reason why railroad securities should be less stable +than bank or insurance stocks. Mr. Jeans says: + + "It is observable, in respect to the net profits from + railway working, that they have not fluctuated from year to + year in the same way as nearly all other profits have + done.... It comes, then, to this, that, next after land and + house property, the railway interest is the largest and most + important in the country. But it is superior to both of + these rival interests in its profit-earning capabilities, + yielding, as it does, more than 4 per cent. on the capital + expended, against a possible average of 2-1/2 to 3 per cent. + in respect to the others." + +There may be some arguments in favor of bonding railroads, but this +practice is, upon the whole, productive of infinitely more evil than +good. The State should, therefore, compel railroad companies to +liquidate all of their bonded indebtedness without unnecessary delay. In +the proportion in which this is accomplished railroad shares will gain +in stability and value. + +Railroad men complain that the small savings of the poor invested in +railroad securities do not yield adequate returns and are often lost in +consequence of the foreclosing of the roads in which these investments +have been made. Others complain that railroads are bankrupted in the +interest of designing bondholders. Still others charge that rich and +powerful roads contrive to obtain a controlling interest in the +depreciated stock of weaker roads and then manage these roads in their +own interest and greatly to the detriment of other stockholders. All +these evils would disappear if the law required the identity of actual +and virtual ownership. "Freezing-out" processes could no longer be +resorted to by expert directors to obtain without compensation the +property of their less sophisticated fellow stockholders. One railroad +could no longer obtain control of another by acquiring an insignificant +part of the sum total of its securities. There would be no longer any +clashing between the interests of bondholders and stockholders, and +railroads would no longer be managed in the interest of a small minority +of their owners. + +In addition to the cancellation of all railroad mortgages the State +should require that all railroad stocks should, in the future, be paid +in full. Furthermore, roads should be built only from the proceeds of +the capital stock, and the expense of repairs should be defrayed from +the revenues of the road. Dividends should only be paid from surplus +earnings and should in no case exceed a fair rate of interest on the +actual present value of the road. The statistician to the Interstate +Commerce Commission suggests the creation of a special commission +charged with the duty of converting the actual capitalization of +railroad lines into a just value of their property. To do justice to +both the railroads and their patrons in the fixing of rates, it is +important that the just value of railroad property be ascertained, but +the work could probably be done with less friction by a cooperation of +National and State commissions. A number of reforms are needed within +the province of railroad management. Passenger rates are, as a rule, too +high, and out of all proportion to freight rates. Many passenger +tariffs still recognize the old stage-coach principle of fixing the fare +in an exact proportion to the distance traveled. Thus a passenger who +takes the train for a five-mile trip pays only fifteen cents for his own +transportation and that of one hundred pounds of baggage, while the +passenger who buys a ticket for a journey of one hundred miles pays, on +most American lines, exactly twenty times the amount paid by the +five-mile passenger. Here the principle of collecting terminal charges +is entirely ignored. Sufficient inducements are not held out to the +passenger to prolong his journey, and as a consequence of this +short-sighted policy of the railroad companies the average distance +traveled in the United States by each passenger, instead of having +gradually increased, has gradually decreased of late years until it is +now only 24.18 miles. The average freight haul in the United States is +120 miles, or about five times as long as the average journey per +passenger. How can such a difference be accounted for except by the +dissimilarity in the principles which govern the computation of +passenger and freight charges? The same rule should be adopted in fixing +passenger rates that is recognized by railroad men in fixing freight +rates: the rate per mile should decrease with the increase of the number +of miles traveled. + +The principle of arranging passenger tariffs on a sliding scale has +found recognition in Europe. In Denmark first-class passenger fare is +3.13 cents for each of the first 47 miles, 2.67 cents for each of the +next 47 miles, and only 2.22 cents for every additional mile. The +practical application of this principle is, in fact, only limited by the +extent of the kingdom. In nearly all European countries a uniform +reduction, ranging from 20 to 30 per cent., is made from regular rates +for return trip tickets, and coupon tickets are issued to tourists +almost everywhere at largely reduced rates. + +Hungary recently adopted a new method of making passenger and freight +tariffs for its state lines. This is now generally called the zone +system. There are two classes of tickets sold, one for short trips on +suburban or branch lines, the other for longer journeys on the main +lines. The distances that can be traveled on short or suburban lines are +divided into two zones of stations, and those on main lines into +fourteen zones. The division of the kingdom into zones is made with +Buda-Pesth as the center. A ticket purchased for a particular zone +carries the passenger to the end of that zone or any nearer station. + +The following table will show the extent of each zone and the fares +paid: + + --------------+---------------+--------------------+-------------------- + | | LOCAL TRAINS. | FAST TRAINS. + ZONE | DISTANCE |------+------+------+------+------+------ + | |First |Second|Third |First |Second|Third + | |Class.|Class.|Class.|Class.|Class.|Class. + --------------+---------------+------+------+------+------+------+------ + Short Lines.| | Fl. | Fl. | Fl. | Fl. | Fl. | Fl. + |First Station. | 0.30 | 0.15 | .10 | - | - | - + |Second Station.| .40 | .22 | .15 | - | - | - + Main Lines. | | | | | | | + 1 | 1-25 km. | .50 | .40 | .25 | 0.60 | 0.50 | 0.30 + 2 | 26-40 " | 1.00 | .80 | .50 | 1.20 | 1.00 | .60 + 3 | 41-55 " | 1.50 | 1.20 | .75 | 1.80 | 1.50 | .90 + 4 | 56-70 " | 2.00 | 1.60 | 1.00 | 2.40 | 2.00 | 1.20 + 5 | 71-85 " | 2.50 | 2.00 | 1.25 | 3.00 | 2.50 | 1.50 + 6 | 86-100 " | 3.00 | 2.40 | 1.50 | 3.60 | 3.00 | 1.80 + 7 | 101-115 " | 3.50 | 2.80 | 1.75 | 4.20 | 3.50 | 2.10 + 8 | 116-130 " | 4.00 | 3.20 | 2.00 | 4.80 | 4.00 | 2.40 + 9 | 131-145 " | 4.50 | 3.60 | 2.25 | 5.40 | 4.50 | 2.70 + 10 | 146-160 " | 5.00 | 4.00 | 2.50 | 6.00 | 5.00 | 3.00 + 11 | 161-175 " | 5.50 | 4.40 | 2.75 | 6.60 | 5.50 | 3.30 + 12 | 176-200 " | 6.00 | 4.80 | 3.00 | 7.20 | 6.00 | 3.60 + 13 | 201-225 " | 7.00 | 5.30 | 3.50 | 8.40 | 6.50 | 4.20 + 14 | 225 km. | | | | | | + | and over | 8.00 | 5.80 | 4.00 | 9.60 | 7.00 | 4.80 + +(The florin is a little more than one-third of a dollar.) + +A ride from a city to the first suburban station costs from 3 to 10 +cents, according to class of car, and to the second station 5 to 13.6 +cents. On through trains a person may travel 15 miles at a cost of from +8-1/2 to 20 cents, according to kind of train and class of car, a +hundred miles for from 85 cents to $2.00; 140 miles for from $1.15 to +$2.80 and any distance above 140 miles for from $1.35 to $3.25. A person +may thus travel from Buda-Pesth to Predeal, a distance of 472 miles, +with a third-class ticket for zone 14, purchased at a cost of $1.35, or +28-100 of a cent per mile. + +Our railroad men with much complacency point to the fact that these +rates do not cover the forwarding of passengers' baggage and that this +service must be paid for separately. These charges, however, are very +moderate, being on 120 pounds of baggage 8-1/3 cents a distance of 34 +miles or less, about 17 cents for a distance of more than 34 and less +than 62 miles, and about 34 cents for any distance over 62 miles. The +additional charge for carrying 120 pounds of baggage from Buda-Pesth to +Predeal is therefore about one-fourteenth of one cent per mile. It must +be admitted that this system of charging separately for passenger and +baggage is eminently just, for there is no good reason why the passenger +without baggage should be taxed to pay for the carriage of that of his +fellow-traveler. + +The zone tariff was introduced on the state railways of Hungary by M. +Barosz, the Hungarian Minister of Commerce, on the 1st of August, 1889. +The adoption of the new tariff was ridiculed and condemned as visionary +by road experts, who even went so far as to prove to the satisfaction of +practical railroad men that the innovation was destined to be a failure. +For a month or two it almost seemed as if their prediction might be +fulfilled, the number of passengers carried remaining behind the number +carried during the corresponding period of previous years. But soon the +reaction set in. The month of November, 1889, already witnessed an +increase in the number of passengers as well as in receipts over the +same month of the year previous. The result of the first year's trial +demonstrated the wisdom of the "innovation." The number of passengers +carried, which had been only 5,186,227 in 1888-89, rose to 13,060,751 in +1889-90, and the total receipts for passengers and baggage rose from +9,138,715 florins to 11,186,321 florins, a gain of 2,047,606 florins, or +22 per cent., during the first year. There is a continued increase both +in the number of passengers and in receipts, and the success of the +system must be pronounced phenomenal. The railroad experts of Europe, +who had predicted the signal failure of the zone system, now that the +unexpected has happened, are trying to discover the particular favorable +conditions which made the success of the system possible in Hungary. It +will probably be a decade, or even two, before the railroad experts of +both hemispheres will be entirely reconciled to this new application of +the old principle that a reduction in the price of a commodity increases +the demand for it. + +It is strange, indeed, that intelligent men should be so slow in +recognizing an economic principle for which both history and daily +experience furnish an unlimited number of illustrations. The post-office +receipts everywhere have increased with a reduction in postage. The +Government telegraph in England did not become self-supporting until +Parliament made a sweeping reduction in its rates. The revenue from the +Brooklyn bridge never paid a fair interest on the capital expended in +its construction until its tolls were cut down. Were it necessary, +hundreds of other examples could be added to these. + +Hungary has also applied the zone system to its freight traffic. Three +zones are fixed for the carrying of goods, viz.: Zone I, for distances +less than 200 kilometers (124 miles); Zone II, for distances over 200 +and less than 400 kilometers, and Zone III, for distances over 400 +kilometers. A uniform tariff is established for each zone, which is +one-third less than the average freight rates for equal distances +formerly in force. American railroads should profit by the wisdom and +experience of the Hungarian Government, and adopt at an early day such +features of its system as upon our soil and under our institutions may +be made practicable. The Hungarian system, with some modifications, is +now being tried by Austria and a few of the German states, and is +increasing railroad revenues wherever adopted. + +There is a growing demand for lower fares. This demand increases in the +same proportion in which the desire and the necessity for travel +increase. European states have not been slow to meet it. Reductions are +made everywhere, and chiefly favor the lower classes. Thus, when France, +within the last year, changed her passenger tariff, she reduced +first-class fare 9 per cent., second-class fare 18 per cent., and +third-class 27 per cent. + +The European passenger reports show the numbers of first and +second-class passengers are continually falling off, while those of the +third-class passengers are fast increasing. In England and Wales the +number of first-class passengers fell between 1875 and 1889 from +37,000,000 to 24,000,000 while the number of third-class passengers +increased during that same period from 350,000,000 to 601,000,000, and +this increase still continues. In the United Kingdom the number of +third-class passengers for 1891 was over 750,000,000. Furthermore, +passenger revenue comes chiefly from the third class. In the United +Kingdom the receipts from first-class passengers were in 1889 +L3,188,000; from second-class passengers, L2,705,000; and from +third-class passengers, L19,785,000. It is thus seen that receipts from +third-class passengers are nearly 3-1/2 times as large as those from the +first and second-class passengers combined. A similar proportion is +found in nearly every country on the continent. European roads +discovered some years ago that first and second-class passengers were +carried at a loss, and all the passenger earnings were derived from +third-class passengers. The profits from this source show a considerable +increase every year. + +The average fare per mile is 2.15 cents in the United States, and only +1.17 cents in Germany, 1.67 cents in Austria, 1.18 cents in Belgium, +1.29 cents in Denmark, 1.45 cents in France, 1.64 cents in Italy, and +1.45 cents in Russia. It is often claimed by railroad men that we travel +more luxuriously than the people of any other country in the world, but +it should not be forgotten that traveling in the United States is also +more expensive than anywhere else. It is contended that class +distinctions are odious in America, and that second and third-class cars +would not be patronized. The same argument might be applied to theaters, +hotels, clothiers, grocers, etc. It is difficult to see why distinction +here should be less odious than on the railroad train. The truth is, +Americans are just like other people and will avail themselves of +accommodations in keeping with their means if they have the opportunity. +Many passengers who will not travel in an uncouth smoking-car would, if +clean second-class cars were provided, gladly dispense with the luxury +of an upholstered seat if by doing so they could save from $5 to $10 a +day. + +A common laborer in this country earns from a dollar to a dollar and a +half a day, and in the performance of his labor as a rule suffers +greater inconvenience than does the traveler who travels the country in +a second-class car. Is it under these circumstances at all likely that +the American would hesitate to travel for a day in a plain but clean +car, if by doing so he could save a week's earnings? We may even go +further and say that it is a very reasonable assumption that the man who +earns his bread by the sweat of his brow would choose the cheaper car if +the difference in one day's fare were equal to one day's wages. It is a +common saying in Europe that the first-class passengers consist of lords +and fools, and few of the hundreds of thousands of American tourists +traveling abroad give the natives occasion to class them with either. +The first-class car has almost fallen into disuse in Europe, and even +the patronage of the second-class is less than ten per cent, of that of +the third. + +Reduced rates for return tickets should be provided under rules and +regulations of commissioners. + +The Massachusetts legislature recently passed a law requiring the +railways of that State to sell interchangeable thousand-mile tickets for +$20. The State commission is given power to except any company from its +requirements if the public welfare or the financial condition require or +demand it. This is a step in the right direction and should be followed +by other States. Michigan also requires certain roads to carry +first-class passengers at two cents per mile. + +Railroad companies should be compelled to discard the pass as a +courtesy as well as a consideration. The giving of passes under the +guise of mileage books, or tickets for pretended or unnecessary +services, is very pernicious and should be prohibited. Such a reform +would soon enable them to offer low fares to all. An employe may be +furnished free transportation while actually engaged in the business of +his company, and it should be made the duty of the State and National +commissions to make proper regulations governing such free +transportation of employes. Half-fare tickets for adults should also be +abolished. The pauper ticket is given to the minister of the gospel to +secure for the railroads the influence of the pulpit, though offered +under the pretense of charity or support of the church. The State should +not permit the railroad companies to practice this or any other kind of +charity at the expense of the general public. The railroad is a highway, +and the company operating it is entitled to rates sufficient to pay +operating expenses and a fair interest on the value of the property. It +can therefore easily be seen that the so-called gifts show no liberality +on the part of the railroad company, but are made at the expense of +other people. Donations made by railroad companies should be made from +the pockets of their stockholders and not from the pockets of their +patrons. + +All perquisites of railroad officers should be abolished. When a railway +official has become so pompous and consequential that he requires a +special car, it is about time to look about for his successor. If we are +to have a special-car aristocracy in this country let it be supported at +the expense of some other interest. + +Another railroad reform is needed on this side of the Atlantic. While +the great majority of railroad officials are courteous and considerate, +and perform their duties in the most agreeable and acceptable manner, +there are a few who do not properly appreciate the relation which they +sustain to the patrons of their companies. They are inclined to forget +that they are quasi-public servants, and that the public has a right to +demand courteous treatment at their hands. All railroad employes should +realize that their first duty is to administer to the welfare and the +convenience of the public, and each one should have the full protection +of the law in his efforts to do so. The American public objects much +less to an inferior car than to rude treatment by the companies' agents. +Railroad superintendents may justly be blamed for the incivilities of +their subordinates. It is their duty to know the character of those whom +they employ, and not to retain in their employ those who are derelict in +their duty to the public. Nothing offends the feelings of a true +American more than the display of a bureaucratic spirit on the part of +public servants. Nothing more commends a line of railroad to the public +than uniform painstaking kindness and courteous treatment on the part of +its employes. It is made the duty of railroad employes of France "to so +treat the public as if they were eager to oblige it," and the very first +paragraph of the official instructions to the railroad employes of +Germany enjoins them "to assume a modest and polite demeanor in their +intercourse with the public." In this connection it might be stated that +the second paragraph of those instructions positively forbids the +acceptance of any gratuity by a railroad employe. If our American +sleeping and dining-car companies would give their employes adequate +compensation and then adopt and enforce the German rule concerning +"tipping," their service would gain popularity and their employes +self-respect. + +Entrance into the railway service should be by agreement for a definite +time, and dismissals and resignations should be governed by rules agreed +upon by boards of commissioners and the companies. + +The use of the corporation has done so much to secure for capital so +large a share of the profits of industrial enterprises, and large +salaries also for the officers who manage them, that laborers have been +led to organize themselves into associations for like purposes, and +ambitious men have not been slow in availing themselves of the +advantages afforded them in this new field. + +It is right and proper for laborers to organize such associations when +they can do so under wise and economical management, for the purpose of +securing greater intelligence, better education, higher culture, higher +wages, a shorter work-day, and a general ameliorating of their +condition, all of which will tend to make them more efficient workmen +and also better enable them to resist the aggression of centralized +wealth; for, in the absence of organization, the single-handed employe +of the great modern employer is comparatively helpless. But if these +organizations are allowed to be controlled by ignorant, unreasonable or +designing men, who will, at trifling provocations, resort to violent and +unlawful measures, they are sure to prove harmful, and a great +detriment, instead of a help, to their members, and the sooner they are +abandoned the better for all. + +Great conflicts are sure to arise between organized capital and +organized labor, and they must be settled in a reasonable way, or +anarchy will prevail. They cannot be left for headstrong or +inconsiderate men representing either side to determine, but the line +must be drawn by the public authorities. + +Each year affords accumulated evidence of the necessity of extending +legal restrictions over the management of the railway business, and the +law, as laid down by Judge Ricks to the Ann Arbor strikers last March, +in the United States Circuit Court, at Toledo, is undoubtedly correct +and will meet with general approval from the public. + +He says: + + "You are engaged in a service of a public character, and the + public are interested not only in the way in which you + perform your duties while you continue in that service, but + are quite as much interested in the time and circumstances + under which you quit that employment. You cannot always + choose your own time and place for terminating these + relations. If you are permitted to do so you might quit your + work at a time and place and under circumstances which would + involve irreparable damage to your employers and jeopardize + the lives of the traveling public." + +Mr. Powderly, in commenting upon the above decision, does not complain +of it, but says: + + "The decision shows, as I have said before, that the + principle of Government ownership of the railroads is being + recognized by the courts. While the decision is apparently + against the men, it emphasizes our position that the + Government has the right to supervise the railroads. Now it + is a poor rule that won't work both ways. + + "The Interstate Commerce Law was passed for the purpose of + controlling the railroads, but up to date no railroad has + paid any attention to the law. Anarchy of the worst kind has + prevailed. By that I mean a total disregard of the law, and + that is what the corporations charge against the anarchists. + The courts hold themselves in readiness to obey the will of + the corporations when a charge is made against the workmen, + but no effort is made to carry out the mandates of the law + when the provokers of strikes, the corporations, violate the + law." + +There is but little doubt, if the judges of the Federal courts would +show the same zeal in holding railroad managers amenable to the law as +Judge Ricks has displayed in this case with the employes, they would +secure increased confidence from the people in the tribunals over which +they preside. + +All fair-minded persons will agree that labor as well as capital must be +subjected to proper restraints, and that the public will demand nothing +unreasonable from either. + +Accidents are too frequent upon American railroads. The reports of the +Interstate Commerce Commission give the following as the numbers killed +and injured during the years named: + + ---------+---------------+---------------+---------------+--------------- + | 1888 | 1889 | 1890 | 1891 + |Killed. Injured|Killed. Injured|Killed. Injured|Killed. Injured + ---------+-------+-------+-------+-------+-------+-------+-------+------- + Employees| 2,070 | 20,148| 1,972 | 20,028| 2,451 | 22,396| 2,660 | 26,140 + Passeng's| 315 | 2,138| 310 | 2,146| 286 | 2,425| 293 | 2,972 + Others | 2,897 | 3,602| 3,541 | 4,135| 3,598 | 4,206| .... | .... + ---------+-------+-------+-------+-------+-------+-------+-------+------- + Total | 5,282 | 25,888| 5,823 | 26,309| 6,335 | 29,027| .... | .... + ---------+---------------+-------+-------+-------+-------+-------+------- + +For the year ending June 30, 1890, the total number of employes was +749,801. There was, therefore, one death for every 306 men employed and +one injury for every 33 men employed. For the previous year one was +killed for every 357 men employed, and one was injured for every 35 men +employed. While trainmen represent but 20 per cent, of the total number +of employes, the casualties among them represent 58 per cent. of the +total number of casualties. + +For the year 1888, one passenger was killed in every 1,523,133 +passengers carried, and one injured in every 220,024 carried. + +The corresponding rate in England for the year 1888 is one passenger +killed for every 6,942,336 carried, and one injured for every 527,577 +carried. + +Railroads doing a large business should be compelled to adopt the most +improved appliances for avoidance of accidents. + +The occupation of trainmen is especially hazardous, and too long +continued service should not be required, but proper intervals of rest +should be allowed. It is to the want of this, undoubtedly, that a great +many of the serious accidents are owing. + +No more Sunday trains should be run than are absolutely necessary. +Provision should be made by law to enable trainmen to procure insurance +at the lowest rate possible, for indemnity against loss of health, life +or limb. + +It was only a few days before the great disaster occurred on the Hudson +River Railroad at Hastings, over a year ago, that an announcement had +been made to the public of the extreme prosperity of the road during the +year. The great slaughter that occurred there is another illustration of +the disregard of public duty, and another instance of the sacrifice of +life and limbs of passengers and employes by a railway corporation in +order to secure large dividends on watered stock. It is not only gross, +but criminal neglect for a company with such an immense income not to +provide greater safety appliances, and the coroner's jury in this case +was too modest when it decided that the management of the road was +morally responsible for the disaster. + +Parliament has compelled the British railways to adopt, in the interest +of the public safety, the block system and continuous brake, and great +lines like the New York Central and Hudson River companies should be +compelled to adopt such improvements. + +The traveling public has another grievous cause for complaint. There are +but few companies that make any efforts to have their trains connect +with those of rival roads. On the contrary, a good deal of scheming is +often done by railroad companies to so arrange their time-tables with +reference to those of their rivals as to inconvenience passengers as +much as possible by delays at competing points. To remedy this evil the +State should require that every time-table should have the approval of +proper authorities, and no change should be permitted without their +approval. + +Railroad companies are chartered for the purpose of promoting the public +welfare, and every violation of their charter should be punished. + +It should be the main object of railroad legislation to compel companies +to fulfill their public obligations without depriving them of their +efficiency. Above all things these companies should be stripped of the +power to use their great wealth for the purposes of corruption or the +attainment of political influence. Our railroads to-day probably +represent no less than one-fourth of the personal property of the +country, and this vast wealth is controlled by a comparatively small +number of men, many of whom have in the course of time become so +arrogant and despotic that they have little regard for popular rights or +the expressed will of a free people. + +It is reported that when, a few years ago, a representative of the press +directed Mr. Vanderbilt's attention to the fact that the public +disapproved of his railroad policy, the latter gave vent to his contempt +for public opinion by the no less profane than laconic reply: "The +public be damned." Ex-Railroad Commissioner Coffin called on one of the +Goulds to urge the adoption of the automatic car-coupler and other +safety appliances for the roads controlled by them. He was very curtly +told that not a cent would be expended by the Gould roads for such a +purpose until the West had repealed its obnoxious railroad laws. The +Gould dynasty thus intends to accomplish the repeal of these laws by +coercion. Railroad magnates and their lieutenants often show still +greater arrogance in dealing directly with their employes. + +It may be difficult for railroad managers of the present school to adapt +themselves to new conditions; it may be impossible for them to +understand how any other practices than those which have long been +established can succeed; yet in spite of them both the law and public +sentiment have already undergone great changes, and still greater +changes will follow. It may take years to accomplish this work; to bring +about any great reform requires time and a deter, mined purpose on the +part of its advocates. Yet I believe the era is not far off when +railroads will be limited to their legitimate sphere as common carriers, +when they will treat all persons and all places as impartially as does +the Government in the mail service, when their chief factor in +rate-making will be the cost of service, when they will respect the +rights of the public and those of their stockholders, insuring perfect +service to the former and fair profits upon the actual value of the +lines operated to the latter. + +The fact should, finally, not be overlooked that it is in the power of +the General Government to prevent many railroad abuses, and especially +excessive freight charges, by the improvement of our rivers and harbors. +That our water-courses act as levelers of interstate rates is apparent +from the fact that railroad rates invariably rise with the freezing of +the water-ways and fall with the opening of river and lake navigation. +By connecting, wherever feasible, our large Western rivers with the +great lakes, the Government could greatly extend the reign of +competition in transportation, and thereby keep freight rates within +reasonable bounds. Lake transportation even now plays an important role. +In 1892 it was not less than 20,000,000,000 ton miles during the season +of eight months' duration, and it is almost equal to one-fourth of the +total ton mileage of all the railroads in the country for the entire +year. The average rate of lake transportation has been reduced to 1.3 +mills per ton per mile, which is only about one-seventh of the average +railroad freight rate in the United States. + +Where the masses hold the sovereign power, there, if anywhere, the +welfare of the people should be the supreme law. Violent political +commotions never disturb the government whose policy is to secure the +greatest good to the greatest number. Thorold Rogers justly remarks that +the strength of communism lies in the misconduct of administrations, the +sustentation of odious and unjust privileges and the support of what are +called vested interests. Lord Coleridge, in a remarkable article +published not long ago, recommended a revision of the laws relating to +property and contract, in order to facilitate the inevitable transition +from feudalism to democracy, and laid down the rule that the laws of +property should be made for the benefit of all, and not for the benefit +of a class. + +During the middle ages, and even up to the beginning of the present +century, nearly all the laws on the statute books looked towards the +protection of the rights of the feudal lord. Provision was made for the +expeditious collection of his dues and a severe punishment of his +delinquent debtor. The peasant was forced to labor fifteen hours per day +and three hundred and sixty-five days in the year to pay the baron's +rentals and sustain life. The law permitted him to be flogged for +failing to courtesy the feudal lord, and to be executed for injury to +the lord's person, while to kill a peasant was no worse a misdemeanor +than to kill his lordship's favorite dog or falcon. In short, all laws +were made to protect and perpetuate the wealth and power of the few by +impoverishing, humbling and enslaving the masses. + +The age of feudalism has given way to an age of democratic liberty, but +there is many a feudal feature left in our statutes and many a feudal +doctrine is enunciated by our judges and learned expounders of modern +jurisprudence. In his decision in the Iowa tariff case Judge Brewer +said: + + "I read also in the first section of the Bill of Rights of + this State [Iowa] that 'all men are by nature free and equal + and have certain inalienable rights, among which are those + of enjoying and defending life and liberty, acquiring, + possessing and protecting property and pursuing and + obtaining safety and happiness,' and I know that while that + remains as the supreme law of the State, no legislature can, + directly or indirectly, lay its withering or destroying hand + on a single dollar invested in the legitimate business of + transportation." + +Had Judge Brewer taken the pains to read on, he would have found in +section 2 of the Bill of Rights the following: + + "All political power is inherent in the people; government + is instituted for the protection, security and benefit of + the people." + +It is strange that the learned Judge failed to see the difference +between "men," the creatures of God, "by nature free and equal," and +"possessing certain inalienable rights," and corporations, the creatures +of man, having no rights except those which the State sees fit to give +them. Had the learned Judge perused the whole of the document to which +he refers, he would have found in article VIII, section 12, the +following provision: + + "The General Assembly shall have power to amend or repeal + all laws for the organization or creation of corporations, + or granting of special or exclusive privileges or + immunities, by a vote of two-thirds of each branch of the + General Assembly." + +It should thus have been plain to the learned Judge that in Iowa +corporations have not human or inalienable rights, and government was +not instituted for their special protection, but for the protection, +security and benefit of her people. Nor should it be otherwise. + +The corporation for pecuniary gain has neither body nor soul. Its +corporeal existence is mythical and ethereal. It suffers neither from +cold nor from hunger, has neither fear of future punishment nor hope of +future reward. It takes no interest in schools or in churches. It knows +neither charity nor love, neither pity nor sympathy, neither justice nor +patriotism. It is deaf and blind to human woe and human happiness. Its +only aim is pecuniary gain, to which it subordinates all else. + +Should the State sacrifice the welfare of all her people rather than lay +its "withering or destroying" hand on a single dollar of corporate +wealth? Are there no human rights, for the protection of which +government was established, more sacred than the rights of a wealthy +corporation's dollar? Have the people made the judiciary a coordinate +branch of the Government in order that it may protect the vested or +rather usurped rights of corporations against legislative attempts to +curtail them? If the courts so interpret the power which has been +delegated to them, they will awake one day to the painful reality that +popular convictions of right are more potent than judicial decrees. + +It is the duty of the State not so much to defend the so-called vested +rights of corporations as to make such just and beneficial laws as will +temper inequality, mitigate poverty, protect the weak against the +strong, preserve life and health, and, in short, promote the welfare and +the happiness of the masses. Constitutions have been made to accomplish +these ends, to protect the lives, the liberty and the conscience of +human beings, while laws have been sufficient to protect the dollars of +corporations. It is a short-sighted policy on the part of the latter to +take unfair advantage of their wealth and influence, for "As ye sow, so +shall ye reap," is the inexorable law of Providence. There is no dynasty +so mighty, no class so privileged, no interest so influential or wealthy +as to obtain immunity from its operation. + + + + +APPENDIX. + + +TABLE No. 1. + +COMPILED FROM THE SIXTH ANNUAL REPORT OF THE INTERSTATE COMMERCE +COMMISSION. + + Mileage in the United States June 30, 1891 168,402.74 + Number of men employed 784,285 + Number of employes per 100 miles 486 + Number of locomotives per 100 miles 19 + Number of passenger cars per 100 miles 17 + Number of cars per 100 miles 721 + Capital $9,829,475,015 + Capital per mile 60,942 + Gross earnings 1,096,761,395 + Gross earnings per mile 6,801 + Operating expenses 731,887,893 + Operating expenses per mile 4,538 + Net income from operation 364,873,502 + Net income per mile 2,263 + Of gross income 67.17 per cent. was earned on freight. + Of gross income 25.64 per cent. was earned on passengers. + Received for carrying mails $ 24,870,015 + Received rentals from express companies 21,594,349 + Received from investments 133,911,126 + No. of passengers carried 531,183,988 + No. of tons freight carried 675,608,323 + Average journey per passenger 24.18 miles + Average haul per ton of freight 120 miles + Average number passengers per train 42 + Average number tons freight per train 181.67 + Average revenue per passenger per mile 2.142 cents + Average revenue per ton per mile of freight .895 cents + Average revenue per train mile, passenger $1.06 + Average revenue per train mile, freight 1.64 + + +TABLE No. 2. + +STATISTICS OF THE RAILWAYS OF THE UNITED KINGDOM FOR THE YEAR ENDING +DEC. 31, 1891. + +From the English Reform Almanac for 1893 and from the Report of +Commissioners R. Giffen and Courtenay Boyle to the Board of Trade. + + Mileage 20,191 miles + Double, triple or quadruple 10,853 miles + Capital per mile L45,536 + Gross income per mile 3,873 + Net income per mile 1,818 + Income from passenger traffic 35,130,916 + Income from goods traffic 43,230,717 + Income from miscellaneous 3,498,974 + ------------ + Income, total L81,860,607 + Operating expenses, 55 per cent L45,144,778 + Rates and taxes 2,246,430 + Government duty 321,260 + Paid for persons injured 165,219 + Paid for damage and loss of goods 257,804 + Number of first-class passengers 30,423,776 + Number of second-class passengers 63,378,397 + Number of third-class passengers 751,661,495 + Number of third-class passengers over 88 per cent. of all. + Number of employes 346,426 + Number of employes per 100 miles 1,750 + Number of locomotives per 100 miles 80 + Number of passenger cars per 100 miles 249 + Number of freight and other cars 2,595 + Revenue per train mile 58.37d + Expense per train mile 30.54d + Per cent. of earnings on capital 4.21 + + +TABLE No. 3. + +SHOWING SALARIES AND WAGES PAID TO OFFICIALS AND EMPLOYES OF STATE +RAILWAYS IN EUROPE. + +Compiled from Roell's Encyclopaedie des Eisenbahnwesens. + + ======================================================================= + POSITION. | AUSTRIA. | HUNGARY. | PRUSSIA. | BELGIUM. + -----------------+-------------+-------------+-------------+----------- + | Fl., equal | Fl., equal | Mark, equal | Fr., equal + | to about | to about | to about | to about + |33-1/3 cents.|33-1/3 cents.| 24 cents. | 20 cents. + | | | | + President | 7,000 | --- |10,500 | 9,000 + Directors and | | | | + Superintendents | 4,000-5,500 | 4,000-4,800 | 4,200-6,000 | 7,000-8,000 + Chief Engineer | 1,600-2,000 | 1,900-2,500 | 3,600-4,800 | 2,700-5,500 + Clerks | 500-1,200 | 640-1,000 | 1,000-2,700 | 900-3,100 + Station Agents in| | | | + Cities, Division| | | | + Superintendents | 2,200-2,600 | 2,600-3,400 | --- | --- + Station Agents | | | | + in Towns | 500-850 | 520-880 | 1,500-3,200 | 1,600-4,000 + Locomotive | | | | + Engineers | 500-850 | 520-780 | 1,200-2,000 | --- + Firemen | 300-350 | 380-480 | 1,000-1,500 | --- + Conductors | 450-550 | 520-850 | 1,100-1,500 | 2,000-2,400 + Brakemen | 300-350 | 380-480 | 800-1,200 | 1,200-2,000 + Section Men | 288-336 | 270-370 | 700-900 | --- + ------------------------------------------------------------------------ + + +TABLE No. 4. + +Compiled from Roell's Encyclopaedie des Eisenbahnwesens. + +_FREIGHT TARIFFS._--BELGIUM. + +All freight is divided into three general classes: + +1. _Express Freight_, which is delivered by special messengers. Parcels +weighing 5 kg. (11 lbs.) and less, if prepaid, are carried for .80 fr. +(16c.) for all distances. Parcels not prepaid and such as weigh from 6 +to 10 kg. pay .90 fr. for a distance of from 1 to 25 km.; 1 fr. for 26 +to 75 km.; 1.10 fr. for greater distances. + +2. _Fast Freight_, which may be made use of for consignments weighing up +to 200 kg. (440 lbs.) Parcels weighing up to 5 kg. pay .50 fr. for all +distances. Parcels not prepaid and such as weigh from 5 to 10 kg. pay +.50 fr. for from 1 to 25 km.;.60 fr. for distances ranging from 26 to 75 +km., and .70 fr. over 75 km. + +3. _Common Freight_, which is again sub-divided into four classes: In +Class I 400 kg., in Classes II and III 5,000 kg., and in Class IV 10,000 +kg. is recognized as the minimum weight. + + * * * * * + +TARIFF FOR THE FOUR DIFFERENT CLASSES OF COMMON FREIGHT. + +_Terminal Charges--Franc 1.00._ + + I Class--For 1,000 kg. (2,250 lbs.) + From 1 to 5 km Fr. 1.00 + From 6 to 75 km, per km .10 + From 76 to 150 km .08 (per km. above 75) + From 151 to 200 km .06 (per km. above 150) + Above 300 km .06 (per km. above 200) + + II Class--For 1,000 kg. + From 1 to 5 km. Fr. 0.40 + From 6 to 75 km., per km. .08 + From 76 to 125 km. .04 (per km. above 75) + Above 125 km. .02 (per km. above 125) + + III Class--For 1,000 kg. + From 1 to 5 km. Fr. 0.30 + From 6 to 75 km., per km. .06 + From 76 to 100 km. .03 + From 101 to 125 km. .02 + Above 125 km. .01 + + IV Class--For 1,000 kg. + From 1 to 24 km., per km. Fr. 0.06 + From 25 to 75 km., per km. .04 + From 76 to 100 km. .02 + From 101 to 350 km. .01 + Above 350 km. .02 + + For distances from 1 to 24 km. the terminal charges are only + .5 fr. for Class IV. + + +TABLE No. 5. + +GERMANY. + + The tariff recognizes the following distinctions: + 1. Fast parcel freight. + 2. Fast carload freight. + 3. Parcel freight. + 4. General carload Class A1, for shipments of at least + 5,000 kg. + 5. General carload Class B, for shipments of at least + 10,000 kg. + 6. Special tariffs. + + _Distance charges per ton per kilometer: (Pfennig, 1/4 c.)_ + 1. For parcel 11.0 pfennige + 2. For carload Class A1 6.7 " + 3. For carload Class B 6.0 " + 4. For Special Tariff A2 5.0 " + 5. For Special Tariff I 4.5 " + 6. For Special Tariff II 3.5 " + 7. For Special Tariff III: + For distances up to 100 km 2.6 " + For distances above 100 km 2.2 " + 8. For fast parcel freight 22.0 " + 9. For fast carload freight, twice the rate of Classes + A1 and B. + + _Terminal Changes._ + + 1. For parcels and carload Class A1: + Up to 10 km 10 pfennige + From 11 to 20 km 11 " + From 21 to 30 km 12 " + From 31 to 40 km 13 " + From 41 to 50 km 14 " + From 51 to 60 km 15 " + From 61 to 70 km 16 " + From 71 to 80 km 17 " + From 81 to 90 km 18 " + From 91 to 100 km 19 " + Above 100 km 20 " + + 2. For carload Class B: + Up to 10 km 8 pfennige + From 11 to 20 km 9 " + From 21 to 30 km 10 " + From 31 to 40 km 11 " + Above 40 km 12 " + + 3. For Special Tariffs A2, I, II and III: + Up to 10 km 8 pfennige + From 11 to 100 km 9 " + Above 100 km 12 " + + _Charges for Live Stock._ + + (a) Horses. Terminal charge per head, 1 m. (24c.) + Distance charge per kl. for one head 0.30 mark + Charge per kl. for 2 head .40 " + Charge for each additional head .10 " + + (b) Cattle. + Terminal charge, per head 0.60 mark + Distance charge per kl., for one head .10 " + Distance charge for each additional head .03 " + + (c) Sheep, Hogs, Calves, etc.: + Terminal charge, per head 0.20 mark + Distance charge, per kl., for each of the + first 10 heads .02 " + Distance charge, per kl., for each + additional head .01 " + + If shipped in carloads the charges for live stock are .03 m. + per square meter per kilometer. + + +TABLE No. 6. + +FRANCE. + +The French railroads divide all freight into six different classes. The +following is the tariff adopted by a majority of the principal roads: + + _Common Freight._ + ================================================== + | Centimes per Ton--Kilometer. + --------------------+----+----+----+----+----+---- + Classes | 1 | 2 | 3 | 4 | 5 | 6 + --------------------+----+----+----+----+----+---- + Up to 25 km | 16 | 14 | 12 | 10 | 8 | 8 + From 26 to 100 km | 16 | 14 | 12 | 10 | 8 | 4 + From 101 to 150 km | 15 | 13 | 11 | 9 | 8 | 3.5 + From 151 to 200 km | 15 | 13 | 11 | 9 | 7 | 3.5 + From 201 to 300 km | 15 | 13 | 11 | 9 | 4 | 3.5 + From 301 to 500 km | 14 | 12 | 10 | 8 | 4 | 3 + From 501 to 600 km | 13 | 11 | 9 | 7 | 4 | 3 + From 601 to 700 km | 12 | 10 | 8 | 6 | 4 | 2.5 + From 701 to 800 km | 11 | 9 | 7 | 5 | 4 | 2.5 + From 801 to 900 km | 10 | 8 | 6 | 4 | 4 | 2.5 + From 901 to 1000 km | 9 | 7 | 5 | 4 | 4 | 2 + Above 1,000 km | 8 | 6 | 5 | 4 | 4 | 2 + -------------------------------------------------- + + The rates for fast parcel freight are, on all roads, for less + than 40 kg., per ton, km.: + Up to 200 km 35 centimes + From 201 to 300 km 32 " + From 301 to 400 km 31 " + From 401 to 800 km 30 " + From 801 to 1,000 km 28 " + Above 1,000 km 25 " + + For more than 40 kg.: + Up to 100 km 32 centimes + From 101 to 300 km 30 " + From 301 to 500 km 28 " + From 501 to 600 km 26 " + From 601 to 700 km 24 " + From 701 to 800 km 22 " + From 801 to 900 km 20 " + From 901 to 1,000 km 18 " + Above 1,000 km 16 " + + Express parcels weighing up to 3 kg. (6-3/5 lbs.), pay 1 fr. for + all distances, and parcels weighing from 3 to 5 kg. pay + fr. 1.20. Delivery to the house, 25 centimes (5c.) + additional. + + Live Stock, per piece, per km.: + Horses and cattle 16 centimes + Calves and hogs 6 " + Sheep, etc. 3 " + + +TABLE No. 7. + +ITALY.--_Freight Tariff._ + + ======================================================================== + | GENERAL CLASSES. + RATES. |------+------+-----+------+-------+------+-----+------ + | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 + -----------------+------+------+------+------+------+------+-----+------ + For the ton--km |0.1632|0.1428|0.1224|0.1020|0.0816|0.0714|0.612|0.0510 + Terminal charges,| | | | | | | | + per ton. |2.04 |2.04 |2.04 |2.04 |2.04 |1.224 |1.224|1.224 + ------------------------------------------------------------------------ + The rate on merchandise sent as fast freight is .452 lire (9c.) per ton + kilometer. + + _Live Stock--(5 Classes.)_ + ======================================================================= + | | Cattle, | | | Cattle, + FIRST-CLASS. |Horses. |Swine and| SECOND-CLASS. |Horses. |Swine and + | | Sheep. | | | Sheep. + ----------------+--------+---------+----------------+--------+--------- + 1 head, per km | 0.1530 | 0.136 |1 head, per km | 0.1530 | 0.1326 + 2 heads, per km | .0918 | .0765 |2 heads, per km | .0816 | .0714 + 3 heads, per km | .0816 | .0714 |3 heads, per km | .0663 | .0612 + 4 heads, per km | .0765 | .0663 |4 heads, per km | .0612 | .0561 + 5 heads, per km | .0714 | .0612 |5 heads, per km | .0561 | .0510 + 6 heads or more,| | |6 heads or more,| + per km | .0663 | .0561 | per km | .0510 | .0459 + | | |III Class | | .02244 + | | |IV Class | | .01224 + | | |V Class | | .00612 + ------------------------------------------------------------------------ + + +TABLE No. 8. + +_Austrian Tariff (in kreutzers).--July 1, 1891._ + + ============================================================================= + | | Parcel | | Special | + | Fast Freight. | Rate. | Carload Rate.| Tariff Rate. | + |--------+-------+----+----+----+----+----+----+----+----| + | | | | | | | | | | |Excep- + |Ordinary|Reduced| | | | | | | | |tional + | Rate | Rate | I | II | A | B | C | 1 | 2 | 3 |Rate + -------------+--------+-------+----+----+----+----+----+----+----+----+------ + 1 to 50 km | 1.20 |0.60 |0.60|0.50|0.34|0.24|0.18|0.26|0.18|0.15|0.12 + 50 to 150 km | 1.16 | .58 | .58| .46| .29| .22| .15| .23| .15| .13| .10 + 150 to 300 km| 1.12 | .56 | .56| .42| .25| .18| .12| .19| .12| .10| .09 + For every | | | | | | | | | | | + addit'n'l km| 1.00 | .50 | .50| .30| .20| .12| .10| .15| .10| .08| .08 + | | | | | | | | | | | + | _Terminal Charges._ + 1 to 30 km | 6.0 |3.0 |3.0 |3.0 |3.0 |2.0 |2.0 |2.0 |2.0 |2.0 |2.0 + 31 to 80 km | 6 |3 |3 |3 |3 |3 |3 |3 |3 |3 |2 + Above 80 km | 8 |4 |4 |4 |4 |4 |4 |4 |4 |4 |2 + -------------+--------+-------+----+----+----+----+----+----+----+----+------ + +_Horses_ and _mules_ are placed in Class II, with a minimum weight of +1,400 kg. for one head and 700 kg. for every additional head. + +_Cattle_ are placed in Class II, and are billed at actual weight. + +_Potatoes_, hay, straw, wood, coal and coke enjoy the "exceptional rate" +when shipped in carload lots. + + +TABLE No. 9. + +_Hungarian Tariff (in kreutzers).--January 1, 1891._ + + ============================================================= + | | Parcel | | + | Fast Freight. | Rate. | | + |--------+-------+----+----| | + | | | | | | + |Ordinary|Reduced| I | II | | + | Rate | Rate | | |"Sperrgueter."| + -------------------+--------+-------+----+----+-------------+ + From 1 to 200 km. | 1.3 | 0.6 |0.72|0.52| 0.9 | + | | | | | | + From 201 to 400 km.| 1. | .5 | .52| .42| .8 | + | | | | | | + Above 400 km. | 1. | .5 | .52| .42| .8 | + | + | _Terminal Charges for 100 kg._ + | .10 | .10 | .10| .10| .10 | + -------------------+--------+-------+----+----+-------------+ + + =============================================================== + | | Special |Exceptional + | Carload Rate. | Tariff. | Tariff. + |----+----+------+----+----+----|-----+----- + | | | | | | | | + | A | B | C | I | II | III| I | II + | | |Lumber| | | | | + -------------------+----+----+------+----+----+----+-----+----- + From 1 to 200 km. |0.32|0.21| 0.16 |0.27|0.16|0.13|0.13 |0.11 + | | | | | | | | + From 201 to 400 km.| .24| .17| .13 | .15| .13| .10| .10 | .09 + | | | | | | | | + Above 400 km. | .16| .10| .09 | .10| .09| .07| .07 | .06 + + + | .06| .06| .04 | .05| .04| .03| .03 | .03 + -------------------+----+----+------+----+----+----+-----+------ + + +Exceptional Tariff I comprises coal, wood, potatoes, stone, hay and +straw. + +Exceptional Tariff II comprises manure, earth and Hungarian ores. + + +TABLE No. 10. + +STATE OF IOWA. + + + SCHEDULE + OF + REASONABLE MAXIMUM RATES OF CHARGES + + IN EFFECT MARCH 1, 1893, + FOR THE TRANSPORTATION OF + + + _Freight and Cars on each of the Railroads in the State of Iowa, together + with a Classification of Freights, prepared by the Railroad + Commissioners, in accordance with the Laws + of the State of Iowa._ + + * * * * * + +Superseding all former schedules on the said railroads, including all +bridges and ferries used or operated in connection with any railroad; +and, also, all the roads in use by any corporation, receiver, trustee or +other person operating a railroad, whether owned or operated under +contract, agreement, lease or otherwise, or which may hereafter be +purchased, leased, acquired or operated within the State of Iowa. + +The classification of freights applies to all the lines, regardless of +class. The schedule of maximum rates applies to all Class "A" roads. The +rates on Class "B" roads will be FIFTEEN per cent. higher, and +the rates on Class "C" roads THIRTY per cent. higher than the +rates named for Class "A" roads. The respective roads have been +classified by the Executive Council of the State as follows, which +classification is adopted by the Railroad Commissioners, and made part +of this schedule: + + +CLASSIFICATION OF ROADS. + +CLASS "A." + +Where gross annual earnings, per mile, shall be $4,000 or +more.--Burlington, Cedar Rapids and Northern Railway; Chicago and +Northwestern Railway; Chicago, Burlington and Quincy Railroad; Chicago, +Milwaukee and St. Paul Railway; Chicago, Rock Island and Pacific +Railway; Chicago and Great Western Railway (operating the Chicago, St. +Paul and Kansas City Railway); Dubuque and Sioux City Railroad; Chicago, +St. Paul, Minneapolis and Omaha Railway; Sioux City and Northern +Railway; Chicago, Santa Fe and California Railway; Sioux City and +Pacific Railroad; Toledo, Peoria and Western Railway; Union Pacific +Railway. + + +CLASS "B." + +Where gross earnings are $3,000 or over and less than $4,000 per +mile.--Iowa Central Railway; Kansas City, St. Joseph and Council Bluffs +Railroad; Omaha and St. Louis Railway. + + +CLASS "C." + +Where annual earnings are less than $3,000 per mile.--Chicago, +Burlington and Kansas City Railway; Chicago, Ft. Madison and Des Moines +Railway; Chicago, Iowa and Dakota Railway; Crooked Creek Railroad and +Coal Company; Des Moines and Kansas City Railway; Des Moines, Northern +and Western Railway; Humeston and Shenandoah Railroad; Iowa Northern +Railway; Mason City and Fort Dodge Railroad; Minneapolis and St. Louis +Railway; St. Louis, Keokuk and Northwestern Railroad; Tabor and Northern +Railway; Wabash Railroad; Winona and Southwestern Railway; Keokuk and +Western Railway. + +Burlington and Western; Burlington and Northwestern; Ames and College; +Albia and Centerville. + + ====================================================================== + | MERCHANDISE IN CENTS | SPECIAL CARLOAD CLASSES IN + | PER 100 LBS. | CENTS PER 100 LBS. + Miles|---------------------------------------------------------------- + | First|Second|Third |Fourth|Fifth |Class|Class|Class|Class|Class + |Class.|Class.|Class.|Class.|Class.| A. | B. | C. | D. | E. + -----+------+------+------+------+------+-----+-----+-----+-----+----- + 5 | 14 | 11.9 | 9.34| 7 | 4.9 | 5 | 4.9 | 4.2 | 3.5 | 2.8 + 10 | 14.8 | 12.58| 10.1 | 7.4 | 5.18| 5.3 | 5.18| 4.44| 3.7 | 2.96 + 15 | 15.6 | 13.26| 10.4 | 7.8 | 5.46| 5.6 | 5.46| 4.68| 3.9 | 3.12 + 20 | 16.4 | 13.94| 10.94| 8.2 | 5.74| 5.8 | 5.74| 4.92| 4.1 | 3.25 + 25 | 17 | 14.45| 11.34| 8.5 | 5.95| 6 | 5.95| 5.1 | 4.25| 3.4 + | | | | | | | | | | + 30 | 17.6 | 14.96| 11.73| 8.8 | 6.16| 6.2 | 6.16| 5.28| 4.4 | 3.52 + 35 | 18.2 | 15.47| 12.1 | 9.1 | 6.37| 6.4 | 6.37| 5.46| 4.55| 3.64 + 40 | 18.8 | 15.98| 12.5 | 9.4 | 6.58| 6.6 | 6.58| 5.64| 4.7 | 3.76 + 45 | 19.4 | 16.49| 13 | 9.7 | 6.79| 6.8 | 6.79| 5.82| 4.85| 3.88 + 50 | 20 | 17 | 13.34| 10 | 7 | 7.05| 7 | 6 | 5 | 4 + | | | | | | | | | | + 55 | 20.4 | 17.34| 13.6 | 10.2 | 7.14| 7.2 | 7.14| 6.12| 5.1 | 4.08 + 60 | 20.8 | 17.68| 13.87| 10.4 | 7.28| 7.4 | 7.28| 6.24| 5.2 | 4.16 + 65 | 21.2 | 18.02| 14.14| 10.6 | 7.42| 7.6 | 7.42| 6.36| 5.3 | 4.25 + 70 | 21.6 | 18.36| 14.4 | 10.8 | 7.56| 7.8 | 7.56| 6.48| 5.4 | 4.32 + 75 | 22 | 18.7 | 14.67| 11 | 7.7 | 8 | 7.7 | 6.6 | 5.5 | 4.4 + | | | | | | | | | | + 80 | 22.4 | 19.04| 14.94| 11.2 | 7.84| 8.2 | 7.84| 6.72| 5.6 | 4.48 + 85 | 22.8 | 19.38| 15.2 | 11.4 | 7.98| 8.4 | 7.98| 6.84| 5.7 | 4.56 + 90 | 23.2 | 19.72| 15.47| 11.6 | 8.12| 8.6 | 8.12| 6.96| 5.8 | 4.64 + 95 | 23.6 | 20.06| 15.73| 11.8 | 8.26| 8.8 | 8.26| 7.08| 5.9 | 4.72 + 100 | 24 | 20.4 | 16 | 12 | 8.4 | 9 | 8.4 | 7.2 | 6 | 4.8 + | | | | | | | | | | + 105 | 24.8 | 20.89| 16.35| 12.33| 8.69| 9.35| 8.63| 7.4 | 6.17| 4.96 + 110 | 25.6 | 21.38| 16.7 | 12.66| 8.98| 9.7 | 8.86| 7.6 | 6.34| 5.12 + 115 | 26.4 | 21.87| 17.05| 12.99| 9.27|10.05| 9.09| 7.8 | 6.51| 5.28 + 120 | 27.2 | 22.36| 17.4 | 13.32| 9.56|10.4 | 9.32| 8 | 6.68| 5.44 + 125 | 28 | 22.85| 17.75| 13.65| 9.85|10.75| 9.55| 8.2 | 6.85| 5.6 + | | | | | | | | | | + 130 | 28.8 | 23.34| 18.1 | 13.98| 10.14|11.1 | 9.78| 8.4 | 7.02| 5.76 + 135 | 29.6 | 23.83| 18.45| 14.31| 10.43|11.45|10.01| 8.6 | 7.19| 5.92 + 140 | 30.4 | 24.32| 18.8 | 14.64| 10.72|11.8 |10.24| 8.8 | 7.36| 6.08 + 145 | 31.2 | 24.81| 19.15| 14.97| 11.01|12.15|10.47| 9 | 7.53| 6.24 + 150 | 32 | 25.3 | 19.5 | 15.3 | 11.3 |12.5 |10.7 | 9.2 | 7.7 | 6.4 + | | | | | | | | | | + 155 |32.8 |25.79 | 19.85| 15.63| 11.59|12.84|10.93| 9.39| 7.87| 6.56 + 160 |33.6 |26.28 | 20.2 | 15.96| 11.88|13.18|11.16| 9.58| 8.04| 6.72 + 165 |34.4 |26.77 | 20.55| 16.29| 12.17|13.52|11.39| 9.77| 8.21| 6.88 + 170 |35.2 |27.26 | 20.9 | 16.62| 12.46|13.86|11.62| 9.96| 8.38| 7.04 + 175 |36 |27.75 | 21.25| 16.95| 12.75|14.2 |11.85|10.15| 8.55| 7.2 + | | | | | | | | | | + 180 |36.8 |28.24 | 21.6 | 17.28| 13.04|14.54|12.08|10.34| 8.72| 7.36 + 185 |37.6 |28.73 | 21.95| 17.61| 13.33|14.88|12.31|10.53| 8.89| 7.52 + 190 |38.4 |29.22 | 22.3 | 17.94| 13.62|15.22|12.45|10.72| 9.06| 7.68 + 195 |39.2 |29.71 | 22.65| 18.27| 13.91|15.56|12.77|10.91| 9.23| 7.84 + 200 |40 |30.2 | 23 | 18.6 | 14.2 |15.9 |13 |11.1 | 9.39| 8 + | | | | | | | | | | + 210 |41.6 |31.18 | 23.7 | 19.24| 14.78|16.56|13.45|11.49| 9.71| 8.3 + 220 |43.2 |32.16 | 24.4 | 19.88| 15.36|17.22|13.9 |11.88|10.03| 8.6 + 230 |44.8 |33.14 | 25.1 | 20.52| 15.94|17.88|14.35|12.27|10.35| 8.9 + 240 |46.4 |34.12 | 25.8 | 21.6 | 16.52|18.54|14.8 |12.66|10.67| 9.2 + 250 |48 |35.1 | 26.5 | 21.8 | 17.1 |19.2 |15.25|13.05|10.99| 9.5 + 260 | 49.6 | 36.08| 27.2 | 22.44| 17.68|19.86|15.7 |13.44|11.31| 9.8 + 270 | 51.2 | 37.06| 27.9 | 23.08| 18.26|20.52|16.15|13.83|11.63|10.. + 280 | 52.8 | 38.4 | 28.6 | 23.72| 18.84|21.18|16.6 |14.22|11.95|10.4 + 290 | 54.4 | 39.02| 29.3 | 24.36| 19.42|21.84|17.05|14.61|12.27|10.7 + 300 | 56 | 40 | 30 | 25 | 20 |22.5 |17.5 |15 |12.5 |11 + | | | | | | | | | | + 310 | 56.5 | 40.5 | 30.5 | 25.5 | 20.5 |23 |18 |15.5 |13 |11.5 + 320 | 57 | 41 | 31 | 26 | 21 |23.5 |18.5 |16 |13.5 |12 + 330 | 57.5 | 41.5 | 31.5 | 26.5 | 21.5 |24 |19 |16.5 |14 |12.5 + 340 | 58 | 42 | 32 | 27 | 22 |24.5 |19.5 |17 |14.5 |13 + 350 | 58.5 | 42.5 | 32.5 | 27.5 | 22.5 |25 |20 |17.5 |15 |13.5 + | | | | | | | | | | + 360 | 59 | 43 | 33 | 28 | 23 |25.5 |20.5 |18 |15.5 |14 + 370 | 59.5 | 43.5 | 33.5 | 28.5 | 23.5 |26 |21 |18.5 |16 |14.5 + 380 | 60 | 44 | 34 | 29 | 24 |26.5 |21.5 |19 |16.5 |15 + 390 | 60.5 | 44.5 | 34.5 | 29.5 | 24.5 |27 |22 |19.5 |17 |15.5 + 400 | 61 | 45 | 35 | 30 | 25 |27.5 |22.5 |20 |17.5 |16 + | | | | | | | | | | + 410 | 61.5 | 45.5 | 35.5 | 30.5 | 25.5 |28 |23 |20.5 |18 |16.5 + 420 | 62 | 46 | 36 | 31 | 26 |28.5 |23.5 |21 |18.5 |17 + 430 | 62.5 | 46.5 | 36.5 | 31.5 | 26.5 |29 |24 |21.5 |19 |17.5 + 440 | 63 | 47 | 37 | 32 | 27 |29.5 |24.5 |22 |19.5 |18 + 450 | 63.5 | 47.5 | 37.5 | 32.5 | 27.5 |30 |25 |22.5 |20 |18.5 + | | | | | | | | | | + 460 | 64 | 48 | 38 | 33 | 28 |30.5 |25.5 |23 |20.5 |19 + 470 | 64.5 | 48.5 | 38.5 | 33.5 | 28.5 |31 |26 |23.5 |21 |19.5 + 480 | 65 | 49 | 39 | 34 | 29 |31.5 |26.5 |24 |21.5 |20 + 490 | 65.5 | 49.5 | 39.5 | 34.5 | 29.5 |32 |27 |24.5 |22 |20.5 + 500 | 66 | 50 | 40 | 35 | 30 |32.5 |27.5 |25 |22.5 |21 + ---------------------------------------------------------------------- + +NOTE.--When rates are not shown in this table for the exact +distance, the rates given for the next greater distance will prevail. +When these rates and the classification conflict, these rates will +govern. + + A = Wheat, flour, millet, flaxseed. + B = Corn, oats, barley, other grain and mill stuffs. + C = Hard and soft lumber, lath, shingles, sash, doors and blinds. + D = Salt, lime, cement, plaster, stucco. + E = Horses and mules in carloads--minimum weight 20,000 lbs., + 31-foot cars, inside measurement. + F = Fat cattle in carloads--minimum weight 19,000 lbs., + 31-foot cars, inside measurement + G = Hogs (single deck) in carloads--minimum weight 15,000 lbs., + 31-foot cars, inside measurement. + H = Sheep (single deck) in carloads--minimum weight 15,000 lbs., + 31-foot cars, inside measurement. + I = Hard coal. + J = Soft coal, lump and nut. + K = Soft coal, pea and slack. + + ======================================================================= + | CARLOAD CLASSES IN | LIVE STOCK IN CENTS |COAL IN CENTS PER + | CENTS PER 100 LBS. | PER 100 LBS. |TON OF 2,000 LBS. + -----+-----------------------+-----------------------+----------------- + Miles| A | B | C | D | E | F | G | H | I | J | K + -----+-----+-----+-----+-----+-----+-----+-----+-----+-----+------+---- + 5 | 4.5 | 3.75| 3.5 | 3.25| 5.37| 5.13| 5.67| 8.4 | .60| .30 | .25 + 10 | 4.7 | 3.92| 3.66| 3.39| 5.75| 5.53| 6 | 8.8 | .64| .34 | .28 + 15 | 4.9 | 4.09| 3.82| 3.53| 6.12| 5.92| 6.33| 9.2 | .68| .38 | .31 + 20 | 5.1 | 4.26| 3.98| 3.67| 6.5 | 6.32| 6.67| 9.6 | .72| .42 | .34 + 25 | 5.3 | 4.43| 4.14| 3.81| 6.87| 6.71| 7 |10 | .76| .46 | .37 + | | | | | | | | | | | + 30 | 5.5 | 4.6 | 4.3 | 3.95| 7.25| 7.11| 7.33|10.4 | .80| .50 | .40 + 35 | 5.7 | 4.77| 4.45| 4.09| 7.62| 7.5 | 7.67|10.8 | .84| .54 | .43 + 40 | 5.9 | 4.93| 4.6 | 4.23| 8 | 7.89| 8 |11.2 | .88| .58 | .46 + 45 | 6.1 | 5.09| 4.75| 4.37| 8.37| 8.29| 8.33|11.6 | .92| .62 | .49 + 50 | 6.3 | 5.25| 4.9 | 4.51| 8.75| 8.68| 8.67|12 | .96| .66 | .52 + | | | | | | | | | | | + 55 | 6.5 | 5.4 | 5.04| 4.65| 9.12| 8.95| 9 |12.4 | 1.00| .70 | .55 + 60 | 6.7 | 5.55| 5.18| 4.79| 9.5 | 9.21| 9.33|12.8 | 1.04| .74 | .58 + 65 | 6.9 | 5.7 | 5.32| 4.93| 9.87| 9.47| 9.67|13.2 | 1.08| .78 | .60 + 70 | 7.1 | 5.85| 5.46| 5.07|10.25| 9.74|10 |13.6 | 1.12| .82 | .62 + 75 | 7.3 | 6 | 5.6 | 5.2 |10.62|10 |10.16|14 | 1.16| .85 | .64 + | | | | | | | | | | | + 80 | 7.5 | 6.15| 5.74| 5.33|11 |10.26|10.32|14.4 | 1.20| .88 | .66 + 85 | 7.7 | 6.3 | 5.88| 5.46|11.37|10.53|10.48|14.8 | 1.24| .91 | .68 + 90 | 7.9 | 6.45| 6.02| 5.59|11.75|10.79|10.64|15.2 | 1.28| .94 | .70 + 95 | 8 | 6.6 | 6.16| 5.72|12.12|11.05|10.8 |15.6 | 1.32| .97 | .72 + 100 | 8.1 | 6.75| 6.3 | 5.85|12.5 |11.32|10.96|16 | 1.36| 1.00 | .74 + | | | | | | | | | | | + 105 | 8.24| 6.87| 6.41| 5.95|12.75|11.53|11.12|16.3 | 1.40| 1.015| .755 + 110 | 8.38| 6.99| 6.52| 6.05|13 |11.74|11.28|16.6 | 1.44| 1.03 | .77 + 115 | 8.52| 7.11| 6.63| 6.15|13.25|11.95|11.44|16.9 | 1.48| 1.045| .785 + 120 | 8.66| 7.23| 6.74| 6.25|13.5 |12.16|11.6 |17.2 | 1.52| 1.06 | .80 + 125 | 8.8 | 7.35| 6.85| 6.35|13.75|12.37|11.8 |17.5 | 1.55| 1.075| .815 + | | | | | | | | | | | + 130 | 8.94| 7.46| 6.96| 6.45|14 |12.58|12 |17.8 | 1.58| 1.09 | .83 + 135 | 9.08| 7.57| 7.07| 6.55|14.25|12.79|12.2 |18.1 | 1.61| 1.105| .845 + 140 | 9.22| 7.69| 7.18| 6.65|14.5 |13 |12.4 |18.4 | 1.64| 1.12 | .86 + 145 | 9.36| 7.79| 7.29| 6.75|14.75|13.21|12.6 |18.7 | 1.67| 1.135| .875 + 150 | 9.5 | 7.9 | 7.4 | 6.85|15 |13.42|12.8 |19 | 1.70| 1.15 | .89 + | | | | | | | | | | | + 155 | 9.63| 8.01| 7.5 | 6.95|15.25|13.63|13 |19.3 | 1.73| 1.165| .905 + 160 | 9.79| 8.12| 7.6 | 7.05|15.5 |13.84|13.2 |19.6 | 1.76| 1.18 | .92 + 165 | 9.89| 8.23| 7.7 | 7.15|15.75|14.05|13.4 |19.9 | 1.79| 1.195| .935 + 170 |10.02| 8.34| 7.8 | 7.25|16 |14.26|13.6 |20.2 | 1.82| 1.21 | .95 + 175 |10.15| 8.45| 7.9 | 7.35|16.25|14.47|13.8 |20.5 | 1.85| 1.225| .965 + 180 |10.28| 8.56| 8 | 7.44|16.5 |14.68|14 |20.8 | 1.88| 1.24 | .98 + 185 |10.41| 8.67| 8.1 | 7.53|16.75|14.89|14.2 |21.1 | 1.91| 1.255| .995 + 190 |10.54| 8.78| 8.2 | 7.62|17 |15.11|14.4 |21.4 | 1.94| 1.27 | 1.01 + 195 |10.67| 8.89| 8.3 | 7.71|17.25|15.32|14.6 |21.7 | 1.97| 1.285| 1.025 + 200 |10.8 | 9 | 8.4 | 7.8 |17.5 |15.53|14.8 |22 | 2.00| 1.30 | 1.04 + | | | | | | | | | | | + 210 |11.07| 9.23| 8.61| 8 |17.87|16 |15.22|22.3 | 2.04| 1.32 | 1.06 + 220 |11.34| 9.46| 8.82| 8.2 |18.25|16.47|15.64|22.7 | 2.08| 1.34 | 1.08 + 230 |11.61| 9.69| 9.03| 8.4 |18.62|16.95|16.06|23.1 | 2.12| 1.36 | 1.10 + 240 |11.88| 9.92| 9.24| 8.6 |19 |17.42|16.48|23.5 | 2.16| 1.38 | 1.12 + 250 |12.15|10.15| 9.45| 8.8 |19.37|17.89|16.9 |23.9 | 2.20| 1.40 | 1.14 + | | | | | | | | | | | + 260 |12.42|10.37| 9.66| 8.99|19.75|18.37|17.32|24.3 | 2.24| 1.42 | 1.16 + 270 |12.69|10.59| 9.87| 9.18|20.12|18.84|17.74|24.7 | 2.28| 1.44 | 1.18 + 280 |12.96|10.81|10.08| 9.37|20.5 |19.32|18.16|25.1 | 2.32| 1.46 | 1.20 + 290 |13.26|11.03|10.29| 9.56|20.87|19.79|18.58|25.5 | 2.36| 1.48 | 1.22 + 300 |13.53|11.25|10.5 | 9.75|21.25|20.26|19 |25.9 | 2.40| 1.50 | 1.24 + | | | | | | | | | | | + 310 |13.8 |11.48|10.71| 9.95|21.6 |20.53|19.13|26.7 | 2.44| 1.52 | 1.25 + 320 |14.07|11.71|10.92|10.15|21.95|20.79|19.25|27.1 | 2.48| 1.54 | 1.26 + 330 |14.34|11.94|11.13|10.35|23.3 |21.05|19.37|27.5 | 2.52| 1.56 | 1.27 + 340 |14.61|12.17|11.34|10.55|22.65|21.32|19.5 |27.9 | 2.56| 1.58 | 1.28 + 350 |14.88|12.4 |11.55|10.75|23 |21.58|19.62|28.3 | 2.60| 1.60 | 1.29 + | | | | | | | | | | | + 360 |15.15|12.62|11.76|10.94|23.35|21.84|19.75|28.7 | 2.64| 1.62 | 1.30 + 370 |15.42|12.84|11.97|11.13|23.7 |22.11|19.87|29.1 | 2.68| 1.64 | 1.31 + 380 |15.68|13.06|12.18|11.32|24.05|22.37|20 |29.5 | 2.72| 1.66 | 1.32 + 390 |15.94|13.28|12.39|11.51|24.4 |22.63|20.5 |29.9 | 2.76| 1.68 | 1.33 + 400 |16.2 |13.5 |12.6 |11.7 |24.75|22.89|21 |30.3 | 2.80| 1.70 | 1.34 + | | | | | | | | | | | + 410 |16.47|13.72|12.81|11.89|25.1 |23.15|21.12|30.7 | ....| .... | .... + 420 |16.73|13.94|13.02|12.08|25.45|23.41|21.25|31.1 | 2.88| 1.74 | 1.36 + 430 |17 |14.16|13.23|12.22|25.80|23.67|21.37|31.5 | ....| .... | .... + 440 |17.27|14.38|13.44|12.46|26.15|23.93|21.5 |31.9 | 2.96| 1.78 | 1.38 + 450 |17.54|14.60|13.65|12.65|26.5 |24.19|21.62|32.3 | ....| .... | .... + | | | | | | | | | | | + 460 |17.80|14.82|13.86|12.84|26.85|24.45|21.75|32.7 | 3.04| 1.82 | 1.40 + 470 |18.06|15.04|14.07|13.03|27.2 |24.71|21.87|33.1 | ....| .... | .... + 480 |18.33|15.26|14.28|13.22|27.55|24.97|22 |33.5 | 3.12| 1.86 | 1.42 + 490 |18.60|15.48|14.49|13.41|27.9 |25.23|22.12|33.9 | ....| .... | .... + 500 |18.87|15.70|14.70|13.60|28.15|25.49|22.25|34.3 | 3.20| 1.90 | 1.44 + ------------------------------------------------------------------------- + +* Stock cattle or feeders and calves take 75 per cent. of fat cattle +rate; 31-foot car (internal measurement) is adopted as the standard for +minimum weight, as per heading in table; 28-foot cars, 90 per cent. of +above; 33-foot 6-inch cars, 108 per cent. of above; other lengths of +cars to take same proportion as above. + + + + +INDEX. + + + Abbett, Gov., 113 + + Absentee ownership, 287 + + Abuses, 101 + cardinal, 134 + for protection against, must resort to polls and not to courts, 332 + increased, 129 + of railroads, 124 + origin of, 434 + still practiced, 400 + + Accidents, 450 + + Acworth, Mr. W. M., 276 + + Adams, C. F., Jr., heresy, 260 + difficulty not in legislation, 258 + favors pooling, 260 + on character of railroad men, 257 + on Iowa law, 332 + H. C., motive for ownership, 436 + + Africa, 61 + roads constructed, 22 + + Agriculture among Babylonians and Assyrians, 19 + + Albany _Evening Argus_, 340 + + Albia, 324 + + Algiers, 62 + + Algona, 328 + + American colonies, 100 + experience, 303 + investments a reproach, 313 + + Americans would avail themselves of low rates, 445 + + American Transfer Company, 119 + + Amsterdam, 97 + owes to canal, 32 + + Ann Arbor Strikers, 449 + + Area of land grants, 329 + + Argentine Republic, 68 + + Arrogance, 453 + + Asia, 59 + early nations of, 18 + + Athens connected with Piraens, protected road, 24 + + Atkinson, Edward, 248 + fallacious argument of, 249 + relies upon a figurehead commission, 249 + + Atlantic nurseryman, 148 + + Attorney-General held that legislature had not the power to prescribe + rates, 330 + + Attorney, slow to accept fee, 402 + + Augustus instituted postal service, 27 + + Australia, 64 + + Austria, 54 + + Average fares per mile, 444 + + + B. & M. Co., 324 + + Baker, C. W., 262 + + Balkan Peninsula, 59 + physical features, important factor, 24 + + Ballou, H. S., 139 + + Baltimore and Ohio, watered stock, 172 + + _Bankers' Magazine_, 301 + + Banks and insurance, not private, 403 + + Barosz, M., 441 + + B., C. R. & N. Railroad Co., increased prosperity of, 344 + + Beach, C. F., Jr., 395 + law of private corporations, 316 + + Bering Strait, 89 + + Belgium, 56, 409 + cost of right of way, 370 + + Bessemer's invention, 374 + + Blackstone, T. B., 413 + + Blatchford, Justice, 213, 290 + + Blinkensop, 48 + + Board of Railroad Commissioners, 428 + + Bolles, A. S., 303 + + Bonded debt of M. & M. R. R., 322 + + Bonham, John M., 268 + + Boone, 327 + + Boston _Advertiser_, 340 + + Bradley, Justice, 213 + + Braithwaite, 49 + + Branch roads, 306 + + Brazil, 69 + + Brewer, Justice, 214, 215, 455 + doctrine, 376 + opinion of reasonable rates, 360 + reply to ruling of, 364 + + Bridge across the Mississippi, 319 + + British railways, cost of right of way, 370 + + Brown, Justice, 214 + + Bryce, Prof., 391 + on decadence of bar, 222 + on lobby, 222 + + Budd vs. N. Y., 213, 290, 295 + + Buddha, commended roads to care of pious, 18 + + Burmah, 61 + + Burstall, 49 + + + California railways, 122 + + Calmar, 328 + + Camden and Amboy charter, 113 + + Camden and Amboy Railroad Company, 102 + + Canada, 73 + canals, 43 + + Canadian Pacific, 74 + + Canal, Erie, 40 + from Bitter Lake to Red Sea, 23 + Nicaragua, 44, 174 + + Canals, Canadian, 43 + in Great Britain, 33 + Italian, 34 + private companies, 42 + Spanish, 34 + + Candidates, railroad, 226 + servile to railroads, 206 + + Cape Colony, 63 + + Capitalization of railroads, 86 + + Capital of Standard Oil Company, 121 + + Carey, H. C., 110 + + Carload lots, 386 + rates, 140 + + Carthage, harbor, fleets, roads, 24 + + Carthaginians, 91 + commerce of, constructed roads, 22 + + Cars refused, 120 + + Cassat, Mr., testimony of, 121 + + C., B. & Q. R. R. strike, 285 + + Cedar Rapids and Missouri River R. R. Co., 324 + + Central America, 70 + + Central Pacific, 175 + scheme, 347 + + Ceylon, 61 + + Charlemagne repaired and built roads, 28 + + Chicago and Milwaukee system, cost of, 235 + and Omaha pool, 194 + convention, 224 + Iowa and Nebraska Railroad, 328 + third-rate lawyer, 222 + + Chile, 68 + + Chinese built roads before the Christian era, 21 + + Classification, 363 + rule, 361 + unjust features, 151 + + Clay, Mr., 303 + + Clews, Henry, 304 + pictures evils, 404 + "Twenty-eight Years in Wall Street," 185 + + Clear Lake, 328 + + Clerk of U. S. Court, 217 + + Cleveland, President, 359 + + Clinton, 328 + + Club address of C. F. Adams, Jr., 257 + + C., M. & St. P. R. R. Co. vs. Minn., 213 + + Coal and kindred articles, 386 + + Coffin, Mr. L. S., 452 + + Colbert, idea of postal service, 30 + + Coleridge, Lord, 454 + + Combinations, 189 + regulate, 299 + + Commission evil, 420 + + Commission received, 119 + + Commissioner system, 246 + + Commission, Interstate, reviews Judge Brewer's rule, 365 + + Commissions acquire expert knowledge, 384 + + Commission's decisions, 359 + acts subject to judicial review, 381 + become a pliant tool, 429 + character of, 359 + + Commission system adopted in Iowa, 335 + + Committee bill passed, 354 + + Commodities, character of, 373 + + Common law, sufficient in theory but fails in practice, 268 + + Competition, 190, 196 + a great educator, 260 + and enhanced rates, 352 + in United States depended upon, 129 + the death of trade, 298 + vicious, 300 + + Communism, strength of, 454 + + Conduit company, 117 + + Confiscation of railroads, 293 + + Conflicts between labor and capital, 448 + + Congress, appropriations for improving rivers, 44 + in three camps, 352 + responds to demand of Pacific road, 183 + to cease futile attempts 299 + + Congressmen imposed upon, 17 + + Connecticut railroad construction, 288 + + Conscientious managers cannot retain business, 399 + + Consolidation of C., R. I. & P. R. R. Co., 323 + tendency to, 262 + + Conspiracies should not be legalized, 260 + + Conspiracy, 296 + + Constitutions made for, 457 + + Contests, expense of in Great Britain, 371 + + Contributions to Pacific roads, 180 + + Control, suggestions for, 425 + + Cooley, Judge, 315, 359 + in reference to State and National Commissions, 426 + + Corporations, danger from, 223 + willing to pay for questionable services, 222 + + Corrupt practice act in Mass., 223 + + Cost of American roads, 187 + of building roads at present, 186 + of existing railway system, 422 + of operating M. & M. R. R., 322 + of railroads, 172, 370, 417 + + Council Bluffs, 324 + line completed to, 323 + + Courteous employes, 447 + + Courts ordered restoration of Erie securities, 170 + should not aid, 381 + + C., R. I. & P. Railroad, 284 + + Crosby, J. O., story of tramp, 178 + + Crusaders, 92 + + Cuba, 70 + + Cullom committee report, 131 + Senator, 353 + + Customs laws, 15 + + + Dabney, W. D., drift toward railroad centralization, 261 + favors pooling, 261 + favors State control, 261 + + Darius I., work on canal, 23 + + Dartmouth College case, 315 + decision, 259 + + Davis, C. Wood, 413 + on cost of roads, 187 + + Dows, David, & Co., 138 + + Davis, Jefferson, plea, 276 + + Delegates to conventions, 224 + + Demand in other States for reform, 331 + + Denmark, 35, 58 + first-class passenger rates, 439 + + Depew, Mr., 138 + + Depew says all railroad men are politicians, 366 + + Devices, various, 296 + + Differentials, 296 + + Discriminations, 118, 137, 143, 156, 147, 160 + damaging, 248 + in classifications, 148 + in Iowa, 337 + practiced openly, 331 + + Dillon, Judge, 411 + Sidney, 273 + on cost of Pacific roads, 185 + + Directors and officials of corporations, 316 + character of, 406 + with personal interests 317 + + Director-General, 431 + should have power to remove managers, 432 + + Distance disregarded, 331 + + Dividends, 164, 187 + by fluctuations, 302 + Standard Oil Company, 121 + + Donations, 329 + for benefit of public, 376 + made by railroad companies, 446 + to Pacific roads, 176 + to railroads, 125 + + Donation to road completed, 320 + + Doud amendment, 331 + + Dual government, 401 + + Dual sovereignty must be recognized, 425 + + Dubuque & S. C. Co., 324 + + Dutch East India Company, 97 + + Duties of common carriers, 315 + + Duty of state, 456 + + + Earnings diverted, 403 + of first Iowa railroad, 320 + gross, larger in United States, 281 + of C., B. & Q., 175 + of Iowa roads increased, 264 + of Massachusetts railroads, 175 + of Lake Shore, 175 + + Earnings of Liverpool and Manchester, 50 + of Terre Haute, 175 + of railroads, 86 + per employe, 372 + per train mile in the United States and United Kingdom, 270 + per train mile larger in United States, 281 + + East India Company, 99, 303 + + Economy of fuel, 375 + + Editors, 221, 231 + controlled by counting-room, 339 + + Egyptians, commerce of, constructed roads, 22 + + Electoral Commission, 215 + + Eminent domain, 314 + Spelling on, 317 + + Employes fare better under Government management, 412 + in Iowa, compensation, 344 + in Iowa, number, 344 + number of, in various countries, 371 + number of, per mile of road, 269 + number of, as related to gross earnings, 269 + organized for political work, 277 + quasi-public officers, 447 + should have passes, 209 + + England, 99 + roads maintained by statute and parish labor, 32 + + English landlords, 287 + + Entrance into railway service regulated, 448 + + Ericsson, 449 + + Erie Canal, 40 + Railroad, 170 + + European and American investments compared, 371 + + European history began in Greece, 24 + + Evans, Oliver, 47 + + Executive charged with construction and maintenance of roads and + canals, 22 + + Executives influenced, 225 + + Experiments with wooden rail, 46 + + Extortion, effects of, 111 + + + Farmers' Alliance, 300 + + Farmers' pool, 300 + + Federal agencies, need of improved, 430 + + Federal courts, influence of, 212 + + Ferocity of public opinion in the West, 312 + + Feudal features, 455 + + Field, Justice, 214, 269 + + Fink, Albert, 200 + + First rail tracks, 46 + + First railroad survey in Iowa, 319 + + Fort Dodge, 325 + + Fortunes, great, 400 + made, 301 + + France, 54 + duty of employes, 447 + first system of roads, first artificial waterways, 30 + large number of canals, 30 + rates on freight and passengers, 293 + + Frederick the Great built turnpikes and canals, 31 + + Frederick William IV., 53 + + Free competition, 407 + + Freight agents, 383 + + Freight carried by railroads in the United States, 292 + + Friction under Iowa law, 341 + + + Galena and Chicago Union, 164 + + Gallatin advocated roads and canals, 38 + + Garfield, President, 224 + on Dartmouth College case, 316 + + Garrett, J. W., 83 + + Germany, first mail service, 31 + first railroad, 53 + + German instructions to employes, 447 + + Georgia prescribed rates, 289 + + Glenwood, 337 + + Gibbon, 92 + + Gibbon concerning postal service, 27 + + Goodman, Mr., testimony of, 138 + + Gospel of wealth, 404 + + Goeta canal, 35 + + Gould's bulldozing, 452 + + Gould, Jay, 212, 224, 269 + on cost of Pacific roads, 184 + + Governor called extra session of General Assembly, 321 + importuned, 228 + of Iowa, 311 + influenced, 227 + + Government ownership drawbacks, 412 + + Granger cases, 212 + + Granger, Judge, 229 + + Granger law did not retard construction, 335 + of Iowa, 332 + + Granger laws, moderate, 322 + repealed, 246 + + Granger movement, 84 + a necessary one, 258 + spread, 332 + + Granger system in Wisconsin, 245 + + Grant and Conkling, 224 + + Grant, Judge, 411 + + Great Britain, canals, 33 + crossed by Roman roads, 27 + recent origin of public roads and postal service, 32 + + Great Northern Railroad Co., 185 + + Grecian civilization passed to Romans and then to other nations, 24 + + Greek geographers, praise of highways of Hindostan, 19 + + Gresham, Judge, 212 + + Grinnell, Hon. J. B., 411 + + Gross and net earnings in Iowa, 344 + earnings, increase in Iowa, 287, 293 + earnings of Iowa roads, 265 + + + Hadley, Prof. A. T., 245 + on passenger rates, 278 + on State legislation, 286 + + Hadley's address before Bankers' Association, 284 + ignorance, 287 + mistake, 290 + + Hadrian improved postal service, 27 + + Hagar, Mr., 109 + + Hackworth, 49 + + Hale, Lord Chief Justice, 316 + + Harrison, President, 214 + on watered stocks, 174 + on Nicaragua Canal, 44 + + Hanseatic League, 94 + object, extent, power, 95 + + Haul, length of, compared, 372 + + Hayes-Tilden contest, 215 + + Hayti, 71 + + Hepburn committee, 137, 146 + + Hindoo culture and broad statesmanship, 18 + + Hoe printing-press, 231 + + Holland, 98 + largest canal of, 31 + + Hoyt, J., & Co., 138 + + Hudson, J. F., 250, 266, 407 + + Hudson River Railroad accident, 451 + Co., 167 + stock watering, 167 + + Humboldt said of roads of Incas, 36 + + Hungary, 54 + + Hungarian zone system, 282, 440 + + Huntington, C. P., 347 + letter of, 346 + + + Illinois canals, 42 + Granger laws, 331 + + Importance of transportation facilities, 17 + + Improved appliances should be used, 450 + + Income of railroads, 128 + per capita, 292 + + Increase of traffic under zone system, 442 + + India supplied Nineveh and Babylon, Greece and Rome, 18 + + Individual entitled to full use, 392 + + Inflation, 163 + + Influences at work to create public sentiment, 294 + + Iniquitous taxation, 307 + + Injunction asked for, 323 + + Inspection service should be established, 432 + + Insurance provided for, 451 + + Interchangeable 1,000-mile tickets, 445 + + Interstate Commerce Act, 85, 319 + amended, 358 + approved, 354 + + Interstate Commerce Commission, sixth annual report, 160 + + Interstate Commerce law attacked, 162 + + Intimidation of railroad employes, 226 + + Inventors, 126 + + Investments, none pay so well, 248 + + Iowa attorney, 210 + Bill of Rights, 445 + Central Air Line, 324 + City, road built to, 319 + Commissioners enjoined, 343 + Commissioners' valuable service, 336 + Falls & S. C. Co., 325 + General Assembly passed maximum tariff act, 264 + General Assembly passed act authorizing commissioners to make _prima + facie_ rates, 264 + law, features of, 341 + misunderstanding of, 342 + vindicated, 266 + legislation, 319 + politics, 311 + prosperity accelerated, 345 + railroad construction, 288 + the queen, 348 + + Irish tenants, 287 + + Iron strap rail, 46 + + Itaki Atabeck, road seen to this day, 19 + + Italy, 57 + canals, 34 + + + Jackson, President, 367 + + Japan, 60 + + Java, 61 + + Jeans, Mr. J. S., 269 + on railroad revenues, 437 + on state railroad, 410 + + Jefferson's inquiries, 37 + + Judges, servile, 162 + use passes, 208 + + Jurists, eminent, 234 + + + Kansas Midland, 187 + + Kent, 314 + + Kirkman, M. M., 239 + + + Labor organizations, 448 + + Labor-saving causes, 375 + + Lake transportation, 453 + + Land grant policy, wisdom of, 320 + to Dubuque & S. C. R. R., 325 + + Land grants to Iowa railroads, 320 + value of, 325 + + Languedoc Canal, 30 + + Lawyer and farmer, 209 + + Lawyers, briefless, 219 + political, 223 + third-rate, 222 + + Legislation, 299 + of California, 123 + + Legislative campaign of 1887, 339 + reform needed, 405 + reports, 110 + + Lincoln, President, 216 + story of the Irishman, and the pig, 271 + + Lines projected, 288 + + Lobbies frowned out of legislative halls, 402 + + Lobby, 219 + formidable, 339 + + Locomotive, early inventors, 47 + reward for, 49 + + Long and short haul clause, 297 + of Iowa law, 341 + + Louis XIV., 98 + + Louis XI. transferred postal service to state, 30 + + Lowest rates in Europe, 409 + + + Mails carried free in France, 373 + + Managers arrogant, 331 + concede necessity of regulation, 369 + have lost influence, 230 + make law odious, 333 + naturally despotical, 151 + of great parties, 144 + + M. & M. R. R. Co., 319 + + Marshall, Chief Justice, 350 + + Marshalltown, 324 + + Massachusetts Commission, 428 + + Mathews, Judge Stanley, 269 + + Maximilian established postal route, 31 + + Maximum charges, 331 + + McDill, Hon. J. W., as a lobbyist, 238 + + McGregor grant resumed, 326, 327 + + McGregor Western R. R. Co., 325 + + Means employed to control legislation, 218 + + Mesopotamia, inhabitants perfect cart, 19 + + Methods for control, 402 + impracticable, 425 + + Mexico, 72 + + Mileage of the future, 389 + to area, 112,389 + to population, 292 + + Minneapolis and Chicago conventions, 224 + + Minnesota case, 295 + Granger laws, 331 + politics, 311 + + Missouri Pacific, 187 + + Mitchell, Alexander, 232 + + Modern doctrine, Kent's rule, 314 + + Monopoly, 317 + in transportation, 90 + + Morgan, Appleton, 250 + + Mortgaging prohibited, 434 + + Munn vs. Illinois, 213, 290 + + Muscatine, branch line to, 319 + + Mushroom millionaires, 307 + + + National banking system, 303 + + National bureau should be established, 431 + + National control, 424 + + Nation inclined to follow beaten tracks, 425 + + Nations should profit by experience, 367 + + Napoleon Company, 108 + + Navigation act, 98 + + Nebraska maximum tariff, 346 + + Net earnings increased in Iowa, 265 + in 1890 and 1891, 187 + + Netherlands, canals, 31 + + Net profit of passenger traffic in United Kingdom, 270 + + Nevada, 324 + + New England railroad construction, 288 + + New Orleans Cotton Exchange case, 360 + + Newton, 47 + + New York canals, 41 + + New York Central, gross earnings, 167 + stock watering, 165 + + New York delegation, 224 + + Nicaragua, 70 + Canal, 44, 174 + + Nile, canals, roads, people, 23 + + Notice given when rates are changed, 388 + + Number of employes per mile, 372 + of hours' work of employes, 372 + + + Office of railroad public, 368 + + Officers of railroads should not be allowed to use proxies, 432 + should take oath, 432 + + Officials not likely to resist temptation, 436 + + Ohio canals, 42 + + Oliver Cromwell, 98 + + Operating expenses reduced, 375 + + + Pacific railroad, 81 + diplomacy, 180 + prejudice, 45 + + Pacific roads before boards of equalization, 186 + comparative cost, 186 + cost to duplicate, 185 + easy grade, 185 + indebtedness to Government, 184 + + Papin, constructed steamboat, 47 + + Parliament compelled British railways, 451 + + Party organs, 221 + + Pass abuse, ruling of commission, 362 + + Pass, purposes for which given, 209 + should be discarded, 446 + + Passenger rate-making principle wrong, 439 + + Passenger rates not reduced, 375 + + Passenger rates too high, 438 + + Passengers carried by railroads in the United States, 292 + + Passengers, English third-class, 270 + killed and injured, 450 + third-class, 269 + + Passes, 207, 208 + plentiful, 420 + to delegates, 226 + + Pauper tickets for the clergy should be abolished, 446 + + Pausanias shown well-kept road, 19 + + Pedigree of a proverb, 298 + + Peik vs. Chicago, 213 + + Pennsylvania canals, 41 + + Pennsylvania Central R. R. Co., 171 + + People prone to believe, 245 + + People's parties called into existence, 404 + + People will not tolerate, 397 + + Perquisites abolished, 446 + + Persian Empire, magnitude, 20 + + Peru, 67 + roads, 35 + + Phoenicians, 90 + built great roads, + traders of antiquity, 20 + first great maritime nation, 19 + + Pipe line, 116, 119 + + Plan capable of being improved, 433 + + Policy of delay, 381 + + Political campaigns in Iowa, 339 + + Politicians as railroad employes, 229 + + Pooling, 261, 398 + committee does not recommend prohibition, 354 + contracts void, 317 + grave effects of, 268 + means of swelling railroad earnings, 267 + should be prohibited, 203 + + Pools, 85, 194, 195, 251, 297 + defended by Mr. Hadley, 247 + defended by Mr. Morgan, 250 + maintained in Iowa, 336 + suppress competition, 198 + + Poor's, H., opinion, 187 + estimate of cost, 86, 173, 247 + + Poor's estimate of watered stock, 186 + + Porter, Horace, _North American Review_ article, 290 + + Porter, John, 104 + + Portugal, 58 + + Portuguese, 96 + + Postal communication, royal road from Susa to Sardes, 21 + + Postal service not carried on by state, 30 + + Potential value of interstate law, 367 + + Powderly, T. V., 449 + + Prediction of Mr. Walker, 299 + + Predictions of railroad men, 332 + + Press abuse, 221 + + Press, efforts of railroads to control, 271 + servile to railroads, 228 + + _Prima facie_ rates, 341 + + Prize worth contending for, 380 + + Procopius, statement of, concerning Via Appia, 27 + + Problem would be solved if abuses, 297 + + Providence, 136 + + Psammitichus cuts canal, 33 + + Ptolemaic kings built canals, 24 + + Public at mercy of managers, 381 + not unreasonable, 450 + + Public opinion dormant, 400 + efforts to influence, 273 + rules, 400 + + Publicity advantageous, 402 + + Purchasers of land made the donation, 321 + + + Question not settled until settled right, 377 + + + Railroad attorneys, 214 + + Railroad-building after 1873, 246 + + Railroad business not private, 403 + safe, 436 + changes in Iowa, 393 + company public agent, 388 + competition, 190, 338 + consolidation, 82 + construction, 287 + diplomate, 228 + first line, 77 + first steam engine, 47 + improved highway, 339 + like common road, 391 + literature, 231 + magazine literature, 273 + managers do not do things by halves, 223 + managers' opportunities to speculate, 399 + men always oppose reductions of rates, 283 + officials, 257 + papers, 340 + precursor of, 46 + president's letters, 229 + + Railroads, abandoned, 79 + bonded for more than cost, 175 + capitalization of, 86 + but few that do not pay, 52 + cost to build, 186 + earnings of, 86 + in Asia, 59 + in Austria, 54 + in Belgium, 56 + in Denmark, 58 + in France, 54 + in Germany, 53 + in Granger States did not comply with law, 246 + in Hungary, 54 + in Italy, 57 + in politics, 205 + in Portugal, 58 + in Russia, 58 + in Switzerland, 56 + in Spain, 57 + in the Balkan Peninsula, 59 + in the Scandinavian Peninsula, 58 + in the United States, 76 + in Turkey, 60 + land grants to, 80 + partake of two natures, 392 + propitiate judiciary, 211 + public tax collectors, 396 + rebelled against Iowa law, 344 + + Railroad stations, number of, 190 + + Railroad tax, amount of, 393 + + Railway acts, first in England, 127 + + _Railway Age_, 288 + + Railway benefits, 231 + employes in politics, 308 + first act, 49 + organs, 229 + Pan-American, 88 + + Railways, highways, 13 + weakened their arguments, 237 + + Railway system, growth of, 87 + length of in the world, 87 + + Rate-making a legislative and not a judicial function, 332 + + Rate-making difficult, 244 + not a judicial question, 378 + + Rate of 1870, 248, 249 + per ton per mile on Camden and Amboy Railroad, 109 + question, 370 + + Rates, fixing of by commission demanded, 430 + fundamental principles in making, 385 + in France, 293 + lower will prevail, 256 + lower, reason for, 374 + might be reduced, 417 + on Milwaukee road, 233 + reduced by zone tariff in Austria-Hungary, 283 + should be lower here than in Europe, 373 + should be referred to National and State boards, 379 + under Granger laws, 246 + under Wisconsin Granger laws, 236 + what are reasonable, 376 + + Reagan, John H., bill of, 352 + + Reform demanded, 295 + + Reasonable rates, 376, 387 + fixing of, 361 + + Rebates Standard Oil Company, 115 + + Redfield, J. F., 312 + + Reduced rates on Government business in France, 293 + increased business, 282 + + Refineries closed, 116 + + Reforms needed, 438 + + Remedies, 389 + proposed by committee, 352 + + Remedy proposed by Mr. Hudson of doubtful efficiency, 268 + + Reorganization of the M. &. M. R. R., 322 + + Report of Cullom committee, 353 + + Reports of Interstate Commission, 366 + + Revenues increased by Granger law, 246, 332 + uniform, 437 + + Revolution and anarchy, 299 + + Rhenish League, 94 + + Ricks, Judge, 449 + + Ridgeway, Jacob, 106 + + Right of control rests upon firmer ground, 318 + + Right of way, cost of, 370 + + River and harbor improvements, 453 + + Rivers, improvement of, 44 + + Robber knights, 93, 149 + + Robbers and feudal knights, depredations being tax, 29 + + Rob Roy, 258 + policy, 102 + + Robinson, H. P., railway in politics, 308 + + Rocket, the, 49 + + Rogers, Thorold, 454 + + Roman Empire, after downfall roads destroyed, 28 + + Roman postal service, 27 + + Romans learned art of paving roads from Carthaginians, 24 + + Rome, 91 + connecting link between antiquity and mediaevalism, 24 + extent, population, roads, etc., 25 + + Roads built from proceeds of stocks and bonds, 373 + + Roads built only when immediately profitable, 328 + early, 37 + pioneers of enlightenment and political eminence, 17 + subject to legislative control, 327 + utility of good, recognized in colonial times, 36 + + Russia, 58 + roads, 35 + + Rutter, J. H., agent of New York Central, 116 + + + Salaries, American railways pay the highest, 420 + + Saloon men politicians, 366 + + San Domingo, 71 + + San Salvador, 70 + + Sanspareil, the, 49 + + Savings under Government management, 422 + + Scandinavian Peninsula, 58 + + Scandinavian roads and canals, 35 + + Schedule rates made by Iowa Commission, 342 + + Schedules should be submitted to bureau, 432 + + Scriptures, roads of the, 22 + + Second-class passenger rates, + why not successful, 282 + + Secrecy a source of evils, 402 + + Select committee, 353 + + Select Committee on Transportation, 351 + + Senate committee, 172 + + Senators and Congressmen raise campaign funds, 436 + + Servility of Interstate Commerce Commission, 203 + + Sesostris cut canal, 23 + + Shippers given favors, 219, 221 + powerless, 382 + + Sioux City, 325 + + Smyth Judge, 229 + + South America, 66 + + Southern Pacific Railroad Company, 122 + + Southern pool, 200 + + Southern Railway and Steamship Association, 194 + + South Sea Company, 303 + + Spain, 57 + canals, 34 + + Spain and Gaul, roads of, 27 + + Special arrangements, 295 + + Special-car aristocracy, 445 + + Special contracts, 137 + rate agreement, 141 + rates, 120, 138 + + Speed of railroads, 279 + + Spelling, T. Carl, 317 + + Speculative element should be removed, 433 + + Speculators and gamblers, 434 + + Spirit of Interstate Law, 369 + + Standard Oil monopoly, 114 + discrimination, 160, 362 + + State control encourages building, 130 + in Iowa asserted early, 330 + Spelling on, 318 + + State, duty of, 391 + management, advantages of, 410 + ownership and regulation, 409 + with private management, 422 + railway system, 277 + + States to cease futile attempts, 299 + + Steam engine, first account, 47 + + Stephenson, 48 + + Stevens, Mr., 107 + + Stewart, A. T., & Co., 138 + + Stickney, A. B., criticises President Mitchell's letter, 23 + his criticism of Iowa rates, 343 + his error, 256 + favors entire control by Nation, 255 + on interstate law, 255 + on national control, 424 + + Stock a bonus, 434 + + Stock and bond inflation, 163 + + Stockholders, 131 + dissatisfied, 112 + interested in publicity, 403 + + Stock market controlled by few, 308 + + Stocks, fluctuations of, 435 + should be paid in full, 438 + shrinkage of value, 284 + + Stockton, R. F., 103 + + Stock watered 50 per cent., 307 + + Stock-watering, 164, 165 + in America, 270 + English, 371 + + Stock wiped out, 326 + + Stone, Governor, 324 + + Subordinates have to suffer for superiors, 203 + + Subsidies, 329 + to press, 271 + + Sunday trains restricted, 451 + + Superintendents responsible for uncivil subordinates, 447 + + Supreme Court, 215, 289 + + Switzerland, 56 + + + Taney, Justice, 216 + + Tariff, a tax, 135 + prepared by sworn officials, 381 + + Tariffs impeachable, 382 + official, should stand until proved unreasonable, 382 + + Texas legislation, 346 + + Text books, 312 + + Thiers, M., 51 + + Third-class passengers in Europe, 443 + + _Times_, New York, 340 + + Tipping, 447 + + Traffic associations, 149, 300 + + Trainmen should be allowed rest, 451 + + Train mile earnings, 269 + + Trains, number of, per mile, per annum, 281 + should connect, 451 + + Transportation not a commodity, 368 + + Trevithick, Richard, 48 + + _Tribune_, Chicago, 244 + New York, 340 + + Turkey, 60 + + Turnpike, first American, 37 + + Turnpikes in Great Britain, 32 + + Turnpike tolls, 396 + + Twelfth General Assembly, 323, 330 + + + Umpires, high-priced, 420 + + Unanimous vote on Iowa law, 341 + + Union Pacific, 175 + + United States Bank, 303, 366 + + Unscrupulous men attracted, 390 + + + Value of land grants, 329 + + Vanderbilt, 82, 452 + + Vedas, testimony of, 18 + + Venetian council, 253 + + Venezuela, 66 + + Venice, 93 + + Via Appia and other roads, 26 + + Violations of law encouraged by courts, 430 + + + Wabash Railroad, 212 + + Walker, A. F., 294, 295, 311 + + Wall Street, defense of, 340 + managers, 346 + method, 302 + + War, 399 + + War rule, 331 + + Washington among the first to advocate internal improvements, 39 + + Water courses as levelers, 453 + + Watering stock, Mr. Jeans on, 270 + methods of, 174 + + Water transportation, 145 + + Watered stocks, 172 + Hadley on, 247 + + Watt and Stephenson's inventions, 126 + + Watt, James, 47 + + Weak roads helped, 344 + + Western candidates, 224 + + Water classification, 343 + + West Indies, 71 + + Western politician outwitted, 225 + pool, failure of, 200 + Traffic Association, 299 + Union Telegraph Company, 127 + + White House, the, 215 + + Whitney, Asa, 81 + + Whitney's cotton gin, 231 + + Why Western people do not invest in railroad stocks, 308 + + Wells, David A., 374 + + Windom committee, 351 + + Wisconsin Granger laws, 331 + + Witnesses recusant, 134 + + Wrecking roads, 305 + + Wrought-iron rails patented, 47 + + _World_, New York, 340 + + + Zone tariff, 409 + ridiculed, 441 + + + + +A Standard Book on an Important Subject. + +THE + +RAILROAD QUESTION. + +A HISTORICAL AND PRACTICAL TREATISE + +ON + +RAILROADS, AND REMEDIES FOR THEIR ABUSES. + +BY + +=_William Larrabee_=, + +Late Governor of Iowa. + +12mo, cloth extra, gilt top (488 pages), $1.50. + +I.--History of Transportation. II.--The History of Railroads. +III.--History of Railroads in the United States. IV.--Monopoly in +Transportation. V.--Railroad Abuses. VI.--Stock and Bond Inflation. +VII.--Combinations. VIII.--Railroads in Politics. IX., X.--Railroad +Literature. XI.--Railroads and Railroad Legislation in Iowa. XII.--The +Inter-State Commerce Act. XIII.--The Rate Question. XIV.--Remedies. +Appendix:--Tables and Statistics. There is also a bibliography on the +subject of Railroads, embracing ninety-eight titles, and a carefully +prepared alphabetical index. + + +Opinions of the Press. + +"No work has ever before told so completely and clearly what the public +want to know, and ought to know, about the secret management and true +legal status of railroads. What journalists and magazine writers have +studiously left unsaid, whether from lack of knowledge or from motives +of 'revenue only,' Governor Larrabee has said, and said it +well."--_Western Rural._ + +"This book is evidently the result of long study and experience and much +thinking. While it is radical in its treatment of the question, no side +of it has been overlooked. It deserves careful reading by every person +who is interested in this great question. No subject is more worthy the +profound study of the statesman, the man of affairs, the scholar and the +citizen. Surely all who are trying to understand the good and evil of +railroads can turn to the pages of this book with the certain +expectation of learning much both in the way of fact and +suggestion."--_Bankers' Magazine._ + +"Perhaps the most interesting chapters are the two in which the author +reviews and criticises former publications on railway questions, and the +one in which he reviews the various remedies which have been from time +to time advanced for railway abuses. The book is concisely and clearly +written."--_Engineering News._ + +"Ex.-Gov. Larrabee of Iowa has written a highly meaty book on the +railroad question. It is a topic he is well qualified to handle, viewing +that he was no small part of the movement in former days to repress +railroad abuses in the West, and particularly in his own +State."--_Chicago Tribune._ + +"A careful study of an important question, fortified by facts and +figures which are both interesting and valuable."--_New York Recorder._ + +Hon. Thomas M. Cooley says: "I have read the book with interest, +especially that part which discusses State ownership and management. I +have not before seen the side you advocate so clearly and so ably +presented." + +"The book is the most valuable work yet issued on its subject."--_Des +Moines News._ + +"Mr. Larrabee is eminently fitted for the task to which he has set +himself. He is not a mere theorizer. He brings to the discussion the +ripe knowledge that comes from long experience in dealing with the +railroad question, not only as a State Senator and Governor, but also +'as a shipper and as a railroad promoter, owner and stockholder,' and +likewise as 'a director, president and manager of a railroad company.' +In his treatment of the railroad problem, moreover, Mr. Larrabee +displays a breadth of view and an earnestness of purpose that must +command respect even where they fail to carry conviction."--_Public +Opinion._ + +"It is devoid of the animus which usually enters into the works of the +reformers, but on the contrary is written in admirable style, enhanced +by happy anecdotes, and altogether is a much more readable book than one +is accustomed to find upon so practical a question."--_Kansas City +Journal._ + +"It justifies a claim to a place among the standard books upon the +railroad problem. It is particularly in those portions of the work which +deal with the relations of the Government to the railroads and the +solution of the difficulties that have arisen between the railways and +the people that the experience of the author both in guiding and +executing the railway legislation of Iowa comes into prominent +play."--_Omaha Bee._ + +"We commend the book to the careful reading of the railroad +stockholder."--_Railroad Record and Investor's Guide._ + +"A thoughtful volume, showing careful research and +reflection."--_Chicago Inter-Ocean._ + +"A most interesting, valuable and timely book. Every student of the +subject will need to read it, and the popular vein of narrative makes it +very interesting and instructive to the general reader."--_New England +Home._ + +"This work will present Governor Larrabee in a new and novel light +before the public. Heretofore he has been known as the successful man of +affairs and business; as the earnest and zealous legislator; as the +persistent and vigorous executive; and now he comes as the laborious +student upon a great economic and practical question who has aptly and +clearly put his views into a book."--_Dubuque Herald._ + +"A thorough treatise by an able mind. The authorities quoted are the +best in print."--_Coming Nation._ + +"By far the best work on the popular side of the railroad +question."--_Gen. M. M. Trumbull in the Open Court._ + +"Gov. Larrabee's book will rank among the greatest productions of the +day on that question."--_Cedar Rapids Gazette._ + +"The book is the result of extraordinary observation, great reading and +careful study. * * * This element of completeness, of massing so much +information between the covers of a book of ordinary size, makes it +invaluable for reference. Of all the many books called out by the +agitation of the railroad question, this one will be oftenest referred +to, not so much for its opinions as for its stores of facts."-- +_Davenport Democrat._ + +"Governor Larrabee has always been a careful and conscientious student +of the railroad question, and in exposing the abuses to which the +railroad system has committed itself he renders a service from which the +public may derive great benefit."--_Good Roads._ + +"The high character and well known reputation of the author will create +a demand for this book, aside from the fact that it contains a vast +amount of information as well as sound reasoning on the railroad +question."--_American Journal of Politics._ + +"The author's attitude, while firm, is by no means a sinister or +fantastic one. He writes obviously from honest conviction, and he writes +with skill and force."--_Philadelphia Press._ + +"A temperate and instructive contribution to railroad +literature."--_Chicago Times._ + +"A mine of facts gathered by a man who has made a specialty of his +subject and who is evidently in earnest in his desire to lessen the +burdens of the American people."--_San Francisco Chronicle._ + +"In point of authenticity the book is absolutely to be relied +upon."--_St. Louis Post-Dispatch._ + +"Governor Larrabee came to Iowa before any railroad had reached the +Mississippi. Engaging in manufacturing, the inconveniences which he +suffered from want of transportation facilities instilled liberal +opinions concerning railroads. He made private donations to new roads +and he advocated public aid to them. As a legislator he introduced a +bill authorizing a 5 per cent. tax in aid of railroad construction. He +believed that the common law and competition could be relied upon to +correct abuses and to solve the rate problem. It has not been until +since these efforts were made that he has become convinced, as he says +in his preface, that 'where combination is possible competition is +impossible.' The object of this work is explained to be to set forth the +objections which lie against the management of railroads as private +property. They are used by their managers for speculative purposes. They +cannot perform their proper functions so long as they are used only for +the interests of their stockholders. In order to serve their real +purpose, 'they must become in fact what they are in theory, highways to +be controlled by the Government as thoroughly and effectively as the +common road, the turnpike and the ferry, the post-office and the +custom-house.'"--_Council Bluffs Nonpareil._ + + + ="THE RAILROAD QUESTION"= + + may be ordered through any bookseller, + or will be sent by mail to any address, + on receipt of price, by the publishers. + + The Schulte Publishing Company, + 334 DEARBORN STREET, + CHICAGO. + + + + + +-----------------------------------------------+ + | Transcriber's Note: | + | | + | Inconsistent hyphenation and spelling in the | + | original document have been preserved. | + | | + | Roman numeral page numbers in the Appendix | + | have been changed to Arabic numerals. | + | | + | Typographical errors corrected in the text: | + | | + | Page 13 Ackworth changed to Acworth | + | Page 25 Jerusalen changed to Jerusalem | + | Page 26 Brundusium changed to Brundisium | + | Page 27 af changed to of | + | Page 27 if changed to of | + | Page 29 Strasburg changed to Strasbourg | + | Page 37 Pittsburg changed to Pittsburgh | + | Page 45 subsides changed to subsidies | + | Page 65 Williamston changed to Williamstown | + | Page 70 Cabello changed to Caballo | + | Page 107 resolulution changed to resolution | + | Page 215 prejudiee changed to prejudice | + | Page 232 aquainted changed to acquainted | + | Page 236 omiting changed to omitting | + | Page 252 Bastile changed to Bastille | + | Page 266 possiple changed to possible | + | Page 342 Is changed to It | + | Page 346 their changed to there | + | Page 350 cammerce changed to commerce | + | Page 361 upan changed to upon | + | Page 368 iujustice changed to injustice | + | Page 373 Eurpean changed to European | + | Page 407 despatcher changed to dispatcher | + | Page 408 despatcher changed to dispatcher | + | Page 417 Sante changed to Santa | + | Page 422 aquire changed to acquire | + | Page 478 reasonaable changed to reasonable | + | Page 482 addres changed to address | + | Page 485 Potuguese changed to Portuguese | + +-----------------------------------------------+ + + + + + +End of Project Gutenberg's The Railroad Question, by William Larrabee + +*** END OF THIS PROJECT GUTENBERG EBOOK THE RAILROAD QUESTION *** + +***** This file should be named 29294.txt or 29294.zip ***** +This and all associated files of various formats will be found in: + https://www.gutenberg.org/2/9/2/9/29294/ + +Produced by Peter Vachuska, Barbara Kosker, Chuck Greif +and the Online Distributed Proofreading Team at +https://www.pgdp.net + + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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