;°. i S. º º § § | ſº § º § º: º & e º sº . . . . … ', . . * *.*.* & , º ºs As ºs-Sº, º ºs." #: º: º see - as . . . . . . . , , , , , , , ... º.º.º. º §§ ; : *s . .." - " - º "r" hºlº, **.*.*.*.** , *ś * . . . ; * * * * .; ; , sº ...º.º.º.º.º...'... • ‘. . . . > - w - º - º º - - - - * , ºqJIIIITIIITIE º E §ºor the H TRANSPORTATION Irº - avº LIBRARY \ * - ...” ...s.º.º. •. . . . . . . . " . . . *-*, - ~s.” . e. " . . . . : , , , *--...-- *--.. R P O R , -}. . . º, C & * f ; ; • . ~. . . . . . . . . E | - : * ~ *, * * : *. i_3 : ; 2. f... . . . . . . ;- - sº ºvº Pºzº, ſº . - . ... * * : . . .”. OF THE ºš.[ “’): Sºs. • * SENATE SELECT COMMITTEE - Čcº. c .x. é- - \\ t S * ~ : - ; - . t * \ *** ON INTERSTATE COMMERCE. (WITH APPENDIX.) FORTY-NINTH CONGRESS, FIRST SESSION.—SUBMITTED TO THE .. SENATE JANUARY 18, 1886. W.A.S EIINGTON: * GOVERNMENT PRINT ING OFFICE, 1886. TABLE OF CONTENTs. 51 Page. 1. Introductory -------------------------------------------------------------- - 1 - Plan of Work Adopted - - - - - - - • - - - - - - - e - - - - - - - - - - - - - - - - - e s = • = • * ~ * * * *' - - - - - 2 Importance of the Question --------------------------------------------- ? 2. The Railroad System of the United States—Its Evolution and Extent—Its Im- - portance in Commercial Transactions-------------------------------- 3 The Results of Railroad Building --------------------------------v- - - - - - - - 6 The Progress of Railroad Construction.---------------------------------. 7 Magnitude of the Railway Service---------------- ----------------------- 10 The Railroad Statistics of 1884 ------------. --------------- * * * * * * * * * * * * * * 10 3. The Internal Commerce of the United States—Illustrations of its Importance - and Proportions---------------------------------- '• * * * * * * * * • - - - - - - - - - 14 The Eastbound Traffic of the Trunk Lines ---------. --------- - - - - - - - ----- 17 The Westbound Traffic of the Trunk Lines------------------...----------- 20 The Cotton Crop of the United States.----------------------------------. 21 The Relations of Internal and External Commerce to Agriculture. ----.... 25 4. The Power of Congress to Regulate Commerce—A Review of the Declarations of the United States Supreme Court on the Subject------------------- 28 The Definition of Commerce -----------. ---------------------------...- ---. 30 What Interstate Commerce Is .------------------------------------------ 32 What is Meant by Regulation. ---- --------------------------------------- 38 The Propositions Established ---------------...------- ------------- - - - - - - - 39 The Legal Status of the Common Carrier-...------------------------------. 39 5. The Relations of the Railroad to the Community and to the Governmental Authority—The Obligations Imposed by its Public Nature and its Ex- ercise of a Public Function --------------...-------* - - - - - - - - - - - - - - - - - - - 40 Some of the Difficulties of Effective State Regulation.-----------...------ 43. Irresponsible Railroad Management ------------------------------ - - - - - - -- 45 The Protection of Stockholders ----------- - - - - - - - - - - - - - - - - - - - - - - - - tº º ºs ºs tº dº º º 47 The Construction of Unnecessary Railroads ------------------------------ 48 - Fictitious Capitalization, or Stock Watering - - - - - - - - - - * * * * * * * * * * * * * * * * * * * 6. The Various Methods of Railroad Regulation ---...----------------... '• • • = • - - - 52 7. The Course of Railroad Legislation in England–Workings of the English Com- mission—The Present Status of Affairs. ----...----. ------------------- 54 8. Railroad Legislation in the United States—Summary of the Provisions of the State Statutes—The Work of the State Commissions ................. 63 The State Railroad Commissions ----------------------- ----...---- ------- 64 List of the Commissioners-------------- • - - - - - - - - - - - - - - - - - - - - * tº º tº gº º tº gº º º sº tº 55 Massachusetts - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 66 Illinois --------------------------------------------- • * * * * * * * * * * * * * * * ~ * * = 71 New York--------------------------------------------------------------- 74 Georgia ----------------------------------------------------------------- 78 Alabama ---------------------------------------------------------------- 83 IV TABLE OF CONTENTS. Page. 8. Railroad Legislation in the United States, &c.—Continued. Arizona and Arkansas--------------------------------------- - - - - - - - - - - - - 85 California -------------------------------------------------------------- 86 . Colorado.---- ---------------------------------------------------------- 91 Connecticut ------------------ w----------------------------------------- 93 Dakota ------------------------------------------------------ - - - - - - - - - - - 95 Delaware --------------------------------------------------------------- 97 Florida, Idaho, and Indiana --------------------------------------------- 98 Iowa ------------------------------------------------------------------- 98 Kansas ----------------------------------------------------------------- 102 Kentucky, Louisiana, and Maine ---------------------------------------- 107 Maryland, Michigan, and Minnesota. ------------------------------------- 109 Mississippi------------------------------ tº º sº * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 111 Missouri ---------------------------------------------------------------- 112 Montana and Nebraska-------------------------------------------------- 113 Nevada ----------------------------------------------------------------- 115 New Hampshire.--------------------------------------------------------- 116 New Mexico, New Jersey, and North Carolina---------------------...----- 118 Ohio and Oregon.-------------------------------------------------------- 119 Pennsylvania ----------------------------------------------------------- 122 Rhode Island ---------------------------,- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 124 South Carolina --------------------------------------------------------- 125 Tennessee ------------------------------------------------------------. 127 Texas ------------------------------------------------------------------ 131 Utah, Vermont, and Virginia-------------------------------------------- 132 Washington Territory and West Virginia -------------------------------- 134 Wisconsin -------------------------------------------------------------- 135 Wyoming--------------------------------------- ----------------------- 137 9. The Comparative Volume of State and Interstate Traffic—Returns from Lead- ing Railroads showing their Business thus Divided.------------------ 137 10. Competition Between Water-Ways and Railroads—Water Routes the Most lºffective Regulators of Railway Charges. ---------------------------. 167 The Effect of Water Competition on Railway Charges---. .----. ---------- 170 The Erie Canal --------------------------------------------------------- 170 The Mississippi River and Its Tributaries ---. -- - - - - - - - - - - - - - - - - - - - - - - - - - - 173 The Proposed Hennepin Canal -----------------------------------------. 173 The Emancipation of the Waters ---------------------. ------------------ 174 11. The Necessity of National Regulation of Interstate Commerce- - - - - - - - - - - - - - - 175 12. The Causes of Complaint Against the Railroad System. ----------------- - - - 180 13. Railroad Rates—The Principles Upon Which they Should be Established, and the Limitations Within Which Discrimination May be Justifiable .... 182 Charging “What the Traffic Will Bear” - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 184 The Classification of Freights-------------------------------------------- 185 Uniformity of Classification --------------------------------------------- 187 Discriminations Between Persons. -- - - - - - * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 188 Concessions to Large Shippers------------------------------------------- 190 Discriminations Between Places----------------------------------------. 191 The Fixing of Rates By Legislation Impracticable - - - - - - - - - - - - - - - - - - - - - - - 194 Rates on Long and Short Hauls ----------------------------------------. 195 14. Publicity the Best Remedy for Unjust Discrimination—The Posting of Rates Under the Direction of a Commission Recommended. - - - - - - - - - - - - - - - - - 198 Cases that Publicity Would Uncover ------------------------------------ 199 What the Posting of Rates Would Mean - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 200 The Question of Pooling------------------------------------------------- 200 The Prohibition of Changes Without Notice. ----...----------...---...-----* 201 TABLE OF CONTENTS. - V. 14. Publicity the Best Remedy for Unjust Discrimination, &c.—Continued. Page. Difficulties in the Way of Enforcing Publicity--...------------------------- 202 A System of Licenses ---...----------------- _* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 205 What Rates Should Be Posted.-----------...----, -----------------------. 206 15. A National Commission—Its Establishmgut Recommended for the Enforce- ment of the Legislation Proposed.----------------------------------- 208 16. The Committee's Bill ----------------------------------------------------- 215. [NOTE.-An index to the Report and to the Appendix will be found at the conclu- sion of this volume. The testimony taken by the Committee is printed in a separate volume.] * -- 49TH CONGRESS, } • SENATE. REPORT 1st Session. { No. 46. . IN THE SENATE OF TEIE UNITED STATES. JANUARY 18, 1886.-Ordered to be printed. Mr. CULLOM, from the Committee on Interstate Commerce, submitted the following R. E POR T : [To accompany bill S. 1093.j The select committee appointed to investigate and report upon the subject of the regulation of the transportation of freights and passengers between the Several States by railroad and water routes respectfully submit -the following report: The committee was appointed by the President of the Senate March 21, 1885, under authority of a resolution adopted by the Senate of the United States March 17, 1885, and reading as follows: JResolved, That a select committee of five Senators be appointed to investigate and report upon the subject of the regulation of the transportation by railroad and water routes in connection or in competition with.said railroads of freights and passengers between the several States, with authority to sit during the recess of Congress, and with power to summon witnesses and to do whatever is necessary for a full examina- tion of the subject, and report to the Senate on or before the second Monday of De- cember next. Said committee shall have power to appoint a clerk and Stenographer, and the expenses of such investigation shall be paid from the appropriation for ex- penses of inquiries and investigations ordered by the Senate. The committee began its work impressed with the importance of the duty with which it had been charged, and with each step taken in prosecuting the inquiry directed has realized more fully how serious were the obstacles to be overcome in attempting to faithfully carry Out its instructions. The field opened up for investigation was So exten- sive, the social, economic, legal, and other questions involved SO Com- plicated, and the agricultural, commercial, industrial, and Corporate interests affected so vast and varied as to require for a thorough and satisfactory examination into technical details more time and labor than could be given, with the facilities at command, during the summer recess of the Senate. --- As the committee was unable to avail itself of the assistance of ex- perts in the different branches of the inquiry, being restricted to the employment of a single clerk, the investigation could not be made as comprehensive and searching in the matter of collecting technical information and compiling detailed statistics as the importance of the Subject deserved. Under these circumstances the conclusion Was reached that the committee would best serve the public interest and carry out the purpose of the resolution under which it was appointed by devoting its attention mainly to the consideration of the question whether any legislation to regulate the management of the transporta: tion lines of the country is advisable, and, if so, what the scope and character of that legislation should be. This is the question that, awaits the decision of Congress. * * * * * * 2 . . INTERSTATE COMMERCE. The committee has endeavored to obtain information that would be of practical value in the decision of this question, and presents the re- sults of its work, confidently believing that it will be of service to those who are seeking the solution of what is known as “the railroad prob- lem.” - - - i PLAN OF WORK ADOPTED. *: As it was understood to be the desire of the Senate that the com- mittee should endeavor to ascertain what causes of complaint existed against the corporations engaged in transportation between the Several States and the opinions of the people as to what remedies could be applied by Congress, arrangements were made to visit Some of the leading commercial centers of the United States and take testimony. Public notice was given of these hearings, and efforts were made, by correspondence and otherwise, to secure the attendance of those most competent to speak as the representatives of every interest and of every shade of opinion. With the view of suggesting subjects for discussion at these hearings and of iudicating to those invited to appear the line of examination to be pursued and to allow time for preparation, the committee issued a circular, containing a series of interrogatories, calling . attention to the questions that have been most prominently agitated of late years in connection with efforts to control the railroad corporations by legislation. . At the same time an extensive correspondence, reach- ing into all parts of the United States, was carried on, and written statements were solicited from localities which the committee found it- self unable to visit, as well as from persons who could not appear at the public hearings. - - - In the course of this correspondence letters and circulars were sent to the railroad commissioners of the several States, to the boards of tº ade, chambers of commerce, and the numerous other commercial and business exchanges and associations of every character throughout the country, to the president of each State board of agriculture or State agricultural society, to the master of each State grange of the Patrons of Husbandry in the United States, to the secretary of the Farmers' Al- liance in each State and Territory where organized, to railroad managers, and generally to gentlemen who were known to have given special at- tention to the transportation question in any of its different phases. Especial efforts were made to reach those whose opinions were most valuable as the representatives of the producing interests or by reason of their study of the subject or practical experience; but the committee, while gratified at the success which attended these efforts, is not dis- posed to claim that all were reached who should have been heard in an investigation covering so broad a field. IMPORTANCE OF THE QUESTION. The testimony taken and the statements received by the committee in response to this correspondence are here with submitted as fairly representing the best thought of the American people upon the ques- tions involved in the regulation of commerce among the States. These statements are a very valuable contribution to the literature of this subject and give the strongest evidence of its position in the public mind as one of the most important and controlling questions now before the country. The interest every where manifested in its investigation has convinced the committee that no general question of governmental policy occupies at this time so prominent a place in the thoughts of the ped INTERSTATE COMMERCE. 3 ple as that of controlling the steady growth and evtending influence of cor. porate power and of regulating its relations to the public ; and as no cor- jorations are more conspicuously before the public eye, and as there are none whose operations so directly affect every citizen in the daily pursuit of his business or avocation as the corporations engaged in transportation, they naturally receive the most consideration in this Connection. af That the industrial and commercial welfare of the country may be materially affected by the wisdom or unwisdom of the policy which may be pursued by the governmental authority in the determination and enforcement of the respective rights and obligations of the citizen and the railroad will more clearly appear from a consideration of the facts hereinafter advanced as to the extent and far-reaching influence of the railroad system of the United States and as to the commanding proportions attained by the internal commerce dependent upon that system for its existence. - TELE RAILROAD SYSTEM OF THE UNITED STATES-ITS EvOLUTION AND EXTENT—ITS IMPORTANCE IN COM- \! { {{{.. [...AL TRANSACTIONS. . . _* The present century has witnessed the introduction of new forces in every department of civilized life, but none have brought about more marvelous changes than has the railroad as an aid to and an instru. mentality of commerce. The commercial, social, and political relations of the nations have been revolutionized almost within the last fifty years by the development of improved means of communication and transportation. Previous to that period each nation lived almost wholly within itself. There was little intercommunication, and ex- changes of products were limited to an extent that can to-day scarcely be realized. The commerce of the World was for centuries conducted almost exclusively upon the Sea, and its proportions were insignificant in comparison with the foreign trade of any leading nation to-day. By the construction of turnpikes and canals and the development of river navigation international trade gradually began to grow up, but barri- ers existed at every frontier; the transmission of intelligence was uncer. tain and expensive; through routes were almost unknown; long-distance transportation was impossible except by water, and there was actually but little communication or trading between different nations or even between distant parts of the same country. All this has wonderfully changed within the past fifty years. The change began about the beginning of the present century with the rev- olution of the shipping business occasioned by the use of steam, and since the successful adaptation of this force to ocean carriers became assured, about forty years ago, Sailing vessels have been engaged in an unequal contest for trade with those propelled by steaum. The latter now comprise at least 25 per cent. of the world’s tonnage, which is esti- mated to have increased from 5,000,000 in 1830 to 20,000,000 in 1880, While their carrying capacity is relatively greater because of their su- perior speed. Fifty years ago the mails were irregular and infrequent, While the charges were almost prohibitory. Commerce received a new impetus by the introduction of postage-stamps in 1840 and the sweep. ing reduction made by England at that time in postal rates, which were cut down to one-tenth of the previous charges. Within the next ten years the leading countries of Europe and the United States adopted the policy of cheap postage and greatly increased the efficiency of their postal service. There has since been a steady improvement and ex: 4 INTERSTATE COMMTRCIF. tension of the system throughout the world, with constant reductions in rates, until every civilized country has united with the Postal Union organized ten years ago; the poorest citizen can afford to transmit a let- ter to any part of the globe, and the number of letters and packages distributed by mail annually is 10,000,000,000. During the same period another revolution in the transmission of intelligence and methods of business has been effected by the invention of the telegraph, which dates from 1837, the first American line being constructed in 1844 by the aid of the General Government. The extent of this change is indicated by the statistics, which show that there are now in operation 600,000 miles of line, comprising 1,600,000 miles of wire. . But still more marvelous have been the changes brought about in the commercial, political, and social relations of nations, communities, and individuals by the improved facilities for transportation and inter- course afforded by the railroad, all within the present century, and mainly within the last thirty-five years. Indeed, the changes which have been alluded to have consolidated independent communities and sovereign states into nations, and their tendency has been in the direc- tion of concentration and Consolidation in political organization as well as in every form of commercial enterprise, industry, and production. And with this changed condition of affairs in the commercial world come new questions of the greatest importance for consideration by those upon whom the people rely for legislation in the public interest. IRailroads are the arteries through which flows the life-blood of the world’s commerce; and to promote the interests of commerce is their manifest destiny and the purpose they are especially fitted to serve. Governor Horatio Seymour says: “The chief element in the prosperity of every State or nation is the economy of transportation of persons and property. It is the marked fact in the difference between civili- zation and barbarism.” In the settlement of this country the “star of empire” closely followed in its continuous Westward march the lines of the great internal water courses, the first available means of inter- communication. The advancing tide of civilization swept by and around vast regions remote from the great rivers, regions in which prosperous States have since grown up; and it may be said of large portions of our imperial Western domain, which owe their development to the build- ing of railroads, that the invention of the locomotive by George Stephen- son in 1830 marked the beginning of “the difference between civiliza- tion and barbarism.” The railroad, as an improved means of communi- cation and transportation, has produced indescribable changes in all the manifold transactions of every-day life which go to make up what is called commerce. Successful commerce brings prosperity, which in turn makes possible the cultivation and development of the graces and attributes of the highest civilization, and the first condition precedent to successful commerce is “the economy of transportation” which the railroad has afforded. * The railroad system of the United States is the marvel of the world, and its expansion has been so rapid and unexpected that it has been impossible during the progress of its wonderful development to deter- mine With exactness or to regulate with thoughtful consideration its proper relations to the citizen or to the governmental authority. At the beginning of the present century the transportation of commodities of exchange for any considerable distance within the United States, ex. cept by Water, Was unknown, and passenger journeys were attended with hardship and difficulty. Then came the era of turnpike roads, Which in time greatly facilitated through travel and reduced the cost INTERSTATE COMMERCE. 5. of transportation overland. This system was quite thoroughly devel- oped in Pennsylvania, New York, and some of the New England States, * with such satisfactory results as to inaugurate a strong movement in favor of a national system of roads constructed with the aid of the General Government. All that was accomplished by Congress in this direction, however, was the partial construction of the Cumberland Road, the “National Pike,” projected from Washington to the Missis- sippi. The next marked improvement in transportation facilities came with the construction of Canals. This system of internal improvements •was inaugurated by the State of New York, which owes its commercial Supremacy very largely to the construction of the Erie Canal. Work upon this enterprise began as early as 1808, and the work of construc- tion began in 1817, and it was finally completed in 1825, at a cost of $5,700,000. Its successful operation led to the construction of other canals, reduced the cost of transportation very greatly, and equally in- creased Commercial intercourse between the Eastern seaboard and the interior. Then came the railroad and the problem of overland transportation Was Solved when the locomotive was invented. Those first constructed were tramways operated by horse-power, the use of steam dating from 1831. The tables submitted by Mr. Henry V. Poor (Testimony, p. 221) show at a glance the marvelous extension of the railroad system of the United States from what now seems the insignificant beginning of 23 miles in operation in 1830 to the more than 125,000 miles now in opera. tion, and Constituting over 45 per cent. of the total railway mileage of the world. **, The conditions and circumstancesthat environed the earlier beginnings of the development of the railroad system of the United States were such that it is easy to understand why no comprehensive and uniform plan, of regulation was then thought of or adopted. The question then was how to get railroads, not how to control them. Had the system grown up under such systematic regulations as many now believe would have proved advantageous, the commercial relations of the railroad to the com- munity would doubtless have been adjusted more satisfactorily, but, on the other hand, it cannot be doubted that the transportation facilities of the Country could not as rapidly have reached their present magnificent proportions under any other conditions than those which have so success- fully stimulated their growth and expansion. The course of events has been inevitable. It was a matter of necessity in a new country with unde- Veloped resources and struggling with other burdens which fully taxed its capacity that the work of railroad construction should be left to pri. Vate enterprise. Such a policy was also in accordauce with the genius and Spirit of our institutions and Government, and the rapid evolution of the System could have been secured only as it was secured—by offering every encouragement to the investment of private capital and every temptation to speculation. A method of uniform regulation adopted at the outset might have prevented a needless waste of capital and might have obviated or mitigated existing evils, but it would assuredly have retarded the building up of the country in comparison with the progress attained under freedom from legislative restrictions. If a mistaken policy was adopted in the beginning, it is questionable whether its resulting general advantages do not outweigh its injurious effects. Indeed, it may be said that in a certain sense the evils com- plained of to-day are in the nature of a mortgage handed down for pay- ment to the present generation as its share of the price paid for making 6 INTERSTATE COMMERCE. habitable and building up our vast domain at a rate of progress never equaled in any other country. Treedom from legislative restrictions has facilitated our grand achievements in this direction, and it is proper that the very important part played by the rapid increase of trans- portation facilitates in hastening the progress and advancing the pros- perity of the country should be given due weight by those who now enjoy and profit by the results, as at least a partial offset to the inequal- ities with which they may be obliged to contend. . It by no means follows, however, that regulation is not now needed, or that the policy which was adopted in the beginning as a matter of necessity, and has served a useful purpose, is still the one best adapted to the present requirements of the country and should be permanently continued. That such is not the case it will be.the purpose of this re- port to show ; but attention has been invited to the advantages which have followed the policy of non-interference so long pursued in order to emphasize the necessity of exercising the utmost caution in So shaping the legislation now required by the changed condition of affairs as not to check the future progress of the transportation interests of the coun- try, which have certainly not yet reached the zenith of their development. TEIE RESULTS OF TRAILROAD 'IBUILDING-. The first railroads were modest ventures, designed only to accommo- date a local constituency. As their usefulness became recognized short lines were constructed between points where the need of better trans- portation facilities was most strongly felt. As these independent lines increased in number they began to afford opportunities for continuous travel and through-traffic, which developed so rapidly that it was soon found to be worth looking after. The struggle to construct through lines led to a uniting of their forces by those already in the field and to a modification of the prohibitory tolls first charged, which had been based largely upon the rates previously established for local traffic by wagon conveyance over the common highway. - - I'rom the beginning consolidations have been a continuous and con- spicuous feature in the history of railroad construction. The tendency to coinsolidation and combination has been equally marked in every country where railroads have been built, and has apparently grown stronger from year to year, and has invariably proved too powerful for legislative control. Consolidations between continuous lines first made through traffic possible, and the immediate result of the improved facilities of intercourse afforded by the union of such lines under one management was a rapid increase of traffic, the extension of estab- lished branches of trade, and the development of new industries. At the outset the railroads were obliged to depend almost entirely upon local traffic for their support, because they virtually had no other. It soon became evident that, after a road had been built and equipped, the question of profits on the investment depended as much upon the volume of business carried as upon the rates charged. A Certain amount of business could be depended on without much regard to What the rates were so long as they did not exceed those previously charged for wagon conveyance, but the necessary expenses of operation would not be appreciably increased by handling a much larger Volume of . traffic. This led to the making of rates with a view to developing business along the lines of the respective roads, and to facilitate the movement of products which had not been previously transported be- INTERSTATE COMMERCE. gº 7 'cause of prohibitory charges. As the corporations gained strength by successive consolidations they began to reach out in all directions after traffic and soon came in competition with each other. Then the policy of developing business by favorable rates was extended to long-dist- ance transportation, and the increase in traffic and in the business of the country has since been unparalleled. By constant reductions in rates and improvements in facilities the railroads of the United States have enormously increased the business of the country, and have there- by performed a public service the beneficent results of which are indi- cated in the marvelous progress made Within the last thirty years in commercial and industrial pursuits. -- As the railroads have made possible and facilitated the exchange of products throughout the whole of our vast territory, the natural re- sources of the nation have been developed and have become available, and its productive power has been wonderfully augmented. Through the agency of the railroad the vast internal commerce of the country has been enabled to brush aside the barriers formerly interposed by the limitations of distance between the sources of supply and demand. The producer and the consumer, however widely separated in fact, are practically being made next-door neighbors, and this is becoming true throughout the world as well as throughout the United States. The produets of the Country are to a very considerable extent dependent upon the railroads for the means of transportation, which makes them marketable, and the railroad system, as a whole, directly or indirectly affects and enters into every business interest, while its opérations ex- tend into every portion of the Union. The policy which has been pursued has given us the most efficient railway service and the lowest rates known in the world; but its recog- nized benefits have been attained at the cost of the most unwarranted discriminations, and its effect has been to build up the strong at the expense of the Weak, to give the large dealer an advantage over the Small trader, to make capital Count for more than individual credit and enterprise, to concentrate business at great commercial centers, to ne- cessitate Combinations and aggregations of capital, to foster monopoly, to encourage the growth and extend the influence of corporate power, and to throw the control of the commerce of the country more and more into the hands of the few. These results are so familiar as every-day facts that they scarcely attract our attention. The wonderful transformation in all economical conditions to be attributed to the use of the railroad is not yet at an end, and the questions presented as a result of these changes demand the most earnest investigation and the most thoughtful consideration. It only remains to add to what has already been said the facts here- With Submitted concerning the progress of railroad construction and the magnitude of the railway service to illustrate the vast extent of the railroad interests. - THE PROGRESS OF RAILROAD CONSTRUCTION. The influence of railroad construction in advancing the material pros- perity of the Country is illustrated by the statistics. On railroads con- tained in the reports of the Tenth Census (vol. 4). It is only necessary to give here a few general statements condensed from that report. The aggregate number of miles of road built in the United States from. 8 º, INTERSTATE COMMERCf. 1830 up to 1880 was 84,964.65, and the number and percentage of this. aggregate built in each decade was (page 290): - • Per cent. Decade. Miles built. of ag- gregate. ;: • * * * * * * * * * * * * * * * * * * * * * * * * * = • = • * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ~ * 2, 264.67 2.6 1840-1849*--------------------------------------------------------------------. 5,015. 77 5. 7 1830-1859°. ---------------------, -, -----------------------. ------------------- 20, 109.03 . 22, 4) 1800–1809".------------------------------------------------------------------ 16,000, 36 18. 3 1870–1879*. -----------------------------------------------------. - - - - - - - - - - - - - - 41, 454, 22 50. 5 • * Inclusive. The increase in population during the same period is shown as fol- lows on page 291: * Per cent. Year. Population. of in- g CI’Cºl S0. 1830-------------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 12, 860, 702 |...-- - - - - - - 1840. -------------------------------------------------------------------------. 17,063, 353 32.7 1850. -------------------------------------------------------------------------. 23, 191, 876 35, 9 1860. ----------------------------,- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 31,443, 321 35. 5 1870. -------------------------------------------------------------------------- 38, 558, 371 22.6 1880. -------------------------------------------------------------------------. 50, 155, 783 30. 1 In commenting on the detailed tables given it is stated in the report (page 291) that “construction steadily increased during the first three decades, while in the fourth it did not increase at the same rate as in the previous one, as 22.9 per cent. of the aggregate mileage had been built in the former and only 18.3 per cent. in the latter. The cause . for this proportionate decline must be attributed to the effects of the civil War. The steady current and proportionate rate of increase, as exhibited during the years preceding 1861, was then broken,” and “from the construction of 1,499.72 miles in 1860 it fell to 1,015.85 in 1861, to 720 in 1862, and to 573.90 in 1863; recovered to 947.40 in 1864, and fell off again to 818.72 miles in 1865. * * * From 1866 con- struction received a new impetus, and ſrom the 1,403.58 miles built in that year it rose steadily in every succeeding year up and including 1872, when it had reached the climax with 7,449.04 miles, the highest number built in any year from 1830 to 1880. In 1873 another de- cline from previous proportionate increase commenced, and not until 1879 did construction recover its former proportions of increase. In that year the Territories and Pacific and Western States came in as a main factor with 2,057.93 miles, or 41 per cent. of all mileage built in the United States during that year, and in the subsequent six months with 1,748.71 miles, or nearly 62 per cent. of all road built and com. pleted during that period. The increase in construction of roads (lur- ing the last decade was unprecedentedly rapid. By examining Table B it will be observed that 50.5 per cent. of all the mileage completed up to December 31, 1879, was built during the fifth decade; also that the New England States built near 31 per cent., the Middle States 41 per cent, the Southern States near 30 per cent., the Central Western States near 60 per cent., Louisiana and Arkansas over 61 per cent., and the Territories, Pacific, and Western trans Mississippi States near 75 per cent. of all their mileage, respectively, during the same decade. INTERSTATE COMMERCE. 9 The latter group, only commencing construction in the third decade by building one-half of one per cent. of all the mileage constructed in these ten years (see Table B), built in the fourth decade near 21 per cent. of the national aggregate constructed and near 24 per cent. in the fifth decade, and during the first six months in 1880 it built near 62 per cent. of all mileage therein constructed. This section of country, which A had not one mile of road previous to 1856, when already the others aggregated 20,000 miles, was found at the end of 1879 to hold fourth rank, and on June 30, 1880, the third. In the short space of time—Say twenty-five years—this section advanced from 48.19 miles in 1856 to 15,222.43 in 1880.” - e An instructive comparison between the increase in miles of road built and completed and the population in the United States during the five decades ending June 30, 1880, is made in the following table, presented on p. 304 of the same report: Miles of road. Population. Built in f Nºat Per cent of Per cent. O €L1(1 O ©I CCInt. O Decade. each Decade. Increase. º aggregate. each de- aggregate. decade. ggreg , cade. Aggregate...... 87,801.42 100.0 Aggregate.----|------------ 37,289,763 100. 0 Jan. 1, 1830. . . . . . . . |-------|--~~~~ June 30, 1830. -- - - - *12, 866,020 | . . . . . . ; ; ; ) - - - - - - - - - - - Jan. 1, 1840 ---. ----. 2, 264.67 2.6 || June 30, 1840. ----- f17,069,453 || 4, 203, 433 11.3 Jan. 1, 1850 - - - - - - - - - 5, 045. 77 5. 7 || June 30, 1850. ----. 23, 191, 876 6, 122,423 16.4 Jan. 1, 1860 - - - - - - - -. 20, 109.63 22.9 || June 30, 1860 - - - - - - 31,443, 321 8, 251,445 22. I Jan. 1, 1870 - - - - - - - -. 16,090.36 18.3 || June 30, 1870. ----. 38, 558, 371 7, 115,050 10. 1 June 30, 1880 .... -- 44; 290.99 50. 5 || June 30, 1880. --... 50, 155,783 11, 597, 412 31. 1 * The mileage built was reported to December 31, inclusive, in each respective year (see Table A); the population is that of the census day in the respective census year (June 30). In the last decade the mileage built in the six months up to June 30, 1880, is included: f Including persons on public ships in the service of the United States. As is said in the report : - The preceding table shows the increase in railroad construction in the United States, lom the grading of the first mile, in 1830, to June 30, 1880, was 87,801.42 miles of completed road, while the increase of the population during the same period was from 12,866,020 on June 30, 1830, to 50,155,783 on the same date in 1880; a total increase of 37,289,763 since construction of roads commenced. Taking either of these aggregates of increase as a basis for comparison, there is found in the first decade the proportion of 2.6 per cent. of the aggregate of road to 11.3 per cent. of the aggregate increase of population; in the second, 5.7 per cent. of road to 16.4 of population; in the third, 22.9 of road to 22.1 of population ; in the fourth, 18.3 of road to 19.1 of population ; and in the fifth, 50.5 of road to 31.1 of population. It will further be observed by Table I that in the first two decades the proportions of mileage built to the aggregate in 1880 was considerably below the relative proportion of increase made in population; that in the third decade it was equal with it, and declined somewhat below that of population in the fourth ; and that in the fifth and last decade it had passed and was far in advance of the proportion of increase in population. This decade shows over 50 per cent. Of all the road constructed to only 31 per cent. of the aggregate increase in population since 1830. Table I also shows that in 1860 the additions to both roads and population were nearly equal in proportion ; that is, 22.9 per cent. of the aggregate road in 1880 was built from 1850 to 1860, and 22.1 per cent. of the total increase in population from 1830 to 1880 was added during the same decade; also that during the ten subsequent years both held nearly the same ratio. From this state of affairs it could have been pre- sumned that in 1860 the mileage of roads had been found nearly sufficient for the re- quirements of the population as it then existed, and that additions were only made in proportion to the increase in population (the proportions at the end of 1870 being about the same as in 1860), were it not for the intervention of the war, the effects of which make it impossible to take the period mentioned as a true basis for judging re- / 10 INTERSTATE COMMERCE. quirements. But assuming that in 1860 28,919.79 miles of road, the aggregate then built, had been sufficient for the 31,545,321 of people, and in 1870 49,168.33 miles of road for 38,558,371 people, then the question naturally arises, Why were these immense additions made in the decade from 1870 to 188U 3 Either the mileage in the previous decades had not been sufficient, or other causes must have interfered and caused this unprecedented construction. In 1880 there are 87,801.42 miles of road to 50,155,783 people, which is an increase from 1 mile of road to 784 people in 1870 to one mile of road for 571 people in 1880. Undoubtedly existing necessities for additional roads in Some sections did call for considerable construction; but when each and all of the six groups are compared, then construction will be found which appears as not hav- ing been compulsory or caused by actual necessities; and it is probable that many miles were built with no expectations of immediate receipts from traffic, and with a view to future prospects. - During this period the average number of the population to 1 mile of road completed by decades has been as follows: In 1840, 6,194; in 1850, 2,705; in 1860, 1,087; in 1870, 784; and in 1880, 571. — ` It is also shown that in the census year there were for each mile of road completed in the United States 23.8 square miles of area, a popula- tion of 571, and 3,243 acres of improved land; and that the average value of products for each mile of road aggregated $88,347, distributed as follows: Farm, $25,209; manufactories, $16,155; mines, $1,498; quarries, $209; petroleum wells, $276. MAGNITUDE OF THE RAILWAY SERVICE. Interesting illustrations of the magnitude of the railway service are given in the statement of Mr. Edward Atkinson (Testimony, p. 318), and in the very complete statistics furnished the committee by Mr. Henry W. Poor (Testimony, p. 221), and by Mr. H. R. Hobart (Testimony, p. 675). Mr. Atkinson estimates that the railway property of the country con- stitutes one-fifth part of the accumulated capital of the country to-day. There are 650,000 people employed in that service in the mere mechan- ism of the distribution of products, without reference to those employed in construction. These railways move about 400,000,000 tons a year, half of which is food and fuel, and he argues that the railroad has re- duced the struggle for food and fuel in greater measure than any other instrumentality, because it has virtually annihilated distance and brought the movement of a year’s supply of food for the mechanic in Massachusetts, a distance of 1,000 miles, down to the measure of one day’s labor, “If a mechanic will give up one holiday a year,” he says, “he is placed alongside of the prairie, and distance is eliminated from his condition.” - Since Mr. Poor appeared before the committee and submitted the tables printed with his testimony the returns of the companies for the year 1884 have been completed, and the edition of his “Railroad Man- ual” reviewing the operations of that year has been published, from which the following liberal extracts are here reproduced for convenience of reference, because they contain valuable detailed information as to the latest ascertained results of the business of the entire railroad sys- tem of the United States: The railroad statistics of 1884. The total number of miles of railroad in the United States at the close of 1884 was 125,379, of which 3,977 miles were constructed during the year, the rate of increase being 3.17 per cent. The number of miles making returns of their share capital and ſunded and floating debts equaled 125,152, against 120,552 for 1883, the increase being 4,598, the rate of increase being 3.8 per cent. . INTERSTATE COMMERCE. 1 The share capital of the mileage in operation in 1884 equaled $3,762,616,686, against $3,708,060,583 in 1883, the increase equaling $54,556,103, the rate of increase being about 1.4 per cent. The funded debts of all the lines at the close of the year aggregated $3,669,115,772, a sum $168,235,858 in excess of the total of 1883 ($3,500,879,914), an increase of nearly 5 per cent. %. other forms of indebtedness of the several companies at the close of the year equaled $241,666,596, against $268,925,285 for 1883, the decrease being $24,258,689. The total share capital and indebtedness of all kinds of all the roads making returns equaled at the close of the year $7,676,399,054, a net increase in the year of $198,533,- 272 over the total of 1883 ($7,477,865,782), the rate of increase for the year being about 2.6 per cent. * The cost per mile of all the roads making returns as measured by the amount of their stocks and indebtedness equaled very nearly $61,400, against $61,800 for 1883. The gross earnings or receipts of all the lines from which returns were received for the year equaled $770,684,908, of which $206,790,701 were received from transporta- tion of passengers; $502,869,910 from transportation of freight; $7,464,099 by lines the returns of which were so incomplete as to preclude their use in the tables giving the general results—the sources of income, amount of tonnage moved, &c.—and $53,749,997 from the transportation of mails and express matter, from investments, and from the sales of land applicable to the payment of interest or dividends. * * * - # # % * . % The gross earnings of all the lines for the year ending December 31, 1883, equaled $823,772,924, exceeding those for 1884 by $53,088,016, the falling off for the year equal- ing 6.4 per cent. The earnings in 1883 from the transportation of passengers equaled $206,835,456; from freight, $544,509,831; from lines the operation of which, from the incompleteness of their returns, could not be included in these general tables, $16,660,047; from transportation of mail and express matter, from investments, and tº the sale of lands applicable to interest or dividends, $57,667,590, against $53,749,997 or 1884. The earnings per mile from which full returns were received in 1884 equaled $6,663, against $7,461 for 1883, the decrease equaling $798 per mile. -- The net earnings of all the lines for 1884 equaled $268,106,258, against $293,367,285 for 1883, the falling off equaling $25,261,027, the rate of decrease being about 9 per Cent. * * The amount of interest paid in 1884 equaled $176,694,302, against $173,139,064 in 1883, the increase being $3,555,238, the rate of increase equaling more than 2 per Cent. The amount paid in dividends in 1884 equaled $93,244,835, against $102,052,548 in 1883, the falling off equaling $8,807,713, the rate of decrease being about 8.8 per Cent. & - *** The number of persons transported in 1884 by all the lines was 334,814,529, against 312,685,641 for 1883, the increase for the year being 22,127,888, the rate of increase equaling 7.8 per cent. The number of passengers carried one mile in 1884 equaled 8,778,581,061, against 8,541,309,674 for 1883, the increase equaling 237,271, persons carried one mile, the rate of increase equaling very nearly 3 per cent. - The distance traveled by each passenger in 1884 equaled 26.24 miles; in 1883, 27.32 miles. The amount received per passenger per mile equaled 2.356 cents in 1884, against 2,422 cents in 1883. Had the passenger rates for 1883 been maintained for 1884, the earnings from this source would have equaled $212,617,233, a sum $5,826,532 gréater than that received. g - The number of tors Óf freight transported on our railroads in 1884 equaled 390,- 074,749, against 400,453,439 tons in 1883, the falling off equaling 10,378,690 tons, the rate of decrease being about 2% per cent. The value of the tonnage moved in 1884, estimating its value at $25 the ton, equaled $9,751,868,725. . . The number of tons transported one mille in 1884 equaled 44,725,207,677, against 44,064,923,445 tons moved one mile in 1883, the increase of service performed for the year equaling 660,284,232 tons moved one mile, the rate of increase being about 14. per cent. -- The rates per ton per mile for 1884 of freight transported equaled 1.124 cents, against 1236 cents for 1883, the falling off equaling 1.12 mills per ton per mile. Had the rates for 1883 been maintained for 1884, the earnings from freight would have been $353,094,042 in place of $502,869,901, the amount actually received. Had the rates of 1883 for the transportation of passengers and freights been maintained for 1884 tho gross earnings of all the roads would have been $827,525,371, exceeding by $56,840,463 the amount actually received, and greater by $3,752,447 than the earnings for 1883. 12 INTERSTATE COMMERCE. It will thus be seen that the decline in the earnings for the past year was due wholly to the reduction in the Tates charged. . Notwithstanding the great prostration of business which prevailed, the tonnage of merchandise distributed in 1884 fell very little short of that of 1883, while it ex- ceeded the tonnage moved in 1882 by 29,583,374 tons. The service performed in 1884 in the transportation of freight was greater than that performed in 1882 by 5,422,998,428 tons moved one mile. ~ * The falling off of the earnings of the railroads of the country is something phenom: enal, so far at least as their recent history is concerned. The total earnings of all the lines in operation in 1877 equaled $472,909,272; in 1878, $490,103,351; in 1879, $525,620,577; in 1880, $613,733,610; in 1881, $701,680,982; in 1882, $770,209,899; in i883, $823 772,924; the increase in the period of six years equaling $350,863,652; the ratio of increase for the same period being nearly 75 per cent. In four years, ending December 31, 1883, the increase of earnings of all the roads equalled $298,152,347, the average rate of increase being over $75,000,000 annually. This vast increase was due very largely to the enormous expenditures in the period of five years ending with 1883 in the construction of railroads, within which about 40,000 miles of line were con- structed, at a cash cost of at least $1,200,000,000. The expenditure was well distributed throughout the country, and gave an extraordinary impulse to trade and production of every kind. In 1884 only about 4,000 miles of new line were constructed, the cost of which did not exceed $20,000 per mile, and perhaps not over $15,000 per mile, or a gross sum of from $60,000,000 to $75,000,000. From such a decrease in an expenditure which in a single year, 1882, reached $350,000,000, it was inevitable that a violent shock should be given to all the great interests of the country. In a country like our own a check has frequently all the effect of a great disaster. The tonnage moved in 1883 by the railroads exceeded that of 1882 by 40,000,000 tons. . At $25 to the ton, the increase of value in one year of the tonnage moved equalled $1,000,000,000. All the great interests of the country had not only extended their op- erations in like ratio, but in far greater ratio, under the expectation that 1884 would show an addition of 40,000,000 tons, having a value of $1,000,000,000, to that moved the previous year. Instead of an increase in 1884, there was a falling off of 10,000,000 tons, having a value of over $250,000,000. In consequence, almost every branch of production and trade was brought to what seemed a complete standstill. Such really was by no means the case. The volume of merchandise moved and distributed in 1884 very nearly equalled that of 1883, while consumption went on very nearly at the rate of the previous year. As provision had been made for an increase in 1884 equal to that of 1883, the result was a complete glut of every kinds of products, hardly any one of which could be sold at a price that left any satisfactory profit to the producer. * - * * * % # * It is to be remembered that the rates of interest paid by the railroad companies on their bonds equal 6, 7, and 8 per cent., 7 per cent. being a very common rate. These bonds are now rapidly falling due. They will be replaced by bonds bearing interest at the rate of 33, 4, or 5 per cent., the reduction in rates inuring wholly to the bene- fit of shareholders. The chief sufferers by the recent decline of earnings have been the great trunk lines between Chicago and the seaboard—the decline with these being in part due to the large falling off in our exports of breadstuffs and provisions—the Union and Cen- tral Pacific, and the lines traversing the mining States and Territories. The volume of tonnage of the Union Pacific lias been well maintained, but its great apparent success for a timé was dne to a monopoly of the business of its route, which enabled it to charge nearly twice the average rates for the country. That monopoly is now well nigh lost, and with it the rates once maintained. The managers of the Central Pacific have destroyed the monopoly it once enjoyed as a through route, by con- structing a rival line of their own in which their interests are now mainly concen- trated. Mining, particularly of gold and silver, is at best a very uncertain business, and the railroads built to accommodate it are subject to similar extreme fluctuations. The general volume of business in 1884 very nearly equalled that of 1883. In ex- tensive sections, mainly free from the influences which have affected the lines de- scribed, the earnings in 1884 compare favorably with those for 1883. The earnings of the railroads in the New England group in 1884 were $58,558,913, against $59,155,763 for 1883, the falling off being only $596,850. The earnings of the ten States comprising the southern group were $71,861,795 in 1884, against $69,844,273 for 1883, the increase for the year being $2,017,522. The earnings of the six great lines within the territory lying to the south and west of Lake Michigan were in 1884 $74,253,296, against $75,564,744 in 1883, the decrease for the year being only $1,211,448 The number of tons moved by these lines in 1884 was 32,573,518, against 31,663,979 in 1883. The rate per mile was 1.251 cents in 1884, against 1.308 cents in 1883. These fines were mainly free from the competition which so disastrously affected many ~, ... INTERSTATE COMMERCE. - 13 Eastern ones, each of the former having a large local business of its own. With the exception of the class of roads referred to in the preceding paragraph, which embrace a comparatively limited number of lines, rates and business for 1883 were fairly maintained. With the recovery by the trunk lines of their business—a slow but cer- tain process—whith is not to be relatively on the scale of the past, our whole system will again assume something of its wonted prosperity. . It is not to be forgotten that a great change has taken place the world over in the abundance of capital compared with that of former years. The rates for money, in this country at least, are to be very much less in the future than they have been in the past, so that a 5 per cent. in- vestment will be looked upon as quite as desirable as was an 8 per cent. a few years ago. † * º # * * # The cause of the recent falling off in the earnings of our railways was a reduction in rates equal to only a little over one mill perton per mile. An increase of Inet earn- ings equal to only one mill per ton on the freight moved by the New York Central would have added $1,970,087 to the net earnings of that line. An additional charge equal in the average to one mill per ton per mile on all the tonnage transported by the railroads of the country for 1884, would have added over $44,000,000 to their net €3 TDIID 9. S. , it would seem natural, when thetide turned, that the expenditure of $1,200,000,000 upon 40,000 miles of new line, in the period of five years ending with 1883, would have been followed by an extraordinary monetary stringency similar to that which fol- lowed the great movement in the five years ending with 1873, during which fully 27,000 miles of new line were constructed. At the close of the five years ending with 1873, the condition of the country was only a little short of bankruptcy, in which the banks and the great producing and commercial interests were alike involved. The earnings of our railroads which, in 1873, equaled $526,419,935, fell off in 1874 to $520,466,016; in 1875 to $503,065,505; in 1876 to $497,257,959, and in 1877 to $472,909,272. . It was not until 1878 that there was any indication of recovery, the railroad earnings for that year being $490,103,351, an increase of $17,194,079 from the previous one, the gross amount being still $36,316,584 below those of 1873. It is not necessary here to enter upon the causes of the long period of depression which followed 1873. Its most striking feature was the lack of money—of capital for Čarrying on the ordinary operations of the country. The most striking feature which so far has followed the period ending with 1883 has been the abundance of money—of capital. The railway movement ending with 1873 was a most exhaustive one. The labor of years of our people was then required to restore the waste and exhaustion that had been suffered. In the period which followed 1883, in the face of a recent expenditure of $1,200,000 on new lines, capital has been far more abundant than at any previous period in our history, showing how much stronger the ground upon which the coun- try now stands than that upon which it stood in the period following 1873. For the - period of five years ending with 1883 the earnings of railroads were excessively stim- ulated by the extraordinary expenditures that had been made upon new lines. When this stimulus was withdrawn there was an excessive falling off of earnings, the falling off in 1884, equaling $52,988,016, or at the rate of 6.5 per cent. From 1873 to 1874, how. ever, the earnings, which then had not received such extraordinary impulse, fell off to the extent of only $5,953,919, or at the rate of 1.1 per cent. The decline in earnings from 1874 to 1875 was $17,400,511, on early thréefold greater than for the previous year, showing a much greater degree of depression for 1875 than for 1874. The earnings of the railroads for 1885 will not be much below those of 1884. There is every reason to believe that in 1885 railway earnings will reach their lowest ebb, and that in 1886 jº" show a decided increase over those for the current year, or even over those OT 4. - The periods preceding and following 1873 and 1883 have many similar features, but they are wholly unlike in this, that in the period which preceded 1873 the capital of the country was thoroughly exhausted in the construction of 27,000 miles, and that the losses sustained bad to be restored in the period that followed, which was one of great commercial and industrial depression and distress; while in the period which preceded 1883 capital steadily increased in abundance in face of the enormous expen- ditures that had been made, so that the period when it closed, instead of ending as did that closing in 1873 in a great crisis in which all interests were alike disastrously involved, closed with a capital greater in abundance than when it was entered upon. The evils, if they can be called such, under which the country now apparently la- bors is a plethora, not an absence, of capital. The problem now before the people is #. a restoration of the waste of the past, but some disposition of its vast accumula- IOIlS, ^: * 14 INTERSTATE COMMERCE. Comparative statement showing the averages per mile of the stock, bonds, cost, and ea "nings, percentage of expenses to earnings, earnings per passenger train-mile, and per freight train- mile, and per tonnage-mile, &c., for 1882, 1883, and 1884. 1884 1883. 1882, -Capital stock per mile of completed road------------------------------- $38,064 $30,759 $30,674 Bonded debt per mile of completed road. -- . . . . . . . . . ------------. * * * * * * * 29, 317 28, 650 - 28, 268 Cost of road and equipment per mile of completed roaſi . . . . . . . . . . . . . . . . 55, 329 55, 461 52,726 I’assenger earnings per mile of road in Operation - - - - - - - - - - - - - - -...----. 1, 801 1, 951 1, 926 Freight earnings per mile of road in operation. . . . . . . . . . . . . . . . .--------. 4, 382 5,092 4, 824 Gross earnings per mile of road in operation . . . . . . . . . . . . . .----. . . . . . . . . 6, 663 7,641 7, 377 Net traffic &arnings per mile of road in operation ..................... 2, 318 2,762 2, 670 Tercentage of Cxpenses to earnings - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 65. 21 63. 78 63. 61 IPassenger earnings per passenger train-mile. - - - - - - - - - - - - - - - . . . . . . . . . . . 1. 001 1. 11 1. 14 Freight earnings per freight train-mile----...- . . . . . . . . . . . . . . . . . . . . . . . . 1. 502 J. 56 1.59 * Cents. Cemfs. Oents. ICarnings per passenger per mile ... --...------------...---------. -- ------ 2. 356 2. 422 2. 514 Darnings perton per mile.-------------------------------------------. 1. 124 1. 236 1. 236 - Miles. l'Iiles. Miles. Average distance per passenger. ------...----...------------. . . . . . . . . . . . . 26. 24 27.32 25. 89 Average distance per ton ----------------------------------------- -- . . 114.66 110. 04 109, 02 e Per cent. | Per cenit. | Per cent. Interest per cent. of bonds and debts -------------------------...-...--. 4.51 4.59 4, 40 Dividends per cent. of stock. ------------...----------------. -----------. 2.48 2.75 2.91 Interest and dividends per cent. of stock, bonds, and debt..... --...----. 3. 52 3. 68. 3. 65 The vast magnitude of the operations of the country iL railways, in the period of five years ending with 1883, is well shown by the annexed tabular statement of the amount of the listings of the share capital and bonds of railways of the country at the New York Stock Exchange for a period of six years ending with 1884. Their gross amount for six years equaled $3,361,017,293; for five years ending with 1883, $3,030,762,319. A portion of these listings were the stocks and bonds of reorganized companies, such as the Erie, Wabash, and others, and were so far relistings under new names and forms. Estimating the relistings at $500,000,000, the annount of new securities listed in the five years equaled $2,530,762,319, the average being over $500,000,000 annually. The listings equaled something over $60,000 to the mile of new lines. In addition, very large amounts of securities were issued, which were not listed at the Stock Exchange. In addition, in the period of five years, large amounts of securities of new lines were listed at the Stock Exchanges of Boston and Phila- delphia. It was inevitable that operations conducted for years on such a colossal scale should be followed by a violent and excessive reaction—a reaction not caused. by any want of capital, but showing itself in an almost entire cessation in the con- struction of railroads and in the creation of new securities. The listings up to Jnly 1, 1885, have equaled only $39,515,466. § TEIE INTERNAL COMMERCE OF TEIE UNITED STATES.– ILLUSTRATIONS OF ITS IMPORTANCE ANU) PROPOR- TIONS–TEIE TRAFFIC OF TEIE TRUNK LINES. It has been shown that the railroad has been an invaluable aid to commerce of every description, but from the force of circumstances as an overland highway its relations to inland or internal commerce are naturally more intimate than to foreign commerce. And as the pres- entinguiry is directed mainly to questions affecting internal commerce, that comes properly in order as the next subject for consideration. It is deemed proper at the outset to call attention to the difficulty of collecting reliable general statistics as to the extent of the vast inter- nal commerce of the United States. In contrast with the attention paid to all the details of our foreign commerce, the failure of the Gov. . ernment to set in motion the necessary machinery for keeping an accu- rate record of the growth and development of the vastly more impor- tant internal trade of the country is remarkable. The report of the chief of the Bureau of Statistics for 1885 begins with the explanatory statement that— * It is impossible to deal with the internal commerce of the United States as a whole, owing to the fact that it is impracticable to procure statistics expressive of its total value from year to year, and also owing to the almost infinite variety of conditions • under which it presents itself, INTERSTATE COMMERCE. º 15 This statement by the officer especially charged by law with the duty of reporting statistics and facts in regard to commerce among the Sev- eral States emphasizes the necessity of further legislation for the pur- pose of adding to the machinery for collecting such information, and also serves to explain why this committee, with the facilities at its com- mand much more limited than those possessed by the Bureau of Statis. tics, has found it impracticable to make as Satisfactory and comprehen- sive a general exhibit of the internal commerce of the country as its importance would have justified. It is believed, however, that so far as the questions of legislation to be considered are concerned, the illus- trations of the proportions and extent of our internal commerce here- with presented, in connection with the information as to the magnitude of our railway service already submitted, will prove sufficient for all practical purposes. * - Notwithstanding the unfortunate defects in that part of the govern, mental machinery to which attention has been called, Mr. Nimmo's re. ports furnish many interesting indications of the wonderful progress of the country in commercial pursuits. For example, the following com- parison between the material resources of the United States in 1850 and in 1880 was presented in the report of the Bureau for 1884 to illustrate “the wonderful development of the natural resources of the country and the growth of our internal commerce”: Material resources of the United States in 1850 and in 1880. -- Resources. 1850. 1880. Improved land in farms---------------------------------------- 3.C.TeS. . 113,032, 614 *284,771,042 Wheat produced.------------------------------------------. bushels.. 100, 485,944 420, 154,500 Corn produced ------------------------------------------------- do---. 592,071, 104 1, 551, 066, 895 IIorses on farms--------------------------------------------. number. - 4, 336, 719 10,838, 111 Milch-cows on farms. --------------------- --------------------- do. . . . 6, 385,094 13, 125, 685 Swine on farms. ------------------------------------------------ do.... 30, 354, 213 43, 270,086 Pigiton produced ---------------------------------------------- tons.. 563,755 5, 146, 97% Coal produced. --...-… • - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - do.... 7, 358,890 96,000, 000 Railroads in operation----------------------------------------. miles.. 9, 021 121, 592 Value of products of manufacture. --------------------------- ------. $1,019, 106,616 | *$5,369,579, 191 * For the census year 1880. In the language of the report— These eloquent facts tell the unvarnished story of our Territorial expansion, the progress of our agricultural pursuits, the wonderful development of our mining in- dustries, the creation of highways of commerce vast in extent and marvelous in effic- iency, and of an advance in the mechanic arts which, in accordance with what ap- pears to be good authority, constitutes the United States the first manufacturing country on the globe. These facts also serve to indicate and to illustrate the rapid growth of the internal commerce of the country during the last thirty years. J. 16 INTERSTATE COMMERCE. A glimpse at the steady increase in the volume of the internal com merce of the United States by rail is afforded by the following table and Statement found in the same report: Total number of tons (of 2,000 pounds) transported upon the New York State canals, the New York Central and Hudson River Railroad, the New York, Lake Erie and Wºstern Railroad, and the Pennsylvania Railroad, each year from 1868 to 1883, inclusive. New York | New York, e Year New York Central and |Lake Erie and º, & State canals.“|EIudson River Western vision.f IRailroad.* | Railroad.* lS10D., º Toºls. Toºns. Tom 8. Toms. 1868. ----------------------------------------- 6,442,225 1, 846, 509 3,908, 243 4,722,015 1809.----------------------------------------. 5, 859, 080 2,281, 885 4, 312, 209 5, 402, 991 1870.------------, ---------------------------. 6, 173,769 4, 122,000 4, 852, 505 5, 804,051 1871------------------------------------------ 6, 467, 888 4, 532, 056 4, 844, 208 7, 100,294 1872. ----------------------------------------- 6, 673, 370 4, 393, 965 5, 564, 274 8,459, 535 1873. ----------------------------------------- 6,364,782 5, 522,724 6, 312, 702 9, 211,231 1874. ----------------------------------------. 5, 804, 588 6, 114, 678 6,364,276 8, 626, 946 1875 ----------------------------------------- 4,859, 858 6,001, 954 6, 239,946 9, 115, 368 1876. ----------------------------------------- 4, ký2, 129 6, 803, 680 5, 972, 818 9,922, 911 1877. ----------------------------------------- 4, 955, 963 6, 351,356 6, 182,451 9,738, 295 1878. ----------------------------------------- 5, 171, 320 7, 695, 413 6, 150, 568 10, 946,752 1879. ----------------------------------------- 5, 362, 372 9,015, 753 8, 212, 641 13, 684, 041 1880. --------------------------------------- 6, 457, 656 10, 533,038 8,715 892 15, 364,788 1881 - - -------------------------------------- 5, 179, 192 || 11, 591, 379 || 11,086, 823 18, 229, 365 1882 ----------------------------------------- 5,467, 423 11, 330, 393 || 11, 895, 238 20, 360,399 1883. ------------. . . . . . . . . ------------------. | 5, 664, 056 | 10, 892, 440 | 13, 610, 623 21, 674, 160 * From annual report of Auditor of Canal Department, State of New York. f From annual reports of Pennsylvania Railroad Company. From this table it appears that the tonnage transported on the New York Centräl and Hudson River Railroad increased from 1,846,599 tons in 1868 to 10,892,440 tons in 1883; that the tonnage transported on the New York, Lake Erie and Western Rail- road increased from 3,908,243 tons in 1868 to 13,610,623 tons in 1883; and that the toumage transported on the Pennsylvania Railroad increased from 4,722,015 tons in 1868 to 21,674,160 tons in 1883. The total tonnage transported by rail on these three roads increased from 10,476,857 tons in 1868 to 46,177,223 tons in 1883. TEIE TRAFFIC OF TEIE TRUNEC LINES. In this country the most active exchange of products takes place be- tween the East and the West, or rather follows those lines in its move-. ment. For this reason by far the most satisfactory conception of the volume and distribution of the products of the country is obtained from the operations of the great trunk lines and their connecting roads. Complete returns of the movement of east-bound and west-bound traffic over these roads are made to the trunk line commission, and from the detailed Statistics regarding such traffic published by the commission a number of significant statements have been compiled for this report, and are here with submitted. INTERSTATE COMMERCE. .* 17 TEIE EAST-BOUND TRAFFIC OF TEIE TRUNK LINES. Statement showing the number of tons of east-bound “dead” freight, and also the tonnage of cattle, hogs, and dressed beef forwarded from the western termini of the trunk Zints, and from points west thereof, destined to New York City, Boston, Philadelphia, and Balti- more, during the periods named, over the following roads : Now York Oity.—Via New York Central and Hudson River, New York, Lake Erie and Western, JPennsylvania, and the Raltimore and Ohio Railroads. IBostom.—Via New York Central and EIudson River, vania, Baltimore and Ohio, and Grand Trunk Railroads. NOW York, Lake Erie and Western, Pennsyl- Philadelphia.—Via New York Central and Hudson River, New York, Lake Erie and Western, Penn- sylvania, and Baltimore and Ohio Railroads. Baltimore.—Via New York Central and Hudson River, Pennsylvania, and Baltimore and Ohio R2il- roads. General IDressed freight. Cattle. Hogs. beef. - 1880. New York City.------------------------------------------- 3, 682, 101 || 420, 855 152, 580 - - - - - - - - - - Boston ---------------------------------------------------- 888, 296 | *30,076 | *32,488 *8, 364 Philadelphia----------------------------------------------- 1,425, 473 87, 788 30, 315 - - - - - - - - - - Baltimore---------, ---------------------------------------- 1, 488, 376 34,363 || 33, 114 |.... . . . . . . - Total -----------------------------------------------. 7,484, 246 - 573,082 248, 497 8, 364 1881. - New York City-------------------------------------------- 3, 873, 608 || 397, 936 131, 780 |. --...----. Boston------------------------------------`----------------- 1, 822,960 106,303 || 79, 587 29, 718 Philadelphia. --------.* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1, 374, 829 | 84, 171 27, 404 | . . . . . . . . . . Baltimore.---------------------------`---------------------. 1, 187, 437 || 35,547 || 30, 436 |. -- - - - - - - - Total ------------------------------------------------ 8, 258,834 623, 957 269, 207 29, 718 1882. New York City-------------------------------------------- 2,968, 119 || 366,489 || 114, 331 #2, 633 Boston. ---------------------------------------------------- 969, 716 62, 548 || 85,833 29, 830 Philadelphia. --------- , e = * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 886, 185 | 89,694 25, 222 i448 Daltimore-------------------------------------------------- 673, 657 | 20, 188 28, 599 #879 Total ------------------------------------------------ 5,487,687 538,919 || 253,985 33,790 - 1883 - New York City-------------------------------------------- 2,773,252 | 392,006 || 138,890 16, 365 Poston----------------------------------------------------- 966, 108 88, 451 88, 403 43, 7 1 Philadelphia----------------------------------------------- 921, S63 87, 905 || 30, 956 8, 601 Baltimore.--------------* * * * * * * * * * * * * * * * * * * * * * * * * * * * * = * * * * * * 738,988 23, 249 || 32,852 4, 158 Total -----------------------------------------------. 5,400,211 || 501,701 || 291, 111 | 72,835 1884. - — New York City-------------------------------------------. 2, 320,710 || 327,986 144, 217 34, 955 Boston----------------------------------------------------- 810, 708 || 74, 505 141, 960 | 121,015 Philadelphia----------------------------------------------- 816, 793 80,572 30, 949 12, 815 Baltimore------------------------------------------------- : 782,369 24,619 33,923 4, 281 Total ------------------------------------------------ 4, 680, 580 || 507, 682 || 351,049 173,066 * From September 13 to December 31. # For November and December only. Years 1880 and 1881 embrace traffic via New York Central and Eſudson River, New York, Lake Erie and Western, Pennsylvania, and Baltimore and Ohio Rail- roads. Years 1882 and 1883 embra:e traffic via New York Central and Hudson River, New York, Lake Irie and Western, Pennsylvania, Baltimore and Ohio, and Grand Trunk Railroads. S. Rep. 46—2 . \ 18 INTER STATE COMMERCE. ORIGIN OF THE EAST-BOUND TRAFFIC, ACCORDING TO STATES. Statement showing the tonnage and per cent, of total tonnage from points of origin, classi- fied according to States, of the east-bound “dead freight” traffic destined to points east of the westerm termini of the trunk lines during the periods indicated. 1880. 1882. 1883. 1884. Four trunk lines. | Five trunk lines. | Five trunk lines. Five trunk lines. Tons. Per ct. Tons. Per Ct. Tons. Per Ct. Tons. Per ct. Wisconsin. - - - - - - - - 595,656 5. 65 803, 429 8. 27 892, 633 8.87 | 1,022,924 | 1. 48 Iowa -------------- 592, 980 5. 52 224,660 2. 30 295, 594 2.94 282, 596 3. 17 Missouri. -- . . . . . . . . 454, 577 4. 31 453, 182 4.66 466, 979 4. 64 466, 715 5. 24 Arkansas, Texas, Louisiana, and \ Indian Territory. 49,900 0.47 43,980 0.45 69,639 0, 69 59, 428 0.66 Illinois - - - - - - - - - - - - 2,808, 216 26.80 2, 368,978 || 24.40 2, 575, 589 || 25.59 2, 190, 580 || 24.59 Indiana. . . . . . . . . . . . 1, 168, 681 11. 09 820, 450 8.45 824, 623 8. 19 64, 975 7. 46 Michigan . . . . . . . . . 531,446 5. 04 755, 641 7. 79 700, 813 6.96 560,497 6. 90 io. ------. . . 2, 109,212 20.00 | 1,747, 217 | 17.99 || 1,636,388 | 16.25 | 1,472, 803 | 16. 57 South of Ohio River 241, 540 2, 29 416,737 4.29 294,434 2. 93 300, 904 3. 38 Western Pennsyl- | Vällä - - - - - - - - - - - 300,987 2, 86 642, 305 6. 61 672, 134 6. 68 614, 415 6. 89 West Virginia. . . . . . 32, 626 (). 31. 34, 954 0.36 41,935 0.42 41, 237 0.46 New York State . . 1, 111,789 10. 54. 773,741 7. 96 869, 458 8.64 . 685, 674 7. 70 Western Canada. . . 183, 83 1. 75 474,124 4.89 524, 852 5, 2] 390,217 4.38 California. . . . . . . . . 22, 848 0.22 39, 670 0.41 31, 899 0.32 33,042 0.37 Unknown . . . . . . . . . 343,022 3. 25 113, 844 1. 17 168,663 1. 67 120, 381 1. 35 Total . . . . . . . . 10, 544, 308| 100.00. 9,712, 912 100.00 | 10,065, 633 100.00 | 8,906, 388 100.00 NOTE.—This statement includes for 1880 the traffic via New York Central and Hudson River, New York, Lake Elie and Westein, Pennsylvania, and the Baltimore and Ohio Railroads, and for the other years that via said Roads and the Grand Trunk. During 1881 the total tonnage was 10,567,928. During 1884 the Delaware, Lackawanna, and Western and West Shore roads carried about 1, 120,000 tons, which is not included in the above. Yº EAST-BOUND TRAFFIC FROM CERTAIN WESTERN CITIES. Statement showing the total number of toms of east-bound “dead freight” traffic originating at or passing through the cities named during the years indicated. 1881. 1882. 1883. 1884. Chicago. . . . .----------------------------------------- 2,892,236 || 2,167,371 2,337,218 | *2,841, 841 Saint Louis. ------...--...----------------------------. 407,797 477, 949 528, 972 531, 202 Cincinnati (town) . . . . ------------------------------- 165,300 222, 603 196, 876 161, 170 Ciucinnati (from puints beyond)? -------------------. 143,475 236, 269 177, 519 207,520 Louisvillo (town) --- . . . . . . . . . . ---------------------- 48, 568 81,031 63, 958 66, 758 Louisville (ſrom points South). -- . . . . ... ------------. 106,499 120, 474 110,828 127, 806 Indianapolist --------------------------------------. 501, 371 399, 580 177, 519 394, 821 *Including traffic from Joliet, Matteson, Bloom, Blue Island, and Washington Heights, which was not included in previous years. f Except that originating at or passing through Saint Louis, Indianapolis, and Louisville. f Except that passing through Saint Louis, Chicago, Peoria, or Louisville. * INTERSTATE COMMERCE. 19 TEIROUGEI EAST-BOUND TONNAGE. Statement 8howing the through east-bound tommage, exclusive of live stock, originating at or beyond the western termini of the trunk limes and destimed to the four Atlantic cities and the New England States, during the periods named. Proportion to each city. .. tons#: Year. O IOUll" CID16S and New Eng- Boston º º land. 8-> #. and New dº, . Total. England.ºepnia. g 1878. -------------------------------------- 7, 318,000 42.8 22, 0 17. 6 17. 6 100 1880. -------------------------------------- 9, 138, 313 40. 3 27.8 15. 6 l 6. 3 10() 1881--------------------------------------. 8,477, 018 45. 7 24. 1 16, 2 14. 0 100 1882. -------------------------------------. 6,844, 809 43. ]. 34.2 12.9 9. 8 100 1883. -------------------------------------. 7, 012, 466 39, 6 36.8 13. 2 10.4 100 1884. -------------------------------------- 6, 136,762 37.8 37. 0 13. 3 11. 9 100 The figures for 1878 and 1881 embrace the four trunk lines only. The others embrace the five trunk lines. In 1884 the Delaware, Lackawanna and Western and the West Shore carried to above points about 846,000 tons. IXISTRIBUTION OF EAST-IBOUND TRAFFIC. Statement showing distribution of the east-bound “dead freight” originating at or beyond the western termini of the trunk lines, the destinations of the 8ame, and the percentage de- livered at each. Destinations. 1880. 1882 1883. }. 1884. Tom 8 Per ct Tom 8. Per ct. . Toºns. Per ct Tons. Per ct. New York City ....] 3, 682, 101 || 34.92 2,968, 119 || 30.56 2,773, 834 27 56 2, 320,710 26.05 Philadelphia. ...---- 1,425,473 13. 52 86, 185 9. 13 921, 901 9, 16 816,793 9. 17 Baltimore - - - - - - - - - 1,488, 376 14, 12 673, 657 6.94 739, 143 7. 34 732, 369 8, 22 Portland - - - - - - - - -. 27, 298 0.26 115,847 l. 19 184,449 1. S3 172,729 1.94 Vermont ... -- - - - - - 9, 405 0.09 81, 943 0.84 86,221 0.86 72,953 (). 82 Maine-...---------- 43,890 0.42 105,732 1.09 136, 503 1. 36 121, 515 1.37 New Hampshire ... 58, 505 0. 55 115,596 1. 19 128, 161 1.27 121, 515 1. 37 #º - - stt * * * * * * 810,708 9, 10 &lSSºl,ChillSOtúS - - . . fºr . 461, 023 5. T 8 Rhode Island . ---. 1,702,956 | 16.15 1,848,720 | 19.03 | 1,939, 462 | 19, 27 110, 758 1. 24 Connecticut - - - - - -. 297,570 3.24 Now Brunswick and Nova Scotia, 22,437 0.21 87,005 0.90 102,792 1. 02 98, 119 1. J 0 New Jersey - - - - - - - 179,232 1. 70 182, 518 1, 88 207, 840 2. 06 211, 818 2.38 Mary land and South ----------. 118,338 1. 12 194, 289 2. 00 197, 656 1.96 228, 679 2. 57 New York State -. 808, 168 7. 67 | 1,119,343 11.52 1, 293, 877 | 12.86 | 1,031, 483 11. 58 Pennsylvania. . . . . . 611,939 5.80 | 1,010, 095 || 10.40 947, 923 9. 42 870, 386 9.77 Delaware . . . . ----- 25, 779 0, 25 32, 338 0.33 32, 234 0.32 38, 621 (). 43 West Virginia. . . . . 45,832 0.43 66,902 0.69 64, 502 0.64 62,444 0.70 Eastern Canada ---|------------|-------. 224, 623 2. 31 309, 135 3. 07 326, 195 3, 67 Unknown ... ------. 294, 579 2.79 |------------|-------|------------|--------|-----------. . . . . . . . Total -------- 10, 544, 308 100.00 9,712, 912 || 100.00 | 10,965, 633 100.00 8,906, 388 100.00 Tho figures for 1880 do not include returns from the Grand Trunk. Those for the other years cover tho traffic of the five trunk lines. In 1884 the Delaware, Lackawama and Western and West Shore Ioads carried about 1,120,000 tons, which it is estimated were distributed as follows: To New York City, 403,000; Boston and New England, 375,000; Philadelphia, 68,000; New York State, 189,000; New Jersey, 15,000; Pennsylvania, 70,000. 20 INTERSTATE COMMERCE. `--- EXPORTS CARRIED TO THE SEABOARD. Statement eachibiting the tonnage carried to the seaboard cities by the trunk limes under through bills of lading for exportation during the years named, and the percentages of the total receipts at Seaboard cities, and of the total east-bowmd tonnage of the trunk lines ex- ported. * - 1880. 1881. 1882. 1883. 1884. New York City ----------------...--------------. 814, 878 628, 217 441, 101 || 386,710 307,030 Boston ------------------------------------------ A04,719 384,070 351, 621 421,795 371,963 Philadelphia -----------------------------------. 148, 301 91, 340 80, 345 - 91,043 84, 974 Baltimore --------------------------------------. 57, 619 33, 355 23, 671 41, 606 37, 677 Total.-------------------------------------. 1, 125 517 l, 136,982 | 896, 738 911, 154 801, 644 Percentage of exports to total receipts at sea- - board cities . . . . . .----------------...--.. sº º B & 18, 97 13, T4 16. 34 17. 43 17. 13 Percentage of exports to totaleast-bound traffic- 13, 52 10. 32 9. 23 9. 35 9.00 Proportions of same eaſported via each city. - - New Philadel- | Balti- Year. Total tons. York. Boston. phia. IQ OF6). Total. 1880----------------------------------- 1,425, 517 57.2 28.4 10.4 4. 0 100.00 1881----------------------------------. 1, 136,982 55.3 33. 8 8. 0 2.9 100.00 1882. ---------------------------------- 896, 738 49.2 39.2 9. () 2. 6 100. 00 1883. ---------------------------------. 941, 154 41. 1 44.8 9. 7 4.4 100, 00 1884---------------------------------- 801, 644 38. 3 46.4 10. 6 4. T 100.00 The above statements cover the traffic of the four trunk lines for 1880 and 1881. For the other years the Grand Trunk is included. wrest-Bound TRAIFFIC EIROM THE SEABOARD. Statement giving for a series of years the total number of toms of all classes of west-bound freight forwarded from the four Atlantic cities and interior New England competing points by the New York Central and Hudson River, New York, Lake Erie and Western, Pennsylvania, Baltimore and Ohio, and the Grand Trunk Railroads. *. a- Boston and | a Year. New York New Phila del. Baltimore. Total. City. England. phia. 1878 ------------------------ x * * * * * * * * * * * * 740, 629 206, 527 197, 641 130,061 1, 274,858 1879 ------------------------------------- 831, 138 248, 605 245, 961 200, 219 1, 534, 923 1880 ------------------------------------- 1,022,728 309, 228 299, 487 24l, 641 1, 873, 084 1881 ------------------------------------- 1, 242, 461 383,466 280,742 215, 003 2, 131,662 1882 ------------------------------------- 1, 405, 174 454, 858 329, 803 180, 007 2, 370, 742 1883 ------------------------------------. 1,019,490 424, 520 268, 439 179,675 1, 892, 124 1884 ------------------------------------. 1, 138,983 366,954 263, 643 152, 612 1, 922, 192 The figures given for 1884 include traffic over the Delaware, Lackawanna and Western and the West Shore roads in addition to those named above. INTERSTATE COMMERCE. 21 DESTINATION OF WEST-BOUND TRAFFIC, ACCORDING TO STATES. Statement showing the distribution and per cent, of tommage to destimation of lraffic original- ing at the four Allantic cities and the eleven New England competing points forwarded to the West by the trunk lines during the years named, classified according to destimation by States. 1879. 1880. 1881. Distribution by States. -- - -- Tons Per cent. | Tons. | Per cent. | Tons. | Per cent. Wisconsin --------------------------. 99,907 6, 51 107, 237 5. 72 134, 298 6. 30 [9Wa--------------------------------. 30,705 2. 00 38, 246 2.08 41, 878 1.97 Missouri----------------------------- 149, 899 9.77 | 166,449 8.88 211, 377 , 9.92 Arkansas, Louisiana, Texas, and In- dian Territory ---------------...--. 23, 0.29 1. 50 22, 800 1. 22 38, 210 1, 70 Illinois ------------------------------ 336, 623 21.94 400, 888 21.41 496, 484 23. 24) Indiana-----------------------------. 84, 458 5. 50 89, 976 4, 81 | 103, 573 4. 8 (; Michigan ---------------------------. 87, 985 5. 73 116, 354 6. 21 119, 545 5, 61 Ohio --------------------------------- 344,023 22. 41 404, 659 21. 6 L 453, 719 21. 28 South of Ohio River - - - - - - - - - - - - - - - - - 49, 125 .3. 20 62, 120 3.31 70, 475 3. 3 Pennsylvania.----------------------- 189, 675 12.36 292, 363 15. 61 268, 662 12. 64) West Virginia.---------------...----- 23, 657 1.54 28, 473 1. 52 25, 649 1. 20 New York State............ --...----. 54, 381 3.54 G8, 259 3. 64 75 930 3. 50 Western Canada.----...--... -...--. 25,092 1. 63 25, 366 1. 35 30, 345 1.42 California.-----------------... ------. 36, 364 2. 37 49, 894 2.68 61, 517 | * 2.8%) Total.-----------------------. 1, 534, 923 || 100.00 1, 873, 084 100.00 2, 131, 662 100.00 1882. 1883. 1884. Distribution by States. * Tons. | Per cent. | Tons. | Per cent. | Tons. Per cent. Wisconsin.-------------------------. 195, 219 8. 24 147,317 7. 79 156,092 8. 12 OWa. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 51, 304 2, 16 38, 614 2. 04 37, 710 1.96 lMissouri.---------------------------. 252,205 10. 64 190,918 10. 09 188,955 9. 83 Arkansas, Louisiana, Texas, and In- dian Territory.-------------------. 36, 556 1.54 25, 370 1. 34 23,078 1. 2() inois ------------------------------ 581, 151 24, 52 4.17, 120 22. 04 446, 248 23. 22 Indiana------------------------------ 115,561 4.86 99, 244 5. 26 103, 674 5. 39 Michigan'.--------------------------. 135, 434 5. 71 122, 022 6.45 127, 885 6.65 Ohio --------------------------------. 496, 421 20.95 413, 764 21, 86 410, 989 21. 38 South of Ohio River.-- - - - - - - - - - - - - - - 71, 444 3.01 60,556 3. 20 54, 862 2.86 Pennsylvania ------------------------| 207,982 8.78 194,474 10. 28 195,547 10. J7 West Virginia ---------------- - - - - - - 27, 963 1. 18 28, 174 1. 5() 28, 506 1. 48 New York State -------------..... --. 92, 217 3, 88 74,538 3.93 77, 574 4.04 Western Canada..... ---------------. 41, 452 1. T5 37, 362 1.97 31, 669 I. 65 California.---...-...----------------. 65,833 2.78 42,651 2.25 39, 403 2. 0.5 Total -------------------------- 2, 370, 742 100.00 | 1, 892, 124 || 100.00 | 1,922, 192 100. 00 This statement is based on the traffic of the five trunk lines, except that for 1884 it includes also the traffic of the Delaware, Lackawanna and Western and West Shore roads. *. TEIE GOTTON CROP OF THE TINITED STATES. The magnitude of the internal commerce of the United States is strik- ingly illustrated by the statistics of the leading productions of the coun- try, some of which are reasonably complete and accurate. As the cot- ton statistics are perhaps the most complete of any, that product has been selected for this line of illustration. by the National Cotton Exchange of America, of which Mr. C. H. Par- ker, of New Orleans, is secretary, and the returns made account for sub- The estimate of the last crop made a year ago only varied from the actual returns since received to the almount of 20,000 bales. The official report of the National Cotton Exchange upon the cotton crop of the United States for the year 1884–85 was issued September stantially every bale of cotton produced in the country. These statistics are collected 22 INTERSTATE COMMERCE. 1885. From this report upon the last crop the following statements have been taken : The American cotton crop for 1884–85 varied but little from that of the preceding year. years as follows: * The movement compares with the previous four Year ending close August— 1885. 1884. 1883. 1882, 1881. Port receipts. -----------------------------. . . . 4, 773, 541 || 4,800, 554 6,009, 612 4,688,037 5, 878, 106 Ovotland to mills . . . . ------------------------ 633, 241 591, 580 641, 801 489, 170 508, 327 Southern consumption, net. . . . . . . . . . . . . . . . . . . . 200, 383 321,066 298,243 278,841 219, 317 Total crop -------------------------. . . . 5,706, 165 5, 713, 200 6, 949, 756 5, 456,048 || 6,605,750 12xports: --- Great Britain..... ------------.. ---------. 2, 425, 239 2.484, 836 2,885, 904 2,204, 560 2,832, 127 Trance.---- -----------------------------. 403, 726 468,996 438, 808 379, 915 554,069 Channel ports.-------------------------- . . . . . . . . . . . . . . . . . . . 15, 403 49,973 31, 016 Continent. -- - - - - - * * = • - - - - * * * * * * * * * * * * * * * * . 1,090, 664 962, 749 1, 383,929 826, 627 | 1, 148, 104 Canada, rail.--...--...--------. . . . . . . . . . . . . . 28, 3 22,052 || 42, 553 i 31, 547 24, 030 Total ---------------------. . . . . . . . . 3,947,972 3,938, 633 || 4,766, 597 3,582, 622 || 4, 598,346 Stock close of year . . . .----------------. . . . . . . 129,488 126,721 235, 484. 125, 582 217, 031 Northern mills takings. -- . . . . . . . . . . . . . . . . . . . . . 1,437,063 1,537, 166 | 1,759,703 | 1,677, 581 | 1,713,626 | The takings of Northern mills were on an average 27,629 bales per week, against 26,560 bales the previous year, and 33,849 bales the year before that. Southern mills took 6,078 bales weekly, making the to- tal consumption for all the United States 33,707 bales weekly, against 36,088 the previous year. N The following statement shows the net receipts of cotton at United States ports for the last three years: Net receipts of cotton at United States ports. Ports. 1884-'85. 1883–84. 1882-'83. * JBales. Bales. IBales. New Orleans ----------------------------------------------------- 1, 529, 592 | 1, 529, 158 1,690, 709 Galveston ------------------------------------------------------- 463,463 595, 800 863 104. Mobile----------------------------- * - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 237,071 244, 325 313, 228 Indianola . . . . . . . . . . ----------------------------------------------- 12, 813 9, 251 19,049 9harleston.------------------------------------------------------- 507, 802 420,000 564, 289 Savannah -------------------------------------------------------- 728,087 655, 746 817, 670 Providence “.... --------------------------------------------------|-----------. 25, 521 12, 723 Wilmington ------------------------------------------------------ 94, 054 91, 691 129, 805 Norfolk. --------------------------------------------------------- 545, 418 581,097 787, 931 Jºltimore.-------------------------------------------------------. 74, 571 54, 410 86,031 Y9W York ----------------------------------------------------. 99, 200 117, 046 152, 184 Boston ----------------------------------------------------------- 80, 470 92, 092 .191, 298. Philadelphia * * * * * * * * * * * * s s = e º ºs e = sº s & a s s e º sº s = e s = < * * * * * * * * * * * * * * * g. 58, 175 102,706 8,850, City and West Points, Richmond, &c., not included at Norfolk... 228, 790 186, 389 226, 344 Port Royal ------------------------------------------------------. 7, 509 11, 198 19, 524 Pensacola -------------------------------------------------------- 23, 845 34, 140 99"pus Christi --------------------------------------------------- 91 76 *98. ---------------------------------------------------------- 44 155 *Wnsville ------------------------------------------------------|------------ 14 * ----------------------------------------------------------- 666 1, 604 * Pass.--> -------------------------------------------------- 30 11 *** -------------------------------------------------------- 6, 145 ||------------ > 36,876 (#9"#9town, &c., S.C. --------------------------------------------|-----. 1, 508 New Berne and Washington, N.C., not counted elsewhere ....... 5,907 8,861 Now Port News, Va.--------------...----------------------------. 58, 706 26, 373 * Me --------------------------------------------------|------------ 2, 350 !”handina, Fia. -------------------------------------------------- 198 47 *nswick, Ga. --------------------------------------------------- 10,894 8,084 |J Total bales ------------------------------------------------. 4,773, 541 || 4, 800, 554 6,009, 612 * No longer considered a port. INTERSTATE 23 COMMERCi. Total eaſports of cotton for the last three years. Continent w Great Total Total Total Ports. tº ſº tº France. and y Q_” } JBritain. chi.e. 1883-'84. 1882–83. 1881–82. JBales. JBales IBales. IRales. IBales. I3ales. New Orleans. ------------. ------ 698,800 301, 651 | *334,917 | 1, 335, 368 1,451, 383 1, 603, 947 Galveston ---------------------- 157,648 9, 619 *77, 962 245, 229 370,791 521, 376 Mobile-------------------------. 43, 130 || --- - - - - - 700 43,830 57, 537 45, 290 Savannah. ---------------------. 179,903 11, 699 199, 256 390, 858 359, 799 418, 998 Charleston.--------------------. 164,211 22, 259 153, 515 339, 985 268, 570 369, 681 Wilmington -------------------. 51, 822 |. --...----- 14,040 65,862 47, 242 57, 762 Norfolk------------------------. 277,667 6,375 I1,775 295,817 243,381 372, 529 Baltimore.---------------------. 118,696 3,087 40, 656 162,439 170, 664 246, 933 New York ---------------------- 494, 208 || 49,036 231,384 774,628 644, 0.96 774, 351 Boston.------------------------. 134,750 |. --...----- 742 135, 492 126,402 186, 623 Philadelphia---------.. * * * * * g e º ºs & 62,223 ||--------- 5, 834 68,057 111, 150 82, 675 Port Royal.---------------------|------------|----------|------------|------------ 5, 190 2,990 Newport News. ---------------. 22,976 ----------|-----------. 22,976 Portland, Me.............. --: - - - , 521 |---------|------------ 2, 521 #::::::::::::::::::::::::::::::::::::::... • * = • * * - - - 5,733 5,733 60,376 40,889 Pensacola, Fla......... --...----- 8,674 |----------|-----------. 3, 674 City and West Point.......... -- 13,010 ||---------. 14, 150 27, 160 Total --------------------- 2, 425, 239 || 408,726 1,090, 664 3,919, 629 || 3,916, 581 4,724,044 Last year----------------------- 2, 484,836 468,996 962, 749 |------------|------------|---------. Year before--------------------. 2,885, 904 || 438,808 1,399, 332 |. -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - *Including 7,875 bales from Galveston to Mexico; 666 bales from Laredo, 13,141 from El Paso, and 30 bales from Eagle Pass, Tex., all to Mexico; 6,316 bales from New Orleans to Mexico—making total to Mexico from all United States ports by sea and rail, 28,028. - Statement of the crop based upon the general movement to and from the seaboard. 1884–85. 1883–84. IBales. JBales. Receipts at shipping ports -----------------------------------------------------. 4,773, 541 4, 800, 554 Shipments overland and direct to manufacturers, including Canada.-- - - - - - - - - -. 633, 241 591, 580 Southern consumption, exclusive of amount taken from ports.-----...----------. 299, 383 321, 066 | Total crop of the year, bales ----- tº tº gº tº gº tº gº tº gº tº tº use º 'º º te tº º tº tº sº º º tº º 'º--------------- 5,706, 165 5,713, 200 24 INTERSTATE COMMERCE. Statement exhibiting the overland movement of the crop. 1884-'85. 1883–84. t JBales. Bales. . Shipped from Saint Louis ------------ 290,857 304, 273 Carried north across Mississippilºtiver - at Hannibal . . . . ----. -----------. 19,772 77, 364 Carried north from Cairo, via Cairo - and Vincennes R. R. ... -- - - - - - - - - - -. 167,384 181,225 Carried north from Cairo via Illi- nois Central R. R. ----- - - - - - - - - - - - - - 139, 338 56, 246 Carried north from Evansville, via Evansville and Terre Eſaute R. R. -- 49, 734 f 33,485 Carried north from Louisville, via Ohio and Mississippi R. R. --...----. 2,027 4, 171 Carried north Louisville, via Jeff, Mad. and Ind. R. R.. ----------...--. 30,672 61, 338 Carried north, Louisville via Louis- - ville, Cincinnati and Lexington R. R. 41, 633 60,263 Carried north, Louisville via L., N. A. cº, and Ch. R. R. -- - - - - - - - - - - - - - - - 1,566 5,479 Shipped across the Ohio River at Louisville by the Chesapeake and * Ohio S. W. R. R., riotincluded above. 44, 643 - 92, 237 North from Louisville, &c., not in- º cluded above . . . . . --------------| -------- 4, 133 Carried north via CincinnatiSouthern R. R. - - - - - - - - - - - - - - - - - - - - - - - - - - 75,477 75,255 Carried across Potomac River by Alexandria and Fredericksburg R. R 8, 308 3, 407 Receipts at Cincinnati by river.-----. 56,482 21,726 Carried across Potomac River by Nor- folk and Western R. R. . . . . . . . . ----. 34,232 38,778 Carried north across Potomac River by Virginia Midland R. R. . . . . . . . . . - 4, 258 2,952 Shipped to mills adjacent to river, not included in above. . . . . . . . . ------ 6, 626 g 6, 599 *==ºme smº 973,008 1,028, 931 Less deductions: - .* Shipped from Cairo to Saint Louis. --. 44,009 # 35, 117 Receipts at Cincinnati from New Orleans by river---------...---------| ---'----- 512 Shipped from Saint Louis to Vicks- - *. burg, Memphis and New Orleans, by river and Tail . . . . . . . . . . . . . . -----| -------- - 50 Shipped from Saint Louis to Louis- * S . * * * *s as as a s = º a s sº tº sº º is sº e ºs º º sº as a e s a s = e ºs * s ºn ſº tº a s gº tº UlDCI Ty . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 15 Cincinnati to Louisville - - - - - - - - - - - - - - - - - - - - -. # Shipped from Saint Louis via Norfolk 159 and Newport News . . . . . . . . . . . . . . . . 288 3, 296 Total deductions. -- - - - - - - - - - - - - - *=ººmsºmºsºme 44,297 — 39,651 Deduct: 928,711 989,280 Receipts overland at New York, Boston, Philadelphia, Providence, .*** Baltimore, &c --------------------|----------------- 271,976 "... 870, 530 Shipments from Mobile and other - outports by rail and river to in- terior. ----------------------------|--------. 191, 992 219,772 Less deducted at : New Orleans---------------------. 156,060 169, 494 Savannah. ------------------------|-------- Norfolk--------------------------- 2, 384 1,775 Mobile---------------------------. 10,054 21, 133 Other ports.------------ * @ e º sº tº sº as as a * * * * * * * * 200 — 168, 498 — 192,602 gº 23, 494 27, 170 / 295, 470 397,700 Direct overland not elsewhere - counted, including Canada..... * * * * * * * * * * * * * * * * * * * * * * * * * * * * 633,241 591, 580 - cº INTERSTATE COMMERCE. - 25 Herewith is given a statement exhibiting the total production of cot- ton in the United States for the last eleven years, 475 pounds gross representing a statistical bale of 450 pounds net : Production of cottom for eleven years. a * Number Number wº§. Gross weight statistical lactual bales #P T crop, pounds. bales,450 & J.'º a • pounds net. 1884-'85 ----------- * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 5,706, 165 480.70 || 2,742, 966, 011 || 5, 774, 665 1883-'84.----------------------------------------- 5,713, 200 482. 66 2, 757, 544, 422 5, 805, 357 1882-'88------------------------------------------ 6, 949, 756 489.95 || 3,405,070,410 7, 168, 569 1881-'82-----------------------------------------. 5,456, 0.48 474.38 2, 588, 236,636 5, 448, 919 1880-'81. ------------------------------------. T. --| 6,605, 750 484.40 3, 199, 822, 682 6, 736, 469 1879-'80------------------------------------------ 5, 761, 252 481. 11 2,771, 797, 156 5, 835, 362 1878-79.----------------------------------------- 5,074, 155 473. 85 2, 404, 410, 373 5,061,917 1877-78------------------------------------------ 4,773, 865 473. 47 2, 260, 285, 666 4, 758, 496 1876–77-----------------------------------------. 4,474,069 468.45 2,095, 901, 297 4, 412,424 1875-'76-----------------------------------------. 4, 632, 313 469. 67 2, 175, 678,045 4, 580, 375 1874-75.----------------------------------------. 3, 827,845 468. 00 | 1,790, 522, 656 3,769, 521 Secretary Parker estimates the coming crop of 1885–86 at 6,650,000 bales, an increase of 944,155 bales over 1884–85. THE RELATIONS OF INTERNAL AND EXTERNAL COMMERCE TO AGRI- CULTURE. The comparative status of our internal and external commerce in their relations to agriculture was exhibited in a report issued by the Depart. ment of Agriculture in November, 1884, in which Mr. J. R. Dodge, the statistician of the Department, says: * Compared with the domestic demand, the foreign is utterly insignificant, either for agricultural or manufactured products. The foreign trade has received a recog- nition in the public mind far beyond its relative importance. Until recently our exports of merchandise failed to yield money enough to pay for imports, and the pro- duction of our mines went to pay the balance. In forty years of the last half cen- tury only nine had a balance in favor of imports. In the last ten, owing to crop failures in Europe and extension of crop area on millions of acres of land given away to native and foreign born citizens, the balance has favored exports. The comparison is as follows: 1835–’74, excess of imports.----- -- - - - - - - - - - - - - - - - - - - - - - - - e - - - - - - - - - - - $1,579,829,806 1875-'84, excess of exports------------------------------------, ----- 1,360,482,467 Excess of imports in fifty years.------------------------------ 219,347,339 Therefore, during the fifty years exports were in debt to imports $219,347,339. So we have failed by that amount to produce enough for home consumption. But our deficiency is far greater, because the values of imports are known to be understated, and they are always the value at foreign ports, upon which the cost of freights and commissions must accrue. - To pay for this excess of imports our gold and silver must be used ; and the excess of such exports over imports in fifty years amounts to $1,068,561,548. So the excess of these payments over the apparent indebtedness from excessive imports of mer- chandise is $849,214,209, an average draft of $16,984,284 per annum for the entire period. It is true that immigrants bring money and other effects, which add to the wealth of our country, and far more than balances the above deficiency. The fact re- mair s, nevertheless, that the domestic production of the United States fails to equal, by a very small difference, the consumption of the United States. * * * The grain supply will hereafter be in larger proportion for domestic con- 26 # iNTERSTATE COMMERCi. sumption, the cotton demand will continue to move in the direction of larger domestic manufactures, and the pork trade will be in larger proportion consumed at home. These three products, which almost monopolize the export trade, have all been the result of undue stimulation, of a disproportionate distribution of farm labor and crop areas, while other products needed for consumption have been unnecessarily scarce and high. The excess of wheat-growing has brought prices to a ruinous point, when sound grain can be bought in Dakota for 40 cents, and again, in London for $1 It is down close to India rates. assº. - In an earlier paper the same authority said: The domestic trade of a country is always its principal commerce. In this country the foreign trade probably represents scarcely $1 in $20 of the grand volume of mer- cantile transactions. It raight be less without the slightest inconvenience to a human being, the importer alone excepted. With an area bounded by the two great oceans of the globe, and touching the domain of everlasting ice on one side and that of trop- ical temperature on the other, there is little need to go beyond its boundaries for any- thing. This continental area includes a range of elevation occupied in agriculture of 7,000 feet, giving variety of climate and production without regard to latitude. . North Carolina and New Hampshire have a range of 6,000 feet and California still greater difference of altitude. North Carolina produces rice and wheat, figs and ap- ples, and can supply both ice and Sugar for its insiduous yet popular potations of peach brandy. The productions of the United States range from lichens to lemons, and include the fruits of all zones, from gooseberries to guavas. With these resources of soil and sun, of coal and iron, of gold and silver, of water for transportation and for power, of mind and muscle, of skill and genius, how stupid the folly of desuetude, how abject the shame of inanity, how injurious the crime of idleness. To go thou- sands of miles for that which we can produce from our surplus labor would be burn- ing the candle at both ends and drifting into the darkness of national poverty. Our population doubled in twenty-seven years from 1853. It will double again, it is estimated by Professor Elliott, in thirty years, in 1910. Assuming thirty-five years and forty years for subsequent duplications, the population will be 400,000,000 in one hundred years from the present date, or nearly one-third of the present population of the world, with a consuming power, there is reason to believe, of nearly half the world. This is the field, rather than a foreign one, which American agriculture is called to fill in production and distribution—a field broad enough to satisfy the largest ambi- tion. º In support of the propositions that every nation must be practically self-supporting, and that the consumption of the United States is the main stimulus of its production, and will be in the future, the same writer cites the following facts: It is true that our production has advanced with wonderful strides. While popu- lation doubled in twenty-seven years the wheat area doubled in fifteen; there were four million farms in 1880 and but two million in 1860. The maize crop of one year is equal to the product of four years in Europe. The supply of wheat per capita was only 4.33 bushels in 1849, 5.5 in 1859, 7.46 in 1869, and 9.2 in 1879. We might pro- duce 20 bushels per capita, but it would be folly to do it. The area in wheat is now 38,500,000 acres, and 12,000,000 acres are cultivated in excess of the wants of the coun- try, the produce of which must be sold abroad, mainly in Liverpool, in competition with the grain of Russia, of South America, of Australia, and of India. It is sent 1,500 miles by land and 3,500 miles by sea, and from California more than half round the world, to compete with the half-civilized fellahs of Egypt and the slavish ryots of India. It is a competition unworthy of American freemen, and utterly unnecessary, being caused by bad calculation in the distribution of crop areas, for while we export one-third of the wheat production we import one-seventh of all the barley consump- tion, and $100,000,000 worth of sugar at foreign valuation, which brings about $150,000,000 in our local markets in addition to the costs and profits of refining here. iNTERSTATE COMMERCE. 4. 27 In this country, certainly, the record of progress of population and production has reversed the dictum of Malthus, which states that pop- ulation increases by geometrical ratio and production by arithmetical ratio. While the population has doubled, production of food has far more than doubled. It is possible until surplus lands are occupied and the limit of productiveness attained still to increase the food supply per head, yet the time will doubtless come when the proportion of surplus will diminish and population will tend to press upon subsistence. Until that day arrives there will be an excess of agricultural production which may be spared to eke out the supplies of countries less fortunate. The tendency, however, is strong in favor of placing this surplus in condensed form, Saving profits of condensing and cost of transporta- tion. Instead of corn, or meal even, beef, pork, lard, butter, and cheese are exported; wheat will be converted into flour and less of it exported; cotton alternately shipped as yarn and cloth. } Asia has little occasion to import the standard food products, and could not pay for foreign subsistence of her dense populations; South America, Australasia, and Africa have immense areas of rich lands un- occupied, and could easily double or quadruple their present produc- tion. Europe is mainly Self-supporting; the eastern half of it is only partially and crudely subjected to cultivation; the western half has Only a Very small area unable to sustain its population, and England has unoccupied land enough to produce every pound of meat and bread that is now imported. So the outlook is not good for the United States to ship breadstuffs in , unlimited quantities throughout the civilized world, and the principal markets, both for bread and meat, must hence- forth be sought at home. The influence of farm machinery on production has been very great, as is shown by the following comparison of the progress of twenty years by Census returns and Supplementary estimates as follows: Products. 1859. 1879. Corn -------------------------------------------------------- bushels 838,792, 740 1,754, 591,676 Wheat --------------------------------------------------------. O 173, 104,924 459, 483, 137 Oats.---------------------------------------------------------- do. -- 172, 643, 185 407, 858,999 Rye ------------------------------------------------------------ do 21, 101, 380 19,831, 595 Barley --------------------------------------------------------- do 15, 825, 898 43, 997,495 Buckwheat---------------------------------------------------- do 17, 571, 818 11, 817, 327 ice------------------------------------------------------s-pounds 187, 167,032 110, 131, 373 Irish potatoes.--------------------------------------------- bushels 111, 148,867 169, 458, 539 Sweet potatoes.------------------------------------------------ do 42,095, 0.26 33, 378, 693 dy - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - tons 19, C83, 896 35, 150, 711 Cotton ------------------------------------------------------ pounds 2, 274, 372, 309 2,771, 797, 156 Tobacco-------------------------------------------------------- do....| 434, 209, 461 472, 661, 157 Peas and beans.---------------------------------------... • - - - - bushels.. 15,061,995 9, 590,027 Market garden “.-----------------------------------------------------|----------------|--------------- Orchard products *---------------------------------------------------|----------------|---- * * * * * * * * * * * * * Hops -------------------------------------------------------- pounds 10,991, 996 26, 546, 378 Hemp ---------------------------------------------------------- tons 74,493 5,025 Flax ------------------------------ • s = * * * * * * * * * * * * * * * * * * * * * * * pounds. . 4, 720, 145 1, 565, 546 Flax-seed --------------------------------------------------. bushels.. 566, 867 7, 170,951 Cane sugar.---------------------------------------------. hogsheads. . 230, 982 178, 872 Maple sugar ------------------------------------------------ pounds. . 40, 120, 205 36, 576,061 Cane molasses----------------------------------------------. gallons.. 14, 963, 996 16, 573, 273 Sorghum sirup ------------------------------------------------- do. --. 6, 749, 123 28,444, 202 Maple sirup.--------------------------------------------------. do. --. 1, 597, 589 1,796,048 Beeswax ---------------------------------------------------- pounds. . 1,322,787 1, 105,689 Boney------------------ tº s m as sº as as e º ºs s = e s m is s = º ºs e º ºs ºs s m e º ºs ºs ºn tº s is sº * * * * * do. --. 25, 366, 357 25.743, 208 Grass seed-------------------------------------------------- bushels 900,040 1, 317, 701 Clover seed.-----. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - do. --. 956, 188 1, 922, 982 Wines.------------------------------------------------------ gallons.. 1,627, 242 20,000, 000 Woolf------------------------------------------------------- pounds.. 75,000, 000 240, 681, 751 Butterf-------------------------------------------------------- do. --. 500,000,000 900,000, 000 Cheese f : --- -------------------------------------------------- do. . . . . 130,000, 000 300,000, 000 Milk consumedf.-------------------------------------------, gallons...| 1,000,000,000 1,800,000, 000 Poultry products f.---------------------------------------------------|----------------|---------------- * As reported in the census, not including an immense home consumption. f Census returns of farms, supplemented by estimates of ranch and town production. 28 INTERSTATE COMMERCE. In view of such rapid increase in production and the declining foreign markets for it, we are admonished of the importance of producing many things we now import, extending and enriching the variety of all needed supplies of food products, vegetable oils, medicinal substances, and vegetable fibers, depending mainly on home consumption, while re- sponding to any foreign demand that may arise throughout the World, especially for extended products that may easily bear the burden of transportation. . THE POWER OF CONGRESS TO REGULATE COMMERC E– A REVIEW OF THE DECLARATIONS OF THE UNITED STATES SUPREME COURT ON THE SUBJECT_PROPOSI- TIONS THAT ARE ESTABLISHED. e The Constitution says (article 1, section 8) that “The Congress shall have power * * * to regulate commerce with foreign nations, and among the several States, and with the Indian tribes,” as well as the power “to make all laws which shall be necessary and proper for carry- ing into execution the foregoing powers.” The language of the Constitution is plain and simple, and leaves very little ground for differences of opinion as iO the intent and meaning of these provisions. But whatever doubts may have existed have been cleared away by the United States Supreme Court, which has repeat- edly construed every part of the commercial clause of the Constitution, and has settled beyond dispute the exclusive power of Congress to regulate commerce among the States. . - ** No arguments which the committee could advance would be as con- clusive and authoritative as these declarations by the tribunal of last resort, and the important principles established will be best understood by reproducing such utterances of the court as bear most directly upon the subjects of the present inquiry. The circumstances which brought about the incorporation of the com. mercial clause serve to explain the intent of the framers of the Con- stitution and the meaning of the language used. It is a Well known historical fact that one of the chief reasons for the change from a con- federation of States to a government by the people, With one Union and one Constitution, was that the confederacy was powerless to raise rev- enue and to regulate commerce With foreign nations and among the several States. This is shown by the fact that the first movement to- wards an amendment of the original Articles of Confederation was to give Congress enlarged power over the subject of commerce. When the convention assembled there was no controversy over the proposi- tion to give to the General Government the control over commerce, and the provision now in the Constitution was incorporated in it as a neces. sity in the interest of the common prosperity of the people. Referring to this, Mr. Webster said: In the history of the times it was found that the great topic, urged on all occasions as showing the necessity of a new and different government, was the state of trade and commerce. * * * The New Jersey resolutions complain that the regulation of trade was in the power of the several States, within their special jurisdiction, in such a degree as to involve many difficulties and embarrassments; and they express the earnest opinion that the sole and exclusive power of regulating trade with foreign States ought to be in Congress. * * * The entire purpose for which the delegates assembled at Annapolis was to devise means for the uniform regulation of trade. They found no means but in a general government, and they recommended a convention ‘t INTERSTATE COMMER.C.E. 29 to accomplish that purpose. Over whatever other interests of the country this Gov- ernment may diffuse its benefits and its blessings, it will always be true, as matter of historical fact, that it had its origin in the necessities of commerce, and for its immedi- ate object the relief of those necessities, by removing their causes and by establishing a wºmiform and 8teady System. The condition of affairs at that time, and the particular reasons which influenced the grant of the power over commerce to Congress, cannot be better expressed than in the language of Mr. Justice Marvin (Metropolitan Bank vs. Van Dyck, 13 Smith's (27 N. Y.) R., 508), as fol- lows: * There existed at the time of the adoption of the Constitution thirteen States, and it was understood that this number would be increased. Each of these States pos- sessed powers common to all independent nations—of regulating their own commerce and the law of contracts; of making money or declaring what should constitute money; and, of course, what should pay debts. They could emit bills of credit; issue their own paper money, and make it receivable in payment of debts. They could discriminate, in regulating commerce, in favor of their own citizens, and against the citizens of other States or nations. Under such circumstances -it was obvious, indeed it was already proved, that there could be no such thing as harmony touching any of those matters. Most of the then States possessed harbors upon the ocean, and were engaged in foreign commerce, and commerce among themselves. Some of the States tried to agree upon a system among themselves, and failed. The system of one State would nullify the system of another. Free importations by one State would render impracticable the systems of other States imposing duties for revenue or for the protection of home industry. Embarrassing and unreasonable regulations touch- ing commerce between the citizens of one State and those of other States would be made. Each State might have a moneyed system unlike that of any other State. Commerce between the citizens of one State and those of other States might be pro- hibited or destroyed. The confederacy had no power to derive a revenue from impor- tations, nor had the States practically this power, as they could never be able to agree on a common system, and owing to their geographical positions any system other than free trade would be practically Inullified by the action of the other States. This state of things could not last. The people were powerless to protect their in- terests. A change was necessary if they were to indulge in the hopes ture prosperity. This practically powerless condition of the people was an important, if not the most important, reason for making an effort to devise a remedy; and the remedy devised was the Constitution. A leading object of the Constitution was to get rid of all con- flicting commercial interests, and, as to commerce, to effect a union of all the people of all the States, great and small, and make them one people, one nation, without di- vided interests, and without the power, as States, to produce divided interests or conflicts. This was a leading idea in favor of the Constitution, and to me it has al- ways seemed the most valuable one. Was this idea carried into effect by the Constitution ? I think it was, clearly and fully. It required several provisions to effect the object—some conferring powers on the new Government, others prohibiting the exercise of certain powers to the State governments. Hence were granted the powers : to regulate commerce with foreign nations, among the several States, and with the Indian tribes; to establish uniform laws on the subject of bankruptcies throughout the United States ; to coin money regulate the value thereof, and of foreign coin, and fix the standard of weights and measures. The prohibitions upon the States, in connection with commerce, are, that they shall not lay duties on imports apd exports, emit bills of credit, make anything but gold and silver coin a tender in payment of debts, or pass any law impairing the obligation of contracts. These provisions, I think, accomplish the object intended, 30 INTERSTATE COMMERCE. namely, the committing to Congress, the common representative and agent of all the people, the exclusive power to establish a uniform system of commerce throughout ... the United States. All these powers have a very important connection with, and re- lation to, commerce, over which the common Government was to exercise great, if not exclusive, control for the common benefit of all the people of all the States. With this understanding of the circumstances which caused the inser- tion of the commercial clause in the Constitution it is in order to con- sider the nature and extent of the powers thereby granted to Congress. In this connection the following inquiries naturally arise: First, What commerce is; second, What is interstate commerce; and third, What is meant by the word “regulate,” or by regulation. Pirst, What is commerce # - Webster defines commerce as “the exchange of merchandise on large scale between different places or communities; extended trade or traffic "; and as “social intercourse, the dealings of one class in society with another.” The meaning of the word, as used in the Constitution, has been very carefully and fully defined by the court of last resort in a number of cases. In the leading case of Gibbons vs. Ogden, 9 Wheaton, Chief Justice Marshall gave a definition which has since been closely followed and is recognized as conclusive, as follows: The subject to be regulated is commerce; and our Constitution being, as was aptly said at the bar, one of enumeration and not of definition, to ascertain he extent of the power it becomes necessary to settle the meaning of the word. The counsel for the appellee would limit it to traffic, to buying or selling, or the intercharge of commodi- ties, and do not admit that it comprehends navigation. This would restrict a general term, applicable to many objects, to one of its significations. Commerce undoubtedly is traffic ; but it is something more ; it is intercourse. It describes the commercial inter- course between nations and parts of nations in all its branches, and is regulated by pre- scribing rules for carrying on that intercourse. The mind can scarcely conceive a system for regulating commerce between nations which shall ” “ * be confined to the prescribing rules for the conduct of individuals in the actual employment of buying and selling or barter. * * * It has been truly said that commerce, as the word is used in the Constitution, is a wnit, every part of which is indicated by the term. If this be the admitted meaning of the word in its application to foreign nations, it must carry the same meaning throughout the sentence, and remain a unit, unless there be some plain, intelligible cause which alters it. In the same case Mr. Justice Johnson added to the definition of the Chief Justice as follows: e Commerce, in its simplest signification, means an exchange of goods; but in the advancement of Society labor, transportation, intelligence, care, and the various me- diums of exchange become commodities, and enter into commerce ; the subject, the vehicle, the agent, and their various operations become the objects of commercial regula- tion. The word was further defined by the same court in the Passenger Cases (7 Howard, 416), where it was held that “commerce consists in selling the Superfluity; in purchasing articles of necessity, as well pro- ductions 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 the idea that transportation is an essential element of commerce is still more plainly stated in the case of the Reading Railroad Company vs. Pennsylvania (15 Wallace, 232), in which the court says: * Beyond all question the transportation of freights or of the subjects of commerce for the purposes of exchange or sale is a constituent of commerce itself. This has never INTERSTATE COMMERCE. * 31 been doubted, and probably the transportation of articies 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 traffic with foreign nations or among the States. The same doctrine was expressed by Mr. Justice Field in the case of the County of Mobile vs. Kimball,(102 U. S., 691), when, after reviewing Some of the notable decisions upon questions involving the construc- tion of the commercial clause, he says: Perhaps some of the divergence of views upon this question among former judges may have arisen from not always bearing in mind the distinction between commerce as strictly defined, and its local aids or instruments, or measures taken for its im- provement. Commerce with foreign countries and among the States, strictly considered, consists in intercourse and traffic, including in those terms navigation and the transpor- tation and tram 8it of persons and property, as well as the purchase, sale, and exchange of commodities. For the regulation of commerce as thus defined there can be only one system of rules applicable alike to the whole country; and the authority which can act for the whole country can alone adopt such a system. Action upon it by separate States is not, therefore, permissible. Language affirming the exclusiveness of the grant of power over commerce as thus defined may not be inaccurate when it would be so applied to legislation upon subjects which are merely auxiliary to commerce. The same justice, in his dissenting opinion in Bridge Company vs. United States (105 U. S., 470), said: . It must be borne in mind that the power to regulate commerce with foreign na- tions and among the several States, extends to such commerce on land as well as to that on navigable waters. There are highways on land in every State on which a far greater commerce, both interstate and foreign, is conducted than that which is borne upon its navigable waters. Congress can require that this commerce shall be as free from unnecessary obstruction as that on navigable waters connecting two or more States or leading to the sea. There is nothing in the Constitution which in any respect distinguishes the regulation it may exercise in either case. Its power, in all its extent and with all its limitations, is the same in both. The fact that navigable waters are natural highways, and canals are of artificial construction, does not affect the power. That is one of regulation of interstate aud foreign commerce by whatever channels conducted. An interesting application of this doctrine was made by the court in the case of the Pensacola Telegraph Company vs. Western Union Tele- graph Company (96 U. S., 1), in which it was held that the telegraph Was an instrument of commerce. Referring to that decision Mr. Chief Justice Waite declared, in Telegraph Company vs. Texas (105 U. S., 460), that— A telegraph company occupies the same relation to commerce as a carrier of mes- Bages that a railroad company does as a carrier of goods. Both companies are instru- ments of commerce, and their business is commerce itself. They do their transportation in different ways, and their liabilities are, in some respects, different, but they are both indispensable to those engaged to any considerable extent in commercial pur- Suits. It has been repeatedly held that the power to regulate commerce in- cludes the regulation of the transportation of persons and property upon the high seas, the lakes, the rivers, or upon railroads or other artificial 32 INTERSTATE COMMERCE. Channels of Communication. As was said by Mr. Justice Curtis in Cooley vs. Board of Wardens (12 Howard, 299): The power to regulate commerce embraces a vast field, Containing not only many but exceedingly various subjects quite unlike in their nature; some imperatively de- manding a single uniform rule, operating equally on the commerce of the United States in every part, and some, like the subject now in question [which was pilotagel, as imperatively demanding that diversity which alone can meet the local necessities of navigation. - - *- From the judicial construction of the word commerce by the court of last resort it is appareut that it has a very wide meaning as employed in the Constitution, and that it includes not only intercourse and traffic but as well the subject-matter of intercourse and traffic, and also the Channels through which and the agencies by which such intercourse and traffic may be carried on. The commerce of a nation indicates its life and power and the prosperity of the people. There is no commerce Where there is nothing to sell, to exchange, or to transport. In this advanced period of civilization the exchange of products of the soil and of manufactures is essential to the welfare of the human race. The means of eXchange must be provided, and every nation has within itself the power to regulate all the elements and agencies that become neces. . Sary to the carrying on of these transactions. What is interstale commerce 3 - While the decisions of the United States Supreme Court may not, perhaps, afford as conclusive an answer to this inquiry as to the pre- ceding one, we believe that they indicate very clearly what the view of that tribunal will be, when it is called upon to more closely draw the line between that commerce which is wholly subject to State authority and that which is exclusively under the jurisdiction of Congress. Within but a few years, comparatively, has there been legislation either by the States or by Congress for the regulation of inland commerce, except as it has been carried on upon the rivers and lakes. When the Constitution was adopted the commerce of the Country was carried on almost entirely upon the water, either with foreign nations or among the States. In the language of the court, in 21 Wallace,470, “commerce by water was principally in the minds of those who framed the Consti- tution.” The condition of affairs has changed Wonderfully since the adoption of the Constitution. The nation has grown from thirteen to thirty-eight States, with nine Territories rapidly filling up with people. We are a nation of 55,000,000 of free, intelligent people, and while our foreign commerce has increased, though not to what it ought to be, yet the commerce among the States, the inland commerce of the United States, stretching, from ocean to Ocean, has increased a thousand fold. The bulk of the inland commercé has left the rivers . and lakes, and now depends upon the railroads of the Country. Internal commerce must be either State or interstate. It has already been shown that the express purpose and theory of the Constitution was to secure commerce between the States against the possibility of embar- rassing restrictions, discriminating regulations, or a conflict of authority between different States. This purpose could only be accomplished in one way, and that was to make every transaction, every shipment, every article of transport—in short, all commerce—subject to but one system of regulation. With this in view, it would seem that the only construction applicable under all circumstances would be that which INTERSTATE COMMERCE. 33 limits the authority of the State strictly to that commerce which is wholly domestic or internal, and which gives Congress exclusive Con- trol over the remainder. That this is the view taken by the Supreme Court is, we think, sufficiently clear from its declaration in Cooley vs. Board of Wardens (12 Howard, 299), in relation to the power to regu- late commerce, which is the key-note to all the decisions, that— Whatever subjects of this power are in their nature national, or admit only of one uniform system or plan of regulation, may justly be said to be of such a nature as to require exclusive legislation by Congress. This doctrine is laid down more fully and emphatically in County of Mobile vs. Kimball (102 U. S., 691), in which case Mr. Justice Field, in delivering the opinion of the Court, said: The objection that the law of the State, in authorizing the improvement of the harbor of Mobile, trenches upon the commercial power of Congress, assumes an ex- clusion of State authority from all subjects in relation to which that power may be exercised, not warranted by the adjudications of this court, notwithstanding the strong expressions used by some of its judges. That power is indeed without limita- tion. It autlaorizes Congress to prescribe the conditions upon which commerce in all its forms shall be conducted between our citizens and the citizens or subjects of other countries, and between the citizens of the 8everal States, and to adopt measure8 to pro- mote its growth and insure its safety. And as commerce embraces navigation, the improvement of harbors and bays along our coast, and of navigable rivers within the States connecting with them, falls within the power. The subjects, indeed, upon which Congress can act under this power are of infinite variety, requiring for their successful management different plans or modes of treat- ment. Some of them are national in their character, and admit and require uniformity of regulation, affecting alike all the States; others are local, or mere aids to com- merce, and can only be properly regulated by provisions adapted to their special circumstances and localities. Of the former class may be mentioned all that portion of commerce with foreign nations or between the States which consists in the transpor- tation, purchase, Sale, and exchange of commodities. Here there can of necessity be only one system or plan of regulations, and that Congress alone can prescribe. Its non- action in such cases with respect to any particular commodity or mode of transportation is a declaration of its purpose that the commerce in that commodity or by that means of transportation shall be free. There would otherwise be no security against con- flicting regulations of different States, each discriminating in favor of its own prod- ucts and citizens, and against the products and citizens of other States. In all its decisions the court has been guided by the definition of in- terstate commerce so clearly expressed by Chief Justice Marshall in the noted case of Gibbons vs. Ogden. He there says: The word “among” means intermingled with. A thing which is among others is intermingled with them. Commerce among the States cannot stop at the boundary line of each State, but may be introduced into the interior. It is not intended to say that these Words comprehend that commerce which is completely internal, which is carried on between man and man in a State, or between different parts of the same State, and Which does not eactend to or affect other States. Such a power would be inconvenient, and is certainly unnecessary. Comprehensive as the word “among” is, it may very properly be restricted to that commerce which concerns more States than one. #. #. * * * yº * But in regulating commerce with foreign nations the power of Congress does not 8top at the jurisdictional lines of the several States. It would be a very useless power if it could not pass those lines. The commerce of the United States with foreign nations is that of the whole United States. Every district has the right to partici- S. Rep. 46—3 34 INTERSTATE COMMERCE. pate in it. The deep streams, which penetrate our country in every direction, pass through the interior of almost every State in the Union, and furnish the means of exercising that right. If Congress has the power to regulate it, that power must be exercised wherever the subject exists. If it exists within the States, if a foreign voyage may commence or terminate at a port within a State, then the power of Congress may be exercised within a State. This principle is, if possible, 8till more clear when ap- plied to commerce “among the several States.” “ * * The power of Congress, then, whatever it may be, must be exercised within the territorial jurisdiction of the several States. In a late case (Tiernan vs. Rinker, 102 |U. S., 123), referring to its de- cision in Welton vs. Missouri (91 U. S., 275), the court said: The court, therefore, held that the commercial power of the Federal Government over a commodity continued until the commodity had ceased to be the subject of dis- criminating legislation in any State by reason of its foreign character, and that this. power protects it after it has entered the State from any burdens imposed by reason of its foreign origin. The court also held that the inaction of Congress to prescribe any specific rules to govern interstate commerce, when considered with reference to its leg- islation with respect to foreign commerce, is equivalent to a declaration that inter- state commerce shall be free and untrammeled, and that this policy would be defeated by discriminating legislation like that of Missouri. The doctrine of this case has never been questioned; it has been uniformly recognized and approved, and expresses now the Settled judgment of the court. The guiding principle of all these decisions is shown by the declara- tion of the court in Henderson vs. Mayor of New York (92 U. S., 272), in which the following language is used : It is said, however, that under the decisions of this court there is a kind of neutral ground, especially in that covered by the regulation of commerce, which may be oc- cupied by the State, and its legislation be valid, so long as it interferes with no act of Congress or treaty of the United States. Such a proposition is supported by the opinions of several of the judges in the Passenger Cases; by the decisions of this court in Cooley v8. Board of Wardens, 12 Howard, 299, and by the cases of Crandall vs. Nevada, 6 Wallace, 35, and Gilman vs. Philadelphia, 3 Wallace, 713 But this doc- trine has always been controverted in this court, and has seldom, if ever, been stated without dissent. These decisions, however, all agree that under the commercial clause of the Constitution, or within its compass, there are powers which, from their nature, are exclusive in Congress; and in the case of Cooley vs. Board of Wardens it is said that “Whatever subjects of this power are in their nature national, or admit of one uniform system or plan of regulation, may justly be said to be of such a nature as to require exclusive legislation by Congress.” There has been some dispute as to the extent to which the States may go in imposing regulations upon the instrumentalities of commerce which may indirectly affect interstate commerce until Congress sees fit to prescribe a uniform plan of regulation. A notable case is that of The People vs. The Wabash, Saint Louis and Pacific Railway Company (105 Illinois, 236), in which this question was squarely met. In this case, which is now pending before the Supreme Court of the United States, the supreme court of Illinois held that the act of that State, imposing a penalty upon railroad companies for unjust discrimination in the rates of freight charged, was generally applicable to contracts for the trans- portation of goods to and from points without the State, and its validity was sustained on the ground that in its application to such contracts it had reference merely to inequalities in the charges made for the distance traversed within the State. The proceeding was based upon the fact INTERSTATE COMMERCE. 35 that a greater charge was made for transporting freight between New York and Gilman than between New York and Peoria, under similar circumstances, the distance from Peoria being greater than from Gilman. The court held that a prima facie case of unjust discrimination was made out, as it was not shown that the inequality in charge Was all for carriage entirely beyond the limits of the State. The view that will be taken by the Supreme Court of such an attempt to regulate that part of an interstate shipment which is within a State is indicated in all the decisions that have been quoted, and quite clearly in Hall vs. De Cuir (95 U. S.,485), which involved an act of the State of Louisiana prohibiting discrimination by common carriers of passengers between persons of different race or color. By its terms the act applied to carriers engaged in transporting passengers from State to State. It was declared void as an interference with interstate commerce, even if construed to be limited to that part of the carriage within the State. Upon this point the court said: While it purports only to control the carrier when engaged within the State, it must necessarily influence his conduct to some extent in the management of his busi- mess throughout his entire voyage. His disposition of passengers taken up and put down within the State, or taken up to be carried without, cannot but affect in a greater or less degree those taken up without and brought within, and sometimes those taken up and put down without. * * * It was to meet just such a case that the commercial clause in the Constitution was adopted. Judge McCrary, of the United States circuit court, in the case of Raeiser vs. Illinois Central Railroad Company, in which suit was brought under the Iowa statute to recover damages for overcharges upon freight shipped from points in Iowa to points in Illinois and Wisconsin, used this language: -- It seems very obvious that the regulation of the transportation of merchandise over a line extending, it may be, from the Atlantic to the Pacific Ocean, is a subject which is in its nature national. It is so because it necessarily concerns the people of the whole country, and is beyond the legislative power of any State. * * * : And Since no State law can have any extra-territorial force, is it not clear that the attempt to enforce the statutes of each of the several States, in so far as the carriage within such State is concerned, would lead to conflicts and disputes which no State authority would be competent to adjust and determine. These considerations, I think, lead inevitably to the conclusion, not only that such commerce is the subject only of na- tional control and regulation, but that any attempt to devolve upon a single State the power to regulate it in part would necessarily give to such State the right to dis- criminate against other States of the Union. & These same questions were presented and considered in the proceed- ings had in the United States courts of Tennessee, to test the validity of the statute enacted in that State for the regulation of railroads, certain provisions of which were held to be an attempt to regulate interstate transportation. In these cases Judge Elammond reviewed at length the decisions of the Supreme Court bearing upon the question of the limit of a State's authority. Referring to the Granger Cases, he said: The decisions amount, we think, only to this: Where a warehouseman or common carrier is engaged in the storage of goods or their carriage within a State, and ex- clusively within it, the rates of charges for such business are subject to legislative control by the State, and the fact that such legislation may indirectly and remotely affect commerce between the States does not invalidate it; because, if Congress bas, by reason of this indirect and remote relation of such local business to interstate com- merce, any right to assert control over what is primarily domestic commerce, only it, 36 . INTERSTATE COMMERCE. is to be presumed, until Congress acts, that it does not intend to displace the right of the State to control its domestic commerce. - & - It was to obviate the necessity for making commercial treaties * * * and to avoid the danger, confusion, and disaster certain to result to commerce between the States from this power of sovereign States over that commerce that the exclusive power was conferred upon the Federal Government “to regulate commerce with for- eign nations, and among the several States, and with the Indian tribes.” ” “ ” This operates as a necessary, wise, and self-imposed limitation upon the otherwise sovereign power of the States over the subject. It is not a police power in any proper sense, and in our judgment much confusion has arisen by so treating it in the struggle to find some method of evading the Federal compact to surrender it. It be- longs, it may be, to that immense and almost illimitable residuum of governmental power which has not been technically classified; but if it has been, there is no better name for it than that by which it is known among all nations—the commercial power, or, as it is called in the Constitution itself, the power to regulate commerce. If the interchange or intercourse be “within the State,” it is properly called do- mestic commerce; if from one to another, international, or, as in our Union, interstate commerce; and the Government may, and often does, where it can control at all, under this power “to regulate commerce,” control the instrumentalities of that com- merce. There are, to be sure, certain limitations on the power, as on all its other powers, arising out of the laws of private right and private property; but it is too late now to deny, in view of these decisions of the Supreme Court, that charges for trans- portation are a matter of public concern, the private property engaged being dedi- cated, so to speak, to a public use, and the Government may therefore exercise cer- tain legislative control of these charges. But non constal that the States may, under our system of government, exercise it. If it be domestic transportation, wholly within the State, they may; nor does it cease to be wholly within because the thing trans- ported has come from without, nor because it may be destined to go, ultimately, beyond the State; but the particular transportation for which the charge is made must be , wholly within the State. If it be partly within and partly without, the State cannot regulate that within and leave the Federal power to act on that without, but has no control whatever over the charges for such transportation. It is in the very nature of the thing itself not local or of domestic concern, and the States have no more power by such a construction or characterization to regulate the rates by the uniform legislation suggested by the Section of the act just quoted than they have to so reg- ulate the rates of postage or the weights of coins. - The definition of interstate commerce " " " is fixed, whether Congress has acted or not, and the real question, as to the States, always is twofold—does the proposed law act upon the commerce itself, or does it act only on the instrumentality? If the first, it is always void; if the second, its validity depends on the circumstances. In concluding his review of the leading decisions of the Supreme Court, Judge Hammond said: The whole list, from Gibbons vs. Ogden, 9 Wheaton, 1, and Brown vs. Maryland, 12 Wheaton, 419, to the latest, point with reasonable certainty to the line between valid and invalid legislation by the States. The Granger Cases must take their places in this line and conform to it, for there is not the least indication of any purpose 50 Over- rule the other cases, and an abundant manifestation in subsequent cases of adherence to them. They show that the States may tax, inspect, police, and in other abundant ways by the exercise of any kind of power they possess, regulate the agencies and in- strumentalities of interstate commerce; they may dig canals, build railroads, im- prove rivers and harbors, establish ferries, build wharves, construct dams and bridges, and control pilotage ; or they may authorize persons and corporations to do all these tlyings, and regulate them after they are constructed or established; but neither in their taxation, their inspection, their policing, nor other exercise of power can they by their regulations act directly on the commerce, as these cases define it, between the States. As to that, until Congress acts, the commerce must be free, INTERSTATE COMMERCE. - 37 In Moran vs. New Orleans (112 U. S., 69), a municipal ordinance of the city of New Orleans to establish the rate of license for proféssions, callings, and business avocations, which directed a tax to be collected from persons running tow-boats to and from the Gulf of Mexico and New Orleans, was held to be a regulation of commerce among the States. and unconstitutional. - - If any further evidence of the views of the court be needed it can be found in one of its latest decisions, in the case of Gloucester Ferry Com- pany vs. Pennsylvania (114 U. S., 196), decided April 13, 1885. The proceedings resulted from an attempt by the State of Pennsylvania to collect taxes upon the capital stock of the company, which was in- corporated in New Jersey, and operated a ferry across the Delaware River between Gloucester, in New Jersey, and Philadelphia. . In deliv- ering the opinion of the court Mr. Justice Field said : Transportation implies the taking up of persons or property at some point and putting them down at another. A tax, therefore, upon such receiving and landing of passengers and freight is a tax upon their transportation; that is, upon the commerce 'between the two States involved in such transportation. It matters not that the trans- portation is made in ferry-boats which pass between the States every hour of the day. The means of transportation of persons and freight between the States does not change the character of the business as one of commerce, nor does the time within which the distance between the States may be traversed. Commerce among the States consists of intercourse and traffic between their citizens, and includes the transportation of persons and property and the navigation of public waters for that purpose, as well as the purchase, Sale, and exchange of commodities. The power to regulate that commerce, as well as commerce with foreign nations, wested in Congress, is the power to pre- scribe the rules by which it shall be governed, that is, the conditions upon which it shall be conducted; to determine when it shall be free and when it shall be subject to duties or other exactions. The power also embraces within its control all the instrumentali- ties by which that commerce may be carried on, and the means by which it may be aided and encouraged. The subjects, therefore, upon which the power may be exerted are of infinite variety. While with reference to some of them, which are local and lim- ited in their nature or sphere of operation, the States may prescribe regulations until Congress intervenes and assumes control of them, yet, when they are national in their character and require uniformity of regulation affecting alike all the States, the power of Congress is exclusive. Necessarily that power alone can prescribe regula- tions which are to govern the whole country. And it needs no argument to show that the commerce with foreign nations and between the States, which consists in the transportation of persons and property between them, is a subject of national character and requires uniformity of regulation. Congress alone, therefore, can deal with such transportation; its non-action is a declaration that it shall remain free from burdens imposed by State legislation. * * * The grant of power is general in its terms, making no reference to the agencies by which commerce may be carried on. It in- cludes commerce by whomsoever conducted, whether by individuals or by corpora- tions. And what could be more explicit than the declarations of the court in the case of Brown vs. Houston (114 U. S., 622), decided May 4, 1885? Speaking for an unanimous bench, Mr. Justice Bradley said: * . The power to regulate commerce among the several States is granted to Cougress in terms as absolute as is the power to regulate commerce with foreign nations. If not in all respects an exclusive power; if, in the absence of Congressional aetion, the States may continue to regulate matters of local interest only incidentally affect- ing foreign and interstate commerce, such as pilots, wharves, harbors, roads, bridges, tolls, freights, &c., still, according to the rule laid down in Cooley vs. Board of War- 38 INTERSTATE COMMERCE. dens of Philadelphia, 12 Howard, 299,319, the power of Congress is exclusive whenever the matter is national in its character or admits of one uniform system or plan of reg- ulation; and is certainly so far exclusive that no State has power to make any law or regulation which will affect the free and unrestrained intercourse and trade be- , tween the States, as Congress has left it, or which will impose any discriminating burden or tax upon the citizens or products of other States coming or brought within its jurisdiction. * * * So long as Congress does not pass any law to regulate com- merce among the several States it thereby indicates its will that that commerce shall be free and untrammeled, and any regulation of the subject by the States is repug- nant to such freedom. This has frequently been laid down as law in the judgments of this court. * * * In short, it may be laid down as the settled doctrine of this court at this day that a State can no more regulate or impede commerce among the Several States than it can regulate or impede commerce with foreign nations. These two decisions, it will be observed, have been delivered since the last Session of Congress, at which the question of regulating inter- State commerce was prominently under consideration. What is meant by regulation. The decisions already quoted indicate very plainly the meaning given by the Supreme Court to the word “regulate,” as used in the Constitu- tion. They show that regulation has almost as wide and Varied a mean- ing as commerce. In its ordinary signification it means the prescribing of rules for the carrying on of commerce, including both transportation and traffic, but it is not limited to that. The power to regulate not only carries with it the power to prevent the obstruction of commerce, but also to facilitate it by whatever means will best answer the purpose. As was said by the Supreme Court in Mobile vs. Kimball— That power is indeed without limitation. It authorizes Congress to prescribe the conditions upon which commerce, in all its forms, shall be conducted. * * * and to adopt measures to promote its growth and insure its safety. This power has been freely exercised by Congress, although hereto- fore it has been used mainly for the government of commerce upon the water. Under this power light-houses, beacons, buoys, and public piers have been established, and there have been numerous statutes enacted for the regulation of shipping, while millions upon millions of dollars have been expended in improving rivers and harbors under the same power. - And in two instances Congress has, without question, exercised the same power by enacting statutes applying directly to the management of railroads engaged in interstate transportation. The first act of this character was that of July 15, 1866, which author- ized railroads chartered by the States to carry passengers and freights from State to State, and to receive compensation therefor, and to con- nect with roads of other States so as to form continuous lines. The second was that of October 1, 1873, which prohibited railways forming part of an interstate line and vessels transporting cattle, sheep, swine, or other animals from State to State, from confining the same in cars, boats, or vessels for more than twenty-eight hours consecutively, without unloading the same for water, rest, and feeding, for at least five consecutive hours. The decisions to which reference has been made conclusively estab- lish, in the judgment of the committee, the following propositions as to the power of Congress, under the commercial clause of the Constitu- tion, to regulate all railroads engaged in interstate commerce within the United States: • INTERSTATE COMMERCE. 39 (1) Commerce, in the meaning of the Constitution, includes the trans- portation of persons and property from place to place by railroad. (2) Commerce among the States includes the transportation of persons and property from a place in one State to a place in another State. Inter- State Commerce is all commerce that concerns more States than one, and em. braces all transportation which begins in one State and ends in or passes through another State. (3) The power to regulate such commerce is vested eacclusively in Congress without any limitations as to the measures to be adopted or the means to be employed in its discretion for the public welfare. (4) The States being without power to regulate interstate transportation, the people must look to Congress &lone for whatever regulation may be mec- 688/try as to interstate commerce. TEIE LEGAL STATUS OF TEIE COMMON CARRIER. Having considered the judicial construction given to commerce, State and interstate, and to the power to regulate such commerce, it is proper to refer briefly to the legal status of the railroads, the medium through which by far the greater portion of the inland commerce is carried on. IRailroads are everywhere recognized as common carriers. They are so treated by the courts, and are held liable for the performance of such duties as devolve upon common carriers under the law. In his work on “Common Carriers” Chitty says: The common carrier is defined to be one who by the ancient law held, as it were, a public office, and was bound to the public, and who to become liable as a common carrier must exercise the business of carrying as a public employment and must under- take to carry goods for all persons indiscriminately, and hold himself out as ready to engage in the transportation of goods for hire as a business and not as a casual occu- pation. - Justice Story defines a common carrier as one who undertakes for hire or reward to transport the goods of such as choose to employ him from place to place. Chitty, Kent, Story, and the law writers generally have given substantially the same definition of what constitutes a com- mon carrier. A common carrier may be a person engaged in transport- ing the goods of such persons as choose to employ him by the use of a wagon, stage-coach, Canal-boat or other vessel on the lake or high Seas, or by operating a railroad. Eſence it was decided that the lighterman who carried goods between wharves and ships for any person who chose to employ him was a Com- mon carrier. He who holds himself out to the World as prepared to carry all goods brought to him must be ready and able to perform all that he advertises to do. He must at least be prepared to do all that he could reasonably be expected to do, and to perform the service in a Safe and suitable manner. A common carrier must be able to carry for all alike, and cannot show any preferences without making himself lia- ble for damages. Much is heard among the people about the giving of undue preferences to one man or one community as against another. Under the common law a common Carrier has no right to give prefer- ences, and is liable in an action for damages for accepting for transpor- tation the goods of one man in preference to another, or for granting favors to one over another in the amount charged for similar Service. Hutchinson, in his work on common carriers, says that— The very definition of a common carrier excludes the right to grant monopolies or. to give special or unequal preferences. It implies indifference as to whom they may serve, and an equal readiness to serve all who may apply in the Order of their ap- plication. 40 INTERSTATE COMMERCE. It will be seen by the foregoing brief general statement of the law as applied to common carriers that no common carrier has the right under the common law to discriminate between persons or places, or to give preferences in any manner. The theory of the common law is that all who are situated alike must be treated alike. Unjust discrimi- nation is the chief cause of complaint against the management of rail- roads in the conduct of business, and gives rise to much of the press- ure upon Congress for regulative legislation. The railroad companies do not recognize as they should the fact that they sustain a different re- lation to the public from persons engaged in ordinary business enter- prises. Railroad companies are not disposed to regard themselves “as holding a public office and bound to the public,” as expressed in the ancient law. They do not deal with all citizens alike. They dis- criminate between persons and between places, and the States and Congress are consequently called on to in some way enforce the plain principles of the common law for the protection of the people against the unlawful conduct of common carriers in carrying on the commerce of the country. If the law as it now stands, and as it has over and over again been interpreted by the courts, in relation to the legal status and duties of railroads towards the public, were enforced, there would be no occasion for either the States or the National Government to take any action with a view to the regulation of commerce, either State or interstate. But the law is not enforced, for reasons which will hereafter be ex- plained, and the experience of all States and nations where railroads have been built shows that the people cannot with safety rely upon the ordinary common law remedies to protect them against unjust discrim- ination and extortion. In the language of one gentleman who came before this committee, “the ordinary courts are open theoretically, but they are closed practically to the individual man who has a grievance.” The man imposed upon by a railroad company in his dealings with it bas under the common law his right of action against the company for damages, and can go into court to enforce his right, but experience has shown that in most cases he does not do so because he cannot on ac- count of the expense, and especially because of the difficulty of making the necessary proof to sustain his action. Hence it is that statutes have been passed in aid of the common law, in many States the rule of evidence being changed in causes between the people and the railroads and provision made for commissions or special tribunals to aid in the enforcement of the law. - It is not deemed best to discuss the law in relation to the care and delivery of goods by Common carriers, or the loss of goods in possession of such carriers, or the exceptions to the carrier's liability under the law as to passengers or goods, as such a discussion would require more space than it would be proper to use in this report. TEIE RELATIONS OF THE RAILROAD TO THE COMMUNITY AND TO THE GOVERNMENTAL AUTHORITY.—THE OBLI. GATIONS IMPOSED BY ITS PUBLIC NATURE AND ITS EXERCISE OF A PUBLI() FUNOTI () N. As a common carrier and as the privileged manager of the business of transportation upon a public highway, the relations and obligations of the railroad to the community and to the governmental authority are essentially different from those of the ordinary corporation which does not enjoy similar exclusive privileges or perform a public function. In the very nature of these distinctions and in the peculiar relations they occasion are to be found the reasons which justify and relıder necessary ~ INTERSTATE COMMERCE. e 41 the legislative regulation of the railroad corporations engaged in the business of transportation for the public convenience. The State pri. marily gains its right to exercise such regulation because the railroad proper, as a line of communication, is a public highway, and necessarily subject to the same supervision as any other public road. But this right might perhaps be restricted to the exercise of the same degree of super- vision as roads and highways are subject to, and might not extend to the management of the business carried on by the railroad company, if based upon this ground alone. As the State itself, in this country, has not deemed it advisable to construct and operate this class of high- ways, that work has been left to private enterprise, and it has been the universal policy, first as a matter of necessity, and since of con. venience, to place the construction and management of the railroad in the hands of an artificial person, which assumed the duties of the State in this respect, and in return was authorized to collect tolls to meet the expenses of operation and maintenance, and to yield a reasonable re- turn upon the capital invested. The only reason for the existence of railroad corporations, is that they might undertake a duty which the State was unable or unwilling to perform, and to that extent they exercise a public function. In the performance of this duty private capital was invested, for the use of which it was proper that due return should be made. It was also necessary to provide in some Way for the expenses of maintenance and operation. As the most convenient and equitable method of raising whatever amounts should be needed for these purposes, such corporations have been authorized to collect these amounts from the persons making use of the facilities for transportation afforded by the railroad; or, in other words, to place this burden, which must in some way be borne by the people, upon the passengers and freight transported instead of upon the property of the entire community, as other taxes are commonly levied. By granting railroad corporations authority to thus levy a tax upon commerce, even with the expressed or implied reservation that their charges should be reasonable, they were necessarily given a mo- nopoly of this right, at least, so far as their own highways were con- cerned, and the fact that such a corporation is in the nature of a monop- oly is a stronger and broader reason why it should be subject to the control and regulation of the State, and widely extends the jurisdiction and rights of the State in that respect. And as the agents of the State in supplying the community with facilities for transportation, the railroad corporations necessarily rest under the same obligations to deal fairly and equitably with all its citizens, without favoritism or dis- crimination, as the State itself. t The public nature of these corporations has been uniformly maintained by the courts and legislatures of the several States. In Massachusetts, for example, as Judge Russell, the chairman of the railroad commission, Stated to the Committee: ...” Our Supreme court has always held very strictly the doctrine that railroad corpora- tions are public corporations, created solely for the good of the public, and that they are to be dealt with accordingly. A great many years ago Mr. Choate said to the leg- slature, “Railroads are made for the people and not the people for the railroads;” and that idea has been adopted by the supreme court in this State. The doctrine that a railroad corporation is a public corporation, existing solely for the benefit of the people and not of fibe stockholders, has been stated by Chief-Justice Shaw and Justice Gray, who was lately our chief justice, as strongly and as clearly as ever any granger asked to have it stated. (Testimony, p. 301.) - 42 INTERSTATE COMMERCE. These principles are well settled, and since the decisions by the United States Supreme Court in the “Granger Cases” brought the railroads to a realizing sense of their obligations they have been sub- stantially conceded. But when we consider the imperial influence which these most mighty engines of civilization can exercise upon the development, progress, and commerce of the Country, making possible the ruin or prosperity of cities, States, or even larger areas of our terri. tory by the exercise of their power, it becomes evident that the State possesses the right to supervise and regulate the administration of Such imperial power upon the broad ground of public policy, in addition to the fact that a railroad corporation manages a public highway, exer- cises a public function, and is in the nature of a monopoly. - The extent of the obligations of the railroad to the State and of the State to the railroad is well expressed by the railroad commissioners of New York, who, in a report to the legislature of that State, summarize their conclusions upon the subject as follows: A common carrier thus created becomes at common law a quasi public servant, bound, as the price of its privileges conferred, to carry all persons and property offered to it for a just and reasonable compensation, and with due regard to public safety and convenience. It is the right and duty of the State, either in the original charter, or by subsequent legislative or other action, to see that the citizen has service to which he is thus entitled, to prevent railroads from assuming rights and privileges not granted, to compel the correction of abuses, and to require the performance of duties assumed. No less has the railroad at least a well-recognized equitable right to insist that the State shall guard its property; that it shall be protected in the exercise of its chartered privileges, and that subsequent legislation shall not exceed the limits above Stated. . ... • This position towards its citizens and towards its railroads the State ever and un- ceasingly occupies. For instance, the right conferred to impose and collect fares and freight rates is the permission of the State to exact from transportation and com- merce a tax in return for a public service required of and performed by the railroad. The amount of this tax, in a just and equitable view, and based on a public policy which duly regards good faith, and which is liberal enough to promote and Sustain prompt, efficient, and constantly improving service on the part of railroads, is that amount which will pay expenses and a fair return upon the capital of the corporation invested. º To keep the tax within this limit is the duty of the State towards its citizens; to sustain it at this point is the corporation’s right, in the enforcement of which the State ought not to interfere. The relations of the railroad to the community and to the Govern- ment are complicated by its corporate character, and by the difference between an investment in a railroad and in an ordinary individual Com- mercial enterprise. As the construction of a railroad is usually an un- dertaking of too great magnitude for the limited capital of a single in- dividual, or even of two or three individuals, it necessarily requires the combination of private capital in a corporation ; such an investment as necessarily becomes largely a speculative one, because of the risks taken by the investor. By placing his capital in a corporation, the in- dividual loses control of it, and must take the chance of having it man- aged to the best advantage by others, and of being fairly dealt with by them. But this is not his only risk. EIe cannot expect any immediate return from his investment. Eſe must look to the future success of the enterprise, not only for his profit, but for an opportunity to turn his cap- ital into other channels. Unless he is fairly treated, and the enterprise be- comes a profitable one, he loses not only his expected profits, but luis en- INTERSTATE COMMERCE. •, 43 tire investment as well. He cannot recall his capital if it is any object to do so. . The merchant who finds it necessary to discontinue Operations because of the stress of competition, of unexpected changes in the Con- ditions of trade, or of continued business depression, can pocket his losses, and either close out his business or transfer his stock to another field without perhaps seriously impairing his original capital. No Such alternatives are open to a railroad corporation. If built where it was not needed, or if located in a region. Where there is not enough traffic to support it—facts that cannot always be determined in advance—its rails cannot be taken up and transferred to a betterfield, nor can it afford to suspend operations. The capital expended is permanently invested in the enterprise for wealor for woe, and the investor's only hope of legitimate profit is in its success. Such investments, therefore, assume very largely a speculative character, in which profits are hoped for commensurate with the risks assumed. On the other hand, however, there are advantages to be considered in this form of investment. Whatever may be the out- come, the investor knows exactly the extent of his liability. If the cor- poration goes to the wall, he loses his money, and that is the end of it. Somebody else comes into possession of the property, but he cannot be called upon to make good the corporation's indebtedness. This protec- tion is needed by small investors, and without them it would have been difficult to obtain the aggregations of capital which have been required for the construction of railroads, but the naturally speculative charac- ter of these investments has been largely increased by the opportunities afforded to those able to secure the control of the combinations of Capital thus brought together. Railroad corporations have been organized and manipulated by speculators; rings within rings have controlled their operations and fattened on their revenues; “railroad wrecking” has be- come a fine art; Values have been made to fluctuate wildly, without due cause; panics have been occasioned by the magnitude of these opera- tions, and the whole railroad system, as well as the commerce of the country, will suffer for years from the effects of those eras of mad specu- lation which are yet fresh in the memory of all. Few railway properties in this country have escaped the injurious effects of speculative manipulation. The processes through which they have passed are familiar, and the result has been a fierceness of compe- tition that stopped at no form of discrimination, reckless rate wars, and a lack of stability and uniformity that has given an element of uncer tainty to all commercial transactions. SOME OF THE DIFFICULTIES OF EFFECTIVE STATE REGULATION. Any absolute or comprehensive regulation of the railroad system of the United States would include the official supervision of every step taken from the granting of a charter, and selection of a route on through all the financial operations incidental to the organization of a company and the construction of the line, and of the policy pursued by the man- agement after the road begins business. While ample authority for Such thorough supervision unquestionably exists, the powers of the States and of the General Government are so divided as to make it dif. ficult, if not impracticable, to secure a uniform system of regulation applicable alike in all the details mentioned to the entire system. The States have chartered the railroads of the United States, and there car be no assurance of concert of action among them, or of any degree of uni- formity in their legislation with respect to the granting of charters or the control of the financial operations of such corporations when or. 44 INTERSTATE COMMERCE. ganized. It was with this difficulty in view that Mr. Simon Sterne made the following suggestion : - & - I recognize the difficulty, and perhaps, for the purpose of meeting that question, - sooner or later we shall have to pass a constitutional amendment to clothe the Gen.- . eral Government with the exercise of the power of eminent domain within the sev- eral States, for the purpose of chartering interstate lines and assigning to existing. State lines fields, and probably, without such a constitutional amendment, whatever exercise of power Congress may see fit to put forth may be challenged, and probably will be challenged, in the courts, as an impairment of the rights of the States; but it is well to recognize a difficulty which presents itself on the outset of the question, for the purpose of seeing whether what we are doing is not merely a tentative meas- ure until we can produce more far-reaching and wider results by changes in the or- ganic law. (Testimony, p. 57.) It was also urged by the same witness that the concentrated powers of these great instrumentalities of commerce had in various States proved too powerful for the State Government. His words were: I do not say that in a hypercritical mood, but it is in human nature that it should be so. You get an institution like the Standard Oil Company, with its $50,000,000 of capital, or an institution like the Burlington and Quincy Railroad, or the Northwest- ern Railroad, running through several States, and you concentrate that power at any State capital, the temptations are almost irresistible to bow to the powers that be, even if not corruptly, for the purpose of gaining its favor, on the part of an ambi- tious young legislator who is a lawyer and who desires to be appointed as counsel for the company in a particular district, and thus to make himself a member of like in- struments of commerce and of influence. They have, like every other great agency, means of corruption that are not merely pecuniary. Then, the press is under their influence to a considerable extent; they are large advertisers; and it becomes a seri- . ous consideration in this country whether, independent of the question of freight. charges and passenger traffic and individual rates, for the purpose of protecting the general wealit is not essential that these instrumentalities should be subordinated to the General Government. (Testimony, p. 67.) Whatever may have been the extent to which the influences alluded to have been used, the fundamental difficulties arising from the consti- tutional organization of our dual system of State and National Govern- ment preclude the possibility of effective and satisfactory regulation of the business of transportation by the States alone. The difficulty oc- casioned by this division of power and jurisdiction between the States and the General Government is encountered at every step taken when an attempt is made to devise a plan of regulation. Nevertheless, while the solution of the railroad problem might be greatly facilitated by the giving of exclusive jurisdiction over all the operations of the entire railroad system to the General Government, there is no occasion to consider the necessity of a constitutional amendment until it has been demonstrated by actual trial that the powers now possessed by Congress –eannot be exercised effectively. - In several of the decisions already quoted, the courts have pointed out the impracticability of allowing each State to impose such restric- tions as it pleased upon the commerce passing into, through, or beyond its borders, and have confined the jurisdiction of the State's authority to the commerce originating and terminating within its own domain, that which is strictly domestic. Commerce must be State or interstate, and either can be subject to but one jurisdiction and set of regulations. This is evidently the only safe rule. The disastrous effects of any other Construction need not be enlarged upon. INTERSTATE COMMERCE. 45 sº In the exercise of their undoubted right to regulate, the States have been hampered by their inability to apply their regulations to inter- state commerce, which comprises, in most instances, the greater portion of the business transacted within their borders by railroads. The es. sence of the effective regulation of business transactions is equality and uniformity, and this is impossible as to two transactions alike in every other respect when one reaches across a State line and the other does not. In the controversies that naturally arose over these questions in different States, as the records of the courts demonstrate, the rail- road companies have not hesitated at évery opportunity to insist upon and take advantage of the exclusive power of Congress to regulate in- terstate commerce. And, on the other hand, the records of Congress show that they have been equally swift to maintain and to deprecate interference with the rights of the States whenever national regulation has been proposed. With its authority restricted to less than half of the business operations of the transportation companies subject to its jurisdiction, the obstacles encountered by a State in the exercise of a satisfactory supervision over the railroads engaged in business within its borders and in the administration of equal justice to all its citizens who might use them are apparent. When these difficulties, with all the opportunities they present for evasion of the State's authority, are un- derstood, it is not a matter of wonder that the various State commis- sions should fail to accomplish all that has been expected of them, but it is rather a matter of Surprise that they should have succeeded in bringing about the beneficial results which are acknowledged as a re- sult of their labors. - IRRESPONSIBLE RAILROAD MANAGEMENT. In the consideration of the proper relations of the railroad to the State and to its citizens it is important that the position occupied by the man- agement as well as by the railroad should be clearly understood. The reckless manner in which railroads are often managed makes it neces- sary to distinguish between the official management of a railroad, which under the existing methods of organization may be irresponsible and governed by selfish personal considerations, and the corporation itself as representing the stockholders and investors whose property is con- trolled by the management. Should the railroad be operated mainly in the temporary interest of the managers it may be used for speculative purposes or in such a manner as to depreciate or destroy the value of the property, thus abusing the rights of the owners and at the same time necessarily injuring the business of the community. Under such conditions the true interests of the corporation itself are not properly recognized and served by the managers, who lose sight of the law that the prosperity of the Corporation depends upon a recognition of the mu- tuality and interdependence of the interests of the railroad and its pa- trons. The possibility and existence of irresponsible railroad manage- ment result in a confusion of ideas and terms that aids in mystifying the railroad problem, and is in itself an evil so far-reaching in its effects as to call for special consideration. If it were proper for this committee, in conducting an investigation of Such a general Character, to institute comparisons as to the manner in which particular roads are managed, it would be no difficult task to show the same difference in results between responsible and irrespon- sible official management that is exhibited in all other business enter- prises. Alld it is believed that a thorough analysis of the complaints 46 INTERSTATE COMMERCE. made against railroads in general, if specifications should be called for, would establish the fact that a number of the leading corporations in the country succeed in so far recognizing their obligations to the com- munity as to leave little ground for complaint on the part of those who have dealings with them, and that no inconsiderable proportion of the evils from which the people suffer should be attributed to the char- acter of the management of the roads most complained of rather than to that unavoidable necessity which such officials plead in justification of their methods, or to the inherent defects of the organization of the entire railroad system, or to the absence of regulation. There is reason to believe that the railroad system of the United States has reached a point where its expansion will be less rapid in the years to come, and where of necessity more attention must and will be de- voted to the science of management. As a whole, the system is still in a formative state, and it is impossible to foretell with accuracy the future character or direction of its development. It may not inaptly be compared to a youth who has by rapid growth attained the stature of manhood, but whose mental and moral development has been out- stripped by his physical growth and does not yet fairly indicate his future character or disposition. - . The fact that it has been possible for some of the best railroad prop- erties in the country, possessing no greater natural advantages than are enjoyed by others similarly situated but less successful, to be so managed as to give occasion for no special complaint from any quarter, and the further fact that, as a general rule, the smallest proportion of complaints are charged against the more prosperous roads, show that in the railroad business, as in every other, honest and efficient manage- ment is the wisest and most profitable. - In the light of these facts there is at least ground for hope that the evils directly resulting from reckless and irresponsible railroad man- agement may in time bring their own remedy, and that the demand may some time cease for officials whose usefulness is measured by their capac- ity to deceive and cheat their competitors. Until that period arrives, reliance must be had upon legislation for the prevention of inequitable and reprehensible practices which have become recognized features of railway management. While it is sometimes necessary to recognize the distinction that may exist between a raßroad as a corporation and its management, it is equally important to bear in mind that measures which may be for the interes, of individual shippers may not be for the interest of the com- munity. The evils which individuals see most plainly are those which directly affect themselves, and the tendency is to suggest and ask for measures of regulation calculated to remedy the particular difficulty With Which each person Comes in contact. It is natural that these Questions should usually be looked at from a local standpoint, but the legislator must take a broader view of them. The true interests of a railroad corporation are identical with those of the community as an entirety, and the true principle which should govern the action of leg. islators and railroad officials is lost sight of when undue preference is given to the interests of any particular class or locality, either by the managers of the road or by the legislation enacted for its regulation; and this is equally true whether the attempt be made to unduly favor the interests of the stockholders, or to artificially build up certain cities or localities, or to extend undue advantages to those engaged in any given industry or branch of trade, INTERSTATE COMMERCE. 47 THE PROTECTION OF STOCKHOLDERS. It is a singular feature of the existing condition of affairs that legis. lation is now asked of Congress for the protection of the interests of stockholders almost as urgently as for years past it has been sought for the protection of the people who use, but do not own, the railroads. This demand was voiced by Mr. George R. Blanchard, a recognized representative of the railroad interest, who based the request upon the following grounds: -- - - The Congress of the United States owes the investors in the securities of legally organized railroads just as much protection and encouragement as it owes the farm- ers, who are not investors in, but do greatly use, these railroads. In other words, the broad idea of every national legislator I have ever met is that his duties extend to all classes of people. Look, for example, at the widespread ruin that has come upon the thousands of investors (not the speculators) of this country by cut, preferential, and therefore discriminating, and unstable rates, in the last four years, as compared with the abscence of ruin to the farmers of this country. The bona fide investors have lost millions out of their pockets from the voluntary reductions in rates or the con- tests of their companies, but from whatever cause they have in every case benefited the farmers and others; and I say that one of the views your committee ought to hold is the equally interested and just protection of the investors who own the rail- ways, as well as the receiver and sender of traffic over them that do not own them. (Testimony, p. 16].) - In answer to an inquiry as to who are the investors in railways, Mr. Blanchard said: I believe the books of sound railway companies will show that about 80 per cent. of their bonds are held by a class known as investors and bondholders, and the remain. ing 20 per cent. are spread through small holders in all the avenues of life. While, as carefully expressed by Mr. Blanchard, the justice of the claim that the stockholding interest is entitled to the same degree of protection and consideration as that of the patrons of the railroads may be admitted, it seems impracticable for Congress to devise specific regulations for the protection of stockholders, for the reasons suggested by Mr. Sterne, as follows: * I take it Congress will meet with considerable difficulty in any attempt to protect the stockholding interest. As a rule railway corporations have been chartered by the States and not by the General Government. Therefore, as to their relations to the stockholder and to the investor, they will claim entire immunity from Congress. ional legislation in that respect; and any law you may recommend the passage of. and that may finally get upon the statute-book, which will attempt the regulation of the financial relations of the corporation to its stockholders, or the director to its stockholders, will meet with determined opposition on the part of the railroad corpo. porations as unconstitutional, on the ground that that is not the regulation of com- merce, for in that respect they do not perform any public function, but that is a pri- vate relation between the stockholder and the corporation, and if the directors see fit to cheat and Swindle the stockholders it is none of the business of Congress, for they are responsible to the particular States which gave them their charters and created their organizations. Otherwise I should suggest that but for that difficulty of power it would be your duty to recommend some form of protection to stock- holders analogous to that which exists in England, where the stockholding interest is better protected than in the United States. Under the English law as the stock- holding interest of the individual shareholder increases his relative voting power decreases. A man has one vote for every share up to ten; then he has one vote for every five shares up to one hundred, and then one for every ten beyond that; so that 48 - INTERSTATE COMMERCE. his progressive power does not increase arithmetically with his increase of stockhold- ing interest. The small shareholder is protected by the English legislation through- out, so that he is not overslaughed by the large stockholding interest. Then they have a much more direct responsibility of the directors to the corporation. They are required to advertise semi-annual meetings, to have them at certain public places, and they are required to do many things in the way of reports which we have neg- lected to provide for. Perhaps the most potent and beneficial result that could be accomplished in the way of improvement of legislative methods as between the direc- tors alıd the stockholding interest is the introduction of some system of minority representation in boards of direction, so that the board of directors would be a reduced photograph of the whole stockholding interest. (Testimony, p. 82.) THE CONSTRUCTION OF UNNECESSARY RAILROADS. The committee has been impressed by the unanimity with which the witnesses examined agreed in attributing the evils most complained of to transactions which have been made possible by the lax general legislation of the several States, such as the construction of unnecessary railroads for speculative purposes, fictitious capitalization, and all the fraudulent financial schemes by which such enterprises have been notably charac- terized. It has been contended by the railroad officials that the funda- mental cause of the evils admitted to exist has been the building of unnecessary railroads, and to this cause they attributed the disastrous wars which have demoralized business, which have enormously depre- ciated the values of railway securities, and which have led to every wa- riety of objectionable discriminations. - - Commissioner Fink, for example, attributed the practice of unjust discrimination in all its varied forms to “the fact that there have been created in this country under the laws of the several States some fifteen hundred independent railroad companies, each one having the legal right to establish such tariffs as it may see fit, and under such circum- stances it must not be expected that tariffs constructed independently by so many companies should not be conflicting and unjust, considered as a whole.” In his opinion, “the first cause of all these evils is the building of unnecessary roads.” & Mr. George R. Blanchard took the position that the laws of the United States and of the States have encouraged the building of par- allel roads, and that there ought to be some way of deciding whether a new road was needed, or of confirming the purpose to build it, or of putting its building under just limitations. And Mr. Frank J. Firth, of Philadelphia, president of the Erie and Western Transportation Company, added his testimony, as follows: The community at large is vastly more interested to-day in devising some proper method to restrict the needless increase of transportation facilities, and the serious commercial disturbances resulting therefrom, than it is in any other phase of the transportation question, There are few citizens, whether capitalists or laborers, who are not interested in transportation securities. If the money of the capitalist is in bank stock, trust or insurance companies, he will find the capital and surplus of these companies largely invested in and dependent on the railways. If the laborer de- posits his hard-earned savings in the saving banks, it is to find that these institu- tions are also investors in and largely dependent on the railways. The most serious problem that will confront the national board will be how to pro- tect the railway property of the country from the utter ruin that threatens it as the result of the unrestrained enlargement of the transportation facilities of the country that is now liable to take place at any time that a band of speculative capitalists may see an opportunity to make a dishonest profit by a creation of such facilities and unloading their so-called securities on a confiding public, INTERSTATE COMMERCE. 49 The statistics of railroad construction show that the wonderful ex- tension of the system within the last few years has been out of propor- tion to the development of the country and the demand for increased transportation facilities, and this apparent overproduction of railroad lines accounts in a measure for the depression from which that interest is suffering. During the period of five years, including the years 1870, 1871, 1872, 1873, and 1874, there was an increase of 27,252 miles in the total railway mileage of the United States, or 15 per cent., the average yearly increase being 5,450. In the next similar period, covering the years 1875, 1876, 1877, 1878, and 1879, which was a period of unusual financial depression, the increase in total mileage fell to 14,114 miles, or 11 per cent., the average annual increase being 2,822 miles, or but little more than half of that of the preceding period. But within the last five years prior to 1885 the total mileage has increased from 86,497 to over 125,000 miles, a total increase of some 39,000 miles, or about 45 per cent, and an average yearly increase of 7,800 miles. During this last period the total amount of capital reported invested in railroads increased from $4,800,000,000 to about $8,000,000,000, an increase of over $3,000,000,000, or over 62 per cent., within five years. Such a remarkable expansion has never been witnessed in any other important interest or industry in any country, and its inevitable effect upon the general prosperity can be better appreciated when it is remembered that according to the census reports the railroads represented over 12% per cent. of the esti- mated actual wealth of the United States in the last census year, and are now supposed to represent 20 per cent. thereof. But, whether necessary or unnecessary, these new lines have been constructed, and they have come to stay. They have been built under authority of law, and it is too late to question the legitimacy of the purpose which inspired their construction. While railroad securi- ties continue to depreciate, while dividends continue fitful and un- certain, and while capital grows more and more timid, there is little danger to be apprehended from speculative railroad building in the near future. But the experience of mankind admonishes us that his- tory will repeat itself, and that these speculative eras are periodical; and with a few years of general prosperity it is safe to assume that the bard-earned lessons of the past will be disregarded, and that the mania for speculative construction will break out again. Just at this time, therefore, when the evils that have been experienced from this cause are most apparent and generally admitted, an unusually favorable op- portunity is presented to guard against their repetition in the future. If a thorough investigation could be made into the history of the vari- ous enterprises which are denounced as unnecessary and as speculative ventures, with a view to ascertaining the causes which influenced the construction of such new lines, the Committee is satisfied that it would be made clear that, while some of these projects were inspired by the personal self-interest of the promoters, who counted upon gaining hand- Some profits at the expense of a confiding public, in every case these operations were made possible by the misconduct of the lines they were intended to injure, and in most cases they were actively aided or en- tirely engineered by rival lines. It has been the settled policy of the stronger corporations to secure, by all means within their power, the absolute control of all the traffic possible. To accomplish this purpose they have endeavored to obtain possession of the roads tributary to them, especially at competing points, in order to divert traffic away from their competitors. These in turn, animated by the predominating spirit of rivalry, and guided by the same S. Rep. 46–4 50 INTERSTATE COMMERCE. policy, have in many instances constructed new feeders through terri. tory already supplied with all the transportation facilities the traffic would legitimately support. In this Way great Wrongs have manifestly been committed, for which the railroads themselves have been directly responsible. Not only have the expenditures upon such uncalled-for lines robbed investors.of their legitimate profits upon investments pre- viously made in the lines pursuing this policy of reckless extension, but the addition of every unnecessary road has imposed an unjust burden upon the public. - - It cannot be claimed that there is any obligation on the part of the community to support an unnecessary road, but when once it is put in operation and fastened upon the public it will contrive thereafter to live at its expense. It is contended by railroad men that in such cases the losses fall entirely upon the railroads; that there is only so much business to be carried, that competition-keeps the rates down, and that even where the business is divided and carried at greater expense the people pay no more than before. - This may be partially true, but the fact still remains that the con- struction of every new road imposes an additional burden or tax upon commerce for its maintenance, and the people have a right to demand protection against the imposition of such a burden Without any benefits being conferred in return by way of compensation. & It is evident that the cost of moving the traffic between two given points will be greater when the business must meet the expense of maintaining and operating several lines than when divided among whatever lesser number may be able to furnish all the facilities for transportation required. The cost of doing the business, without any, regard to making profits, is necessarily increased when two organiza- tions, two working forces, and two lines of road are maintained and all the facilities are duplicated to do the work which one organization can do. And while the addition of a line that is not needed may not, per- haps, result in higher rates being charged, it is none the less a burden upon the Qommunity if it increases the cost of operating lines prºviously existing, and thereby prevents them from providing improved facilities or from making the reductions in rates which the public would other- wise be entitled to secure as business increased. These propositions would be self-evident if all the roads in the United States belonged to and were operated by the Government, and would be equally clear if they were all operated in the public interest, as they should be. In searching for a remedy for the evils resulting from unrestricted construction our attention is naturally invited to the English system. The restrictions placed upon railroad building in England have not. hindered the steady growth of the system, but have tended rather to secure better roads and better management. As is known, the con- struction of an English railway cannot be entered upon without thorough investigation as to its plans and purposes, the financial re- sponsibility of its promoters, public discussion of the project in all its bearings, and the approval of Parliament. If the proposed enterprise is opposed, as it is likely to be, a costly contest follows continuing, perhaps, through several sessions. Every community, property owner, or person affected has an opportunity to be, heard, experts are em- ployed on both sides, and the result is an exhaustive inquiry into the merits of the projected undertaking. This system is so expensive that it has been asserted that 10 per cent. of the capital of the English rail. Ways las ineen expended in parliamentary contests, but it has unmis- takable advantages in restricting purely speculative enterprises, and in INTERSTATE COMMERCE. 51 compelling projectors to establish affirmatively their own responsibility and good faith and the merits of their enterprises. *. The adoption of such a system in the United States is not practicable, although there are many important considerations demanding the placing of greater restrictions upon the starting of railroad enterprises, and the requirement of proofs of responsibility and good faith from their promoters. Proper legislation by the States would go far to remedy the evils to which attention has been called, such as the adoption of measures which would at least compel those proposing to build railroads to build them with their own money. This could be accomplished by providing that no corporation should have the right to commence the construction of a railroad until it had furnished proof to some desig- nated authority that a reasonable per cent. of its estimated cost had been provided. This would certainly be wiser than to allow, as is now done in many States, the incorporation of railroad companies under general law by parties who have only to pay the fees of filing and re- cording to acquire the right to condemn private property and the power to materially affect the value of existing lines, when the only purpose is to further private speculation, and the necessary result will be a public injury. - e” The importance of affording better guarantees to the investment of capital in future legitimate railroad enterprises, and of maintaining the credit of American railway Securities at home and abroad, naturally. suggest the inquiry whether any remedy for the evils that have been pointed out lies in the hands of Congress. The peculiarity of the sit- uation is that, so far as concerns the charter restrictions which have been suggested, the jurisdiction of the States extends over both the State and the interstate roads; and the committee, after due consideration of the questions involved, does not believe that Congress, by virtue of its undoubted power to regulate interstate transportation can, without in- terference with the rights of the States, exercise any direct or indirect control over the granting of charters to railroads by the States or over the other proceedings preliminary to their construction. * FICTITIOUS CAPITALIZATION. Another serious evil incident to the prevailing methods of railroad management, and One Which is especially conspicuous in connection with the construction of unnecessary roads, is fictitious capitalization, popu-º larly known as Stock Watering. This pernicious practice has unques- tionably done more to create and keep. alive a popular feeling of hostil- ity against the railroads of the United States than any other one cause. It has been the favorite device adopted to illegitimately increase the profits of these corporations and their speculative manipulators, and has been made use of to cover up and conceal from the knowledge of the public the returns really received from the capital actually invested. It has encouraged extravagance and corruption; has been made the means of Swindling innocent investors out of millions of dollars; has promoted Stock gambling, and, Worst of all, has imposed a serious and Continuous illegitimate burden upon commerce. In the words of Mr. F. B. Thurber, “Excessive capitalization operates as a mortgage upon the industry of the Country, and as a machinery for concentrating wealth in few hands wherever the power exists to impose rates for transporta- tion which will yield dividends on watered stock.” By reference to the statement of Mr. Poor (testimony, p. 228), the extent to which this vicious practice has been indulged in will be better A 52 INTERSTATE COMMERCE. understood. Mr. Poor estimates that of the capital stock, bonds, and other evidences of indebtedness issued by the railroads of the United States, amounting in the aggregate at the close of 1883 to $7,495,471,311, at least $2,000,000,000 represents what is known as “watered stock.” Others have pronounced this estimate too low ; and attention is invited to the statements of Messrs. Poor, Sterne (p. 79), Thurber (pp. 274 and 295), O’Donell (p. 46), and King (p. 130), for illustrations of the effects of this practice. As the committee is not prepared to suggest any method by which Congress can directly regulate such financial operations on the part of railroads chartered by the States, it is only deemed necessary at this time to call attention to the need of State legislation calculated to effect- ively check such speculative transactions. - - The committee is, bowever, of the opinion that Congress can aid ma- terially in bringing about this much to be desired result by eausing the financial operations of all interstate roads to be thoroughly investigated and by requiring of them such detailed reports as will accurately ex- hibit their actual Condition and the net results of their business. There is no uniformity in their methods of book-keeping or any guarantee that the reports published honestly répresent their true financial condi- tion, nor can there be until they are required to adopt a uniform system of accounts, and provision is made for a thorough investigation and analysis of their accounts by trained experts representing the public. The publicity which would attend such investigations and reports would of itself have a potential influence in preventing illegitimate transactions in the future, and would awaken a public sentiment strong enough to secure whatever State legislation might be found necessary. The committee further believe that such investigations should be conducted under the direction of a national railroad commission, and that the importance of this work furnishes a strong argument in favor of the creation of Such a commission. • g , , THE WARIOUS METHODS OF RAILROAD REGULATION. Various methods of compelling the performance by railroads of their public obligations and of preventing and correcting abuses in their . dealings with the community have been tested by other nations and by the States of the Union, and it will be instructive to review these efforts at regulation before entering upon the consideration of the necessity for Congressional action. - The introduction of the railroad brought into the world an untried and powerful force, the possibilities of which are even yet but imperfectly understood, and its operation brought important questions which of necessity were met and decided blindly, without the advantage of prec- edent or experience, and without any adequate appreciation of the unforeseen and manifold changes that have since resulted through its gency. During What may be termed the era of construction the chief consideration that influenced the people and the legislators of Great britain and America was how to secure railroads, not how to control them. It was many years before the necessity of control became ap- parent or the matters over which control was needed became under- stood. The construction of railroads was at first authorized by special. ' charters. When the first charters were granted it was supposed that the railroad would be merely a modification of or an improvement upon the public highway; that it. Would simply furnish a line of communica- INTERSTATE COMMERCE. - 53 - tion open to all, like a canal, and that it could be used at pleasure, as a Water route is used, by all who might be disposed to place upon it means of Carriage. It was also supposed that the railroad would be used only for the carriage of passengers and not for the transportation of freight, except perhaps to a limited extent. How thoroughly this misconception prevailed is illustrated by a report made to the New York legislature as late as 1835, in which the four leading engineers of that State expressed the following remarkable opinion: The railroads admit of advantageous use in districts where canals, for the want of water, would be impracticable. They will probably be preferred where high veloci- ties are required, and for the transportation of passengers, and, whder 80me circum- stances, for the conveyance of light goods. ...” The supposed analogy between the railroad and the public highway in their relations to the community gave direction to the earlier legislation of England and the United States. And even when the discovery was made that there was an element of monopoly inseparably connected with the business of transportation by rail, the earlier efforts at regula- tion were directed at the limitation of the profits of the corporation rather than towards the protection of the shipper. The widely varying methods which have been adopted by different Governments in dealing with the problems of railway development and regulation may be grouped as follows: 1. The policy of private ownership and private management— (a) Without interference or supervision by the Government. - (b) Subject to compulsory and penal legislation for control and regulation of rates. (c) Subject to investigation by a commission with advisory powers, and depending largely upon public opinion for the enforce- ment of its recommendations. - ... • (d) Subject to investigation by a commission with power to fix and regulate rates. 2. Exclusive State ownership and Government management. 3. State ownership and private management under Government super- vision and control. - - 4. Partial State ownership and management in competition with pri- vate ownership and management. - Begulation through state ownership has been practically unknown in the United States. It is of foreign origin and is foreign to the charac- ter of our institutions. The time may come when the people.of the United States will be forced to consider the advisability of placing the railways of the country completely under the control of the General Government, as the postal service is, and as many believe the telegraph Service should be. This would seem to be the Surest method of secur- ing the highest perfection and greatest efficiency of the railroad system in its entirety, and the best method of making it an harmonious whole in its operation and of bringing about that uniformity and stability of rates which is the greatest need of trade and commerce. But the dan-e gers to be appreheuded from the giving of such vast additional power to the Government will always prove a formidable barrier to the adop- tion of such a policy, and this committee sees no necessity for consider- ing its advantages or disadvantages until other methods of regulation more American in spirit have at least been given a trial and have proved unsatisfactory. Nor is it deemed important to investigate in detail the experience of those European nations in which the policy of State own- ership or management in one form or allother has prevailed. 54 - - INTERSTATE COMMERCE. In those nations the railroad question has presented itself under dif- ferent conditions, and has admitted of methods of regulation wholly imprácticable in the United States, by reason of the marked differences in the organization of the machinery of government and in the customs, temper, and habits of thought of the people. The English railroad Sys- tem, however, has grown up under conditions more nearly resembling those prevailing upon this side of the Atlantic than those existing in any other country. . It has been developed under the operation of the principle of private ownership and management subject to Parliamentary control, and substantially all of the methods of regulation proposed in this country had first been tested there. The English people early undertook the legislative regulation of their railroads. They have been considerably in advance of us in dealing with the difficulties that have been encountered, and have given the subject no little attention. - For these reasons the experience of England is of more interest and Value to us than that of those nations in which the policy of state own- ership has been more or less generally adopted, and these reasons seem to warrant a glance at the efforts which have been made in that country for more than fifty years to unravel the complications of the railroad question, and to hit upon a satisfactory method of enforcing the per- formance of public obligations and of adjusting the relations between the railroads and the people. The information on these subjects here- with submitted is based largely upon the statements contained in the numerous reports which have been made by Parliamentary Committees. THE COURSE OF RAILROAD LEGISLATION IN ENGLAND– WORKINGS OF THE ENGLISH COMMISSION.—TEIE PRES- ENT STATUS OF AFE AIRS. When railroad construction began in England that country already had quite a complete system of canals, with which the new methods of transportation came immediately into active competition. By the char- ters first granted the railroads were required to admit to their lines the cars and locomotives of other companies and individuals, and the acts usually prescribed the maximum tolls to be charged for such service. These were regulations which it had been found necessary to apply to the Canals, in the management of which abuses had been complained Of Somewhat similar to those that afterwards characterized the manage- ment of railways. Competition between the different carriers who were expected to use the route was relied on to secure to the public needful facilities and fair rates under these provisions: But this was not the result, and within ten years after the opening of the first railway it was generally recognized that a railroad must be to some extent a monopoly, because the Service to be performed was of such a nature that the high- est degree of efficiency would be attained and the convenience of the public Would be best subserved by committing the work to but one car- •rier. It is Worthy of remark that even at that early period in railroad history the future direction of the development of the system was clearly foreseen by at least one man. - * In the words of Mr. Sterne : I have in hand a speech delivered in the House of Commons by Mr. James Morrison on the 17th of May, 1836. Mr. Morrison was the A. T. Stewart of England, and died loaving a fortune of four or five million pounds sterling. He was a member of Parlia- ment, and he told his associates, as early as 1536, that their maximum rates would be INTERSTATE COMMERCE. 55 sof no value, that the economies of railway transportation from decade to decade, and she improvement of railway transportation and the development of railway traffic, would make their maximum rates ridiculously high, and would be an excuse for ex- tortion in individual instances. Indeed, the clear understanding which he had of the railway problem, as early as 1836, was absolutely marvelous. But no attention was paid to his recommendation; it was voted down. They recognize now, however, that Mr. Morrison was one of the few men who then foresaw the railway problems of the present as they are now developing. (Testimony, p. 70.) The new questions raised by this discovery of the element of monop- oly in railroad transportation were considered by a Parliamentary com- mittee, of which Sir Robert Peel was a member, and which reported in 1840 that the method of competition which has been described was im- practicable; that monopoly upon each line was inevitable; that a single management of each railway was expedient, and that these changed conditions made necessary the protection of the public interests, for the reason “that the interest of the companies was, to a certain extent. only, that of the public.” At the same time the committee expressed the belief that “an enlightened view of their own interests would always compel managers of railroads to have due regard to the general advantage of the public.” - - * It was supposed that the principles of free trade would apply in the construction and operation of railroads, and it was quite naturally ex- pected that this business would be subject to the same natural laws of competition that governed and regulated other commercial enterprises and Operations. - While these, theories held sway parallel lines were looked to as an effective means of regulation. Parliament encouraged the building of competing lines, and this policy brought on a period of great activity in railroad construction and speculation. But the effects of competi- tion between different lines were not what had been anticipated, and at- tracted so much attention that in 1844 another committee, headed by Mr. Gladstone, was appointed, which took under consideration the ques- tion of competition and management, and submitted in all five reports. The second report recommended the appointment by Parliament of pri- vate bill committees to examine into the propriety of proposed competing schemes, and the third expressed the following conclusions: ... “ That the indefinite concessions made to the earlier companies had be- come unnecessary; that competition between railways would do more harm to the companies than good to the public; that the effect of mo- nopoly upon the public directly and upon the railways indirectly ought to be guarded against, and that in authorizing new lines Parliament should reserve certain powers to be exercised after a time. \ The idea of state ownership as an effective means of regulation capti- wated this committee, which became convinced that the people must in one way or another pay for whatever transportation facilities they en- joyed, and that the main question was how to secure by legislation “the greatest amount of accommodation at the least cost.” And the general conclusion reached by the committee in its final report was that regula- tion was to be depended upon rather than competition. These reports led to the passage in 1844 of a law looking to the ultimate acquisition of the railways by the Government, and prescribing the terms of their purchase at the expiration of twenty-one years should that policy be de- cided upon. During this interval another unexpected characteristic of railway man- agement came prominently into notice. The addition of too many com- 56 - INTERSTATE COMMERCE. peting lines developed a tendency toward amalgamation, and verified George Stephenson’s axiomatic statement that “Where combination is possible, competition is impossible.” Accordingly, in a report made by the Board of Trade of the United Kingdom relative to the numerous amalgamations proposed in 1845, it was recommended that amalgama- tions should not be permitted by Parliament when the purpose was to avoid competition, but only between branches and main lines or when continuous lines were formed, and then only after due consideration. Another committee, appointed in 1846, discovered that where amalga- mations had not been authorized the roads often reached the same end through private working arrangements, some of which virtually amounted to consolidation, and that they avoided competition wher- ever practicable. On the recommendation of this committee that it was necessary to establish a department of the Government to take “super- vision of the railways and canals, with full power to enforce such regu- lations as may from time to time appear indispensable for the accom- modation and general interests of the public,” the railway commission was created, but was only allowed to exist until 1851, when its duties were transferred to the Board of Trade. Meantime the efforts at amal- gamation grew more and more determined, and the process went on by the consent of Parliament, notwithstanding all the restrictions imposed upon it, and despite the growing public dread of its effects. Still another committee inquired into this vexed question of amalga- mation, and its elaborate reports upon the subject brought about the passage of the “canal and railway traffic act” of 1854, usually known as the Cardwell act, which has been the model of much of our State legislation against unjust discrimination. The purpose of the act was to prevent undue preferences, and to compelinterchange of traffic between railways and between railways and canals upon equal terms. (See tes- timony, p. 58.) This act established two important principles that have since been generally followed. One was that every company should be compelled to afford the public the full advantages of the convenient interchange of traffic from one line to another. The second was that the companies were under obligations to and should be required to make equal rates to all under the same circumstances. - The time when the state could take possession of the roads came in 1865, and a royal commission was appointed, which gathered a great deal of evidence and went into the questions presented quite fully. The most important conclusions of the commission have been Sum- marized as follows: - That it is not expedient for the Government to avail itself of its reserved right to purchase railways. That Parliament should not interfere with the incorporation and financial affairs of railway companies, leaving such matters to be dealt with under the “joint stock companies act,” limiting its own action to regulating the construction of the lines and the relations between the public and the companies so incorporated. t That railway companies should be bound, to run at least two trains a day for third- class passengers. That it would be “inexpedient, even if it were practicable, to adopt any legisla- tion which would abolish the freedom which railway companies enjoy of charging what sum they deem expedient within their maximum rates, when properly defined, limited as that freedom is by the traffic act.” That railway companies should be required to make stated reports to the board of trade in such form as the board may require. INTERSTATE COMMERCE. 57 Finally, in 1872, a joint select committee was appointed and made a most thorough investigation of the railroad question. The report of this committee passed in review the history of England’s legislation during its experience of forty years. It was shown that little had been accomplished, although thirty-three hundred acts had been passed and an expenditure of some £80,000,000 had been imposed upon the companies. It was also shown that the process of amalgamation had gone on with little regard to the recommendations of committees, com- missions, and Government departments, and the result was that “While committees and commissions carefully chosen- have, for the last thirty years, clung to one form of competition after another, it has, neverthe- less, become more and more evident that competition must fail to do for railways what it does for ordinary trade; and that no means have yet been devised by which competition can be permanently maintained.” Nor did the committee see any reason “to suppose that the progress of combination has ceased, or that it will cease until Great Britain is di- vided between a small number of great companies.” At the same time, however, the committee made it evident that in the past amalgamation “had not brought with it the evils that were anticipated, but that in any event long and varied experience had fully demonstrated the fact that while Parliament might hinder and thwart, it could not prevent it, and it was equally powerless to lay down any general rules determining its limits or character.” Other important conclusions were reached by the committee as fol- low:S : " - w That competition between railways existed only to a limited extent and could not be maintained by legislation. - - That combination was increasing and likely to increase. º That competition by sea should be secured by preventing railway companies from getting control over public harbors. That canals were of advantage in securing competition; that their facilities for through shipments should be increased, and that no canal should be placed directly or indirectly under the control of any railway company. * - That a system of equal mileage rates, or charges in proportion to distance, was inex- pedient and impracticable for the following reasons: - (a) It would prevent railway companies from lowering their fares and rates, so as to compete with traffic by sea, by canal, or by a shorter or otherwise cheaper railway, and would thus deprive the public of the benefit of competition, and the company of a legitimate source of profit. - (b) It would prevent rāilway companies from making perfectly fair arrange- ments for carrying at a lower rate than usual goods brought in larger and con- stant quantities, or for carrying for long distances at a lower rate than for short distances. - - (c) It would compel a company to carry for the same rate over a line which has been very expensive in construction, or which, from gradients or otherwise, is very expensive in working, at the same rate at which it carries over less expens- ive lines. - --- In short, to impose equal mileage on the companies would be to deprive the public of the benefit of much of the competition which now exists, or has ex- isted, to raise the charges on the public in many cases where the companies now find it to their interest to lower them, and to perpetuate monopolies in carriage, trade, and manufacture in favor of those rates and places which are nearest or least expensive, where the varying charges of the companies now create compe- tition. And it will be found that the supporters of equal mileage, when pressed, 58 INTERSTATE COMMERCE. often really mean, not that the rates they pay themselves are too high, but that the rates that others pay are too low. * * Pressed by these difficulties, the proposers of equal mileage have admitted that there must be numerous exceptions, e.g., where there is sea competition (i. e., at about three-fifths of the railway stations of the United Kingdom), where low rates, for long distances will bring a profit, or where the article carried at low rates is a necessary, such as coal. It is scarcely necessary to observe that such exceptions as these, whilst inadequate to meet all the various cases, destroy the value of “equal mileage” as a principle, or the possibility of applying it as a gen- eral rule. -- That the fixing of legal rates based upon the actual cost of the ºilways and calcu- lated to yield only a fair return upon snch cost was impracticable. That the plan of maxima charges had been a failure, and that such rates afforded little real protection to the public, since they were always fixed so high that sooner or later it became the interest of the companies to carry at lower rates.' That there should be publicity of rates and tolls. That a new tribunal was needed to take supervision of the transportation interests of the kingdom, and with authority to enforce the laws relating to railways and canals, to hear complaints and adjust differences, and to advise Parliament upon questions of railway legislation. - This investigation, by making plain the lessons taught by many years of experience, was especially valuable in at least bringing about a gen- eral recognition of the fact that the relations between the railways and the community require special treatment and cannot be defined or gov- erned in accordance with the natural laws regulating ordinary commer- cial intercourse. It was evident that the policy adopted by the com- mittee, if followed out to its conclusion, might lead in time to a few great corporations obtaining an absolute monopoly of the business of transportation by rail throughout the entire kingdom, and even to finally placing the control of these most important interests in the hands of a small number of individuals, whose powers might become greater than those of the Government itself. Nevertheless, without being able to indicate how the relations between the Government and these great monopolies would or should ultimately be adjusted, the committee did not appear to believe that the time was ripe to check the development of the railway system of Great Britain by extreme measures, and was content to recommend the establishment of a special tribunal as the first step to be taken in inaugurating the policy of special treatment which it had become apparent must be adopted to meet the exigencies of the situation. tº This recommendation was complied with by the creation of what is known as the railway commission of 1873, which was at first given a tenure of but five years, but which has since been continued. This tribu- nal is chiefly judicial in character; it is, in fact, a separate railway court, composed of three commissioners or judges, and has jurisdiction over all matters in relation to the interchange of traffic, and to all contracts between railway companies, as well as complaints of undue preferences and of other violations of railway laws. The most recent official dec- laration concerning this commission is found in the report of the select Committee of twenty-seven members, appointed by the House of Com- mons, in 1882, to inquire into its working and the rates charged by rail- Ways and Canals. After an investigation, lasting several months, this Committee reported that the tribunal should be made permanent as well as Special, and say: I - The railway commission has, to a great extent, been hindered in its work by the temporary character with which it has hitherto been invested. At the same time INTERSTATE COMMERCE. * 50 your committee are convinced that the establishment of the commission has been of great public advantage, not merely in, causing justice to be speedlly done in those cases which have been brought before it, but also in preventing differences from aris- ing as between railway companies and the public. Its utility is not to be measured solely by the instances in which it has been called upon to “hear and determine,” but also by the deterrent and controlling influence of its existence. Representatives of the railway companies, backed up by legal gentlemen of emi- nence, have urged upon your committee that it is not desirable to continue the spe- cial tribunal in its present form, but that the court should be reconstituted by the appointment of a single judge, to be selected from the bench or the bar, aided by assessors wherever other than legal knowledge is required. From the traders and the general public, on the other hand, no demand has come for such a change; on the contrary, the general tenor of their evidence exhibits satisfaction with the serv- ices rendered to the public by the existing railway commission. Accordingly the committee recommended : That the railway commission be made permanent, and a court of record. -- That the powers and jurisdiction of the railway commission be extended to cover— (a) All questions arising under the special acts or the public statutes for regu- lating railway or canal traffic affecting passengers or goods. (b) The making of orders which may necessitate the co-operation of two or more railway or canal companies within the statutory obligations of the com- panies. *- - (c) Power to order through rates on the application of traders, but no such order to impose on a railway company a rate lower than the lowest rate of such railway company for similar articles under similar circumstances. - (d) The revision of traffic agreements, both of railways and canals, in as large a measure as the powers formerly exercised by the board of trade. (e) The granting of damages and redress for illegal charges and undue prefer- €In CGS. - (f) The commissioners to have power, on the joint application of parties, to act as referees in rating appeals. . . - That the railway commissioners should deliver separate judgments when not unan- imous. - * ---, One appeal to be granted as of right from the judgments of the commission, and “prohibition" as well as “certiorari” to be forbidden. . . . In conclusion, the committee “report that on the whole of the evidence they acquit the railway companies of any grave dereliction of their duty to the public. It is remarkable that no witnesses have appeared to complain of ‘preferences’ given to individuals by railway companies as acts of private favor or partiality, such as were more or less frequent during the years immediately preceding the act of 1854. Your com- mittee find that the rates for merchandise on the railways of the United Ringdom are, in the main, considerably below the maxima authorized by Parliament, although these charges appear to be higher for the longer distances than on many continental lines. But, on the other hand, the service on Our home railways is performed much more rap- idly than on the continent.” - Eor later and more complete information concerning the English Raii- way Commission than could elsewhere be obtained the committee is in- debted to the recently published work on “Railroad Transportation,” by Mr. Arthur T. Hadley, of New Haven, who has made a very careful study of the English railway system and legislation. The results of his 60 INTERSTATE COMMERCE. * > investigations are herewith presented in condensed form. He states the general situation as to legislation in the following paragraphs: With the act of 1873 the general railroad legislation may be said to have closed. The movements which the public had feared for thirty years had now pretty much expended their force. Amalgamations which were confidently expected in 1872 did not take place after all. Joint-purse arrangements became less important instead of more important, because railroads found that they could maintain rates without them. * g - •. It is not exactly true to say that “in Great Britain the discussion of the railroad problem may be considered as over for the time being.” The railroad problem has ceased to be a bugbear; but it has become all the more a question for practical dis- cussion. Vague fears with regard to the growth of the railway power have given place to pointed complaints as to its abuse in individual instances. The period of general legislation has passed. Mr. Adams is right in saying, “As a result of forty years of experiment and agitation Great Britain has on this head come back very nearly to its point of commencement.” He is not quite right in adding, “It has set- tled down on the doctrine of laissez faire.” It might better be said that it has settled down on the policy of specific laws for specific troubles. . After briefly mentioning the three experiments in the line of railway commissions attempted in England, in 1840, 1844, and 1846, Mr. Hadley SayS: We have seen what were the events which led to the passage of the regulation of railways act in 1873. The commission appointed under that act was to consist of three members; one of them a railroad man, one a lawyer. They received a salary of £3,000 each. They were to decide all questions arising under the act of 1854, and subsequent acts connected with it. They were further empowered to arbitrate be- tween railroads in a variety of cases; to compel companies to make through rates which should conform to the intention of the act of 1854; to secure publicity of rates; to decide what constitutes a proper terminal charge, and some other less important matters. On questions of fact their decision was to be final; on questions of law it was to be subject to appeal. The railway commissioners themselves were to determine what were questions of fact and what were questions of law. Subsequent acts have made but slight changes in these powers. . -- & The commission consisted of able men—Sir Frederick Peel, Mr. Price, formerly of the Midland Railway, and Mr. Macnamara; the last-named died in 1877, and was succeeded by Mr. A. E. Miller. They went to work with energy, and in a spirit which promised to make the experiment a signal success. And it was at first sup- posed to be such a success. People judged by the reports of the commission itself; and they were the more prone to believe these reports because it was so desirable to find an easy solution of perplexing questions of railroad policy. Mr. Adams, writing in 1878, said, “The mere fact that the tribunal is there; that a machinery does exist for the prompt and final decision of that class of questions, puts an end to them. They no longer exist.” That represented the general public opinion on the subject at the time; it represents the general impression in America down to the present time. In 1878, the very year when Mr. Adams wrote, the original term of the commission expired. People supposed that it would be made permanent. Instead of that the renewals have been for much shorter periods, leaving the commissioners a precarious tenure, and showing dissatisfaction somewhere. A Parliamentary investigation on railroad rates in 1881–82 showed the grounds of dissatisfaction only too clearly. The testimony revealed a state of things almost unsuspected by the general public, and giving an entirely different explanation of the fact that the commissioners had so few cases to deal with. The substance is that the power of the commission satisfies nobody. It has power enough to alumoy the railroads, and not power enough to help the public efficiently. INTERSTATE COMMERCE. 61 The railway commission was a court, not an executive body, but to all intents and purposes a court of law. And in establishing this new court, in addition to those , already existing, Parliament had two ends in view: (1) To have a tribunal which would and could act when others would or could not. (2) To avoid the expense, de- lay, and vexation incident to litigation under the old system. Neither end was well fulfilled. - - (1) The commission could not act, partly from want of jurisdiction, partly from want of executive power. Its jurisdiction did not cover by any means the whole ground. The provisions about terminals, arbitration, working agreements, &c., amounted to very little. Its real power was under the act of 1854. . It could under this act require companies to furnish “proper facilities,” and it could prevent their giving “preferences.” But it could not compel a company to comply with special acts or special provisions of its charter. This is a serious difficulty, because the ques- tion of proper facilities was closely connected with charter requirements, and the railroad could almost anywhere raise the point of want of jurisdiction. Nor could it enforce its decrees. Passive resistance of the railroads and jealousy on the part of the old established courts combined to produce this effect. For in- stance, under the act of 1854, if the railways refused to comply with the decisions of the court of common pleas, they were liable to a fine of $1,000 for every day's delay. The London, Chatham and Dover Railway refused to comply with one of the com- mission's decisions, and claimed that they were not liable to any such fine, although all the powers of the court of common pleas, under the act of 1854, had been trans- ferred to the railway commission by the act of 1873. The court of exchequer ac- tually sustained the railroad; and it was not until 1878 that by a decision of the Queen's bench the railway commission really had the power to do anything if a com- pany chose to disregard its orders. - - The injunctions of the commission, at best, only affect the future ; for any remedy for the past there must be a new complaint and trial before a regular court. And so it often happens that a railroad, after exhausting all its means of resistance, obeys the decision of the commission in reference to one particular station, without taking any notice of it at other stations where the same principle is involved. Thus, in the case of the manure traffic of Aberdeen, after long litigation, the rate was decided to be illegal. The railroad then reduced its Aberdeen rates, but continued its old sched- ule of charges at other points on its route where there were not organized interests strong enough to make a fight. On the face of the act of 1873 the decisions of the commission, as to what were questions of fact or questions of law, appeared to be final. But by writ of mandamus from a court of appeal the decision on this point could be at once taken out of the hands of the commission by compelling them “to state a case,” which could then be made the subject of action in the higher court. So this important power was made of no effect. . (2) Complaints before the commission are not quite so slow or costly as they were before the courts, but they are bad enough to prevent most men from undertaking them. Sir Frederick Peel himself admits that the expense frightens people away from making complaints. But this is by no means the worst. The testimony before the Parliamentary committee of 1881–82 is full of matter to startle those who argue that because there are few complaints before the commission there are few men that have grievances. Men have good reason to think twice before they enter a com- plaint. . - In the Aberdeen manure case, already referred to, the Aberdeen men, successful at every point, lost more money than they gained. Every important case is so persist- ently appealed that the original promptness or cheapness of railway commission practice counts for nothing. But the indirect results are yet worse. A complainant is a marked man, and the commission cannot protect him against the vengeance of 62 INTERSTATE COMMERCE. * the railroads. A town fares no better. It complains of high terminal charges, and the company retorts by raising the local tariff for that place 100 per cent. A coal mine complains of freight rates, and the company refuses to carry for it on any terms; it has ceased, it says, to be a common carrier for coal. Even the war department is afraid. It has grievances, but it dares not make them public for fear of reprisals. “It is quite clear,” says the secretary of the board of trade, “that it is a very for- midable thing to fight a railway company.” It is not easy to see what can be done in the face of these difficulties, so different from anything which we see in most American States. Our commissioners, with fewer powers, have infinitely more power. The reason is, that in America to defy such an authority involves untold dangers, public sentiment being irritable and un- restrained, whereas in England it involves no danger at all, public sentiment being long-suffering and conservative. * - The lawyers say, strengthen the legal element in the commission. Some of the railroad men say so too, because they think that a commission formed on the model of the old courts would interfere no more than the old courts. On the other hand many men desire the appointment of a public prosecutor to relieve individuals of the danger and odium of bringing complaints, or that chambers of commerce may be allowed to undertake such prosecutions. Others go still further and urge that the powers of the commission be increased, and that they be allowed to determine on general grounds what constitutes a reasonable rate. The commission itself would be glad to do that, but such a thing; however cautiously carried out, would involve the granger principle of fixing rates. It seems unlikely that Parliament will make any of these proposed changes, except to give chambers of commerce the right to prefer charges. - We have dwelt on the dark side of the picture, because there is a general impres- sion in this country that the English railway commission is a complete success. It must not be inferred that it is a complete failure. It has in the first nine years of its existence passed judgment on one hundred and ten cases. Only seventeen of these have been appealed, and in eleven of them the commissioners have been sustained. The decisions have, as a rule, been marked by good sense and impartiality. The di- rect good to the complainants may have been small, but the indirect good to the public was, doubtless, great. The commission has made serious and generally suc- cessful efforts to enforce a law in cases where it would otherwise have been a dead letter. These particular cases may have given more trouble than they were worth. But the very existence of such a power constitutes a check upon albitrary action in general. We cannot assume, as many do, that the few complaints preferred before the commission represent anything like the amount of well-founded grievances. But we can assume that the chance for such complaints to be made and heeded makes the railroad managers more cautious in giving occasion for them. Although no one is fully satisfied with what the commission has done, the great majority of shippers are obviously of the opinion that it has prevented much evil which would otherwise lave gone unchecked. In concluding his sketch of English railroad legislation, Mr. Hadley shows that the system of special rates to develop business has grown up in the same way as in America; that the chief source of pnblic com. plaint is not extortionate rates, but differential rates; that the low through rates are occasioned by the cómpetition of the water routes, which has existed at three-fifths of the stations in the United Kingdom; that the railroads have been obtaining control of the canals, and even of the Open Water routes in some cases, by securing possession of the landing places and harbor facilities, but are unable to control the water routes between London and foreign countries; that while the courts have succeeded in almost entirely stopping discriminations between in. dividuals, personal favoritism, and the payment of rebates, the discrim- imations against localities and certain lines of business have become INTERSTATE COMMERCE. T 63 more conspicuous; and he sums up the present state of things, as follows: . - (1) The roads may make what special rates they please; but if they make a rate for one man they must extend the same privilege to all others in like circumstances. If they have been secretly paying rebates to one shipper, they may be compelled to refund to any other shipper similarly placed the same rebates on all his shipments. Since the special contract with the one slipper began. - (2) It is held by the railway commissioners that two shippers are similarly placed and must be similarly treated when the cost to the railroad of handling the goods for one is the same as for the other; and, conversely, unless some special reason can be. shown, the railroad has no right to put a less favorably situated shipper on an equality With a more favorably situated one. (3) But the last Parliamentary committee has refused to indorse these principles, and has said that a preference is not unjust so long as it is the natural result of fair Competition. - -> * RAILROAD LEGISLATION IN THE UNITED STATES_SUM- MARY OF THE PROVISIONS OF THE STATE STATUTES— TELE WORK OF TELE STATE COMMISSIONS. Railroad regulation in the United States has thus far been confined within State limits. With the exception of the two measures hereto- fore mentioned, not of a general regulative character, Congress has not undertaken to regulate the railroads engaged in interstate commerce. In many of the States, however, earnest efforts have been made to pre- vent and correct the abuses of Railroad management by varying meth- ods of regulation and with different degrees of success. The history of these efforts has never been written, and little has been known of them as a whole. Information in regard to them is not easily accessible, and even those best informed on the subject have been compelled to base their conclusions upon meager information or upon their knowledge of affairs in but a few States. The lack of accurate information as to the methods of regulation which have been adopted in the several States, and as to the exact pro- visions of their enactments on the subject, and the difficulty of obtain- ing access to the multitude of session laws, reports, and documents in which such information lies buried, have prompted the committee, as a fitting preliminary to action in the same direction by Congress, as well as for the information of the public, to make as thorough an examina- tion as time permitted of the railroad legislation of each State and Ter- ritory in the Union, and to present in as compact form as possible a summary of their legislative enactments on the subject of railroad reg- ulation, together with Such information as was attainable in regard to the methods of regulation adopted and the results accomplished in those States in which action has been taken. The information obtained by an examination of the session laws of each State and Territory, and of the reports and publications of the vari- ous State railroad commissions, is supplemented by the testimony of the railroad commissioners of New York, Massachusetts, Illinois, Missouri, Iowa, Nebraska, Wisconsin, Minnesota, Tennessee, and Georgia, who personally appeared before the committee, and by the written state- ments submitted by the railroad commissioners of Kansas, Michigan, Rentucky, Maine, Connecticut, Ohio, South Carolina, and Dakota, ac- companying this report. * 64 INTERSTATE COMMERCE. ; TEIE STATE RAILROAD COMMISSIONS. The State railroad commissions, which are to-day a recognized factor in railway administration, have come intô existence and prominence within the last ten or fifteen years, although there were so-called com- missions at an earlier period. New York had a short-lived one in 1855, and after the civil war several were created for a temporary purpose, distinct from regulation, such as that in Arkansas, which passed upon applications for State aid to railroads, and that in Tennessee, in 1870, which was authorized to sell or lease railroads in default to the State for loans. There are marked differences in the plan upon which the exist- ing State commissions are organized. Of the older ones, those of the New England States, with the exception of Massachusetts and New Hampshire, form a distinct class by themselves, their duties being mainly limited to the inspection of the railway equipment and service. Of an entirely different type were the commissions of the Western States, which owed their origin to the widespread “granger” movement. Whatever may be said of the character of the legislation inspired by that agitation, it certainly served a timely and useful purpose in its day, and substantial and beneficial results must be accredited to that popular uprising against the railroad corporations. Matters had reached such a pass that nothing short of the sturdy, forceful methods adopted in Illinois and in neighboring States could have allayed the gathering storm of public indignation which the then existing methods of manage- ment had aroused. But when, in the notable “granger cases,” the United States Supreme Court upheld those methods and left the rail- roads at the mercy of the State legislatures, the corporations assumed a radically different attitude towards the gommunity and towards the law. making power. They have since been more ready to recognize their public obligations, greater respect for public opinion is manifested, and in consequence the recommendations of the State commissions, which were at first contemptuously ignored, have since, as a rule, been com- plied with. This radical change of policy, not adopted voluntarily, but prompted solely by motives of self-interest, has been taken advantage of by the State commissions with acknowledged favorable results, chief among which have been the cultivation of a better understanding and state of feeling between the railroads and the people, and a sufficient mitigation of the local abuses most prevalent to sensibly diminish the volume of complaint. Attention has already been called to the difficulties of effective State regulation arising from the division of powers between the State and National Governments; but, notwithstanding these difficulties, the good results accomplished under the State commission system, the growing confidence of the people in that system as a means by Which corporate abuses can best be restrained and regulated, and the more general rec- ognition of the important principle that the business of transportation requires special treatment for the proper adjustment of its relations to the citizen, are indicated in the fact that State after State has adopted the system, until commissions are now in operation in twenty-four States and one Territory. The following statement shows the States having commissions and the date in which commissions were first established in each State, arranged in the order of their establishment : INTERSTATE COMMERCE. State. Date. State. Date. State. Date New Hampshire ----------. 1844 || Wisconsin . -----ºr - - - - - - - - - 1874 || Alabama . --...------------ j.881 Connecticut --------------. 1853 || Minnesota ---------------. 1874 || New York ... ----..... --. 1882 Vermont------------------- 1855 || Missouri------------------ 1875 || Kansas. ----------------. 1883 Maine --------------------- 1858 || California.----------------- 1873 || Mississippi.------------. 1884 Ohio ----------------------- 1867 || Virginia -----------------. 1876 || Nebraska ---------...--. 1885 Massachusetts------------- 1869 || Iowa. --------------------. 1878 || Colorado - - - - - - - - - - - - - - -. - 1885 Illinois -------------------- 1871 || South Caroliua...----...--. 1878 || Dakota Territory........ 1885 Rhode Island -------------- 1872 || Georgia.------------------ 1879 *- Michigan ------------------ 1873 || Kentucky ---------------- 1880 An examination of the statements hereinafter submitted will show that of the thirty-eight States and eight Territories (not” including Alaska), making forty-six in all, in Arkansas, Delaware, Florida, Indi- ana, Louisiana, Maryland, Pennsylvania, New Jersey, Tennessee, and West Virginia (ten States), and in Arizona, Idaho, New Mexico, Wash- ington, Wyoming, and Utah (six Territories), sixteen in all, there is either no regulation in force or practically very little. Leaving these fifteen out of account, it appears that of the thirty States and Territo- ries that have taken action twenty-five have adopted the commission system, while the remaining five, Nevada, North Carolina, Oregon, Texas, and Montana, depend upon legislative restrictions without pro- viding any special means for the enforcement of their enactments. . Following is a list of the States having railroad commissions, show- ing when a commission was established in each State (not necessarily the existing one), the names of the present commissioners and their secretaries, the location of the office of the commission, and the sala- ries paid. TEIE STATE RAILROAD COMMISSIONERS. re; Q) º - State. # Name and position. Location of office. Salary. ſº Alabama -------. 1881* ºffenry R. Shorter, president ---...--...--...--. Montgomery. --- $3,500 Levi W. Lawler, commissioner------------- ---do ----------- y W. C. Tunstall, Commissioner---...-------. ----do ----------. 3,000 J. K. Jackson, clerk. --...------------------- ----do ----------- 1, 500 California ------- 1876.1.6. J. Carpenter, president:----------------. San Francisco .. 4,000 "| W. P. Humphreys, commissioner:---------. --- do ----------- 4,000 W. W. Foote, commissioner. ... ---...--...--. ----do ----------- 4,000 | W. R. Andrus, secretary. ------------------. ----do ----------- 2, 400 Colorado. -------. 1885.43°W. B. Felker, commissioner. ---...--------. Denver .-------. 3, 600 * * * , Secretary - - - - - ---------------- -do ----------- 1,800 Connecticut ----. 185% ºgorge M. Woodruff, chairman: -----------. EIartford ------. 3,000 * John W. Bacon, commissioner-------------. ----do ----------- 3,000 William H. Bayward, commissioner ------. ----do ----------- 3,000 George T. Utley, Secretary ----------------. ----do ----------- 1, 800 Dakota. ---------- 18854 william M. Evans, chairman . ---------...--. Fargo ---------. 2,000 * | Alexander Griggs, commissioner -----------|---. do ----------. 2,000 W. H. McVay, cºmmissioner ---------------|- ---do ----------- 2,000 - Isaac E. West, Secretary ------------------- --- do ----------- 1, 500 Georgia.---------- 1879 |-Campbell Wallace, clairman -- - - - - - - - - - - - - - Atlauta.------.. 2,500 Leander M. Trammell, commissioner . . . . . . ----do. ---------- 2, 500 Drwin, commissioner---------------- ----do ----------- 2, 500 A. C. Briscoe, Secretary -------------------- ----do ----------- 1, 200 Illinois ---------. 1871. John I. Rinaker, chairman------...---------. Springfield ..... 3, 500 - | B. F. Marsh, commissioner. ----------------- ----do ----------- 3, 500 William T. Johnson, commissioner ......... --- do ----------- 3, 500 N. D. Munson, Secretary ------------------. --- do ----------- 1, 500 Iowa------------. 1878-lºeter A. Dey, chairman -------------------. Des Moines..... 3, 000 | James W. McDill, commissioner ........... ----do ----------- 3,000 L. S. Coffin, commissioner. ------------...-. ----do ----------. 3,000 I9. G. Morgan, secretary------...-------...--. . . . . do ----------- 1, 500 Iºansas ---------- 1883. James. Humphrey, chairman.--------------. Topeka --------. 3,000 L. L. Turner, Commissioner ----............ ----do ----------- 3,000 | Almerin Gillett, commissioner.----......... ----do ----------- 3,000 I. J. Turner, Becretary. . . . . . . . . , , , , , , , , , , , . . . . .00 . . . . . . . . . . . l, 500 66 INTERSTATE COMMERCE. The State railroad commissioners—Continued. re; GD *: * State. #. Name and position. Location of office. Salary Ş Up j ſº - ECentucky ------- 1880 J. P. Thompson, chairman'. ---------------. Frankfort ------ $2,000 || A. R. Boone, commissioner...--...----------- ----do ----------- 2,000 John D. Young, commissioner-------------. --- do ----------- 2, 000 Clarence Egbert, Secretary ----------------- do ----------. 300 Maine -------. tº e ºs . $5 por diem. Mississippi Missouri.-------- Nebraska.--...--. , , Æ New EIampshire. South Carolina... Vermont Virginia --------. Wisconsin...---- 1858+4. W. Wildes, chairman. ------------------- 1869, 1873. 1874 ...” º 1884. 1875, 1885. "|*Thomas O. Seaver, commissioner Tºſorace G. Moffett, commissioner tº Nils P. Haugen, commissioner James H. Foster, secretary and deputy..... * * * * : John F. Anderson, commissioner. ---------. *Thomas Russell, chairman..... --------...--- William A. Crafts, clerk º/illiam McPherson, jr., commissioner Wyllys C. Ransom, deputy. ---------------- 23. H. Baker, chairman. --...----------------- S. S. Murdock, commissioner E. S. Warner, secretary -3olhn M. Stone, chairman , Secretary---------------------------.- , George C. Pratt, chairman. ----------------- James Eſarding, commissioner .--------...-- William G. Downing, commissioner . H. Gregg, secretary H. A. Babcock, auditor Charles Buschow, secretary E. B. S. Sanborn, clerk E. J. Tenney, commissioner John D. Kerman, chairman . ----------------. William E. Rogers, commissioner John O'Donnell, coimmissioner *Walter R. Stiness, commissioner.... .. 3..... *M. L. Bonham, chairman -------------------. L. J. Walker, commissioner ----------------. M. T. Bartlett, Secretary . . . . .-------------. D. N. Mortland, commissioner. ------------. * = ºr Edward W. Kingsley, commissioner. --...--. 4- tº º º Bverett A. Stevens, commissioner. --...----- sº a as sm sº sº e º ºr as s º & º ºs e º 'º & E º George L. Becker, commissioner------------ e - • sº e s = e º s sº gº ºs e º e º sº me tº tº . e. W. B. Augustus, commissioner------------- * - gº º -W. Eſ, McWillie, commissioner..........--. g * * * * * * * * * * * * * * * g e º ºs e s s = * -JE. P. Roggen, secretary of state.----------. .T,i William Leese, attorney-general------------ * Benjamin R. Cowdrey, secretary------------ - - - tº:O. C. Moore, chairman s tº as s as sº me is tº ºr e º is s e = * * ..] William C. Hudson, secretary. ------...--...--. Henry Apthorp, commissioner D. P. Duncan, commissioner. --------------- * = & © - - - - C10 - - - - - - - - - - - - Saint Paul ------ ---. do --do----- * * * * - - - ---do-----. tº ºr s is º ºs Jackson. -- .---- 4 ºn tº sº tº º sº tº as Charles H. Gere, Secretary.-----...----------- * * - e. - we e s sº e º is sº º & sº tº e º gº º is * * * * = e º sº as gº è * * * * gº tº gº º tº º ſº tº gº gº ºn tº gº gº tº ºr * * * * * * * * g º e tº º sº tº ſº e º gº º ſº e * * * * * * * * * * * Providence Columbia------. ----do Richmond Madison do $5 per diem. $5 per diem. . 4,000 3,500 3, 500 2,000 2,500 1, 500 3,000 3,000 3,000 MASSACEIUSETTS, The Massachusetts commission furnishes the most conspicuous in- stance of the purely advisory commission, depending upon investiga- tion, the justice of its conclusions, and the force of public opinion for the enforcement of its recommendations; and by reason of its success- ful working under a novel plan and of the ability of its membership it . has always made its influence widely felt. Since its establishment in 1869 its career has been closely watched, and its success is now undis- puted. That it has not been due solely to fortuitous circumstances, or to its application to a limited local field, is indicated by the fact that the principle upon which it is organized has been successfully applied in other States and has been followed with satisfactory results in the State of New York, with its concentration of great and diverse railroad and commercial interests. » - The statement of Judge Russell, the chairman of the board, so fully explains the practical working of the commission as to leave little to be l INTERSTATE COMMERCE. 67 added here. (See testimony, p. 300.) The main features of the Massa- chusetts legislation, as given by him, may be briefly stated as follows: Every railroad charter granted, with the possible exception of the Boston and Lowell corporation, which has never set up any privilege under its charter, is subject to the reserved right of the State to at pleasure alter, amend, or repeal. This gives the State almost absolute power over every charter. It is also expressly enacted that all fares, tolls, and charges shall at all times be subject to revision or alteration by the legislature, or by officers appointed thereby. As Judge Russell says, this reserved power of the legislature, always existing, is none the less valuable because it does not have to be exercised more than once in ten years. There are three statutes upon which the commission de- pends. An early statute provided that. railroads shall charge only- reasonable rates, giving a civil action for violation and a criminal process for a penalty. This also required equal rates to be given. Equal was held by the Supreme Court to mean equitable rates, and another statute was enacted which forbids any undue or unreasonable preference or advantage, or “any undue or unreasonable prejudice or disadvantage” against any party. What is just and what is unjust discrimination, between which a difference is recognized, is left to the determination of the commission and the courts. . . The third statute, known as the short haul law, has been the subject of so much discussion that it is here given in full, as printed by the commissioners in their report of January, 1885, with their comments upon the law, as follows: - “No railroad corporation shall charge or receive for the transportation of freight to any station on its road a greater sum than is at the time charged or received for the transportation of the like class and quantity of freight from the same original point of departure to a station at a greater distance on its road in the same direction. Two or more railroad corporations whose roads connect shall not charge or receive for the transportation of freight to any station on the road of either of them a greater sum than is at the time charged or received for the transportation of the like class and quantity of freight from the same original point of departure to a station at a greater distance on the road of either of them in the same direction. In the construction of this section the sum charged or received for the transportation of freight shall in- clude all terminal charges; and the road of a corporation shall include all the road -in use by it, whether owned or operated under a contract or lease.” - - We have italicized certain words, because in criticising the law it is customary to speak of it as if they were not included in the act. In fact these words constitute the éssential difference between our law and the wild and unjust legislation which has sometimes been proposed. Of such propositions the board has said in the decision reſerred to : “The words in italics are a substantive and essential part of the law, without which it could not have been passed. We have a right to say this, because such a law was proposed to the legislature, and was rejected in 1871, when the ‘short haul law” was first enacted. This proposed bill read as follows: “‘No railroad corporation of this Commonwealth shall charge or collect for the transportation of goods or merchandise for any shorter distance, any larger amount as toll or freight than is charged or collected for the carriage of similar quantities of the same class of goods over a longer distance upon the same road.” “But the general court not only have not enacted such a bill, but have refused so to do, and for good reasons. It is interesting to notice that when the ‘short haul law” of this State is censured, as it recently has been by interested parties, it is always misrepresented to be just what the petitioners supposed it to be.” (Pittsfield v. Boston and Albany I. I. Company, Appendix F.) 68 - INTERSTATE COMMERCE. The inquiry most frequently addressed to the board upon this matter has been a question whether this law is enforced in Massachusetts, or whether it is, as has been alleged, “a dead letter.” To this the answer has been made, and it is now made once more, that no law in this State is more thoroughly enforced than this. Indeed it would be more correct to say that, instead of being enforced at all, it is universally acquiesced in and obeyed. It is true that in 1882 it was shown that a railroad com- pany in this State was acting in violation of this law. But upon receiving the opin- ion of this board that it was so offending, the corporation desisted from the prac- tice, and lowered its rates to conform to the statute requirements. And this was done, as the managers of that corporation inform their stockholders, at the annual loss of $37,000 illegally extorted heretofore from their customers. Since that time neither this nor any other railroad company has, to the knowledge or belief of the board, violated this provision of the statutes. And now the fact that, because of their obedience to law, they are not indicted is used in other States to prove that our act is “a dead letter.” - - In an extended investigation of freight rates made a year since with reference to other questions, and in some recent inquiries made with special reference to this question, the board has observed the scrupulous care with which, in spite of tempta- tions, any infraction of this law has been avoided. In exceptional cases, and to a small extent, it may work harshly, but its general working has been most beneficial. It has remedied a great evil and a great injustice ; it has helped to save small indus- tries and small places from being crushed out of existence; it has checked the ten- dency to consolidation, which would build up one place or a few places at the cost of . local enterprise, thus creating traffic for the railroads by giving occupation to their customers. And it is believed that any attempt to repeal this safeguard of fair deal- ing would receive almost universal condemnation from the business men of Massa- chusetts. - • . . . The short-haul law, as the text shows, applies to connecting roads and to freight of the same kind. To come under the law goods must be of the same kind, of the same quantity, must start from the same point, and must be going in the same direction over the same road. It does not Contemplate that freight rates should be proportionate to mileage. In addition to these general statutes, the physical condition of the roads is intrusted to the commission, the ordering of precautions, the regulation of Crossings, the examination into the causes and prevention of accidents, and the terms upon which connecting roads shail take traffic from each other. Upon these matters the commission has positive power and gives decisions which a court would enforce. Under another statute, whenever twenty citizens of a town apply to the Selectmen or the city government and state any grievance against a road, they must look into the same, or petition the commission, or give a reason why they do not. In either case the question reaches the board for investigation. The commission also investigates all complaints as to the location of stations or the lack of such accommodations. As to the advantages of the public hearings held by the commission on all matters brought before it, Judge Russell says: Of course the petitioners do not always gain their case as to accommodations or as to rates, but they have the satisfaction of being heard. And it often happens that when the circumstances are explained they find that their grievance is imaginary or at least that it is less than they had supposed. A public hearing on the spot often leads to a better understanding. On the other hand, it has happened more than once that when the complainants have told their story the railroad managers have granted their request at once. Yet the time might never have come when the managers would hear the petition had not the law appointed a tribunal and had not the tri- bunal appointed a place and a day for hearing it, a INTERSTATE commeRCE. 69 It will thus be seen that the most noticeable characteristic of the Massachusetts system is its simplicity. Its distinguishing feature is the very limited arbitrary power of the commissioners. They are given every facility and all the authority needed to obtain full information as to the actual operations of the railroads. With the opportunity, thus afforded of ascertaining the actual facts as to any given matter of Com- plaint, they are forced to sustain their position in every proceeding by inaking out a case that will stand the test of public criticism and carry conviction with it, whether the decision be in favor of the complaining citizen or of the defendant railroad. As Mr. Adams said in 1874, the commission was “simply a medium, a species of lens by means of which the otherwise scattered and powerless rays of public opinion could be concentrated to a focus and brought to bear upon any corpo- ration.” - - 'The fact that during the fifteen years of its existence every decision of the commission on the many complicated questions as to rates and discriminations that have arisen has Vindicated and enforced itself without resort to the counts (See Testimony, p. 303), must be regarded as satisfactory evidence that the system has proved effective where it has been most thoroughly tested. º It has been so, not because the railroad managers of Massachusetts are different from those of other States, not because they prefer to run their roads by the advice of the commissioners rather than to follow their own notions, but simply because self-interest admonishes them of the Supreme folly of encouraging or engaging in a losing contest with the forces of public opinion as concentrated and made effective through the commission. It is not because the managers, directors, or stock- holders personally shrink from public criticism, but because back of the commission stands the legislature and back of the legislature stand the people, and they realize that themselves will inevitably be the sufferers when they invite or provoke a contest with those forces. * In the Way of practical results the Massachusetts commission is shown by its record and by the testimony to have exercised by its reports and decisions an acknowledged influence upon railroad managers in bring- ing about needed reforms, and to have been successful in the redress of grievances and the correction of abuses. It has held the railroads to obedience to the laws, and has not only secured the passage of needful legislation, but prevented unwise measures. Through its recommenda- tions Voluntary reductions in rates have been made and discriminations of different kinds done away with. It has secured uniformity in the accounts and reports of the roads. It has fixed the responsibility of accidents and done great Service in requiring the adoption of improved appliances for safety. Other specific instances of the results accom- plished are mentioned by Judge Russell, and in conclusion it may be said that the committee made especial effort, by inquiries among all classes of the Community, to ascertain the popular judgment in Massa- chusetts as to the Working of the commission, and that not a whisper of complaint against its methods was heard, nor was there found any indi- cation of dissatisfaction in that State with the operation or results of the existing system. 70 INTERSTATE commRRCE. i The following statements contained in the last report of the commis- sion (January, 1885), are of more than local interest: COST OF RUNNING TRAINS. The average cost of running trains 1 mile during this year on all the roads reported has been $0.895. The cost of running each train mile for the past eight years was as follows: - Cost per total train mile. 1882–83 1883–784 * * * * * * * * * * * is sº s = s. tº sº º sº º sº gº tº de FARES AND FREIGHTS. * * * * * * * * * * * * * * *g sº wº e º is me sº as s as sº s sº as sº e º sº º sº tº s = s. se sº sº is ºr a s = * * * * * * * * * * * * * * * * * * * * * . 902 . 810 . 863 . 949 . 895 The four following tables show the average fares on all roads, the average fares and freights for eight years on the leading roads freight on seven roads since 1865: Average fare on all roads in the State. , and the change in average rate of TVear A mount. Year. Amount, 1876–77 --------------------------------- $0.0240 || 1880–81 -------------------------------- $0.0220 1877-78 --------------------------------- 0.0240 || 1881–82 ----------------------------...--- 0.0200 1878–79 ------------------------ • - - - - - - -- 0.0212 || 1882-'88 -------------------------------- 0.020.1 1879-'80 --------------------------------- 0.0224 || 1883-'84. ------------------------------. 0.0102 Average fares for six years. --- J'ares. 1878–79. 1879–80. 1880–81. 1881–82. 1882-'83. 1883–84. - Cents. Oents Oents. Oents. Cents. Cents. Boston and Albany ----...---------------- 2. 14 2. 08 1, 97 1.97 2. 08 1.91 Boston and Maine. ---------- .* * * * * * * * * * * * 1.93 2. 06 1.99 1. 95 1, 97 I, 90 Boston and Providence. --- - - - - - - - - - - - - - - 1. 80 1. 80 1, 95 1.96 1.88 1. 88 Old Colony-----------------------------. 2. 00 2. 00 2. 14 2, 00 2. 00 1. 87 Boston and Lowell ---------------------- 2.04 1. 92 1, 88 *1. 67 1.94 2. 12 Fitchburg ------------------------------ 1.90 1. 89 1. 82 1.71 1.77 I (35 Tastern --------------------------------. 2. 05 1.97 1. 93 1. 88 1, 82 1. 72 New York and New England ..... ------ 2, 15 2. 12 2.25 2. 09 2. 06 2.01 Connecticut River . . . . . . . . . . . ., - - - - - - - - - - 2. 61 2. 59 2.53 2.48 2. 36 2.37 New York, New EIaven and Eſartford. .. 2, 26 2.02. 1. 80 1. 81 1.98 1.96 Providence and Worcester....... --...--. 2.87 2, 33 2. 24 2. 12 2. 14 2. 12 Worcester, Nashua and Rochester.----. 2.90 2.78 2. (59 2, 79 2. T4 2. 74 INTERSTATE commeRCE. 71 Average freight8 for 8ia: years. Freights. 1879. 1880. 1881. 1882. 1883. 1884. - Oents. Cents, Oents. Cents. Cents.|Cents. Boston and Albany --------------------------------------------- 1. 11 | 1. 20 | 1.04 || 1.07 | 1. 20 | 1.09 Boston and Maine ----------------------------...---------------| 2.49 2.33 2.43 2.35 | 2.24 2. 34 Boston and Providence ----------------------------------------- 2. 27 | 2, 44 2.77 2.83 2.83 || 2.82 Old Colony------------------------------------------------------ 2, 69 || 2.90 2.99 || 3. 04 || 3. 16 3.00, Boston and Lowell----------------------. '* * * * ~ * * * * * * * * * * * * - - - - - - 3. 35 | 2, 95 || 3. 13 2.60 2.98 || 2. 33 Titchburg------------------------------------------------------ 1. 30 - 1.37 | 1. 26 1, 18 || 1. 10 | 1.09 Tastern--------------------------------- ... s = s. s is sº is * * * * * * * * * * * * * * * * * 2. 19 | 1.94 || 2.06 || 2.03 || 1.92 1. 81 New York and New England----------------------------------- 2.89 2, 86 || 2.20 | 1.77 | 1.38 | 1.41 Connecticut River------------------------------------- p = • - - - - - - 3. 50 3.35 | 2.99 || 3.07 || 3.04 || 3.05 New York, New Haven and Hartford--------------------------- 2.36 2, 10 | 1.79 | 1.98 || 1.89 1.96 Providence and Worcester . ----------------- •- - - - - - - - - - - - - - - - - - 2, 97 2.85 2.80 2.78 2.96 || 3.09 Worcester, Nashua and Rochester------------------------------ 2. 30 || 2, 02 || 2, 22 2.29 || 2, 34 || 2. 33 Average rates of freight, 1865 and 1884. Per cent. Rate 1865. | Rate 1884. of 1884 to 1865. - . & § Oents. Oents Boston and Albany---...--- * - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3.90 1. 09 28 Boston and Maine-------------------------------------------------- 4, 58 2, 34 .51 Boston and Providence--------------------------------------------- 4.38 - 2.82 64 Tastern ------------------------------------------------------------ 4. 40 1. 81 41 Connecticut River --------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6. 20 3.05 49 Fitchburg-------------------------------- * - - - - - - - - - - - - - - - - - - - - - - - - - 4. 10 1. 09 - 27 Old Colony --------------------------------- ------------------------ 3. 20 3. 00 94 IILLINOIS. The Illinois commission has been the leading exponent of the other theory of regulation through a commission, and is next considered to bring the two systems into contrast and because the Illinois legislation has been followed in a number of States. It was inaugurated by the adoption of the constitution of 1870, now in force, which declared rail- ways to be public highways, and free to all persons for the transpor- tation of their persons and property thereon, under such regulations as may be prescribed by law. The general assembly is required to pass laws establishing reasonable maximum rates of charges for the trans- portation of passengers and freight; to correct abuses and prevent un- just discrimination and extortion; and to enforce such laws by adequate penalties to the extent, if necessary for that purpose, of forfeiture of the property and franchise of the railways. The consolidation of railroad companies owning parallel or competing lines is prohibited, and sixty days’ public notice of all proposed consolidations is required. In compliance with these requirements, the act of 1871 created the railroad and Warehouse commission, consisting of three commissioners appointed by the governor, and subject to removal at his discretion. Their term of office is two years. No person connected with, inter- ested in, or employed by any railroad company or warehouseman shall be eligible to such appointment. They give bonds in the sum of $20,000, are paid $3,500 per annum by the State, and have the right to pass free over all the railroads of the State in the performance of their du- ties. Annual reports under the Oath of the proper-officers are required 72 4” INTERSTATE COMMERCE. from every railroad and warehouse, the act specifying in detail what such reports shall contain, The commissioners are required to examine into the condition and management of the railroads and warehouses, and to prosecute all vio- lations of the laws relating to them which come to their knowledge. They are authorized, upon hearing, to cancel the license of any public warehouseman found guilty by them of violating the law. They are given authority to examine the property, books, and records of all rail- road companies and Warehousemen, and to examine their officers and employés under oath. In making investigations they can Compel the attendance of witnesses by the aid of the circuit courts, the penalty for refusing to appear and testify being a fine of from $25 to $500, or im- prisonment for thirty days, or both. The penalty for failing to make the reports required or for obstructing the commissioners in the dis- charge of their duties is a fine of $100 to $5,000, with a like penalty for every ten days of willful refusal. The attorney-general and the state's attorneys of the respective counties are required to prosecute all suits and proceedings directed by the commissioners. There were other provisions forbidding any discrimination whatever, under any circumstances, but these were declared unconstitutional by the supreme court of the State, because the act failed to recognize the distinction between discrimination and unjust discrimination, but pro- hibited discriminations of any character, and because it did not allow the companies to explain the reason of the discrimination. Accordingly the next legislature, in 1873, passed the amendatory act Inow in force, which defines and prohibits extortion and unjust discrimination, makes discriminating charges prima facie evidence of unjust discrimination, and fixes the penalties at a fine of from $1,000 to $5,000 for the first offense, $5,000 to $10,000 for the second, and $10,000 to $20,000 for the third offense, and makes the company liable to a fine of $25,000 for each subsequent conviction. Persons damaged by Such charges may also recover triple damages, with costs of suit and attorney’s fee. It is made the duty of the commissioners to make, for each railroad doing business in the State, a schedule of reasonable maximum rates, which schedule shall in all suits against such railroads be deemed and taken by the courts as prima facie evidence that the rates therein fixed are reason- able. This changed the rule of evidence so that, if the railroad charged more than the maximum rate, and the case was taken into court, the burden of proof was thrown upon the railroad, which was compelled to prove such charge a reasonable one, instead of the people being com- pelled to prove it an unreasonable one. Under this act separate schedules for each road were prepared, but since 1881 the roads have been divided into two groups, with but two schedules, a slightly higher rate being fixed for the less prosperous and least favorably situated roads. The railroads did not accept the rates prescribed, and litigation ensued all over the State. The contest was a memorable one, and it was not until 1880, six years later, that the valid. ity of this legislation was finally determined. Meantime a notable victory was achieved and the final outcome of the contest foreshadowed, when the United States Supreme Court, in 1877, decided the Munn case and affirmed that part of the legislation regulating the ware- housing and inspection of grain. a - The membership of the board was changed in 1877, and the new commissioners were prompt to make the most of the changed attitude assumed by the corporations after the Warehouse decision. While awaiting the final determination of their authority by the courts, they INTERSTATE commeRCE. - 73 put in practice the Massachusetts principle of arbitration, believing it useless to indefinitely multiply the number of suits instituted. Says Mr. Bogue, for six years a member of the commission: - We constituted ourselves (on our own motion, as there is no such power in the law) a sort of board of arbitration, in which we heard all complaints. We communicated with the railroads in regard to them, and in nearly every case all the complaints were adjusted very quickly and readily by the roads. (Testimony, p. 734.) This policy has been since continued, and without any modification of the law has become a recognized feature of the Illinois system, which thus combines the principle upon which the Massachusetts Commission has operated with perhaps the most stringent railroad legislation in the United States. As to general results, the Illinois legislation must be credited with contributing largely to the memorable triumph over the corporations achieved in the “Granger” decisions. As to the work of the commis- sion within the State, it is in evidence that the rates prescribed in 1881 made an average reduction of about 30 per cent. upon those of 1874. This schedule was accepted by all the roads in the State, and became the standard of the charging rates. This was not wholly due to legis- lation, for there had been a considerable voluntary reduction of rates since 1874, but the commission must be credited with having secured a substantial reduction in the rates charged at non-competing points. At these points the roads charge the maximum rates allowed, and it is at such points, which are otherwise without protection, that the benefits of this legislation are most apparent. It is also shown that with a largely increased mileage and volume of business there has been a steady decrease in the receipts per mile of the roads on their business in Illinois, showing a constant reduction in rates, and that the average rates prevailing in Illinois have been lower than in the adjoining States. It is also in evidence that the roads are complying with the law and the regulations of the commission, and that, since 1877, the commission has brought about more harmonious relations between the corporations and the people, but it is not claimed that the law, or the system of fixing rates, is in all respects satisfactory. In the report of 1882, the following suggestion Was made: …' - - The commission has found some difficulty in doing complete justice in many cases coming before the board, owing to the mandatory and inflexible character of certain provisions of the law, as, in the case of all statutory enactments, instances will arise where justice between the parties can be better accomplished by relaxing the more rigid rules of the law; and we are of the opinion that this statute could be better administered, and justice better insured, if some amendments were made, rendering certain of its provisions more flexible, and giving the commission greater discretion- ary powers. - In the report of 1884, another set of commissioners furnish a notable instance of the disadvantages that may result from an inflexible law in the following statement: APPLICATION OF J. F. TUCKER, GENERAL TRAFFIC MANAGER OF THE ILLINOIs CEN- TRAL RAILROAD, FOR SPECIAL RATE ON COAL. Tracy and Starne, of Springfield, were desirous of supplying the Michigan Central Railroad Company with coal at Chicago. This involved a haul of 200 tons daily from Springfield and 300 from Tracy, upon which they could only pay a rate of $1 per ton 74 INTERSTATE COMMERCE. from the former and 55 cents per ton from the latter place. On the basis of the Chi- cago selling price at that time, it would have amounted to an industry for the State ºf nearly half a million dollars. The gross revenue to the Illinois Central Railroad Company derived from it would have been annually about $200,000, and the State would have received 7 per cent. of that amount, or $14,000 a year. The counſpetition in this case was with the Indiana mines. It was not commercial coal, and being lim- ited to the use of the Michigan Central Railroad Company alone, would not have affected the rights or interests of persons in the general market at all, as the company for which it was intended would in no event be a purchaser there. It would have developed the mines in question, but not at the expense of any other town or mine or citizen of the State of Illinois. The commission, however, had not the discretion under the law to make such a rate, and the business went elsewhere. Possibly this course is right and best, but many clear-headed people find it difficult to see the wis- dom of it. It in reality seems to give the force of law to a discrimination against im- portant interests of our own State, and forbids the exercise of the commonest motives of self-protection usually resorted to in such cases. In conclusion, the following statement as to the results of the Illinois system, taken from the report of the commission for 1884, is presented: Thirteen years ago this commission, was established, and for many years struggled to obtain that recognition to which it was entitled by law, and now, after the high- est legal tribunals have affirmed the great powers conferred thereon, all the railroads, doing business in the State comply with the requirements and decisions of the com- mission on the various questions connected with the great problems of transporta- tion. * - The inclination now apparent in railroad management to avoid prosecutions and to foster friendly relations with the public demonstrates the wisdom and efficiency of the present system of State control of corporate interests. For further information as to the history of the Commission reference is made to the statement of Mr. George M. Bogue (Testimony, p.732), and as to its present Workings to the statements of Commissioner Rimaker (Testimony, p. 548), and of Messrs. Edward C. Lewis (Testimony, p. 569) and William N. Brainard (Testimony, p. 579), late commissioners. NEW YORK. The policy of practically unrestricted railroad construction which has prevailed among the States was inaugurated by New York in 1850 by the adoption of its general railroad law. Since that date the legisla. tion of that State in relation to railroads has been so voluminous that only the principal features of the act of 1882, creating the railroad commission, can be considered here. The general powers of the board Were thus stated by Commissioner Kerman: - Under the act of this State the power of the board is that of an investigating and advisory body. We are directed in all matters connected with railroad management and transportation, and with the condition and operation of railroads, to keep our- selves fully informed, and under the act are provided with abundant facilities and powers to that end. We are directed to report violations of law by any railroad corporation in the State to the attorney-general, and he is to take such action as may be necessary for the protection of the public interests. We are also required to rec ommend that repairs be made where necessary; that additions to rollin g-stock changes in stations or station-houses, or additional terminal and other facilities, shall be afforded where needed; also, that any changes in the rates of fare or freight be made wherever we deem it reasonable and expedient in order to promote the security, convenience, and accommodation of the public. (Testimony, p. 4.) f INTERSTATE COMMERCE. 75 If the roads fail to comply with the recommendations of the board, it is its duty to report the facts to the attorney-general, who takes action in cases of the violation of a statute or of a charter obligation, Or to the legislature if special legislation is needed. The statute con- tains no specific compulsory provision making the recommendation of the board obligatory upon the railroads, and it is as yet an open ques- tion whether under the statute such a recommendation imposes upon the corporations a legal obligation to comply therewith. The commis- sioners express themselves as satisfied with the powers conferred upon them, but have twice asked for additional legislation to facilitate the enforcement of their recommendations. They suggested the amend- ment of the present act as hereinafter stated for the following rea- SOD S : - .” The board would suggest that the best method to enforce its decisions, or to review them, if unjust or unreasonable, would be to amend the act by providing: (1) That railroads shall be obliged to comply with reasonable and expedient recom- mendations. - & (2) That failure to so comply with such recommendations shallsubject them to ade- quate penalties. * (3) That in all actions for penalties hereafter incurred, the recommendations of the board and its findings shall be prima facie evidence of the facts found, and of the rea- sonableness and capédiency of the recommendations made. Thus the people could enforce recommendations that are right. - Thus railroads could contest such as might be unjust and unreasonable, and protec themselves from public odium for their refusals to obey. Thus the findings and decisions of the board would be free from that autocratic char- acter which they seem now to possess, and yet could be used in actions by the people for penalties to establish prima facie the facts upon which the action would be based, and to place properly upon railroads the onus of proving the findings and recommen- dations of the board to have been wrong. We say properly placing this onus upon railroads, because it seems ridiculous that the hearings before the board and its labors should go for nothing, and again because all the facts and data relating to such mat- ters are usually within the exclusive knowledge and possession of railroads. The board consists of three members appointed by the governor, one being chosen from each of the two leading parties and one to represent the Chamber of Commerce of the State of New York, the New York Board of Trade and Transportation, and the National Anti-monopoly League. The act provides for assessing the Salaries and all the expenses of the commission upon the railroads of the State. The board is given con- trol over the form of annual reports of the railroads, which are re- quired to furnish all information called for, and to give every facility for inspection of their records and property. Managers are required to report all accidents involving loss of life or injury to persons, and the board to investigate and report upon the same. The annual reports already published by the commissioners attest the value of their services to the people of the State. One of their first important duties was to investigate the advisability of rate-fixing legis- lation and report to the State Senate upon a proposed pro rata freight act. In their report the commissioners reviewed the efforts made by the various States and by foreign countries to regulate transportation, and reference is made to the testimony of Commissioner Kernan, in which he summarizes the views of the board upon fixing rates, pool- ing, and the other questions investigated. (Testimony, p. 6.) Refer- 76 - INTERSTATE COMMERCE. .* ring to this investigation, and to the other cases decided during the year, the report for 1884 says: The board has not been unanimous inits decisions in several of these cases, although it has reached unanimously the following conclusions: (1) There should be entire publicity of railroad rates, whether the same be tariff or special rates. (2) Railroads should not, as a general rule, charge more between a terminal and an intermediate point, for a like class and quantity of freight, than is charged between Such-terminal and a more distant point, even though at such more distant point there be railroad or water competition, unless railroads can affirmatively establish such circum- stances governing such competition as justify the higher charge for the shorter dis- tance. - *- . (3) Any form of contract or any kind of discrimination against shippers, which com- pels citizens to refrain from freely using the canals of the State in preference to rail- roads, is against a sound public policy and ought not to be permitted. (4) There is no form of specific rate-fixing legislation which can be at present rec- ommended. Such legislation is not advisable in this State until it is established that all proper modifications in rates and correction of existing wrongs cannot be obtained under existing laws, with the amendments as are hereafter recommended. The commission has passed upon a considerable number of complaints, and the testimony shows that in most instances the recommendations of the board have been complied with without recourse to the courts or further proceedings. The significant fact that the strongest and most influential corporations are usually the most ready to comply with the requirements of the board, a fact to which the attention of the committee has also been called by the commissioners of other States, was stated by Commissioner O’Donnell as follows: Now, I want to state another fact, which is very important from my standpoint. I believe our commission act would be like a rope of sand were it not for the fact that the principal railroads of the State of New York have cheerfully obeyed our recom- mendations. Had they treated us as one or two lateral roads have, we should not probably have had a single recommendation obeyed. The first among these is the New York Central, which was formerly the worst oppºnent of a commission law that we ever had. I have appeared and argued against Mr. Depew time and again, for years, in favor of a commission act; but since the enactment of the law the New York Central road has been foremost in obeying our decisions promptly and pleasantly. The importance of this remark will be seen when I state that we have had forty-six complaints against the New York Central road. The CHAIRMAN. You mean during the last year 3 * Mr. O'DONNELL. No, sir; since the organization of the board, about two years ago; and all but four have been decided in favor or the New York Central. One decision alone against the road took out of their treasury $200,000 a year, and will for all time. (Testimony, p. 41.) f * - The decision referred to was that reducing the milk rate over the Harlem Railroad, which is said to have taken $250,000 from the revenue of the road the first year, and yet was promptly obeyed. - A Valuable work has been accomplished by the board in securing the adoption by all the roads in the State of a uniform system of accounts and reports. Upon this point Commissioner Rogers testifies as follows: Perhaps it is pertinent to say that one of the principal causes leading to the crea- tion of this commission was the widespread demand for publicity of railroad trans- actions. It appeared to be the idea of railroad managers to operate their roads in a mysterious way. All sorts of secret compacts were made, and the very fact that there was secrecy gave rise to the opinion that there might be some great abuse. That INTERSTATE: COMMERCE. 77 secrecy revealed, and the veil pulled aside, a large proportion of the grievances, or the supposed grievances, disappeared spontaneously. We now compel railroads to make reports to us of a very elaborate character; and, in addition to that, we com- pel them to make a quarterly report of their financial condition at the end of every three months. These quarterly reports serve as mile-stones through the year, and tend to prevent a great deal of that corporate mismanagement that has taken place heretofore, such as the secret bondings of roads, the secret issues of stock, and a thousand and one things of that sort. (Testimony, p. 30.) -- As to the character of the complaints received, it is said by the board in the report for 1884: - The complaints received during the year alleging discriminations as between per- 80ms are generally based upon the ground that the road compels the shipper to con- tract to ship all his goods by the road in question, and by no other line or canal; otherwise he is charged higher rates than his neighbor or competitor. The board condemns all such contracts on grounds of public policy. Commissioner Rogers further testified that but few complaints that “ local rates were excessive were made, or that one man received less rates than his neighbor. He thought the latter grievance had been pretty well done away with. The following extract from his statement illustrates the methods adopted by the board in dealing with cases in- volving the reasonableness of the rates charged : Mr. ROGERS. Where complaint is made that too much is being charged from a par- ticular point the method in which our commission deals with it is this: We take up the question of the cost of the construction of the road, we find out how much it has taken to build it, how much stock and how many bonds are out, and how much has gone in good faith into the construction of the road. We then take their revenues and see whether those revenues are paying a fair rate, after the costs of hauling and handling are taken out, upon the cost of construction. If so, we reach the conclu- sion that the general rates upon that road ought not to be diminished under the guar- antee of the general railroad act. Senator HARRIS. What do you assume to be a fair rate 7 Mr. ROGERS. In the State of New York 10 per cent. upon the capital actually ex- pended is allowed to be earned by law. -- -- Senator. HARRIS. A dividend of 10 per cent. 3 Mr. ROGERS. Yes, sir; in general terms. Senator PLATT. In dealing with this question, do you call the “cost of construc- tion” what the company represents the cost of construction to be, or do you try to get at what the road was actually constructed for ? * Mr. ROGERS. We get at what it actually was constructed for. Of course we cannot go into the question as to whether they paid more for their iron or their ties than they really ought to have paid, but we do substantially get at the question what amount of money went in, and take out the “water.” (Testimony, p. 39.) The practical result of such an investigation is shown in the case of the elevated roads in New York City, which are stocked and bonded at $45,000,000. The commission found that the actual cost of their con- struction was $22,680,000. During its brief existence the commission has been called upon to deal With important questions affecting the great commercial interests of the Empire State. The illustrations that have been given of the re- Sults accomplished warrant the conclusion that the interests of the peo- ple are better protected than they were before the creation of the com- mission and that substantial and satisfactory progress has already been made under the existing system towards the effective regulation of the railroads of New York, y 78 INTERSTATE COMMERCE. GEORGIA. The railroad legislation of the Southern States has in the main fol- lowed the general features of the Georgia system, which is similar to that of Illinois. The constitution gives the general assembly power to regulate railroad freight and passenger tariffs, prevent unjust discrim- inations, and require reasonable rates, and it is made its duty to pass laws for these purposes and to enforce the same by adequate penalties. The general assembly is prohibited from authorizing any corporation to buy shares or stock in any other corporation in the State or elsewhere, or to make any contract or agreement with any such corporation which may have the effect to defeat or lessen competition in their respective businesses, or to encourage monopoly; and all such contracts are de- clared illegal and Void. Railroad companies are prohibited from giving or paying any rebate, or bonus in the nature thereof, directly or indi- rectly; or doing any act to deceive the public as to the real rates re- ceived. Such payments are declared illegal and void, and the general assembly is required to enforce these probibitions by suitable penalties. The act of 1879, passed to carry out these constitutional require- ments, provided for the appointment by the governor of three commis- sioners, their term of office to be six years. They may be suspended by the governor and removed if a majority of each branch of the legis- lature concur. They are prohibited from holding any railway stock or bonds, being agents or employés, or having any interest in any railway company during their terms. They are required to make, to be ob- served by all railroads doing business in the State, reasonable and just rates of freight and passenger tariffs, reasonable and just rules and regulations as to charges at all points for handling and delivering freights, for preventing unjust discriminations in the transportation of freight and passengers, for charges for the use of cars, and to prevent the paying of any rebate or misleading the public as to the real rates charged. - The commissioners are required to make schedules of rates for each railroad, and to change and revise the same as circumstances may re- quire. Such schedules shall be deemed by the courts as sufficient evi- dence that the rates fixed therein are just and reasonable, and the rail- roads are required to post a copy at all of their stations. The commis- sioners are required to investigate the books and papers of the compa- nies and to personally visit their offices and stations, and are given power to examine their agents and employés under oath, to see if the laws are complied with. All contracts and agreements between rail- roads are to be submitted to the commission for inspection and correc- tion, and all agreements as to division of earnings by competing roads are to be submitted for inspection and approval. Any such agreements not approved by the commission or by virtue of which rates exceeding those fixed are charged are declared illegal and void. Extortion and unjust discrimination are prohibited. Any company violating the rules and regulations of the commission, and failing after due notice to make full recompense for the injury done as directed by the commission, is liable to a penalty for each offense of not less than $1,000 nor more than $5,000, actions for recovery to lie in the county where such violation occurred. Any person injured by any such viola- tion is given a right of action, the damages to be the same as between individuals, except that in cases of willful violation of law the railroad companies are liable to exemplary damages. Officers, agents, and em- ployés of railroads who refuse to furnish any report required by the INTERSTATE COMMERCE. 79 commissioners, or willfully hinder them in the discharge of their duties, are made liable to a fine of from $100 to $5,000 for each offense. It is especially provided that the act shall not be taken as abridging or con- trolling the rates on freight coming from or going beyond the bounda-. ries of the State and on which less than local rates are charged. Commissioners were appointed under this act October 15, 1879, the present chairman, Maj. Campbell Wallace, being one of the original board. The records show that the action of the commission has, from the beginning, been cautious, and has been based upon close investiga- tion and an intelligent appreciation of the interests of the people and of the railroads. The first important step taken was the promulgation of a provisional “standard tariff,” the idea being to establish a standard and make such modifications in the case of each road as seemed advis- able. When this was issued the board called upon the railroads and the people to show cause why it should be modified, thus practically placing the onus of complaint upon the railroads instead of upon the public, a plan which brought the commission valuable and exact infor- mation. When the board was prepared to act the system of regulating rates still in force was adopted. This consists of a “standard freight tariff,” which fixes a maximum charge per hundred pounds on the Vari- ous classes of freight, for each 10 miles, up to 460 miles, and also similar special rates on a number of leading products. Taking this tariff as the standard for all roads, wherever modifications are deemed advisable, the percentage of addition or deduction allowed on particular commodi- ties in the case of each road is plainly specified in the list which follows, as well as the passenger fare allowed, which is 3 cents, except on five roads, where the rate is either 4 or 5 cents. A uniform classification for all the roads is also a part of the standard tariff, which is made com- plete by a series of twenty general “freight rules and regulations.” This plan, it will be seen, admits of modification very readily, and any change that becomes necessary is covered by issuing a circular chang- ing the rules or classification, or by an occasional revision of the tariff. The number of changes thus made has averaged about ten a year. The general principles followed by the board in this undertaking are indicated in the following paragraphs from a letter to the Kentucky commission, written by Major Wallace, November 24, 1881 : Under the law, the commission recognize their duty to make a tariff of rates that would be “just and reasonable for both the people and the railroads.” We recognize the right of every man in the State of Georgia, no matter where located, to have his freights carried at “just and reasonable" rates, to be fixed in accordance, with his fa- cilities for transportaion, natural or artificial, or both. - I mean this: A community having more railroads than one, or having one only and a navigable water course, has commercial and transportation advantages and facili- ties that, according to all the laws of trade and commerce, do not accrue to a com- munity or an individual with only one railroad, or simply a navigable water course. Now, with this idea governing the Georgia commission, we recognize the right of every man ill the State of Georgia to select his own market, in which to buy his supplies or sell his products without obstruction on the part of transportation companies, either in the form of unreasonable and unjust rates or arbitrary rules. No agreement or con- tract, expressed or implied, among or between such companies, should be permitted to delay or interfere with the shipment of freights to any market, or over any route the shipper may designate. Division of the earnings or the quantities of tonnage by a stipulated percentage among themselves to the injury of shippers, subjects the com- mon carrier to damages. The shipper, on his part, must be content with the advantages or disadvantages of 80 INTERSTATE commRRCE. his commercial location. If a man voluntarily builds his house on the top of a hill, he must make up his mind when he goes from home to have the inconvenience and labor of climbing that hill when he returns. If a man raises his bale of cotton 10 or 20 miles from a railroad station, or cultivates his land on the banks of a navigable river, or on the line of a railroad without competition, he can neither expect nor rightfully de- mand as low a rate of freight as the man with all the advantages of competition ac- cruing to him by a multiplicity of the means of transportation. If the former gets the “just and reasonable" rates contémplated by the law of Georgia, he has his full rights, not only under the law of his State, but his equitable rights under the law governing commerce adapted to his location and transportation facilities. To carry out the foregoing general views as near as practicable, we adopted what we denominate a standard tariff of rates; that standard varies these rates from the greater to the less rate for each and every 10 miles, gradually lessening the prorate of charges as the distance increases, always considering starting and terminal expenses to be an item in the rate fixed. This standard of rates and distances is made to apply to the real necessities of the people, and the railroads of the State, by a percentage added or deducted; and also by a change as to distance, in which the rate shall apply, adapted to each road, as in the judgment of the commissioners may be just and rea- sonable to the shipper and carrier. - In 1880 a bill was filed in the United States circuit court for the northern district of Georgia by George H. Tilley, praying that the com- missioners be restrained from enforcing their rates and regulations on the Savannah, Florida and Western Railroad. The affidavit filed by the Commissioners in response to this application for injunction demonstrates very clearly the thoroughness with which they had investigated the Question of fixing rates and the exactness of their knowledge as to the condition of each road. This statement is printed in the second semi- annual report of the commission, and was so conclusive that the court not only sustained but complimented the action of the commissioners. Their views upon the vexed question of the profits to which a railroad is entitled were expressed as follows: The inquiry “Upon what sum should a given road pay interest ?” involves many and nice considerations. Evidently, in the opinion of the commission, the value of the property, as distinguished from its original cost, is the criterion. But to deter- mine the value is difficult. Still, practically, this determination must needs be fre- Quently made and acted on. Valuation is necessary annually for taxation—almost daily for sales and purchases—such a valuation as determines practical application. These general views of principles and facts open the way for a closer discussion of the action of the commission and its reasons. The objects as set forth in the law were twofold—the prevention of extortion and unjust discrimination. * * * The basis of estimate as to what is just and reasonable may be briefly set forth as fol- lows, viz: In their double aspect as corporations of a quasi-public character, and also private corporations in their means and resources, the same railroad corporations are entitled to a reasonable profit on the value of their corporate property. The value must be ascertained, not merely the cost, for railroad property, like all others, #uctuates in value, and the cost is but an element or factor in the estimate of value. Various methods have been adopted to determine value. There may be difficulties in the way of such determination, but they are exactly the same for this purpose as for all others, and are of a sort that have to be determined for other purposes, as, say, for taxation, for sale or purchase, or for a proper report, &c. Practically, an esti- mate is put upon the property in every respect in the general exhibit. To rectify this, and make it as accurate as possible, is really one of the chief duties “and func- tions of the higher officers, who profess in their reports to give information to the stockholders and the public. Without entering more into the exact means of esti- mating the value, it may be remarked that the proper and frequent use of the profit INTERSTATE commRRCE. 81 and loss account is indispensable to reconcile the fluctuations of actual value for in- formation and for action, for sale and taxation. z Reports, &c., are intended that the condition of the corporation should be intelli- gibly stated. Huge errors of the most practical character, and disastrous to all in- terests, arise from the failure' to do this thing. The huge lumping standing item with which most exhibits begin, “the road and its outfit,” is really subject to these very changes, most important of all to be known and understood. As well have a ther- mometer of solid contents instead of quicksilver, and complain that it is too trouble- some to use one with liquid. This is the final result, the resultant of all book-keep- ing, and needs to move up and down according to the facts—the value meter. Upon this value (as actual and important, though an annual estimate will perhaps suffice) a reasonable profit is to be made. This profit is the excess of the earnings over the operating expenses. The measure of its reasonableness is another thing to be de- termined, and this depends upon the general profits of other investments of capital. It should generally be such a profit as to embrace legal interest and a certain increase for the risks of stocks as compared with bonds. Probably in Georgia about 8 per cent., 7 per cent. interest and 1 per cent. insurance. This profit should be the excess of earn- ings over expenses with average economy of management. If the road is managed with superior skill it is entitled to the gain thereby effected; if without proper econ- omy, the profits must be reduced, the loss and waste to fall where it belongs, on the poor management. - - - * It has been our aim constantly to reduce the domain of mere conjecture and to enlarge that of calculation. With a proper system of book-keeping and tabulation, not less important, the question of reasonable rates can be made about as soluble as many other practical questions, and much more certain than the conjecture and fluctuating and guessing work actually resorted to. The fact that it is difficult argues more dil- igence in solution instead of more guess-work. - - A comprehensive statement of the difficulty experienced by the citi- Zen in enforcing his common-law rights and of the necessity for such an additional remedy as the commission system affords was given in the report of 1881, as follows: . . Prior to the act of 1879 the common-law right of the citizen to be protected against extortion and unjust discrimination existed in its full force; but the remedy for its violation was wholly inadequate. Practically the citizen had no rights, though his theoretical right was ample and complete. - The rights of the railroad companies were well defined enough, and their remedies also were adequate, being in their own hands. It was their capacity for abusing their powers which was not sufficiently held in check. *. In the very nature of the case, the citizen stood at such a disadvantage that his rights were merely nominal. To illustrate: Suppose him to receive a package on which the actual freight charge was $1.50, while a just and reasonable rate would be but $1. What could he do? Usually he could not wait, but must pay the $1.50 under protest, and bring suit afterwards, if he thought it worth his while, for the half-dollar overcharge. But could he afford so do this? His interest in the matter would not warrant the expense—the costs, fees, witnesses, the discussion of the principles and facts involved as to what rate would be reasonable and just in the particular case. And only the one case would be settled after all. The next day a parcel would be charged 75 cents, worth but 50, and the 25 cents would involve a new suit. Practi- cally he was obliged to submit. Were it a merchant who overcharged him, he would transfer his trade to another house. But in dealing with the railroad he is dealing usually with a monopoly, unless at a competing point—and now even at such a point by reason of pooling—and so he was remediless. A litigation would usually settle but a single case—one class; one distance—scarcely any principle at all. Such was the attitude of the citizen. Consider next the attitude of the railroad prior to the act of 1879. - - S. Rep. 46—6 82 INTERSTATE COMMERCE. <º It had a large interest in results. Instead of 50 cents multiplied by 1 (the citi- zen's interest) the railroad had 50 cents multiplied by 1,000 or 100,000 as its interest. It would have also ample experience, and the best legal talent already engaged and . trained and waiting, and all the experts favorably inclined. - So unequally were the parties matched that in the whole history of the State there has been (so far as we remember) not one single case of a suit by a citizen to enforce this common-law right—and but one to enforce even a statutory right for an overcharge. In that case the charter of the railroad in express terms limited the rates, yet the railroads fixed its rates beyond the chartered limit, printed them and collected them, and was checked by this suit. - A remarkable commentary on the absolute worthlessness of rights without reme- dies. - - - The consciousness of this huge disparity between the parties is the great reason why juries lean toward the weaker side. Notwithstanding all this, however, unless the sum involved was large, say a suit for life, or limb, or injury, the party ag- grieved would not enter into so formidable a controversy, even with the sympathy of. the jury in his favor. sº - Indeed, the case was not prepared for jury trial. As well turn a jury loose into a great pile of copartnership or bank books to strike a balance as into the complex principles and facts involved in rates of freight without some report like that of a master in chancery as the basis of decision. . - - Now all this has been in large measure remedied by the act of 1879, and adequate provision made also for such a report, so that the parties can stand on a level. The third report of the commission contained an elaborate discussion of the principles governing the right of regulation, of the respective rights of the citizen and the railroad, of the provisions of the law cre- ating the commission, and of their powers, obligations, and duties under it. In the report submitted to the governor October 15, 1882, it is said: The constitutionality of the law creating this commission has been settled in the minds of all thinking people. The experiment which Georgia has made has been suc- cessful; and the law, as it now exists, is believed by not only our own, but by other States, to be sufficient for the accomplishment of the purposes for which it was en- acted. * * * Experience has proved that the transportation companies need a power over them which will curtail their growing extravagance and lessen their current expenses for the benefit of their own stockholders. The people need a power sufficient to control these corporations and prevent excessive and discriminating rates, growing out of loose and extravagant management. * * * Apprehensions that the commissioners might abuse their powers have ceased to exist. There is a feeling of confidence that no combination of capital, either home or foreign, invested in rail- roads can materially injure or affect the public interest so long as transportation is wisely and prudently regulated by law. - Railroad, manufacturing, mining, agricultural, and every other material interest have within the past three years received a remarkable impetus in Georgia. Confi- dence in the stability of the value of every species of property in this State, and in our progressive prosperity as a people, is greater than ever before. - All predictions that the action of the railroad commission of Georgia would para- lyze the railroad interests of the country have failed. An experience of three years of the practical operations of railroads in this State, under the supervision of law, has for that period shown largely increased revenues to the railroads, larger dividends to the railroad stockholders, higher prices for railroad shares, greater volume of busi ness, largely stimulated travel, greatly increased tendency to invest capital in our State, more miles of railroad built and being built in Georgia, and corresponding bene- fits to the public generally, and the railroad authorities and the people on better terms with each other than ever before during a similar period in our history, INTERSTATE COMMERCE. 83 It is stated in the same report that the action of the commission, in refusing to advance the rates on cotton to those agreed upon by the pooled lines of the South, saved the cotton producers of the State that season more than half a million of dollars. Again, in October, 1884, the commissioners say of their work: We think that it can be justly claimed that a fair and impartial review of the work of the commission in carrying out the purposes of the law by a reduction and equali- zation of rates that were of force by the railroad companies at the time of its pas- sage will show a saving to the people of Georgia, annually, of a sum equal to the full amount of their annual taxes, while the healthy financial condition of the rail- roads does not indicate that they have been injured thereby. . A general view of the work of the commission and its results is also given in the testimony of Maj. Campbell Wallace, who appeared before the committee at Atlanta. (Testimony, p. 1416). . . ALABAMA. The constitution of Alabama, adopted in 1875, declared all railroads and canals public highways and common carriers. Railroads were given the right to intersect, connect with, or cross any other railroad, and required to receive and transport each others’ freight, passengers, and cars, loaded or empty, without delay or discrimination. The gen- eral assembly was required to pass laws to correct abuses, and prevent unjust discrimination and extortion in freight and passenger rates on railroads, Canals, and rivers. The granting of free passes or selling tickets at a discount to any member of the general assembly, or any person holding office under the State or United States, other than as . . . . . sold to the public generally, by any transportation company, was pro- hibited. - º By an act approved February 26, 1881, the present railroad commis- Sion was established. The statute prohibits extortion and unjust dis- Crimination. Twice the amount of damages sustained by reason of overcharge or unjust discrimination, with attorney’s fee, may be re- Covered. Only actual damages, and no attorney’s fee, can be recovered if the court finds that the service was performed at rates previously approved by the commission, and in suits concerning rates not higher than those approved by the commission, the plaintiff, if he fail, must pay the costs and an attorney’s fee to defendant. & The penalty for willful extortion is a fine of from $10 to $500 for each offense, but extortion cannot be deemed willful unless committed by a Corporation which has refused to submit its tariff to the commission or to conform to its requirements. In the defense of such suits the ap- proval of the commission is prima facie evidence that the rates approved are not extortionate. The act declared that rates should not be con- sidered extortionale if the net earnings of the railroad for transporting freights without discrimination on the basis of such charges, with its net earnings from passenger and other traffic, would not amount to more than a fair and just return on the value of the road. Actions for damages must be commenced within ninety days after the cause of action accruesº. The railroads must publish their rates by posting them at all depots, and must not make any reduction or rebate from the pub- lished tariff which is not given to all persons and corporations. The act permitted Special rates to be given to any person or corporation to aid in developing any industrial enterprise, but required them to be posted. The Renalty fixed for giving a rebate was a fine of from $10 to $500, to which persons who should knowingly receive the benefit of 84 INTERSTATE COMMERCE. such reduction were also made liable. Any company, however, may carry freight free. The governor nominates three persons for president of the Commission and six for associate commissioners, from which list the Senate elects the president and two associate commissioners, to serve two years. The acceptance by a commissioner of any gift, emol- ument, employment, or gratuity from any railroad works a forfeiture of his office. - * ,-- It is the duty of the commissioners to revise all tariffs submitted to them. If the charges are unreasonable or amount to unjust discrimina- tion against any person, locality, or corporation, the commission is re- Quired to notify the company of the changes deemed necessary, and When they have been made to certify its approval of such tariff. They are required to hear all compaints against such tariffs and notify the roads of any changes deemed proper. The railroads are required to make returns for purposes of taxation to the State auditor, who issues licenses to operate the roads for one year on presentation of the State treasurer's receipt for taxes and satisfactory evidence that the company is prepared to transport freight and passengers with reasonable safety. - The penalty for operating without a license is $100 for each day so en- gaged, one-half the penalty to go to the person suing for the same. The Commission is required to give notice in writing to a company whenever repairs or improvements are necessary, or changes in rates or its manner of conducting its business are expedient, and to report the facts to the legislature. The commissioners are required to keep informed as to the condition and management of the railroads, and to recommend such measures and regulations as they deem conducive to the public Safety and interest. The managers of the railroads are re- Quired to furnish the commission with all information required relative to the management of their lines, and to make annual returns in the manner prescribed by the commission, under penalty of a fine of $50 for each day of refusal. - Accidents attended with any serious personal injury must be reported within twenty-four hours after their occurrence to the commissioners, who may inquire into the circumstances and state their conclusions in their annual report. They may examine witnesses under oath relative to the affairs of any railroad company, the penalty for refusing to testify or obstructing the commissioners in the discharge of their duties being a fine not exceeding $1,000 or imprisonment not exceeding one year, or both. On application of a director or persons owning one-fiftieth part of the Stock or bonds of any company, the commissioners may examine into its financial condition and publish the same. The Supplementary acts passed in 1883 made it the duty of the com- missioners to recommend joint local rates to railroads on freight in all cases where such railroads consisted of a combination of roads under One management, or were connecting lines, so as to avoid as far as possible the injustice of combined local rates over said lines, and to make no recommendation which would not allow the companies fair and reasonable compensation for the services performed. Pooling for the purpose of preventing free competition and establishing extortionate rates, and which should have the effect of being in undue restraint of trade and business at any station, town or city, is prohibited, Officers Or agents of any Company violating this provision are made liable to a fine of from $50 to $200 for each offense. The act is declared to apply to pooling agreements made outside the State, but to be performed in whole or in part in the State. Agreements, rates, or pool arrangements made to cheapen freight rates or extend additional facilities to the * INTERSTATE COMMERCE. - 85 public generally, and which are not extortionate or in undue restraint of trade at any town, city, or station, are not prohibited, and when they have the certified approval of the commission such agreements, rates Or pool arrangements must be deemed prima facie lawful, and no person is liable to prosecution for aiding in carrying them out. By another act the determination of any matter by the commission is made prima facie evidence in all proceedings that such determination Was right and proper. - It appears from the reports of the commissioners that, after consid- erable opposition, they revised the freight and passenger tariffs of every railroad in the State, and that their tariffs went into operation on all the roads, and were generally satisfactory. In their second annual report the commissioners state that no railroad company failed or re- - fused to adopt and put into effect any recommendation made by them, and say: - This whole subject of the regulation of the business of railroads by the State is one which is full of inherent difficulties and surrounded by many embarrassments. It is of recent origin, and yet the march of events forced it upon the most enlightened nations of Europe and a majority of the States of the American Union, None of these nations or States that have undertaken it have receded from this governmental work. Time and experience are necessary to develop and reduce it to a thoroughly arranged and complete system. The reformers who propose by heroic remedies to accomplish complete wonders in a day or not at all will find a more successful field of operation somewhere else than in dealing with this subject. No statutes, however wise, patriotic, or well considered, will in themselves accomplish the work, and a tinkering and meddlesome administration of such statutes certainly will not. To make such regulation just and beneficial, worthy of a great State and promotive of its prosperity and the welfare of all who are entitled to the protection of its laws, this supervision must be exercised by an administration of such statutes, character- ized by a spirit of justice, firmness, and patience. The present commissioners, in a letter to the chairman of the com- mittee, under date of November 2, 1885, say: There were pending before the last general assembly of Alabama several bills hav- ing for their scope and purpose the further regulation and control of railroads in Alabama, but none of them received favorable action from the general assembly, and all were defeated. . The administration of the law creating the commission has given, so far as we are advised, satisfaction in the main to the railroad companies and to the people. ARIZONA TERRITORY. The Territory of Arizona realizes the necessity of railroads to aid in its development, and such legislation as has been enacted has been cal- culated to encourage the construction of railroads, not to regulate their management. - * ARIKANSAS. There has been very little legislation in Arkansas looking to the reg- ulation of the business of railroad transportation. An act passed in 1873 limited the charges for the transportation of passengers by rail. roads in that State to 5 cents per mile for first class and 3 cents for Second class, and required the roads to furnish sufficient first and sec- Ond class cars for the accommodation of the traveling public. The rates on freight were limited to 50 cents per hundred pounds on “heavy articles” and 10 cents per cubic foot on “articles of measurement" for 86 INTERSTATE COMMERCE. every 100 miles, and in like proportion for a shorter distance. Should the railroad charge more than these maximum rates it was made liable to pay to the party injured or to the consignees of freight double the amount so overcharged. A subsequent act made the penalty for over- charging $100. An act passed in 1881 fixed the rates on railroads not exceeding 50 miles in length at not exceeding 10 cents per mile for each passenger and 40 cents per hundred pounds for freight. It was also provided that rates on such roads could be reduced by the railroad Commissioners whenever the net annual profits of a road exceeded 10 per cent. On the capital actually invested. - .* - The railroad commission has consisted of different State officers, and its principal duty has been to ascertain the value of all railroad prop- erty in the State and make the assessment for purposes of taxation. By the revision of the revenue laws, adopted in 1883, the commission consists of the governor, secretary of state, and auditor of public ac- COUntS. - CALIFORNIA. California is the only State which has adopted the commission system as a part of the organic law of the State. The constitution of 1879 is extremely rigid in its provisions for the regulation of railroads. It de- clares all railroad, Canal, and transportation companies common car- riers and subject to legislative control, and requires railroads to receive and transport each other's passengers, tonnage, and cars without delay or discrimination. It prohibits the granting of passes to any person . holding any office of honor, trust, or profit in the State, and the ac- ceptance of such pass by . a member of the legislature or any public officer other than the railroad commissioners, works a forfeiture of his office. Pooling between common carriers or by them with the owner of any vessel touching at ports in the State is prohibited. When rates are lowered for the purpose of competition, the corporations are prohib- ited from raising them again without the consent of the governmental authority. Discriminations in charges or facilities between places or persons, or in facilities for the transportation of the same classes of freight or passengers within the State, or coming from or going to any other State, are prohibited. Railroads, transportation companies, and individuals are required to deliver persons and property at any station, landing, or port, at charges not exceeding their charges for transport- ing persons and property of the same class in the same direction to any more distant station, port, or landing. The State is divided into three districts, in each of which one com- missioner is elected every four years. They must not be interested in any railroad Company or other transportation company as stockholder, Creditor, agent, attorney, or employé. They are given power and it is made their duty to establish rates of passenger and freight charges, to hear and determine complaints, to send for persons and papers, to take testimony and to punish for contempt to the same extent as courts of record, and to enforce their decisions and correct abuses through the medium of the courts. They are required to prescribe a uniform system of accounts for all transportation companies. The penalty for failing to conform to the rates fixed by the commissioners or for charging in excess thereof, or for failing to keep accounts as prescribed by them is a fine of not exceeding $20,000 for each offense, and the officers, agents, and employés are made liable to a fine not exceeding $5,000 orimprison. INTERSTATE COMMERCE. 87 tnent not exceeding one year for violating these provisions. In all civil or criminal proceedings the rates established by the Commissioners are to be deemed conclusively just and reasonable, and exemplary damages may be allowed in-actions for damages by excessive rates. The legis- lature is given power to enforce these constitutional provisions by the forfeiture of charters, and to confer such further powers on the com- missioners as may be necessary for the performance of the duties en- joined on them. Legislation in accordance with the requirements of the Constitution has been enacted. - It appears from the commissioners' report for 1882 that the question of regulating the charges of common carriers received consideration in the legislature as early as 1865, but did not take shape until 1876, when a law was enacted providing for the appointment of three Commissioners with power to inspect the railroads, hear complaints, settle differences, and enforce penalties for extortion and unjust discrimination. This law made the tariffs in force on the 1st day of January preceding its pas- sage the maximum rates. The commission thus established continued the execution of its duties under this and an amended act until January 1, 1880, when it gave place to one chosen in accordance with the new constitution. - - .** The new commissioners devoted the first year to the iſ spection of the railroads of the State, the examination of their tariffs, and the hearing of complaints at thirty-one cities and towns visited. They were expected to make sweeping reductions in rates, but after a year's investigation of the subject they reached the conclusion that an arbitrary regulation of railroad charges is not only unjust to the railroads, but full of danger to the public, and they endeavored to make such an adjustment of rates as would be just to both sides alike. In their report for 1882 the com- missioners, after reviewing the subject of rates in its relation to the shipper, the transportation company, and the general public, express the conclusion that the establishment of inflexible relations between shipper and carrier is impracticable and would work injury to both; and that their enforcement would upset commercial values and destroy confi- dence, the true policy being to give the greatest possible freedom to in- dividual action, consistent with the rights of others equally free. The report for 1883 indicates such a disagreement between the three present commissioners, although all elected by the same party, that majority and minority reports were submitted to the governor. The majority say of the commission : - - As one of the constitutional offices of the State, of comparatively recent origin, be- ing now in the first year of its second administration, it can hardly be said to have outlived its possible usefulness. But it must, like every branch of republican gov- ernment, at the peril of its life, vindicate its right to exist. This can be done in two ways—by theory and results. In theory, the exercise of a power conferred, in the mode prescribed, by a majority of one, is “deemed conclusively just and reasonable.” As this presumption follows and attaches to official acts and their probable results, their opponents have found it safest not to wait for them. Hence the frequency of foregone conclusions against the law and the facts. - But if, neither rashly presuming upon its position and precedence before the courts, nor leaning upon incompetent authority, nor deferring to any unauthorized censor- ship of its course, it has promptly substituted for the facile routine of inconsequen- tial resolutions a thoroughly consistent and advancing plan of action, by methods and measures within the purview of the organic and statute law, it will find in the legitimate instruments of its authority the ready weapons of its defense. If it has resolutely taken the subject-matters of its jurisdiction out of partisan politics, and without fear, favor, or undue influence, has administered them as public trusts in the 88 INTERSTATE COMMERCE. *. interest of all concerned, it has subserved one leading and paramount purpose of its creation. If, never prejudging any cause or question submitted for its decision, it has inflexibly adhered to the law and the facts, it need not fear the ultimato judgment of those having an honest interest in its administration, and can afford to wait for the justice it has done to others. They then proceed to discuss the administrative and remedial pow- ers of the commission, as defined by the constitution and statutes, and . the methods and measures they have adopted. It is shown that the constitution confers the power and imposes the duty to establish and publish rates, and that the commission is also given judicial power to hear and determine complaints to the same extent as courts of record. Then they say— - By these sections of the constitution and statutes “rates,” “rates of charge,” and “change of rates,” are a dozen times repeated and made the burden of investigation and regulation, orders and schedules. It follows that extortions and discriminations are not to be remedied by sweeping and perfunctory declarations that they exist and ought to be forbidden, but by reforming the rates in which they are found. To avoid the plodding process of examination, it is possible to assume without prodf or knowl- edge, as is often done, that all are excessive, and, therefore, extortionate. But that all are unequal, and, therefore, discriminative, is a solecism too palpable to be excused on the score of any negligence or ignorance. And absurd as it is, it is no more so than the correlative proposition that unequal rates can be equalized, and discrimin- ations eliminated therefrom, by uniform reductions. While discarding these absurdities, the commission has settled down to its work upon the theory that extortion may be predicated of each separate rate or class of rates, and, if found to be too high, reduction to reasonable compensation is the rightful remedy ; and as discrimination can be affirmed only of two or more rates for similar equal services, and consists in their inequality, the only possible remedy is by changes up or down, to adjust them to each other and to the service. If it is only when rates are thus “established or adopted, ” changed or regulated, reduced or equalized, by lawful orders and schedules (which, if not waived, are imperatively required), that they are to be “deemed conclusively just and reasonable,” it follows that then, and not till then, can fines or forfeitures for their violation be recovered or enforced. This much debated function of the commission is defined and guarded with excep- tional clearness in the constitution, and concerning it there should be no confusion of ideas or purposes. Its subject-matters are “rates” and “rates of charge;” its ultimate purpose, “to establish or adopt,” or “change” them “from time to time,” so as to eliminate therefrom discriminative inequalities and extortions; its modes of procedure, investigations and comparisons, orders and schedules. Each and every one of eighty thousand existing rates, in its relations to all the rest, and to the gov- erning factors of transportation, is the subject of investigation. What it ought to be, the relative cost and conditions of the service being considered, is the question to be decided. That it ought to be reasonable compelisation for the service, it would be unreasonable to question; and this is the necessary and conclusive inference of the constitution. For, as it ordains, if rates of charge established by the commission are to be “deemed conclusively just and reasonable,” it is because they have been made and are so upon the principle presumed, which is itself the logical corollary of an otherwise ironical presumption. --- The rule of decision thus clearly embodied in the constitution, with all its mani- fold implications, is before and after railroads and railroad commissioners. For three hundred years, in the absence of special agreement between the parties, for services rendered or to be rendered, it has been the measure of compensation and of universal application. Grounded in common sense; as a familiar principle of ele- mentary law, it is the “perfection of reason,” and has been made authoritative by a long and unbroken series of adjudications, \ INTERS TATE COMMERCE. 89 . As to these matters the commissioners summarize their conclusions as follows: - (1) It is a constitutional tribunal, with well defined official functions, to be exer- cised, subject only to the requirements of law, with becoming independence and im- partiality in the interest of all concerned. - (2). Its judicial power to hear and determine complaints presupposes parties of rec- ord to be heard and specific issues between them to be determined, and is to be exer- cised “in the same manner and to the same extent as by courts of record.” (3) Its remedial powers and duties relate exclusively to rates of charge for fares and freights, and when regularly exercised ifi the mode prescribed, its decisions are prima facie “just and reasonable.” (4) To make them in fact what they are presumed to be, they must, without prefer- ence of person or corporation, be based upon the varying conditions of the service, and be a reasonable-recompense therefor. (5) This is the rule of compensation for Government service incorporated in the acts of Congress to aid the construction of the Central Pacific and other overland roads, and estops the Government, and a fortiori all other parties, from discriminating against them in payments for transportation thereon. (6) The circumstantial and conditional factors of transportation are the admitted and necessary criterions of its cost and value, and are each and all of them inconsist- ent with any theory of unconditional uniform rates of fare and freight. (7) To impose such rates upon the Central Pacific Company and leased lines under its management, at rentals ranging from $100 to $5,194 per mile, would be to make some of them bankrupt pensioners upon others; to convert relations beneficial to all into penalties upon such as have the least to gain by them ; to substitute for reason- able compensation a rule of rank injustice, subject to which not one of them could have been constructed, and to arrest their extension to districts in squalid want of them, upon the mere pretense of favoring those who have them. It appears from the report that the Commissioners, after investigation, finally established the maximum passenger rates on the lines owned and operated by the Central Pacific Railroad at 4 and 6 cents a mile. Adopt- ing and Continuing existing rates below 4 cents a mile, this Schedule superseded rates ranging up to 10 cents a mile. On 724 miles of the company’s system the rate was made 6 cents, on 880 miles 4 cents, on 264 less than 4 and more than 3 cents, and on 151 miles less than 3 cents, making, it is said, an average reduction of more than 30 per cent. The companies affected submitted to the enforcement of this schedule under protest. They excepted to the jurisdiction of the com- mission to regulate fares and freights upon the Central and Southern Pacific Railroads on the ground that by the several acts of Congress to aid the construction of said roads all power to regulate their charges, not conferred upon their directors, was reserved by the General Gov- ernment. It was urged that the exercise of this power was contingent upon an income of 10 per-cent. upon the cost of construction of the Central Pacific, exclusive of payments upon loans due the Government, and that the company is protected by the acts of Congress from any State law by which it might be delayed or prevented from performing its obligations to the General Government. - The next step of the commissioners was to reduce non-competitive inland freight rates on the same company's lines, the reductions on Cereals and millstuffs being, it is stated, in some cases as high as 35 per cent., and being so arranged as to abolish discriminations against interior points. These rates were also submitted to under protest and duly posted, taking effect January 1, 1884. * 90 INTERSTATE commeRCE. In their report for the year endin g December 31, 1884, the commis- Sioners say: - - The railroad commission of this State, as at present organized; has been but five years in existence, and is comparatively a new office. It has not, however, been ad- ministered altogether by new men. Its first administration, fortunately for the im- portant interests in its safe and conservative keeping, is generally accredited to prior service and ripe experience in an analogous position. . The result was, at the end of three years, thrée reports and one schedule of freights, introduced, and pressed to its passage, by Commissioner Cone. This administration, in two years, has made two reports and adopted three schedules, reducing and establishing rates of fare and freight. In reviewing their work during the year the commissioners show that reductions were made in the passenger and grain rates of the San Francisco and North Pacific Railroad, the rates fixed on staple prod- ucts being from 10 to 12 per cent. higher than similar rates on the Cen- tral Pacific system, and that steps were taken towards preparing a general schedule of freight rates. On this subject they say: The wheat crop of this State in 1883, as per published returns, was 1,290,000 tons, of which less than one-half was brought to tide-water by the Central Pacific system of roads, including the Southern Pacific, Northern Division. . By average hauls of . less than 84 miles, the longest being from Nevada and Utah, this combination of roads brought to shipping points at tide-water 546,467 tons, for which the gross receipts were $1,137,179.67, which is just $2.08 per tom. That this, in itself considered, and by every fair comparison with any road or group of roads west of the Missouri and lower Mississippi Rivers, is a low average rate, this commission has cumulative and con- clusive proof. Going further east, it has found that up to points of transfer to rival rail and water carriers, for long hauls in large quantities, on small but profitable mar- gins, to the Atlantic sea-board, the tariffs of such roads as the Chicago and North- western, and the Chicago, Milwaukee and Saint Paul, corroborate the statement. But where all relation and proportion of tonnage, distance, and other conditions of service cease, is the end of comparison. And while the great trunk lines, with their incomparable volume of business and met income, by an inherent law of trade, rela- tively still greater, in suppressed rivalry with each other, and in irrepressible com- petition with lake, river, and canal, may dictate through rates from sea to sea, their interstate tariffs will not be taken by this commission as the criterions of any charge or rate of charge on any road or group of roads in this State. Referring to the opening of the Southern Pacific Railroad, it is stated that it took from the grain crop of California, the year it was completed more than a third of the tax levied upon it by ocean carriers. Prior to the year ending June 30, 1883, the cost of transportation by sea had seldom, if ever, gone below an average of 68s. per ton. The average for the year ending June 30, 1881, was 68s. 10d.; and for the year ending June 30, 1882, was 69s. 33d, which was the ruling rate when the road was completed to New Orleans. The opening of this new competing route to Europe, via New Orleans or Galveston, reduced the rate by sailing carriers from 69s. 33d. to 43s. 4d. And the commissioners say: The cost of grain shipments aggregating from 400,000 to 500,000 tons per annum, and more than 80 per cent. of which were and are made in foreign bottoms, was thus - reduced more than 37 per cent. . In speaking of the Southern Pacific Railroad the commissioners speak very plainly their views as to the proper basis of railroad charges as follows: ‘s - - As shown by the accounts of the company, its gross receipts for the last ten months are about $2,000,000 less than for the same months in 1883. So much of the difference INTERSTATE COMMERCE. . - 91. as is not the result of reductions of passenger fares and freight rates, made not on in- come, but as expressly required by the constitution and statute, on the “charge” and “rate of charge,” it must be referred to floods, washouts, and fluctuations in business, beyond human foresight or control. But whether accounted for by one or all of these causes, it makes sport of such public economists as would limit income on a vagrant conjecture and balance an annual account of loss and profit before the books have been opened. Such feats of financiering and book-keeping this commission has not attempted. It has never undertaken to decide how rich or how poor it is lawful to be, but, in conformity with the constitution and law, bas always held, now holds, and will continue to hold, that a common carrier, the same as a hod-carrier, “is entitled to reasonable compensation and no more.” (Civil Code, Section 2173.) This is short, sensible, and to the point. It is the only rule of decision possible in the premises. And even without the sanction of the legislature, of Congress, of the courts, of the nations, or of the ages, it would have been adopted by this commission upon its own motion and sense of justice. - - Armed with new and untried powers, and charged with important duties, the com- mission has questioned the constitution and laws for the reasons which inspired them and for the methods to be followed. Putting aside stump statistics and exploded theories, it has endeavored to exercise its control over the business and management of railroads upon their own prevailing necessary and essential principles. Presum- ing no wrong in individuals or corporations, and putting the onus of proof upon the accusing party, it has respected and applied the forms and principles of even-handed justice. Holding the laws made by and for the people to be the measure of their rightful demands and of official duty, it has shared no trust with the princes of fac- tion nor with the spotless primroses, nicknamed reformers. Sitting in and for judg- ment in the very vestibule of the courts that are to enforce or reverse its orders and decisions, it has made their adjudications the lights and landmarks of its own. On the other hand, the minority commissioner, in his separate report, states that the changes in freight rates made are “utterly insignifi- cant,” and that no material reduction was really made. He says: The average local freight rates are more than twice as high upon the Central Pacific and other lines in this State, upon almost every article produced in large quantities, as upon those that are transported over eastern roads. The “volume of traffic,” an argument often used by railroad authorities bere, is in our favor, so far as local trans- portation is concerned. That reductions are imperatively demanded, and ought to be made upon such articles from “interior points” to “tide-water,” or “shipping points,”. is a proposition too plaim to admit of discussion. In conclusion, the same commissioner pronounces the work accom- plished by the commission during the year “ of the most trifling impor- tance.” - In view of these conflicting statements, the committee has submitted the liberal extracts given from the reports of the commissioners to il. lustrate the situation of affairs in California, but has not been enabled to investigate the Workings of the system now actively on trial in that State with sufficient thoroughness to Warrant a conclusion as to its results. COLORADO. The constitution of Colorado, adopted in 1876, declares all railroads public highways and all railroads common carriers. Railroads are given the right to connect at the State line with roads of other States, and to intersect, connect with, or Cross any other railroad. Consolida- tion with parallel or competing lines is prohibited. It is declared that all persons shall have equal rights to have their persons and property . 92 INTERSTATE COMMERCE. transported over any railroad; that no undue or unreasonable discrim ination shall be made in charges or in facilities for the transportation of freight or passengers within the State, and that no company, nor the lessee, manager, or employé thereof, shall give any preference to indi- viduals, associations, or corporations in furnishing cars or motive power. It is also declared that the right of eminent domain shall never be abridged nor so construed as to prevent the general assembly from tak- ing the property and franchises of incorporated companies and Subject- ing them to public use the same as the property of individuals, and that the police power of the State shall never be abridged or so construed as to permit corporations to conduct their business in such a manner as to infringe the equal rights of individuals or the general Well-being of the State. The fictitious increase of stock or indebtedness is prohibited and declared Void. ** An act passed in 1881 requires every company to keep at the princi- pal city or town on the line in the State an agent authorized to adjust and settle all claims for overcharges collected within the State, and for all loss or damage, under a penalty of $3,000 for each month during which the company fails to keep such agent. . All Overcharges and all claims for loss or damage must be paid within sixty days after presenta- tion to the agent, accompanied by the expense bill and statement of the amount of the claim. If the company shall fail to refund the amount of the overcharge, loss, or damage within such time, the claimant may recover $100 for each month or fraction thereof during which the com- pany shall be in default, provided that he recovers in court a larger amount than the sum tendered by the railroad company. - The first systematic attempt at railroad regulation was made by the passage of an act approved April 6, 1885, which provided for the ap- pointment of a railroad commissioner by the governor for the term of two years. It is made the duty of this officer to investigate any neglect or violation of the laws by railroads that shall come to his knowledge, to examine and inspect their condition and management, and to notify the corporations of any changes he may deem necessary. It is made the duty of the railroads to establish loading points on their lines, at such places as may be designated by the commissioner, for the loading of live stock, ore, coal, coke, stone, lumber, lime, or other freight, in car-load lots, and they are required to furnish cars on demand at their stations and such loading points. The Section prohibiting unjust dis- crimination provides that— g No railroad corporation shall, without the written approval of said commissioner, charge, demand, or receive from any person, company, or corporation, for the trans- portation of persons or property, or for any other service, a greater sum than it shall while operating under the classification and schedule then in force charge, demand, or receive from any other person, company, or corporation for a like service from the same place, or upon like conditions and under similar circumstances, and all con- cessions of rates, drawbacks, and contracts for special rates shall be open to and allowed all persons, companies, and corporations alike, at the same rate per ton per mile, upon like conditions and under similar circumstances, except in special cases designed to promote the development of the resources of this State, when the approval of the commissioner shall be obtained in writing. But nothing in this section shall be construed so as to prevent the said commissioner from making a lower rate per ton per mile, in car-load lots, than shall govern shipments in less quantities than car- load lots, and from making lower rates for lots of not less than five car-loads than for single car-load lots, except in cases otherwise provided for in this section. INTERSTATE COMMERCE. . 93 The next section prohibits unreasonable charges, and requires the railroads to keep posted up in their passenger depots printed copies of the classification and schedule of rates of freight charges in force. The companies are liable for triple damages, with costs of suit and attor- ney's fee, to persons aggrieved by any violation of the provisions which have been cited. Annual reports are required to be made in the man- ner and form prescribed by the commissioner. The commissioner may examine witnesses under oath, and require their attendance and the production of books and papers. On his request it is the duty of the governor to direct the proper district attorney or the attorney-general to institute and prosecute suits for violations of the law. It is the duty of the commissioner, on the complaint of the county commissioners or of twenty-five citizens of any county, to examine the tariff of any com- pany or the condition or operation of any railroad between any points stated in the complaint, and to report to the petitioners and the com- pany and the governor. The expenses of such examination are to be paid by the county or the citizens when the prayer of the petition is denied, otherwise by the railroad company. The railroads are required to report the occurrence of all serious accidents to the commissioner, who may investigate the same and report as to the causes thereof to the governor. * • This new law is proving satisfactory in the regulation of the local traffic of the State, but it cannot be made fully effective until Congress provides some method for the regulation of interstate traffic, as appears from the following statement made to the committee by W. B. Felker, the railroad commissioner, under date of October 20: As you will see upon examination of the law, our commission is advisory, but (with some few additions) of sufficient power to regulate so long as the railroad com- panies will conform to the recommendations of the commissioner. The companies have expressed a willingness to abide by the law and the recommendations of the commissioner, and in every instance thus far have done so. There will be no diffi- culty under this law to regulate the local traffic in this State, but the great trouble in this State from extortionate or discriminating rates arises out of interstate com- In 62I’CO. - - * The policy of the Missouri River roads thus far has been disastrous to the establish- ment in this State of manufacturing industries. Rates on raw material, in many instances, are as great and in some instances greater than on the manufactured articles. The rate upon necessitous shipments from Chicago to Denver is from five to ten times as great as from New York to Chicago. What we are obliged to get from beyond the Missouri River must pay its value in freight charges. There is no competition; rates are pooled and the shipper or consignee must pay. - The people of this State have been and will continue to be at the mercy of railway companies until Congress furnishes relief. Congressional legislation must come sooner or later; I trust it will be the fruit of the labor of your honorable committee. CONNECTICUT. Of the existing State railroad commissions that of Connecticut is one of the oldest, having been established in 1853. The character of the legislation of the State and the general scope of the powers and duties of the commissioners are clearly stated in the following paragraph from their report to the legislature for the year 1884: The law requires us to make a report to you of the general conduct and condition of all the railroads in the State, with such suggestions for legislation as we deem proper. Obviously this report is to be of the colduct, or management, of the rail * 94. * - INTERSTATE COMMERCE. roads, in those particulars which are by law intrusted to our supervision, and the sug- gestions for legislation are to be in the same direction. The legislature has never thought proper to confer upon us any duties in regard to the financial management of the companies, our authority in that direction being confined to seeing that their receipts and expenditures, and their financial condition, are reported to us in the pre- scribed manner, and, so far as appears, correctly. The duties of the railroad commis- sioners in the several States are as varied as the exigencies which called them into being. In some States their chief duties pertain to questions of rates and tariffs, in the fixing of which they have been given almost absolute power. In our own State the plunging of a passenger train into an open draw led the legislature to provide for a board of commissioners, whose duty should be, at their discretion, or on proper com- plaint, to inspect the railroads, “their rails, switches, road crossings, buildings, sta- tions, works, bridges, and engines and cars,” “and make any and all other inquiries meedful to determine whether the affairs of such corporations are managed conform- ably to law and with public safety and convenience,” and to “advise and recommend the making of such repairs” “as they shall deem necessary to the public safety and . to the safety of the operatives on said roads,” and some other like matters. Also to “call for accurate and full returns and statistics from each railroad corporation,” in accordance with the prescribed form. Though the powers and the duties of the com- missioners have been very much énlarged since that time, yet this enlargement has always been confined to matters pertaining to the safety and convenience of the pub- lic and the employés of the companies, and never has been so extended as to give us any control over matters of transportation, or any authority in the regulation of rates and tariffs. Our own duties being then so clearly apart from all questions of trans- portation, we have thought that to recommend or advise the general assembly as to any matter of this kind would be to arrogate to ourselves duties which you have never intrusted to us. - For this reason we have not heretofore made, nor does it seem to us that it would be proper for us to make, any recommendations in regard to the enactment of a law of the character of that which has been under consideration the last two sessions of the general assembly, known as the “short-haul” bill, providing that no railroad company should receive for transportation of freight to any station on its road a greater sum than is at the time charged or received for the transportation of the like class and quantity of freight from the same original point of departure to a station at a greater distance on said railroad in the same direction. * The commission consists of three members, one being appointed an- nually by the governor for a term of three years. Their salaries and office expenses are paid by the State, but assessed upon the railroads accord- ing to their imileage. They are required to exercise a close supervision over all matters connected with the construction and practical opera- tion of the roads. A road cannot be constructed until the location has been approved by the commissioners, nor can it be opened for public travel until they have given a certificate that it is in a suitable and safe condition. . - The “short-haul law " referred to by the commissioners was passed at the last session of the legislature and approved April 16, 1885. It provides. that— - . …” No railroad corporation shall charge or receive for the transportation of freight to any station on its road a greater sum than is at the time charged or received for the transportation of the like kind and quantity of ſreight from the same original point of departure and under similar circumstances to a station at a greater distance on its road in the same direction. - A similar provision is made as to the rates charged by connecting roads on freight transported to any station on the line of either road, INTERSTATE COMMERCE. 95 and the law is made to include all terminal charges. In addition to damages a penalty of $200 for each offense may be recovered by any person aggrieved. - - - IDA.K.O.T.A. The Territory of Dakota has a general railroad incorporation law, en- acted in 1879, similar in its provisions to those of the States. An act passed in 1883 provides that in cases of consolidation the capital stock issued shall not exceed that of the consolidated companies, and that no other evidences of debt shall be issued in connection with such consoli- dation. An act approved March 6, 1885, established a board of rail- road commissioners, and provided for regulating the transportation of freight on railroads in the Territory. In accordance with its provisions commissioners have been appointed and entered upon the discharge of their duties. - - This act provides for the appointment by the governor of three com- missioners, to serve two years, who are given “general supervision” of all railroads, sleeping-car companies, express companies, and telegraph companies in the Territory, and are to inquire into any neglect or viola- tion of the laws by railroads. Whenever, in their judgment, any com- pany fails to comply with the laws, or repairs or improvements are necessary, or changes in its rates or manner of conducting its business, they are to notify the company and report the proceedings to the leg- islature. Annual reports are required of the railroads. The com- missioners are given power to examine the books and records of the corporations, and to examine witnesses under oath, and enforce their attendance in the same manner as the courts. . The willful obstruction of the commissioners in the performance of their duties and the refusal to give information is made a misdemeanor, punishable by a fine not exceeding $1,000. It is provided that “no railroad company shall charge or receive from any persons a higher rate per ton per mile for one car-load of freight than for a greater num- ber of car-loads per car.” The roads are required to receive and trans- port within a reasonable time grain offered for shipment and to permit the same to be loaded on track or at any warehouse without discrimi- nation. The act prohibits discrimination in charges “for a like service from the same place and upon like conditions,” and requires that all Concessions, rebates, and special rates shall be open to all, and that no more shall be charged by a railroad from any point on its line than a fair and just proportion of the price charged for the same kind of freight transported from any other point of equal distance within the Territory. Triple damages, with costs of suit and attorney’s fee, are allowed for extortion or unjust discrimination. It is made the duty of the commis- Sioners to enforce the provisions of the act in the courts, and of the district attorney to prosecute on their complaint. ~ Another enactment regulates the transportation of fuel on the railroads of the Territory. This requires the roads to receive and transport in bulk Within a reasonable time coal or other fuel offered by any shipper without discrimination or favor between shippers, and prohibits any discrim. ination in the charges made for transporting fuel. It is made the duty Of the commissioners to enforce the act. The committee has received from the railroad commissioners of Da- kota, Messrs. William M. Evans, W. H. McVay, and Alexander Griggs, in response to its request, the following “statement of the situation of af. *& 96 INTERSTATE commRRCE. fairs in Dakota as between the transportation interests and the people,” dated at Fargo, October 31, 1885: - & - “It will be seen from the features of the railroad laws of the Terri- tory that the early laws of the Territory seem to have been made so as to induce the building of railroads, and, in accordance with the plans of able railroad counselors and attorneys, with a view to give their clients the greatest available privileges and the least possible hindrances in building and operating the roads. Our legislative assembly seems to have taken no advantage of the experience acquired in the older States which had endeavored to protect the people to some extent by safe- guards and restrictions, for in this Territory many of the common safe- guards against corporate encroachments were so modified or annulled as to leave but few restrictions upon the roads and their management. “The people in their eagerness to secure railroads seem to have been indifferent as to the terms upon which such transportation might be obtained. This is not, however, so much a source of Wonder, when it is remembered that nearly every mile of road in Dakota was constructed in advance of the settlement of the country, and the few settlers along the lines were glad to secure communication with the markets of the East on almost any terms. “When it was observed that a railroad might make or destroy a town ; that the value of land and its products were largely determined by the policy of a railroad company; that even the ordinary laws of trade and commerce were divided and subverted by the action of such companies, in train service, tariff, &c.; that large districts of the Ter- ritory were apparently parceled out between the companies as if owned in fee, and occupied or left with no transportation facilities, in the most arbitrary manner, and that where transportation ought to have been untramineled the producers were, in some instances at least, refused the privilege of shipping their own grain on their own account, and virtually compelled to ship it through dealers, the people became jealous of these enormous powers. “By the laws enacted there was no legal way to direct or regulate or control, in any practical manner, the management of the companies. The charges for service frequently seemed to be governed by no prin- ciples of equity or justice. Damages to life and property were liquidated reluctantly and often refused. These things arid many more that might be mentioned created in the minds of the people a feeling of distrust and in many cases downright hostility toward railroad corporations. “One prolific cause of complaint has been the high tariff on freights, and they are excessive in comparison with rates on Eastern roads where the cost of building is much greater than here. The mass of the people do not understand why a bushel of Wheat or a pound of merchandise can- not be as cheaply transported in Dakota as, for instance, in New York. The long cold winters entail extraordinary expenses in the way of fuel, Snow-plows, Section hands, &c., the freight alone on coal for locomo- tives to a road in Dakota exceeding that of the total cost to some of the Eastern lines. . “Again, the tonnage per mile on the Dakota roads is probably less than one-fourth of that on roads in the Eastern States. And necessarily, therefore, freights must be much higher, but after all it would seem that the difference is still too great. It may be that the rate on the Eastern lines is too low, and that ours is only relatively too high. We do not care to discuss this question, but only present facts as they exist. “Then these charges vary from time to time, bearing, apparently, no relation to the cost of Service. This seemingly unjust discrimination INTERSTATE COMMERCE. - 97. * # - and the forced shipment of grain through the hands of dealers were the chief causes of the attempts which have been made to remedy the diffi- culties. The grain and commission law of 1883 is an example. “But the plea that the companies have vested rights and privileges under laws previously passed has been a bar to successful legislation. The present railroad commission law is another attempt which is now being tried. The law gives to three commissioners various powers, viz., to exact compliance with the present laws, to prosecute for unjust dis- criminations, and to collect information concerning railroads. The present laws pertain chiefly to the safety and convenience of the public, but do not attempt to control the management of railroads as to the kind of service that shall be rendered and other details, nor do they attempt to regulate the tariff rates for passengers or freight, which are the principal causes of complaint. - “The railroad commission law has been very useful in that it has in a marked degree induced railroad' companies to be more careful, Con- siderate, and attentive to the wants of the people. The commissioners have been practically a board of arbitration, and in this capacity have been very beneficial and are doing a vast amount of labor. It would be impossible, in a communication of this nature, to enter into details of what they have done. I will therefore only say that they have secured from the railroad corporations doing business in Dakota Very many additional facilities to shippers and patrons of the roads in the way of grounds for private elevators and warehouses, railroad crossings, side tracks, &c., to say nothing of many miles of new steel rails laid at the request of the board to replace worn iron. Rarely have the roads failed or refused to comply with the recommendations of the board. “Additional legislation is necessary to secure the best results. In regard to national legislation we are of the opinion that a national rail- road commission, with the powers usually given to State commissioners, together with general jurisdiction over the subject of interstate com- merce, would be useful. (Provision might be made to give the chair- man of State commissioners a voice in the national board.) By this we mean general supervisory powers to examine all alleged violations of law and arbitrate the same where possible. “This presupposes Congressional action, and we submit that it will require the wisdom of the best minds in the National Congress to frame a statute that shall solve the Complex problem of a proper regu- lation of interstate commerce. We do not believe in the policy of at- tempting to fix rates by any commission appointed for that purpose. It would seem sufficient to vest such board with advisory powers sim- ply, in this respect, and, further, giving the board power to investigate all cases of alleged extortion or unjust discrimination on the part of railroad corporations, reporting their finding to the United States at- torney, then leaving it to the courts to determine in each case the Question of fact and the punishment. Probably the legislatures of Dakota and Iowa have gone far enough in this direction. In all cases where the complaint involved a charge on freight carried from one State into another the United States courts would seem the proper tribunal before which such cases should be heard.” . . DELAWARE. Delaware has not enacted any restrictive legislation for the regulation of railroads. The only action in relation to railroads taken by the leg- islature of that State in recent years (except the passage of special acts S. Rep. 46—7 - 98 INTERSTATE, COMMERCE. h of incorporation, &c.) has been the adoption at the sessions of 1875, 1877, isig, 1883, and issà, of joint resolutions thanking tſe railroads of the State for favoring the members with passes. - - The legislature of 1881 adopted a joint resolution favoring the estab- lishment of a board of commissioners of interstate commerce by Con- greSS. - - - FLORIDA. There has been considerable legislation in Florida in relation to in- ternal improvement companies, but this has mainly affected canals. In 1873 the legislature repealed all acts authorizing the issue of bonds by the State to railroads. In 1874 a general act for the incorporation of railroad and canal companies was adopted, by which they were author- ized to regulate the time and manner in which passengers and property should be transported and the compensation to be paid therefor. In 1879 an act was passed which limited passenger fares on the railroads of the State to 3 cents per mile. This was repealed in 1881, and the maximum rate fixed at 5 cents per mile. Beyond this there has been no attempt to regulate the management of railroads in that State. IDAHO TERRITORY. To encourage the construction of railroads in Idaho the Territorial legislature in 1873 exempted from taxation until 1880 all railroads con- structed in that Territory, providing, however, that they should not charge higher rates in Idaho than were charged for the same service by the Central and Union Pacific Railroads on their lines. Since that time there has been no legislation in that Territory in relation to rail- roads. - INDIANA. The State of Indiana is practically without any legislation for the reg- ulation of railroads. An act passed in 1867 prohibits railroads from increasing or advancing their rates of freight or charging for the trans- portation thereof a sum greater than the rate asked or charged at the time such freight is offered for transportation. (Rev. Stat. 1881, sec. 4038.) Another enactment makes a railroad refusing to take and trans- port freight or to deliver the same at the regularly appointed place.liable for all damages and the costs of suit. . (Rev. Stat. 1881, sec. 3926.) IOWA. The subject of railroad regulation has received a great deal of atten- tion in Iowa, and the experience of that State is of especial interest in view of the fact that, after a fair trial of a well-devised system of regu- lating rºtes by Specific legislation, the people have adopted the system of regulation through an advisory Commission. The committee was for- tunate in receiving from Judge McDill, of the Iowa commission, the following very concise résumé of the railroad history and legislation of the State (Testimony, p. 943): RósuMſ of RAILROAD HISTORY. From the year A. D. 1853 to the breaking out of the war was the planning and building period for railroads in Iowa. All legislation was for the encouragement of railroad building, and the matter of railroad control does not seem to have been INTERSTATE COMMERCE. 99 thought of or discussed. One who studies the legislation of that period cannot fail to note an anxiety to encourage investments in railroad property. A new and growing community was earnestly struggling for railroad facilities and keenly appreciated their necessity for the development and growth of the State. During the war little or no progress was made in railroad building. At its close the activity and progress were almost magical in character. Very soon lines were completed, systems arranged, and almost as soon there began to be uneasiness and dissatisfaction manifested as to railroad management. The country was new and the situation poorly understood both by railroad officials and the public. In railroad circles the old idea of vested rights under the charters and grants was the controlling idea. They were accustomed to look upon the railroad from a purely proprietary standpoint. The property, it was claimed, belonged to the stockholders, and the public had nothing to do but to pay the rates established and take the accommodations furnished, as the sole considera- tion should be profit to the owners. From year to year the situation grew worse and . worse. Abundant crops, extraordinarily low prices for products, a disturbed condi- tion of mind upon currency and financial questions generally all served to intensify the dissatisfaction, and angry agitation was the order of the day. The loudest talker and the wildest declaimer led the people, and there was in appearance nothing but clash and conflict to be expected in railroad matters. TEIB, GRANGER LAW. Legislation was had in 1874, resulting in the passage of what was known and is yet known as the “granger law.” This act, the result of a conflict of the char- acter above faintly outlined, was not by any means so unwise an act as might have been anticipated from the nature of the preliminary contests and the irritating circumstances which surrounded them. The theory of the law was a limitation of maximum charges for transportation of passengers and freight. The several rail- roads were classified according to the gross amount of their respective earnings within the State per mile, as follows: Class A included those earning $4,000 per mile or more; Class B, those earning $3,000 per mile, and less than $4,000; Class C, those earning less than $3,000 per mile. • * - * - Passenger rates, with ordinary baggage, were fixed for Class A at 3 cents per mile, Class B 3% cents per mile, Class C at 4 cents per mile. . A fixed-distance tariff rate was then enacted for one mile and each additional mile up to a distance of 362 miles upon first, second, third, and fourth-class merchandise per hundred pounds, upon flour and meal per barrel in car-load, upon salt, cement, plaster and stucco per barrel in twenty-five-barrel lots, upon all grain, except wheat and mill-stuffs per hundred pounds in car-loads, upon wheat per hundred pounds in car-loads, upon lumber in car-loads, horses and mules per car-load, cattle and hogs per car-load, sheep per car-load, classes A, B, and C in merchandise per car-load, and coal per ton per car-load. Railroads in Class A could charge 90 per cent. of the rate fixed ; in Class B105 per cent. and Class C 120 per cent., and it was declared unlawful to charge - more. - - - -- A careful classification of goods and articles to be transported was then enacted. Each company was required to prepare and keep posted in each of its freight and passenger offices a true copy of the classification and its rates under the law. An an- nual statement of receipts was required from each company January 1, 1875, and each January thereafter. Penalties for violation of the act were prescribed. If twenty tax-payers notified the governor of a violation of the law, he was to employ suit- able counsel and prosecute the delinquent company. Money was appropriated to conduct the prosecutions. All connecting roads for the purpose of fixing rates were to be regarded as, one road. Like charges were required to be made under similar conditions. All concessions of rates, drawbacks and contracts for special rates, founded upon the demands of commerce and transportation, were to be open to all 100 INTERSTATE COMMERCE. persons alike from the same place and upon like conditions. Each officer, agent, or employé of the companies who violated the provisions of the act was declared guilty of a misdemeanor, and subjected to fine and imprisonment, and any corporation au- thorizing, directing, causing, or permitting any violation of the law by its servants forfeited to the person injured five times the amount, compensation, or charge ille- gally taken, with attorney's fee to be taxed as costs. Thus was provided rates fixed by law, classification fixed by law, penalties and punishments, together with punitive damages. With one or two exceptions the companies endeavored to obey the law but the feeling was intense. * * Similar laws had been passed in other Northwestern States, and, claiming that the law was unconstitutional, the companies took measures to test its validity, which ended in what are known as the “granger cases,” which seem to have established the doctrine that the States may, without violation of any right, regulate domestic as distinguished from interstate commerce, and in so doing may fix maximum rates. The practical effects of the law were eagerly observed, and prophets were not wanting to encourage the contending disputants. Time, however, told its own story. Some. industries were benefited by the law, others were injured. Some localities were helped, others were hurt. In general terms, it may be said that the eastern part of the State was benefited, while the central and western parts were crippled by the operation of the distance tariff. The general arrangement of distance charges may be gathered from the following statement: One hundred pounds of first-class merchan- dise paid for 1 mile, 12 cents; for 362 miles, 73} cents. In the course of four years the change of sentiment in reference to the law was such as to bring about a repeal thereof and the enactment of the present, known as the commissioner law. All parties seemed to unite upon the necessity of regulation; they only differed as to the manner. The prevalent belief was that the law of 1874 was not sufficiently elastic and was un- equal and unjust in its operation. - * . TEIE COMMISSIONER LAW, The law of 1878, known as the commissioner law, repeals all portions of the act of 1874, known as the granger law, except that portion which provides for the classifi- cation of railroads according to earnings per mile, fixes rates for passenger fare, and requires an annual report of gross earnings. It requires the governor to appoint three persons, one of whom shall be a civil engineer, who shall constitute a board of rail- road commissioners, and they are to appoint a secretary. They are to have general supervision of all railroads in the State operated by steam, so far as the public safety and convenience are concerned. To this end they are to inquire into any violation of the laws by railroad companies or their employés, to inform themselves of the condi- tion of the lines, their equipment, and the manner of their conduct and management. If a bridge is deemed unsafe, they may require it to be made safe, and if their order is not obeyed within ten days they may stop and prevent the passage of trains over the bridge while unsafe. They may call the attention of the companies to any violation of the law or of their charter obligations, to necessary repairs to the road, to neces- sary additions to the rolling stock, to necessary additions to or changes of stations or . station-houses, to changes in rates of fare for transporting freight or passengers, or to any change in the method of operating the roads or conducting their business, which in the judgment of the commissioners is reasonable and expedient in order to promote the security, convenience, and accommodation of the public. - Such recommendations are to be in writing, and regularly served upon any station agent, clerk, treasurer, or director of the company; and, if disregarded, that fact is to be reported in their annual report to the legislature. Reports are required from the companies to the commissioners showing capital stock, preferred stock, funded debt, and rate of interest, floating debt, cost, and present cash value of road, value of other property, acres of land granted, acres of land unsold, list of officers and directors, av- INTERSTATE COMMERCE. - 101 erage amount of tonnage that can be carried over the road with an engine of given power, and such other facts as the commissioner may deem important. The commissioners are empowered to examine the books of the company, subpoena witnesses and examine them under oath. Railroad companies are required to furnish suitable cars for the transportation of freight to all persons applying, to transport the same with reasonable dispatch, to provide and keep suitable facilities for handling and forwarding freight, to receive empty or loaded cars of any connecting road, and to return the same, and to charge no more for doing so than other counecting roads are charged; to charge, demand, or receive no greater sum from any person, coin- pany, or corporation than is charged others for a like service from the saine place, or +. upon like condition and under similar circumstances. All concessions of rates, draw - backs and contracts for special rates are to be opened to and allowed all alike at the . same rate per ton per mile by the car-load upon like conditions and under similar. circumstances, unless by reason of the extra cost of transportation from a different point the same would be unreasonable and inequitable, and shall charge no more for transporting freight from any point than a fair and just proportion of the price charged for the same kind of freight transported from any other point. Unreasonable charges for hauling, handling, or storing freight, or for any other service, are pro- hibited. Extortion and unjust discrimination are prohibited, and treble damages and attorney's fees given to any person so injured. Serious accidents, resulting in loss of life or personal injury, are to be investigated by the commissioners with a view to ascertain any mismanagement or neglect. Provision is made for formal complaint by the mayor and aldermen of a city or the trustees of a township as to passenger Ol' freight rates or the condition or management of the road: A the commissioners find the complaint well founded they are to notify the railroad company of their finding and report to the general assembly. A copy of the act is attached to this paper and respectfully submitted with the same. This act, approved March 23, 1878, has re- mained the law without any important amendment to the present time, except legis- lation had at the last session of the general assembly. It may be said that the law and method of regulation are yet upon trial. How it has effected the welfare of the community may, we think, be gathered from the reports of the commissioners made annually, beginning with the year 1878 down to the present year. WANT OF POWER IN COMMISSION. It is certain that the most serious objection, at least in the mind of those who op- pose the present method of regulation in Iowa, to the law as above quoted has been that the commissioners have, as it is asserted, no power to enforce their decisions and ecommendations. In fact, almost every decision and order has been obeyed by the companies, but an important order made about two years ago was disobeyed by one of the companies, which gave force to the argument of those criticising the law, and the last general assembly gave power to the commissioners to enforce their decisions in certain instances. By the terms of that act if an order made by the commissioners was deemed by them to be one affecting public right, and should be disobeyed, they are required to eertify that fact to the attorney-general, who is to bring suit in the courts in the name of the State, and if the courts find that the commissioners had authority to make the order, such orders and decrees are made by the courts and such process issued as shall be deemed necessary to enforce performance on the part of the delinquent company. In a large number of cases that come before the commissioners the whole matter involved affects only private right. In such cases there is no power to enforce their decision except that unmeasured power, public opinion, if the decision appears just and equitable in its nature. We are bound to say that acting as um- pires and arbitrators we have never felt the necessity of any other power. Mr. Peter A. Dey, chairman of the commission, stated (Testimony, p. 957) that the number of complaints they received had increased from year to year, and this he attributed to the fact that the “people have g- 102 INTERSTATE COMMERCE. learned that there was somebody they could go to, and that a small matter would receive from the commission just as close attention as a matter that involved large amounts.” He also testified, as to the effect of the present law, that the feeling between the corporations and the people of the State is a great deal better than it was seven years ago, and attributed this to the fact that the creation of a commission has enabled the people to see both sides of every question that has been discussed. Mr. Dey further stated that the commission had in all re- ceived between six hundred and seven hundred complaints, of which perhaps one-third or one-half were well founded, and that no difficulty had been experienced in having the railroads change their action in such cases. As to the reason for the change from the former to the present method of regulation Mr. Dey testified as follows: . Senator PLATT. You had four years of trial, as I understand it, in the State of Iowa to regulate the transportation companies by statute without a commission? Mr. DEY: Yes, sir. - Senator PLATT. Do you agree with Judge McDill that in the estimation of the pub- lic that was a failure? - Mr. DEY. My idea is that the Iowa legislation, for fixed legislation, was the most perfect that man could get up. I do not believe, if you attempt to govern the thing by fixed law, that it is possible to do any better than was done by the Iowa legisla- tion, but it was repealed. - -- - * Senator PLATT. Repealed, you think, because of the sentiment of the State that you cannot control it by fixed legislation alone? . - Mr. DEY. Yes, sir. - • Senator PLATT. Or was it repealed because the railroad companies, for the time being, got it repealed? . - Mr. DEY. No, sir. I think it was repealed because the majority of the people thought they were injured by it. JKANSAS. Kansas undertook the work of railway regulation in 1883. The act of that year fixed passenger rates at 3 cents per mile, and provided for the election of three commissioners by the executive council (State officers) for terms of three years. But two can be chosen from the same political party. The salaries and expenses of the commissioners are collected from the railroads pro rata, like other taxes. The commissioners have general supervision Over all railroads, express companies, sleep- ing-car companies, and all others doing business as common carriers. They are to inquire into any neglect or violation of the laws by such companies, and to examine the condition and management of each rail- road. Whenever in their judgment any company fails to comply with the laws, or repairs, or improvements, or changes in its rates or manner of conducting its business are necessary, the commissioners must no- tify the company in Writing, and state the facts in their annual report to the governor. Annual reports are required from all transportation companies, giving the information needed for the commissioners' report. The commissioners have power to examine the books and papers of any company, to examine its officers under oath, and to compel the attend- ance of witnesses like Courts of record. Willful obstruction of the commissioners in the discharge of their duties or a refusal to give in- formation is made a misdemeanor. The companies are required to fur- nish cars to all who apply, and to handle freight with all reasonable dis- patch. They are prohibited from charging one person or corporation a INTERSTATE COMMERCE. 103 greater sum than is charged any other person or corporation for “a like service from the same place, or upon like conditions, and under similar circumstances,” and all rebates or special rates and concessions shall be open to all persons and corporations alike. The roads are also prohib- ited from charging more for freight from any point than a fair and just proportion of the price charged for the same kind of freight from any other point. When complaint is made that any unreasonable price has been charged, the commission must investigate the complaint, and, if it is sustained, make a certificate setting forth what is a reasonable charge for the service rendered, which certificate shall be prima facie evidence of the matters therein stated. -- - Pooling is prohibited under a penalty of $5,000 for each month for which earnings are divided. The roads are required to issue duplicate freight receipts to shippers on demand, and only the rates named therein can be collected. When the commission finds that any company has made unreasonable charges they are to require them to make such a modified charge as they shall deem to be reasonable, and the companies must post in each depot such modified rates, which shall in all actions be deemed and held by the courts as reasonable rates. The commis- sioners and the railroads are prohibited from increasing freight rates without sixty days’ public notice. The commission must investigate and examine the freight tariff of any company when complaint is made by a city council or township trustee. If the complaint is well founded it shall so adjudge, and shall decide what is a reasonable charge for such freights, and such adjudication shall be prima facie evidence of what is a reasonable charge for such service. For violating any of the pro- visions of the act the companies become liable to the person or Corpora- tion aggrieved for triple damages, with costs and attorney’s fee. For willful violation the penalty is a fine of $100 to $5,000. The commissioners appointed under this act entered upon their duties April 1, 1883. In their first report they review the provisions of the statute, and, referring to the fact that their powers are supervisory and advisory, they say: - To bave invested the commission with the power to enforce its own orders, it would have been necessary to have changed the character of the board and the scope of its functions and powers; it would have been necessary to have given the commission all the powers of a court of chancery, to be exercised within the scope of its assigned duties, with such ministerial officers attached to the board as are usual and necessary to such tribunals, to execute its injunctions and mandates. It would have rendered it necessary to have instituted a formal investigation, upon proper complaint and notice to the company complained of, and the rendition of a formal judgment and decree upon the evidence which should be submitted to the board. Manifestly, in such case it would have been improper for the board to have acted upon knowledge and information gathered from personal information, or the ex, parte statements of individuals, as much so as it would be for regularly organized courts to act judicially upon evidence which has never been disclosed to the opposite party to the suit. The supervisory powers of the commission would in such case extend only to such matters as should be formally brought before it by complaint, and no such complaint would be made until some one had become the suffering victim of some neglect, failure, or other violation of duty on the part of a railroad Company. Thus the chief benefits which were intended to be secured by giving the commis- sioners general Supervisory powers would be sacrificed by imposing upon them those limitations in the exercise of functions which are necessary to impress upon judicial decrees the weight and character of impartiality. - - Generally, the power to make its requirements imperative through the power of 104 - INTERSTATE COMMERCE. enforcement is not necessary to make the requests and recommendations of the board felt and obeyed. We feel justified in further observing that as the irritation, the friction, and the misunderstandings which inevitably arise from the attempt to adopt an extensive and well-established system of transportation, involving vast pecuniary interests to a new and untried system of regulation, imposing restraints at numerous points where before there existed unrestrained freedom, shall wear away, all reasonable requirements or advice of the board will come to possess the character of commands to railroad managers. 3. * • And in discussing the machinery provided for the enforcement of rates established by the commissioners, they say: None are more fully alive to the fact than the managers of railroads that the com- missioners are not simply three unarmed men, but that they represent the majesty and power of the State, and that their official utterance concentrates the opinion of a million people. Unless the decision of the board upon the question of rates should be manifestly unfair or unjust, these men know that it could not only be futile to resist them or refuse to adopt them, but that to do so would tend to invite a public opinion and feeling which could only be satisfied by measures of retaliation, and would result in a state of things detrimental alike to the interests of both people and the railroads. The burden of proving to the satisfaction of a court and jury that the commissioners' rates were unjust to the company would be an undertaking of such magnitude and difficulty, at least in the majority of instances, as to deter even the rash and presumptuous. It would involve the proving of a mass of minute and technical details, which can only be grasped and their significance perceived by the prolonged study of trained minds, before a body of men possessed of neither aptitude nor the ex- perience and training that fitted them for such investigation, and with every presump- tion of law and fact against the company, and with every interest and prepossession of the triers, the jury, arrayed in opposition. Railroad companies have never courted the verdicts of juries to any great extent, even in cases where the jury was entirely free from the bias of self-interest; it is hardly to be expected that they will tempt. them against strong feelings of self-interest. The first complaint as to rates received affected the Missouri Pacific Central Branch, and the Union Pacific roads. After careful investigation and several hearings the board made an order determining what were reasonable rates at Beloit, the place the complaint came from, by which an average deduction was made of 15 per cent. in the rates, and indicated the necessity of revising the rates over the whole line affected by the decision. The effect of this decision was far-reaching, and its result finally was that the board formulated a schedule for the Central Branch road, which was accepted, and that the Union Pacific ceased to operate the branch line affected, so as to avoid the effect of the decision on its main line. In January, 1884, the board passed upon the complaints against the rates of the Atchison, Topeka and Santa Fé Railroad Company. Of their action they say: & { On Inearly all the roads in Kansas two tariffs have been adopted, in addition to special tariff, governing rates to be charged upon two classes of shipments; and as this is not well understood, and it has given rise to considerable confusion in the public mind, we have deemed it best to offer a brief explanation: “The local tariff”. prescribes rates upon shipments from and to terminal points on the line; for instanées, from and to points upon the Missouri River; the “distance tariff” prescribes rates, upon shipments between interior points. The rates established by the “distance, tariff” are higher than those that rule on the “local tariff.” The higher rates of the “distance tariff” are based on the increased cost of service on short hauls, increased: switching, and more frequent loading and unloading, occasioning longer detention of cars upon side tracks, and the frequent necessity that exists to haul empty cars, from distant points to the place where freight is to be taken up. Either this class of INTERSTATE COMMERCE. | (); shipments must bear a rate in some measure proportioned to the increased cost of service or the burden must be distributed over all. The board found, however, that the purely local traffic was bearing more than a fair share of the tax, and reduced it about 30 per cent, while the through rate was, reduced on an average not to exceed 15 per cent. * 34 # % # % % In a general-freight schedule it is impracticable to provide for every local interest. A tariff of rates may favorably affect all the interests of one locality, and may preju- dicially affect some particular interest of another, and this can only be remedied by some special provision adapted to the interests involved, or by a tariff so flexible as to admit of readjustments. Herein lies one chief objection to a tariff of maximum rates fixed by law. " . In considering the subject of rates at common points the commission- ers refer to the section of the statute probibiting any discrimination in . rates, and declaring that no company shall “charge more for trans- porting freight from any point on its line than a fair and just propor- tion of the price it charges for the same kind of freight transported from any other point,” and say: º Out of this section the commissioners early encountered a practical difficulty. The last clause of the section (the one quoted above), if literally interpreted, would seem to require the establishment of equal mileage rates, and would defeat what the peo- ple have been striving to bring about among railroads in the State, viz, competition for business. The application of the rule, literally and universally over all the roads, would not only defeat competition, but it would deprive those living at common points of those advantages and facilities with which circumstances had favored them, and deny to the road whose route was the longest to a terminal station the privilege of doing business at such common point. To illustrate: Two roads, whose routes have a common terminus, pursue different routes, but come in contact, with each other at one or more points along the route, or perhaps terminate at another common point, but the roads are of unequal length. The short road, i. e., the road having the most direct and nearest route to a common market, fixes the rates at the common points. The long road must adopt the same rates at all common points that the shorter road prescribes, or go out of business at those points. But if rates are to be computed upon a strictly mileage basis, the rates at the com- mon points must rule, as a basis, upon the longer road at all intermediate points be- tween its terminus and common points; this would in many instances be ruinous, and the longer road would be compelled to relinquish any share in the business at such points. This would benefit no one. It would not lower the rates anywhere. It would deprive the longer road of the right to participate in the business at the common points, and the people of such points of the benefits of competition. If a railroad, which being the longest line between a common point and a terminus, W8,S; compelled to adopt rates upon an equal mileage basis, and it chose, nevertheless, to strive for the business at such common point, it would result that it would thereby be compelled to carry the same distance at proportionately less rates than the shorter road. It must either do this or abandon that part of its road that comes in comipeti- tion with the shorter route. This is unjust, and bad policy. The board have found it necessary to give to this section such interpretation as would obviate these difficul- ties, and would tend to preserve the rights of the railroad companies at common points, and preserve the active competition which we believe it was not the purpose of the legislature to destroy. In doing this we think that we are not doing violence either to the letter or spirit of the law. We think that the whole section should be construed together—that the qualifying clause, “...or upon like condition and under similar circumstances,” must apply to and qualify the latter as well as the former clauses of the section. To con- strue it otherwise would be productive of great confusion, and of great wrongs, and nstead of equalizing rates, it would create gross inequality everywhere. 106 INTERSTATE COMMERCE. Tn their second annual report, covering their work during the year 1884, the commissioners say: - - - The board are in numerous instances able to settle causes of complaint without the uecessity for formal investigation and decision, either through personal interviews with railroad officers, or through correspondence. • 2 - - The orders and recommendations of the board have during the past year been, in nearly every instance, adopted and obeyed by the managers of railroads. They have quite promptly and adequately responded to the requests of the board for informa- tion pertaining to their roads. - In this report the commissioners review at considerable length their work in the matter of establishing maximum freight rates and the difficulties that were met with in their efforts to harmonize diverse inter- ests. The following extracts from their remarks upon this subject will be of interest : - - Two roads may have an equal tonnage per mile of road operated, their rates of elharges upon freight may be identical upon the same classes of goods and mer- chandise carried, the expense of operating the respective roads may bear an equal ratio to the tonnage carried, and yet their earnings may be very dissimilar. This is brought about by the character of the business brought to the two limes, respectively. The road that carries the larger tonnage per mile of those classes of goods upon which the rates are highest will make a better showing as to net earnings. If two railroads, situated in respect to their business as above indicated, are required to adopt the same rates, the one may make a reasonable profit, while the other may suf- fer continual loss. - & * The same result is brought about in other ways. For instance, the business of one company may (and this is frequently the case) require the haulage of a larger number of empty cars over its line than another, and since the expense of cost of hauling an empty car is nearly as great as hauling the same car loaded with paying freight, its expenses are in greater ratio to its business. The cost of fuel, labor, and supplies are important items to be considered in this connection, and these vary in different lo- calities. .* - ºf * % * 3% º: # 3f. #. % But notwithstanding these elements of diversity of conditions obtaining among different roads in the same State, with numerous others not mentioned—such, for in- stance, as the original cost of some lines being greater than others, the expense of opera- ation being greater in some instances than in others by reason of grades, curves, expen- sive bridging, &c.—such is the relation of the business to the greater portion of the railroads in the State that it is quite impossible to make a class of rates upon one road without affecting those upon others. * * * It is evident, therefore, that the longer route from the common market to the common point of consumption must com- pete for this carrying trade also at rates equal to those that the short routes can afford. These examples are perhaps sufficient to illustrate the principle heretofore stated, that the railroad system of the State is so related and connected, that, how- ever undesirable it might be to bring about such a result, it is impossible to reduce rates upon one railroad without affecting the rest. This is a consideration of very great importance in determining the rates which should prevail at any given time. A system of rates under which one road might operate without detriment to its per- manent prosperity, would totally paralyze another road whose relative position would render the adoption of the same system compulsory upon it. Indeed, the necessity under which comparatively new and weak lines find themselves to conform their rates of charges to those either established by strong roads, or devised for them, renders a very large amount of railroad property, both in this and other States, wholly unprofitable. - - i INTERSTATE COMMERCE. . j ()7 As to their own action the commissioners state that the reductions in rates effected through them during the year apply chiefly to the middle and Western portion of the State, where rates had not been reduced with the increase in population as they had been in the eastern part of the State. Besides these reductions in the tariff material reductions upon a number of staple articles were made by a change in the classifi- cation. It is also shown that prior to the enactment of regulative legis- lation there had been a reduction of about 40 per cent. from the rates first charged in the State, brought about by competition and other causes, which can neither be evaded or controlled by the companies affected. . • - JKTENTTUCKY. The Kentucky railroad commission was established by an act ap- proved April 6, 1882. This act defines and prohibits extortion and unjust discrimination, but it is expressly provided that it shall not pre- vent the issuing of commutation, excursion, or thousand-mile tickets, or control the rates on interstate freights. The penalty for extortion or unlawful discrimination is a fine of from $100 to $1,000 for the first offense, $500 to $2,000 for a second conviction, and $2,000 to $5,000 for a third conviction. Actions are to be prosecuted by indictment or upon information by the railroad counrmissioners, and the jury is to be gov- erned by a preponderance of the evidence. The railroads are also made liable to the parties aggrieved for triple damages, with costs and attor- ney’s fees. Three commissioners are appointed biennially by the gov- ernor, the districts from which they shall be chosen being specified. Annual reports are required, and the act specifies thirty-six subjects to be reported upon. The commissioners may also propound additional interrogatories. It is made the duty of the commissioners to “examine into the condition, management, and all other matters concerning the business of railroads in this State, so far as the same pertain to the re- lation of such railroads to the public, and whether such railroad corpo- rations, their officers and employés, comply with the laws of this State.” It is their duty to prosecute all such violations of law as may come to their knowledge. They are authorized to examine railroad officials and employés under oath and to require the attendance of witnesses. They are also to hear and determine complaints of extortion and unlawful discrimination and award judgment. Unless the satne be satisfied, a copy of the award is to be filed with the court having jurisdiction of | Such controversy, on which execution shall issue as on other judgments, but any party d?ssatisfied with said award may within ten days file a traverse thereto, whereupon the case is to be docketed for trial. If the matter in controversy exceeds $20 either party may demand a jury trial. If it does not, the case is to be summarily decided by the court. LOUISIANA, The constitution of Louisiana, adopted in 1879, prohibits the ficti, tious issue of stock by railroad companies, and declares railroads pub- lic highways and railroad companies common carriers. No restric- tive or regulative railroad legislation of any kind appears to have been enacted by the general assembly, or is now in force. MAINE. The railroad commission of Maine was established in 1858, and, as Stated in its report for 1884, “the prime object in creating a board of railroad commissioners was to secure the safety of the general public 108 INTERSTATE COMMERCE. -e -- by providing a board of officials whose duty should be to see that all railroads in the State and rolling stock are kept in suitable repair and safe for travelers.” This purpose has been satisfactorily accomplished by the board, and in the report mentioned the present commissioners Say: ^. - * While in many of the States the time of the commissioners is largely taken up in adjusting questions and controversies between their several railroad companies and between these corporations and municipal and other corporate bodies, and with in- dividuals, we are pleased to say that the management of the several railroads in this State in dealing with each other and with individuals and corporations has been such as to rarely call for the exercise of the authority conferred by statute upon the board of commissioners, or to require additional legislation in that respect. The statutes of Maine provide for the incorporation of railroad com- panies under a general law well guarded in its provisions. Articles of incorporation cannot be issued without the approval of the railroad com- missioners, nor can the work of construction be commenced until they have approved the location of the proposed route. Railroads are au- thorized to establish and collect such tolls as their directors (leem fair and reasonable, but on sufficient complaint by interested and responsi- ble parties the Commissioners may, after investigation, revise and es- tablish rates. Each railroad is required to fix its rates of toll per mile for the transportation of timber, wood, and bark, by the ton, cord, or thousand feet, in September of each year, and to keep the same posted at all stations during the year, under a penalty of $100 fine. The rates established by the companies are subject to revision by the legislature. Three railroad commissioners are appointed by the governor for terms of three years, and are paid $5 per diem by the railroads on which their services are rendered while employed. They are required to annually examine the physical condition of each road, and give a certificate as to the same. They may require necessary repairs and improvements, and, if necessary, stop the running of trains. When connecting roads dis- agree as to rates and running arrangements their differences are to be determined by the board. The commissioners may order the erection of depots and stations needed by the public, and must examine into the cause of serious accidents. Provision is made for securing annual re- ports from the companies. * & The statutes also give the consignor the right to determine over what lines goods shall be forwarded ; prohibit discrimination by a railroad between passengels and freight transported entirely over its own line and passengers and freight destined for other roads; requires each railroad to give the same rates and advantages to one road as to an- other, and also requires railroads to give cars containing animals con- tinuous passage and the preference over other freight, besides food, Water, and proper rest. - No difficulty is experienced in carrying out these statutory provis- ions, as appears by the following paragraph from the last report of the commission : At the time of the organization of the railroad commission there were about 400 miles of railroad in this State; at the present time there are 1,148.52 miles. In clos- ing this report, the commissioners tender their thanks to the officers of the different railroads for the uniform courtesy and kindness with which they have been received and treated, and whenever defects have been discovered a simple suggestion from the coulmissioners has generally been sufficient to secure immediate attention. In but a few instances has it been necessary to issue the statute notice in order to accomplish . the desired result. INTERSTATE COMMERCE. 109 MARYLAND. The general railroad legislation of the State of Maryland can be briefly stated. An act passed in 1876 provides that if any person is ag- grieved by any transportation company by reason of anything"done or omitted to be done by such company in violation of its duty in regard to the transportation of persons or property, such person may apply by petition in a summary way to the circuit court, for relief against Such alleged grievance, and the court is authorized to fully investigate the complaint, and grant and enforce proper relief. The general law for the incorporation of railroad companies limits passenger rates to 3 cents per mile, and freight rates to 5 cents per ton per mile, except that the rates on coals, ores, and other minerals are limited to 13 cents per ton per mile. The railroads are required to make annual reports to the comptroller of the State. *. MICEIIGAN. The history of the construction of railroads by the State of Michigan and of the legislation of that State on the subject of railroad regulation is set forth so fully in the very complete statement furnished by William McPherson, jr., the commissioner of railroads, and Wyllys C. Ransom, deputy commissioner (which appears in the Appendix, pp. 32–37), that the committee invites attention to that statement, and asks to have it considered as part of this report. . . . In addition it is only necessary to say that a board of Commissioners was appointed to carry out the provisions of the restrictive legislation of 1873, who in their first report pronounced the law faulty in the fol- lowing respects: e - 1. It bears heavily on the new roads. 2. The law not sufficiently elastic. 3. The law takes no account of short distances. 4. The law fixes maxima for car-loads only. 5. The law treats connecting lines as continuous, but is silent as to division of earnings. -- - - 6. The law imposes duties impossible of accomplishment. 7. The law inadequately provides for enforcement. In their second report, after another year of thorough investigation, the commissioners repeated their former conclusions, and showed that a larger part of the “Potter law” rates were so impracticable that they were disregarded by the railroads with the tacit consent of the people. IMINNESOTA. There have been several changes in the system of railroad regulation adopted by the State of Minnesota. In 1871 an attempt was made to establish rates and prescribe the classification of freights by statute, but this plan did not prove satisfactory and was abandoned in 1874, When a board of commissioners was created and given power to prose- Cute violations of law and fix rates. The railroads accepted the uni- form tariff prescribed, and lived up to it so strictly as to succeed in making it unpopular, especially at places where lower rates had pre- Viol.sly been enjoyed by reason of competition or other advantages, and the result was that the law was repealed in 1875, when provision was made for the election by the people of one commissioner, with ad- 110 dº INTERSTATE COMMERCE. - * visory powers and inspection duties. The incumbents of this office, while able to adjust some of the differences arising between the people and the railroads, have urged the enlargement of the authority of the commissioner. There being no way under that law by which the com- missioner could bring suit in case the road failed to comply with his decisions, they exercised their own pleasure in the matter. Mr. E. S. Warner, the secretary of the commission, testified as to the action of the companies in Such cases that— - It would be owing somewhat to the complaint, how much it involved, and what the principle was. If it was a trivial affair it was almost always adjusted. If it in- volved a principle, or was contrary to their rules and regulations, or if it involved anything of any amount, it was almost universally not acquiesced in. (Testimony, p. 1354.) The result was that the complainants were left to their own resources, and almost invariably concluded that they could not afford to litigate with the railroad company. Mr. Warner further stated that he knew of but two cases where suits had been instituted. Both parties had won, and one had informed the office that the expense of the litigation had been three times what he gained from the railroad. In his report for 1884 General Baker, the railroad commissioner, pro- nounced the railway code of Minnesota “the most meager and defec- tive of any of the Northern States,” saying that “the legislative action of 1871 was carried to such an extreme that in the reaction the people of the State naturally feared to reopen the subject,” and he forcibly urged the adoption of a “more adequate and advanced system of State supervision, more in harmony with the progress of events and the ne- cessities which have arisen.” .* * - S Action in accordance with these recommendations and the public demand for reasonable controlling and restrictive legislation was taken by the last legislature, which adopted a new railway code, from which good results are confidently anticipated. As one of the latest enactments . . of this character and in a State which has gone to both extremes in its railway legislation, its provisions will be of interest. * The act, which was approved March 5, 1885, provides for the appoint- ment by the governor of three “railroad and Warehouse commissioners” for terms of two years, and makes ineligible persons interested in any way in any railroad or warehouse. They are paid $3,000 per annum by the State, and give bonds in the sum of $20,000. Annual reports are required of the companies upon forty-One subjects specified in the act. The commissioners are to make an annual report of their doings, as well as a special biennial report upon the subject of amending the railroad laws of the State. They are required to examine into the condition and management and all other matters concerning the business of railroads, and visit the various stations on the lines of each railroad ; and one of their number must visit each county in which there is a railroad station and personally inquire into the management of railroad business at least once in three months. This requirement ought to bring the commis- sioners into close relations to the people. They are given ample powers for such examinations and investigations and for the examination of witnesses under oath, suitable penalties being provided for a refusal to testify or to furnish reports called for. - - This act has broken up the monopoly of elevators formerly given. It requires the railroads to permit any person to construct and operate elevators at any of their stations, and to furnish the necessary facilities. It also requires the companies, upon reasonable demand, to furnish INTERSTATE COMMERCE, 111 transportation for all grain stored in such warehouses and elevators, and to keep at each station a register of the applications made for cars and their order, and to serve every applicant in his order, without dis- crimination. For the first time in that State shippers can procure cars in the order of their application. Another section, which prohibits un- just discrimination and extortion and makes the car-load the unit of transportation, reads as follows: SEC. 20. No such railroad corporation shall be guilty of extortion, nor of any unjust discrimination as to passenger or freight rates, or the rates for the use and transportation of railroad cars upon its road, or upon any of the branches thereof, or upon any rail- road connected therewith which it has the right, license, or permission to operate, contrôl, or use within this State, or in furnishing facilities for the loading, unload- ing, handling, or transporting of freights, or shall make any unjust discrimination whatever against any person or persons, town, village, city, station, or location in this State, or shall charge, demand, or receive from any person, company, or corpora- tion for the transportation of persons or property, or for any othér service, a greater sum than it shall at the same time charge, demand, or receive from any person, com- pany; or corporation for a like service from the same place upon like conditions and under similar circumstances: Provided, That no railroad company shall charge or receive from any person a higher rate per ton per mile for one car-load of freight than for a greater number of car-loads per car under like conditions and circumstances. . In cases of violation of the law it is made the duty of the commission. ers to institute suits, which the attorney-general must prosecute. They are also required to notify the railroad companies of any changes in rates, &c., which they may deem expedient, and may institute suits to enforce their recommendations. w - When the committee visited Minnesota, the new commissioners had been in office only about two months, and had been devoting their at- tention to Organizing a State System of grain inspection similar to that in operation in Illinois. What they hope to accomplish under this new legislation is, however, indicated by the following extract from the Statement of Commissioner Becker : I have no doubt that this commission here is going to do not only for the railroad companies, but for the people of the State, a great work. I believe that it is going to do a work in the way of educating the people of the State as well as restraining the railroad companies. There are a great many complaints under the law that are trivial and are not well founded ; but nevertheless they are complaints, and they con- stitute grievances. And until the party who makes the complaint or grievance is informed fully on the subject as to what his rights may be, or what the rights of the railroad company are, it is a complaint or grievance; and oftentimes those complaints or grievances can be done away with by a fair representation to the party complain- ing. So that I say the commission itself is an educator of the people, as well as a restraining power upon the corporation. (Testimony, p. 1350.) IMISSISSIPPI. The Mississippi railroad commission was established by an act ap- proved March 11, 1884, which declared railroads public highways and prohibited extortion and discrimination. Under its provisions the party injured may recover double damages by commencing suit within ninety days after the cause of action accrues. Extortion is also made a mis. demeanor, and the penalty therefor fixed at a fine of from $10 to $500, but the railroads are not liable to this if the rates charged have been previously approved by the commission. The act created a commission of three members, appointed by the governor for terms of two years. 112 INTERSTATE COMMERCE. ; i 'The railroads were required to submit their tariffs to the commissioners, and it was made their duty to revise the same, determine whether the charges are unreasonable or discriminating, aud to increase or reduce the rates from time to time as justice to the public and the railroads may require and as experience may show to be just. When approved by the commissioners the tariffs must be posted at all stations, and rebates are prohibited under penalty of a fine of from $10 to $500. The rail- roads are, however, allowed to carry free or at reduced rates for re. ligious or charitable purposes, or to fairs or for pleasure excursions. It is the duty of the commissioners to hear all complaints against the tariffs. If there appears justice in the complaint, they shall notify the Company that at a time set the tariff will be revised as to the particu- lars complained of, and then fully investigate the matter and give Inotice of the changes, if any, determined upon. The railroads are re- (quired to furnish the commissioners all the information called for, to Inotify them in case of accidents, and to make to them quarterly re- turns of their business. The commissioners are required to inspect depots and see that suitable accommodations are provided. They must determine every matter in writing, and a copy of such determination, certified by the secretary, is made prima facie evidence in all civil cases that such determination was right and proper. They may administer oaths and enforce the attendance of witnesses. The penalty for violat- ing the act or the tariffs fixed by the commissioners is a fine of $500 for each offense. The commissioners are to institute proceedings in Such cases through the district attorneys, and suits cannot be dismissed without their consent. A supplementary act provides that the former Shall not be so construed as to require the Commissioners to investi- gate or call upon the companies for rates of charges from any point outside the State to points outside, or to in àny way interfere with such charges. - f An act approved March 12, 1884, makes it a misdemeanor for any legislative, executive, judicial, or ministerial officer of the State, or any person holding an office of honor, trust, or profit under the laws of the State, to travel upon any railroad in the State without paying abso- lutely the same fare as is required of passengers generally. It is also made a misdemeanor for any employé of a railroad to permit such per- son to travel without paying fare. The penalties are: For the first of. ſense, a fine of $25; for the second, a fine of not less than $100 or im- prisonment for ten days; for the third, a fine of $500 and imprisonment for thirty days. - - The committee has received no response to the communications ad- dressed to the railroad commissioners of Mississippi, and has been un- able to procure any reports they may have made, but is informed that since their appointment last year they have been emergetically engaged in the performance of the duties imposed upon them, and that no change in the law has since been made. Proceedings were instituted by the railroad companies to test the Validity of the Mississippi legislation. The case is pending before the United States Supreme Court, and a decision is soon expected. - - MISSOURI. The Constitution of Missouri declares railroads to be public highways and railroad Companies to be common carriers. It also requires the gen- eral assembly to pass laws to correct abuses, and to prevent unjust dis- crimination and extortion in freight and passenger charges, and also to INTERSTATE COMMERCE. 113 pass laws from time to time establishing reasonable maximum rates, and to enforce all such laws by adequate p 2nalties. - The present railroad commission was established in 1875, when the existing legislation was enacted. The general features of the law are stated in the testimony of George C. Pratt, chairman of the commission (testimony p. 797), from which it appears that the law distinctly con- templates the collection and distribution of information on the subject of railroad transportation, the supervision of the structures to secure safety to life and property in transit, and the regulation of rates. Mr. Pratt says it was the intention of the legislature to enable the commis- sioners to fix maximum rates on any article of freight, but this intention was not fully earried out in the law as passed. The act divides all freight into four general classes and seven special classes. It fixes rates on the seven special classes and places a few articles in each class. It does not fix any rate on any of the four general classes, nor does it place any articles in them. It provides that the commissioners may classify all freights into either of the general or special classes, and that they may reduce rates on any of said classes. The commis- sioners have finally, under the advice of the attorney-general, exer. cised the right of reducing rates on any class, but the railroads have never fully admitted that to be the law. Another difficulty has been that the classification itself is not effective. Mr. Pratt says: The law, in making those classes and in authorizing the distribution of freights into those classes, makes some restrictions. For instance, we cannot change class H, which is the live-stock class. We cannot put anything into it or take anything out of . it. It is the same as to class D, which is the grain class. Then there are two other classes which we are forbidden to touch at all, so that it is an impossibility under our law to make a complete and perfect classification of freights, or even get a system of rates. In that respect, then, our law is defective in regard to the matter of rates, and we have to work along the best way we can. We have succeeded in reducing rates on a great many articles. . The commission has no authority to enforce its rates or to institute proceedings for that purpose. That is left to the party aggrieved. But Mr. Pratt states that, as a general rule, the companies are acqui- escing in the reduced rates fixed by the commissioners, who have been careful never to require a reduction unless it can be shown to be en- tirely reasonable and equitable, and hence their decisions have come to be respected and conformed to. MONTANA TERRITORY. In 1873 the Territory of Montana provided for the organization of railroad companies under a general act, which prohibits exorbitant Charges and unjust discrimination, and the giving of passes to any mem- ber of the legislative, executive, or judicial department of the Territory. The act also requires the railroads to keep posted in their depots sched- ules of their passenger and freight tariffs, and makes a violation of this requirement a misdemeanor, punishable by a fine of $1,000 for the first conviction, $2,000 for the second, and not less than $5,000 nor more than $10,000 for further violation. The companies are also required to make annual reports to the auditor of the Territory. There has been no other regulative railroad legislation. NEBRASKA. The constitution of Nebraska (1875) requires railroads to make an- nual reports of such matters as may be prescribed by law to the auditol S. Rep. 46—8 114 INTERSTATE COMMERCE. of public accounts, and to maintain stock transfer offices in the State. Consolidation with parallel or competing lines is prohibited, and no con- solidations permitted except upon sixty days’ public notice. Railroads are declared public highways and free to all persons for the transpor. tation of their persons and property under such regulations as may be prescribed by law. The legislature is authorized to pass laws establish- ing reasonable maximum rates of charges, but cannot limit the liability of railroad corporations as common carriers. The fictitious increase of capital stock or bonds is prohibited and declared void, and no increase of capital stock is permitted except after sixty days’ public notice. The legislature is required to pass laws to correct abuses and to prevent unjust discrimination and extortion in all charges of express, telegraph, and railroad corporations, and to enforce such laws by adequate penal- ties to the extent, if necessary, of forfeiture of their property and fran- Chises. - The first statute enacted in compliance with the requirements of the constitution was the “Doane law,” passed in 1881, although at every biennial session for eight years there had been a great struggle over railroad legislation. This act provides that every railroad corporation shall give all persons reasonable and equal terms, facilities, and accom- modations for the transportation of any merchandise or any other property within the State, and for terminal handling the use of depot and other buildings and grounds, and at any point where it connects with any other railroad reasonable and equal terms and facilities of interchange, and that it shall promptly forward freight to be sent over another connecting road according to directions. The act also provided that thereafter no company should charge a higher rate than was charged on November 1, 1880, as shown by its published tariff, nor charge for any specific distance a greater sum than for a greater distance. It also prohibited the allowance of any secret rate, rebate, drawback, or unreasonable allowance for the use of cars or any undue advantage whatever, and the charging of any person any greater or less sum than is charged others for “like and contemporaneous service in the receiving, transporting, storing, delivery, or handling of freights.” The penalty for violation of the act, in addition to liability for all dam- ages sustained, is $500. For failing to maintain public stock transfer offices or to make annual reports a railroad forfeits all right to do busi- ness in the State, and any court may on application of any person ap- point a receiver and wind up its business. Its principal officers in ad- dition are made subject to a fine not exceeding $1,000 or imprisonment not exceeding three years. ‘. - It appears from the evidence of the witnesses examinod by the com- mittee at Omaha that this law has not been self-enforcing. Its pur- pose was to prevent unjust discrimination and extortion, but it made no special provision for its enforcement, except that persons aggrieved might go to the courts; and, despite the strong feeling on the subject known to exist in Nebraska, no suits appear to have been instituted under this law. The reason assigned by Mr. Gere was— * That the individual injured by the railroad generally suffered only a few dollars. He might have a just cause of complaint, but it would not pay him to hire a lawyer and go into court. In case he got a judgment, the case would probably be appealed, . and a mall would be worn out. For that reason a feeling has been growing up in the State for some time in favor of further remedy; that is, for the establishment of Some sort of authority that would relieve the individual complainant, the man who suffers injustice from the hands of the railroad, from the necessity of himself making all the fight. (Testimony, p. 1156.) INTERSTATE COMMERCE. 115 * Mr. Edward ROSewater attributed the failure of the law to become operative largely to the policy adopted by the railroads of making it unpopular by living up to its strict letter, althcugh he had succeeded in enforcing it in his own business. He stated that the railroads con- strued the short-haul provision in a very exact way and raised their rates in far western localities, so that the people there found the law a burden, not a relief, and that the companies had contrived to create a general distrust and a general dissatisfaction, until the situation was such that the law could be ignored. (Testimony, p. 1133.) . ^- Upon this subject the special committee appointed by the legislature of 1883 said in its report : - Your committee also finds that the railroad companies of the State, while profess- ing to obey the law generally known as the Doane law, have, by a change in the classi- fication of freights, evaded the true and just meaning of the said law, and while do- ing this, have continually, by their officers and agents, endeavored-to prejudice the business men of the State against said law as the cause of higher freights in the State, when really the cause of such higher rates was a change in the classification of freights made by these companies apparently for the very purpose of evading the law. This committee recommended the establishment of a commission and closed its report with the following statement: We further report that it is our firm conviction that through Congress alone can the people receive complete relief; and we earnestly appeal that their power be in- voked to the work of removing every barrier, to the end that justice may be done to the most humble citizen on perfect equality with the most exalted in every respect, as relates to the benefits that may be derived from the existence and operation of these public highways. At that session of the legislature an opinion was obtained from the supreme court that the creation of a commission similar to those of other States would be unconstitutional, because the Constitution pro- hibited the creation of additional State offices, and required that any further executive duties or power should be devolved upon the existing State officers, but that it would be constitutional to give State officers the powers sought to be conferred upon a commission. Nothing was done, however, except to submit to the people a constitutional amend- ment providing for the election of a commission. This was rejected by the people, but the last legislature, elected at the same time, created a commission, as suggested by the Supreme Court, composed of the at- torney-general, Secretary of State, and auditor, giving each power to appoint a secretary, and authorizing the Secretaries to perform any of the duties assigned to the members of the board, except the making of a final determination on questions where an issue is raised between a complaining party and a railroad. This law went into effect on June 6 last, and it is too soon to judge of its results. In its general provisions it is substantially the same as the law in force in Iowa, and is supple- mentary to the “Doane law,” which is still in force. NEWADA. The general act for the incorporation of railroad companies enacted by the legislature of Nevada in 1865 limited their charges to 10 cents per mile per passenger and to 20 cents per mile for each ton of freight. An act approved February 12, 1879, makes it unlawful for railroads to discriminate in their charges for “like and contemporaneous service,” or in the facilities furnished, within the State; to allow rebates or draw- backs; to make combinations or contracts to prevent continuous car- . 116 - INTERSTATE COMMERCE. riage, or to pool Ór divide business or earnings. The railroads are re- guired to keep posted in their stations schedules showing their rates for all classes of Service, and cannot change such rates except by substi. tuting a similar schedule five days before it goes into effect. The act also makes it unlawful to charge more or less than the rates thus posted, and allows triple damages to persons injured by any violation of this provision, to be recovered by suit in any district court. In ad- dition there is a penalty for violation in the shape of a fine of not less than $2,000, to be recovered by the State, one-half of which is to be paid to the informer, Reduced rates may, however, be given on freight carried for the United States and articles carried for charitable pur- poses or to public fairs, and on materials carried for the construction of other railroads. At the same Session the short-haul clause of this act was amended so as to make it unlawful for a railroad “to charge or re- ceive any greater compensation per car-load, or part thereof, of similar property, for carrying, receiving, storing, forwarding, or handling the same for a shorter than for a longer distance in one continuous car- riage.” As first enacted this section would have required equal mile- age rates. - The committee did not have access to the session laws of 1881, but, unless some changes were made that year; that which has been out- lined includes all the railroad legislation of Nevada down to the pres- ent time. - * - - - NEW HAMPSHIRE. The New Hampshire Commission has been in existence since 1844. In organization and authority it resembled the other New England com- missions, and was limited to inspection duties until two years ago, when the law was radically changed, and it was made the only commission in an Eastern State having power to establish rates. - & The general railroad law of the State provides that in every year when the average net receipts of a railroad exceed the average of 10 per cent. Over its expenditures from the commencement of its operations, the excess shall be paid into the State treasury. The consolidation of rival and competing lines is prohibited. . Rates must be posted at all stations, and cannot be raised except after thirty days' notice by posting. The giving of free passes is prohibited, except as indicated in the fol- lowing section: - No person shall be allowed to pass over any railroad without paying the fare thus established, except stockholders going or returning from the meetings of the proprie- tors; the directors, superintendent, treasurer, and clerk of said proprietors, and of roads having a business connection from freight and passengers on said road; persons in charge of mails and expresses; and persons poor and in misfortune, who are unable to pay said fare, and to whom passes have been granted. - - A “short-haul” law was enacted in July, 1879, which provides that— No railroad owned or operated in this State shall charge a higher tariff on like classes of freight, by the car-load, when delivered at any station on its line, than is charged to deliver the same at any station on the road when the transportation is for a greater distance. - … t SEC. 2. Nothing in section 1 shall be so construed as to affect the rights of any rail- road owned or operated in this State from establishing such rates on freights shipped over their lines from points outside of the State to points beyond the State as may seem for their best interests. - SEC. 3. Any railroad corporation or company violating any of the provisions of this act shall be fined not exceeding $500, to be recovered in an action of debt by the party aggrieved, or any person who may sue therefor, INTERSTATE COMMERCE. 117 The general railroad incorporation law, passed in 1883, contains a “short-haul” provision identical in terms with the law of Connecticut on the subject. The commission act of 1883 provides for the appoint- ment by the governor of three railroad commissioners, for terms of three years. The expenses of the board are assessed upon the railroads of the State in proportion to their receipts. The board is given general supervision of all railroads and required to keep itself informed as to their condition, the manner in which they are operated, and the Com- pliance of the corporations with the laws. It is made the duty of the commissioners to fix maximum freight and passenger rates and to change the same as the public good may require. In case of any neglect or violation of the laws, the board must notify the corporation in writing; and, if continued after notice, present the facts to the attorney-general; but the commissioners may, when the public good requires, themselves institute proceedings. The board is required to investigate the condi- tion and operation of any railroad on complaint of the mayor and alder- men of a city or the selectmen of a town, and notify the Corporation of its adjudication. Ample provision is made for the examination of wit- messes, books and papers, and the procuring of information from the roads. - - t In the performance of its duty of fixing maximum rates the board held public hearings and called for complaints. It appears from the re- port of the Commission for 1885, the second under the new law, that substantially no complaints were made, and that the rates complained of in three or four instances were at once satisfactorily adjusted by the roads. The result was that the board established the existing rates as the maximum “until further investigation or complaint preferred sus- tains the advisability of a reduction.” Of their action the commissioners Say: - - - { The maximum passenger and freight rates of the several roads, as established by this board, are now on file in this office, and can be consulted at any time. By law these rates are required to be printed and posted in the several stations. It will be observed that the maximum rates fixed by this board are subject to such changes “from time to time as in the judgment of the board the public good may require.” If any citizen feels that rates are excessive, he has only to state his case by a com- munication to the board to that effect, a day for its public consideration will be named, and the matter will receive full and impartial treatment. With this remedy for any excessive rate or charge, any citizen can, under the present law, “obtain right and justice freely, without being obliged to purchase it, completely and without any denial, promptly and without any delay, conformably to the laws.” Speculation whether such a law is better or worse than another is of small moment in the face of an experiment that has already conferred some benefits, which promises to confer more, and will at least shut out any palpable injustice. The maximum passenger rates thus fixed by the board vary from 24 Cents per mile upon One road to 15 cents per mile upon a mountain road and $1 per mile upon the steep road up Mount Washington, 3 miles in length. Upon the question of uniform rates, the commission- ers say: - The argument for a Tiniform rate would be conclusive if the conditions under which all railroads in the State were constructed and operated were the same. The conditions are so unlike in several vital respects that uniformity would be rank injustice. This does not preclude the idea that the people of one section of the State have a natural right to equal advantages with the people of another section. So they have, so far as their natural and legal rights are concerned, but artificial advantages are subject to no 118 INTERSTATE COMMERCE." such rule. A road with low grades and low cost of construction, superadded to easy operation and a lucrative traffic, can afford rates that would send into immediate bankruptcy a road of heavy grades and high cost of construction running through a poor and sparsely-settled region. It is simply absurd to say that the Portland and Og- densburg road, which is in the bands of a receiver, whose cost of construction was $47,079.48 per mile, and of expense to gross earnings is 144.50 per cent., should have. tlic same rates as the Concord Railroad, which nover had a dollar of bonded indebt- edness, which cost only $40,507.69 per mile, and whose operating expenses are only 67.82 per cent. of its income. It is equally absurd to put almost any two roads of the State upon a like basis for determining maximum fares and freights. One road, by the exercise of severe economy, is able to declare 3 per cent, dividēnds; another road, by the exercise of ordinary prudence, can declare 6, 8, or 10 per cent. (lividends. 'The first conclusion reached was that each road's circumstances should determine the maximum rates for that road. - NEW MEXIC (). The legislation of the Territory of New Mexico in relation to the incorporation of railroad companies and matters pertaining" to the con- duct of their business as corporations is very complete. Annual re- ports to the secretary of the Territory are required. Some years ago a provision was incorporated into the general law limiting passenger fires to 10 cents per mile and freight charges to 15 cents per inile per 2,000 pounds or per 40 cubic feet. This was amended in 1882 so as to limit passenger fares to 6 cents per mile and to 3 cents for children be- tween twelve and six years of age, giving the person charged more than these rates the right to recover a penalty of $500. 3. NEW JERSEY. | In 1873 the legislature of New Jersey provided for the appointment annually by the governor of a “commissioner of railroad taxation,” to make an annual statement and valuation of the railroad property of the State for purposes of taxation. This officer with the comptroller and treasurer constituted the board of railroad commissioners, whose Only duty Was to estimate the value of railroad property for taxation When the companies failed to make returns. In 1884 a new method for the taxation of railroad property was adopted, which provided for the appointment by the governor of a State board of assessors and which abolished the former system. - The general railroad incorporation law of 1873 prohibited the charg. ing of a greater sum for the transportation of freight between way sta- tions or between a terminal and a way station than between terminal Stations, limited passenger fares to 3 cents per mile, and required the roads to make annual reports to the legislature. NORTEI CAROLINA. The lows of North Carolina limit passenger rates on railroads to 5 Cents per mile. The general assembly may at any time alter or re. duce the rates of freight and fare charged, but the same shall not, with- out the consent of the Corporation, be so reduced as to reduce its profits to less than 6 per cent. per annum upon the capital actually expended, or unless the company’s income has been found by investigation to have exceeded such a percentage during the previous year. The railroads are required to malse annual reports to the governor, and to keep INTERSTATE COMMERCE. . 119 posted in their depots a list of their freight charges, which cannot be increased without fifteen days’ public notice. Discriminations in rates are prohibited under a penalty of $200 for each offense, recoverable by the person suing for the same, but special contracts can be made on freight shipped in car-load lots. Pooling and the giving of rebates are prohibited under penalty of a fine of not less than $1,000 or imprison- ment for not less than twelve months, to which all persons concerned, railroad officials and others, are liable. The Attorney-General is re- quired to institute proceedings when contracts are made by railroads giving any person or company preferences or exclusive privileges. The companies are prohibited from loading or unloading freight trains on Sunday, or from running any trains on that day, except to carry passen- gers and the mails. No bill to incorporate a railroad company or change the charter of one can be offered in the legislature unless accompanied. by a receipt from the State treasurer for $250, the sums thus received being paid into the school fund. + OHIO. The first of the State commissioners to come into public notice was that of Ohio, in which State the office of railroad commissioner was created by an act passed in 1867. The office was held for several years by General George B. Wright, whose investigations and reports upon matters of public interest attracted attention among those interested in railroads and railroad regulation, and whose statement to this commit- tee appears in the Appendix, page 84. Under the statutes, the com- missioner is appointed by the governor for a term of two years, and his title is the “Commissioner of Railroads and Telegraphs.” He is re- Quired to inspect the condition of the railroads and require needed re- pairs to be made or necessary precautions for safety to be taken, and also to inquire into any alleged violation of law by the roads. Annual " reports are required in detail, and the roads are required to furnish the Commissioner, on demand, with copies of all leases, contracts, and agree- ments with other companies. He is also to be notified of all fatal acci- dents, and may examine into the causes of the same. Under this sys- tem the physical condition of the roads is annually examined very thoroughly by experts and reported upon at length and with minute detail, and the returns received from the roads are very complete and Voluminous, but this is practically the extent of the work of the com- missioner. - - In 1873 a statute was passed fixing the maximum freight rate at 5. cents per ton per mile for distances of 30 miles or more, and probibit- ing a greater charge on freight of the same class for a short haul than for a longer haul in the same direction over the same railroad or con- necting lines. This statute does not appear to have been enforced, and the Commissioner is not authorized to prosecute proceedings for its vio- lation. - - e - OIREGOIN. At its last session the legislative assembly of Oregon passed an act known as the “Hoult railroad law,” which was approved February 20, 1885, and which was substantially a copy of the “Reagan bill.” Before it took effect, Richard Koehler, the receiver of the Oregon and Califor- nia Railway Company, presented a petition to the United States circuit court for the district of Oregon, which was in charge of the road, ask- ing for instructions concerning his duty in the management of the prop- 120 ... INTERSTATE COMMERCI. erty in certain particulars affected by the act. In his opinion, as re- ported in full in the Portland Oregonian of May 5, 1885, Judge Deady directed the receiver to comply with the act so far as practicable, but not to regard the short-haul provision when it interfered with rates affected by water competition. This part of the decision bears so directly upon the subjects under consideration by the committee that the greater part of it is here with reproduced. After reciting the facts already stated, Judge Deady says: - - The act is very verbose and unskillfully drawn, but so far as it relates to the mat- ters about which the receiver seeks direction, it inay be briefly stated as follows: (1) The fare for the transportation of passengers shall in no case exceed 4 cents a Inile. t *. - (2) All charges for transporting property shall be reasonable; but the rate charged on January 1, 1885, by any corporation shall be its maximum rate. (3) No “greater or less” compensatién shall be charged one person than another “for like and contemporaeous service ’’ in transporting property. * (4) No rebate or drawback shall be allowed in any case, except when property is shipped for points beyond the limits of the State. - (5) Pooling freight or dividing the earnings of “different and competing” railways is prohibited. (6) No greater rate shall be charged for carrying similar property a short haul than a long one, in the same direction. - Any person who violates any provision of the act is made liable to the person in- ‘jured in treble damages and a fine of $1,000. The court next considers the question raised as to the unconstitution- ality of the act, so far as it undertakes to fix charges, and says: Admitting, then, that the legislative assembly has the power to prescribe a maxi- mum rate for the carriage of persons and property, and that such rate is presumed to be reasonable until the contrary is shown, I proceed briefly to consider the matters concerning which the receiver desires instruction. And, first, as to the provision fixing the rates for carrying passengers. There is no sufficient showing that the rate prescribed is not reasonable. The only distinct allegation in the petition to the contrary is that “the actual cost” of carry- ing ‘‘passengers on many portions of the road is in excess of the maximum rates al- lowed” therefor. But what the effect is upon the receipts for passenger traffic on the road as a whole does not appear, and probably cannot be definitely ascertained ex- cept by experience. -- - It is commonly understood that now and prior to the passage of the act the fare between Portland and Albany, Lebanon and Corvallis, was 43 cents a mile; between Albany and Roseburg, 6 cents; and between Roseburg and Ashland, 7 cents; and on mileage tickets between Portland and Oregon City, 2 cents a mile; between Port- land and Albany and Lebanon, 3 cents; and all other points 4 cents a mile. Owing to the increased cost of operation and the limited population and travel it is probably true that a rate which would be reasonable in the Willamette Valley would not pay expenses to the south of it. But if the legislature, in fixing the rate, think proper to make it uniform over the whole line, so as to make the more wealthy and populous portion of the State contribute to the locomotion of the inhabitants of the southern portion thereof, I am not prepared to say it has not the power to do so, of that the corporation can be heard to object thereto, so long at least as the com- pensation received by it for the carriage of passengers over its road as a whole is reasonable. j While the Toad remains in the hands of a receiver of this court it is not desirable that there should be any conflict between its management and the policy of the State, except when the latter is clearly contrary to the legal right and substantial interest of the road. -> INTERSTATE COMMERCE. - 121 For the present the receiver will be instructed to operate the road in this respect in subordination to the act, and if experience shall prove that the rate is insufficient to yield the road as a whole a reasonable compensation, the matter may be further considered. . . As to the matter of long and short hauls, the question, although prima facie one of discrimination, directly involves the right to a reasonable compensation. I assume that the State has the power to prevent a railway company from discrimi- nating between persons and places for the sake of putting one up or another down, or any other reason than the real exigencies of its business. Such discrimination, it seems to me, is a wanton injustice, and may therefore be prohibited. It widlates the fundamental maxim, which in effect forbids any one to so use his property as to injnre another—sic wiere two ut alienum mom laºda8. * - The provisions of the act that I have condensed in paragraphs 3,4, and 6 aforesaid, are intended to prevent this practice. - - But where the discrimination is between places only and is the result of competi- tion with other lines or means of transportation, the case, I think, is different. For instance, the act prescribes a reasonable rate for carrying freight between Corvallis and Portland, or from either to points intermediate thereto. But Corvallis is on the river, and has the advantage of water transportation for some months in the year. The carriage of goods by water usually costs less than by land, and as water craft are allowed to carry at a rate less than the maximum fixed for the railway, they will get all the freight from this point unless the latter is allowed to compete for it. But if, to do this, it must adopt the water rate for all the points intermediate between Port- land and Corvallis, where there is no such competition, it is in effect required to carry freight to and from such points at a less rate than that which the legislature has de- clared to be reasonable, or else give up the business at Corvallis altogether. And the same result would follow as to Salem and other points on the east and west side lines, where there is convenient access to water transportation, - If the legislature cannot require a railway corporation formed under the laws of the State to carry freight for nothing, or at any less rate than a reasonable one, then it necessarily follows that this provision of the act cannot be enforced so far as to prevent the railway from competing with the water craft at Corvallis and other simi- larly situated points, even if in so doing they are compelled to charge less for a long haul than a short one in the same direction. It is not the fault or contrivance of the railway that compels this discrimination, but it is the necessary result of circumstances altogether beyond its control. It is not done wantonly for the purpose of putting the one place up or the other down, but only to maintain its business against rival and competing lines of transportation. In other Words, the matter, so far as the railway is concerned, resolves itself into a choice of evils. It must either compete with the boats during the season of water transpor- tation, and garry freight below what the legislature has declared to be a reasonable rate, or abandon the field and let its road go to rust. Nor can the shipper at the non-competing point or over the short haul complain, so long as his goods are carried at a reasonable rate. It is not the fault of the railway that the shipper who does business at a competing point has the advantage of him. It is a natural advantage which he must submit to, unless the legislature will under- take to equalize the matter by prohibiting the carriage of goods by water for a less rate than by rail. And when this is done, the inequalities of distance as well as place may also be overcome by requiring goods to pay the same rate over a short haul as a long one, and then the shipper at Ashland will be as near the market as any one. As to the interchange of freights with the Oregonian Railway Company, the case stated in the petition does not seem to be one of pooling freights or dividing earn- ings, but rather a case of a long haul at a less rate than a short one in the same direc- tion, to meet the contingency of river competition at Ray's or Fulquartz's landing. Pooling freights or dividing earnings is resorted to by rival and competing lines of 122 INTERSTATE COMMERCE. affairs, dated February 15, 1884: railway as a means of avoiding the cutting of rates, which, if persisted in, must re- sult in corporate suicide. It is not apparent how a division of the earnings of two such roads can concern or affect the public so long as the rate of transportation on them is reasonable. But assuming what is not admitted, that the legislature has the power to prohibit the practice, the Oregon and California and the Oregonian Rail- ways do not appear to be competing ones, but rather supporting ones, the latter Serv- ing as a feeder, branch, or continuation of the former. Nor is the arrangement be- tween them a pooling one, but simply one by which each carries for the other at a fixed price per ton per mile. - - There is nothing in the arrangement which prevents the receiver from doing a “like service’ for auy one else on the same terms, and I have no doubt he would be glad to. The receiver is instructed— • (1) To carry passengers at a rate not exceeding 4 cents a mile on any portion of the road and for as much less on the whole or any part thereof as he may think ad- visable. *- - - - (2) To charge no more for the carriage of goods than the maximum allowed by the act, nor no more for a short haul than a long one in the same direction, except to and from points where the rate obtainable is affected by water transportation, in which case he may carry at as low a rate as the water-craft do, without reference to the length of the haul. - - (3) To continue the interchange of freight with the Oregonian Railway on the foot- ing of the present arrangement as long as he may think advisable; and, - (4) In the discharge of his duties, to otherwise obey and conform to the provisions of the act. . • - The foregoing contains my present impression of the rights and duties of the re- ceiver in the premises. But being ex parte, of course it is given subject to further consideration and correction. The receiver is instructed to obey the act for the time being, except in the case of a long haul to or from a point affected by water transpor- tation. If any one considers himself aggrieved by the action of the receiver in this particular, on application to this court leave will be given to bring an action herein against him for damages, so that the matter may be regularly and formally heard and determined. & As the question involved—“Has the corporation a contract with the State for the right to demand and have a reasonable compensation for the carriage of goods?”—is a Federal one, it is proper that the action should be brought in this court. PENNSYLVANIA. The status of railroad legislation in Pennsylvania is exhibited in the following extracts from the annual report of the secretary of internal Pennsylvania was among the earliest of the American States to encourage and assist in the construction of internal improvements. The Indian trails of a century ago, that passed along the valleys and through the water-gaps, have been succeeded by lines of turnpike-roads, canals, railroads, telegraphs, and telephones. Streams were slack-watered or spanned by magnificent bridges, and mountains tunneled in the construction of great works of inter-communication. The stage-coach long since dis- appeared from the main highways, and water communication, in many sections, has been rendered unprofitable by the building of lines of railroad that successfully com- peted for the carrying trade. The railroad has so well met the necessities of the peo- ple that by common consent it is accepted as the grand highway of the age. Almost as soon as transportation by railroad had been demonstrated to be practica. ble and more economical than the methods previously in use, Pennsylvania built iron links in her main line of communication extending from the Delaware to the Ohio, and, stimulated by favorable legislation from time to time, the construction of lines - - INTERSTATE COMMERCE. 123 in other directions. The various enactments of the general assembly permitting the building of lateral railroads, creating railroad corporations, defining their powers, and regulating their operations, extend over a period exceeding half a century. These were framed in the light and from the experience of the times, with a view to the de- velopment of the resources of the commonwealth and to meet the necessities of the people, but the increase of population has been so rapid, and the creation of new in- terests so great, that, with the multiplication of new corporations, they are insuffi- cient in their provisions to effectively protect the varied interests of investors, the persons served by the transportation lines, or the general public. The first legislation authorizing any kind of state supervision of transportation . lines was the act of April 4, 1859, which required each railroad corporation whose road lay in whole or in part within the limits of the State to make an annual report to the auditor-general, embracing in detail its operations and affairs. This act was extended to canal companies April 15, 1863, and to telegraph companies April 14, 1868. On the 9th day of April, 1870, another act was passed, embracing in its provisions each “railroad, canal, navigation, and telegraph company.” Pursuant to the re- quirements of the constitution of 1873, the act of May 15, 1874, was passed, under which the powers and duties of the auditor-general were transferred to the Secretary of internal affairs, who, by the act of May 11, 1874, was enjoined to exercise a watch- ful supervision over the railroad and other business corporations of the State, to see that they confine themselves strictly within their corporate limits, and to hear and investigate complaints made against them under oath. The laws now in force are sufficient to secure annual or special reports from the cor- porations upon all subjects in which the commonwealth, the investors in railroad stocks or securities, and the general public are chiefly concerned. The legislature evidently designed, in the fourth section of the act last above mentioned, to provide a remedy against companies for transcending their corporate functions or infringing upon the rights of individual citizens; but that act does not make any provision for compelling the attendance of either parties or witnesses on the hearing of complaints, nor does it define the “general supervision” enjoined in the constitution, to be exer- cised by the secretary of internal affairs, or authorize its enforcement except by the making of general or special reports as above mentioned. , " " " The rapid exten sion of our railroad lines, the augmentation of capital invested, and the vast increase of business transacted, showing results far in excess of the most sanguine estimates of a quarter of a century ago, when the first law providing for annual reports was passed, exhibit the necessity for a more careful State guardianship over these corpo- rations, to harmonize clashing interests, scrutinize their operations and affairs, and protect the rights of the people; also, for such additional legislation as will more sharply define the rights and privileges that these corporations may clearly exercise, and those reserved by the Commonwealth. These lines have been efficient agents in the development of the resources of the State; they minister to the comfort and con- venience of the people, and contribute largely to the public revenue, but the fact must not be forgotten that they are creatures of the Commonwealth, deriving all their s power from it, and should be held to a strict accountability for the exercise of their valuable privileges. º - . Many alleged wrongs are perpetrated by railroad corporations upon shippers as well as on people along their lines. The method of redress is so tedious and expen- sive that most persons will submit to what they are inclined to call impositions rather than appeal to the courts. Such grievances, whether real or imaginary, beget a - hostility to the companies that is usually suppressed until when Suitable opportunity offers, it is manifested in such unlawful acts as, unhappily, have been Witnessed on more than one occasion. If there existed, or if the legislature would provide, authority to make such examination of railroad companies, their lines, operations, and affairs as is annually performed in many other States, and for the inexpensive hearing, prompt and efficient disposition of such complaints as inevitably arise be- 124 * INTERSTATE COMMERCE. tween transportation companies and their patrons as well as the public, where every citizen could feel assured of a patient and impartial hearing, a judicious exercise of such power would promote a better state of feeling between all parties. Rallroad lines, indispensable to the civilization of the age, have become a public necessity, and should not be hampered or embarrassed by any harsh, arbitrary, or op- pressive regulations whereby their efficiency or remunerative operations would be af- fected; on the contrary, they are entitled to such fostering care of the Government as is not inconsistent with the general welfare. There ought not to be any ground of col,flict between the corporations and the people—neither can prosper without the other. * * * These lines carry the products of our farms, forests, mines, and manu- factories, develop the rural districts, and assist to populate and enrich the cities. They can be made the means of fostering in provements in some localities and retard- ing them in others; they can aid the prosperity of a favored establishment and “freeze out ’’ another. The people need, and public sentiment demands, that the letter and spirit of the constitutional prohibition of discrimination in charges or facilities for transportation shall be observed, so that all points along the line of a railroad shall bave equal facilities at rates predicated upon distance and service per- formed. Such uniformity cannot be secured as long as each corporation is per- mitted to exercise its extraordinary privileges as its own interest dictates. Com- plaint has been made that in arranging freight tariffs little consideration is given to the wants of the shipper at points where there is no competition. Passenger sched- ules and stops are arranged wholly as the officials of the lines decide, from whose de- cision there is no appeal. Rival lines meeting at a given point are often found to so arrange schedules as to unnecessarily delay passengers whose destination requires a change from one road to another. The testimony taken by the committee in Philadelphia revealed the existence of considerable complaint in that State on the score of dis- crimination, and of a demand for legislation to enforce the provisions of the constitution on that subject. It was shown that, while shippers. are guaranteed equal rights in respect to transportation facilities by the State constitution, by the charters of the railway companies, and by the contract made with the State in 1861 by the Pennsylvania Rail- road Company, known as the “commutation of tonnage act,” by which it agreed to charge no greater sum for a short haul than for a longer haul in the same direction, these constitutional provisions and require- ments had not been self-enforcing, and that, as stated by Mr. John Norris— tº There has been an agitation on this subject for twelve years or more in Pennsylva- nia, and in 1873 the leading points of it were put into the new constitution and adopted by the people. Section 12 of that article provided that the legislature should enforce the provisions relating to railroads by appropriate legislation. No bill was passed until 1883, when the original bill was mangled so as to make it apply to ship- ments under the same conditions and similar circumstances and in the same period of time. For practical purposes that bill is absolutely worthless. To the knowledge of the railroad men there has been no suit brought under it, and it is doubtful whether anything could be obtained under it for the reason that the circumstances regulating transportation are as manifold as the influences that affect the currents of the wind and of the Sea.—(Testimony, p. 539.) REIODIE ISLAND. In 1872 Rhode Island established the office of railroad commissioner, giving to the incumbent inspection duties merely. The statutes of the State require railroads to report all accidents to the commissioner, and to make annual reports to him. It is his duty to personally examine INTERSTATE COMMERCE. 125 the proceedings of any railroad whenever he deems it expedient, and to report to the general assembly whether such facilities and accommo- dations are furnished as are required, and as to such other matters as affect the public interest. The reports of the commissioner show that his attention has been devoted mainly to matters affecting the comfort and convenience of the public, although the later ones indicate some dissatisfaction in the State on account of discriminations. The commis- sioner is appointed by the governor for a term of one year, and his sal- ary is $500. x SOUTH CAR.OLINA. A railroad regulation act was passed in South Carolina in 1881 and amended in 1882 and 1883, the number of commissioners being increased to three, and their duties being materially changed and extended. As it now stands the law requires annual reports to be made to the railroad commissioners, the character and items thereof being fully specified. Unreasonable rates for transportation of passengers or freight, or for the use of cars, unjust discriminations, rebates, and all other undue advantages are prohibited. The act also prohibits a greater charge for the transportation of any passenger, or of freight of any description for any distance within the State, than is made for the transportation of any passenger of the same class or a like quantity of freight of the same class over a greater distance on the same railroad, or for an equal distance, or the making of a greater charge for such service at any point than is charged at the same time at any other point on the same railroad, as well as every other form of discrimination. And all such discriminating charges are made prima facie evidence of violations of the act. Exceptions are made in favor of commutation, excursion, and 1,000-mile tickets, and the issue of second-class tickets at lower rates than first-class. On demand consignees must be furnished with an itemized statement of freight charges before payment of the same, showing the amount to be paid to each road, where the shipment is over more than one. Consignees may require a settlement of charges ac- cording to the Contract set forth in the bill of lading from the shipping point. There is also a provision which travelers will appreciate, mak- ing baggage-landlers liable to a fine not exceeding $50, or imprison- ment for thirty days, for willfully or recklessly injuring or destroying baggage. - There are three commissioners appointed by the governor from dis tricts which are specified, for terms of six years. Their salaries and ex- spenses are paid by the State, but assessed upon the roads according to their gross income. The railroads are required to adopt, and keep ac- cessible for public inspection, schedules plainly stating the kinds and classes of property to be carried, the different stations or places in the State, on the line of its own or connecting roads, between which such property shall be carried, and the rates for given distances, including all through rates and joint rates with other roads and all terminal charges. Changes are prohibited except upon thirty days’ public liotice, and it is made unlawful to charge more or less than such schedule rates. The commissioners are required to revise these schedules, and all contracts or agreements between the companies, and notify them of any modifica- tions deemed proper, the railroads being required to adopt the schedules as thus modified, but having the right of, appeal from the findings of the commission to the circuit court, the action of the board remaining in force pending such proceedings. It is made the duty of the Commis sioners to order changes whenever they believe rates are in violation of 126 . INTERSTATE COMMERCE. a’ the laws against unjust discrimi nations and unjust rates, and to bear all complaints, giving notice to the railroad and “conforming the mode of procedure, as nearly as may be, to that required of arbitrators.” Either party may appeal from the finding of the commission to the cir- cuit court, the railroad, however, being required to give security for the payment of costs and penalties. It is the duty of the commissioners to ascertain if the revised schedules and agreements are complied with, and they are given full powers of investigation. Maximum-passenger rates have been fixed by the general assembly at the rate of 3 cents per mile on roads whose annual passenger earnings exceed $1,800 per mile; 3% cents on earnings between $1,000 and $1,800; 4 cents on earnings be- tween $500 and $1,000; 44 cents on earnings not over $500; and 2 cents for children. The second-class rates are 24 cents for the class first men- tioned above, 3 cents for the second and third, and 4 cents for the fourth, and one road is by name authorized to charge 4 and 3 cents. The commissioners are required to proceed against corporations vio- lating the law, if such violation be continiued after notice, by applying to the circuit court for injunction. They are also required to give no- tice to the roads of repairs, improvements, &c., deemed necessary, and to institute legal proceedings when they fail to comply with their sug- gestions. They must investigate the causes of railway accidents, and examine the conditiou of any road on complaint of the mayor and alder- men or council of any city or town, or board of county commissioners. Pooling contracts must be submitted to the commissioners for their in- spection and approval. They may suggest objections thereto, and must call on the attorney-general to institute legal proceedings if such con- tracts are not amended to their satisfaction. There are a great many other provisions in the State statutes regulating the conduct of the rail. road business. One prohibits the loading or running of trains on Sun. days, except regular mail trains, construction trains in cases of emer. gency, and trains unavoidably delayed. In their first report under the existing law (November, 1883) the commissioners state that upon investigation they found that there was no uniformity in the system of rates of the different roads. “Indeed, the greatest irregularity existed, each road having its own method, and, to add to the complication, no uniform classification, and the pub- lic were, in consequence, unable to comprehend rates they were daily dealing with.” Tollowing as closely as practicable the methods of the Georgia Commission a “standard schedule of just and reasonable pas- senger and freight rates and classifications, also rules and regulations,” was issued and each road was asked to show what variations were necessary in its case. After hearing the representatives of the roads, a standard Schedule was finally adopted and promulgated. The report States that— - In fixing rates the commission established a maximum based upon the length of haul, the capacity of the roads, the amount of business of each, and their financial con- dition, except where these considerations were overruled by the requirements of the law. The maximum rates may be reduced by any railroads, subject always to statu- tory restrictions requiring such reductions to be uniform and non discriminative in their effect. * * * The principle of rates varying as to distance only, without reference to direction of movement or to the point of shipment or destination, is re- garded by the commission as the fundamental rule established by the statute, and this is the principle that they have endeavored to apply and maintain in all they have done. INTERSTATE COMMERCE. - 1. 2 7 * The results obtained were stated to be : (1) The rates for short distances have been generally reduced below what they were before. - (2) The rates for long distances are about the same as before. (3) In the case of the Charlotte, Columbia, and Augusta Railroasd hort-distance rates have been increased, and long-distance rates reduced. In their report for 1884 the commissioners call attention to the fact that but few changes in their schedules had been asked by the railroads under their statutory right to make such applications as an indication that the standard tariff must, in the main, have been just and reasona- ble. They say that the roads generally co-operated with them in an honest effort to give the law a fair trial, though some did not, and con- tinue: - - The commissioners regret to call attention to statements that the decline in busi- ness of certain railroads is “due to legislative enactments and the rulings of the Railroad Commissioners.” The only comment that they can allow themselves to make is to point to the fact that the precise territory in which this decline in busi- ness has occurred is now being penetrated by a new railroad, built with a knowledge of these legislative enactments and the rulings of the commissioners, and intended to be operated under them. - There now exists, so far as we are informed, no discriminating rates in the local tariffs of the different roads, either against individuals or localities, except the rates on the Charlotte, Columbia and Augusta Railroad, referred to elsewhere. Before and after the organization of this board there were frequent and sometimes violent changes in freight rates. This has been rectified, and the present stability in local rates must tend to remove that speculative element in business which is inseparable from sudden and frequent changes in freight rates. - In the early part of our work much time was required to investigate and adjust complaints against the railroads. Each month these complaints have diminished, and now but few reach this office. This confirms the experience of railroad com- missions generally, viz, that they promote in one way or another a spirit of consid- eration on the part of the railroads for the public, which results in reducing the inevitable friction of such large and rapid transactions as daily take place between these corporations and the business community. --- There is less discrimination, more stability in rates, fewer complaints, and greater harmony between the railroads and the people than at any time during the adminis- tration of the present board or their predecessor. - TENNIESSEE. The State of Tennessee early adopted an internal-improvement sys- tem, under which very liberal State aid was granted to encourage the construction of railroads. An act passed February 11, 1852, authorized the issue of State bonds to a certain amount per mile to certain com- panies named, to be used in Supplying the Superstructure and equip- ment of their roads. The amount of State aid was greatly increased from time to time. During the civil war the companies failed to pay to the State the interest upon the bonds loaned to them, and they finally became insolvent with no prospect of ever being able to pay the princi- pal of their indebtedness. They were accordingly taken possession of, and sold by the State through the agency of a “railroad commission ” appointed in 1870 for that purpose, and consisting of the governor, secretary of state, comptroller, and three others. - -- • In March, 1883, the legislature passed an act to provide for the regu- lation of the railroads of the State, and for the appointment of a rail- 128 INTERSTATE COMMERCE. …” road commission, which was vigorously and successfully resisted by the railroads. This statute declared all railroads public highways, and the exacting of more than just and reasonable compensation for transportation, or the making of any unjust and unreasonable discrim- ination in transportation, to be extortion, except that contracts might be made for special rates for the purpose of developing any industrial enterprise. It was provided that the party injured could recover for extortion as thus defined ten times the amount of damages sustained by the overcharge or unjust discrimination, with attorney’s fee; but if the service was performed at rates previously approved by the com- mission only actual damages, without attorney’s fees, could be recov- ered. The act provided for the appointment by the governor of three railroad commissioners, to serve until January 1, 1885, and for the election of their successors by the people in November, 1884, and every two years thereafter. It was made the duty of the commissioners to investigate and determine whether the law was violated, and to cause suits to be prosecuted when it was, such suits to be conducted by the attorney-general under their direction and not to be dismissed without their consent. The penalty for violation ranged from $100 to $1,000. The approval by the commission of the rates charged by any road was made prima facie evidence that such rates were not extortionate. The act required the railroads to post at all their depots the tariffs approved by the commissioners, and made it unlawful to give any reduction or re- bate from such tariff to any person which was not made in favor of all. Agreements between railroads, or between railroads and common car- riers by water, providing for a division or percentage of the freights from any place within the State, were prohibited. The commissioners were required to revise all railroad tariffs, to notify the corporations of any changes necessary to make the rates just and reasonable, and to avoid unjust and unreasonable discrimination, and to approve the same when such changes had been made or none were deemed necessary. Failure to make or to conform to such changes was made prima facie evidence of extortion. Provision was made for hearing complaints against such tariffs or approved rates. The penalty for failing to submit tariffs for revision when called upon by the commissioners was fixed at $100 per day. The act further conferred upon the commissioners inspection duties similar to those imposed upon other like boards, authorized them to ex- amine witnesses under oath and enforce their attendance, and required annual reports to be made by the railroads. To meet the objection that such legislation might check railroad construction it was provided— That none of the provisions of this act shall apply to any railroad now being con- structed, or which may hereafter be begun and constructed, in this State until ten years from and after the completion of such new railroad. The commissioners appointed under this statute qualified April 25, 1883, and immediately called upon the roads to furnish their tariffs for revision. This was done by all the leading roads except one, which claimed exemption from regulation of the maximum charges allowed by its charter. After seven months' investigation and study of the guestions awaiting their decision, the commissioners prepared to for- mally revise the tariffs. Un giving notice of their purpose to the Louis- ville and Nashville Railroad Company, that corporation procured a re- straining order from Judge John Baxter, United States circuit judge, as did another company. Bilis were filed against the commissioners by these companies and motions for injunctions were made, which were heard January 11, 1884, Judges Baxter, Key, and Hammond presiding. INTERSTATE commRRCE. 129 February 29 the court delivered its opinion, holding certain sections of the statute unconstitutional, and granting preliminary injunctions against the commissioners. Four other companies at once obtained similar injunctions. These injunctions prevented the revision of the tariffs of six leading roads, and the commissioners did not deem it ad- Visable to revise those of other rival roads under the circumstances. In their second annual report, dated December 1, 1884, they state that they received numerous complaints of excessive charges, over- charges, and unjust discriminations by the railroads, but that the com- plainants almost invariably declined to reduce them to writing, saying, in substance, “that they cannot afford to incur the hostility of the roads.” Some of the complaints were adjusted by the roads, and some valuable concessions to shippers were secured by the commissioners. - In relation to the construction of new railroads, the commissioners say: It has been said without proof or precedent that a railroad commission will pre- vent the building of new roads in Tennessee. Such has been the assumption in every State where this method of regulation has been adopted. And yet no instance has been adduced from the history of commissions in more than twenty States to sustain it. We know of no State that has taken a backward step on this subject, which it is more than probable they would have döne if their commissions had prevented the railroad progress of the State. Where new railroads are wanted and the business of the country will justify their building they will be built, commission or no commis- SIOI] . . - It is the opinion of all who have given the subject careful investigation that com- missions do not prevent the building of new roads. On the contrary, the small stock- holders, who are the chief and original source from which is derived the money to build new roads, who have so often been induced to part with their stock at a ruin- ous loss by the sharp practices of railroad speculators, are more inclined to invest their money where the policy of the State, through a commission, is to secure, as far as possible, stability in rates, establish friendly relations between the roads and the people, and prevent ruinous impositions upon those seeking investments, by requiring the roads to furnish the commission with sworn annual reports of their financial con- dition, and which reports are open to the inspection of the public. In support of this view, and for the information of those who apprehend paralysis to new railroad building, we give a comparative statement, taken from Poor's Railroad Manual, pub- lished in 1882 and 1883, showing the number of miles of railroad built in 1882 in seven States with commission and Seven without : With commissions. . Miles. Without commissions. Miles. Illinois --------------- ------------ s sº e = * * * * 397 || Indiana---------------------------------- 253 Iowa ------------------------------------- 850 li Colorado--------------------------------- 497 Georgia.---------------------------------. 279 || North Carolina -------------------, ------ 140 California.-------------------------------- 337 || Florida . -- - - - - --------------------------- 179 Kansas . . . . .------------------------------ 547 || Arkansas.--...--------------------------. . 491 Alabama------ ---------------------------- 102 || Louisiana------------------------------- 32 New York. ------------------------------- s 759 || Pennsylvania.--------------------...----- 102 * * * In those States where commissions have been in operation the reports show that railroad building is still in progress, the roads in a healthy condition, the people better satisfied, commerce and facilities for transportation increased; and that the countnissioners have been enabled not only to adjust many complaints and remove causes for litigation between the people and the roads, but also, acting as arbiters, to adjust differences between the corporations themselves. In retirin g from office the commissioners suggested the amendment of the law to meet Judge Baxter's objections. S. Rep. 46—9 130 . INTERSTATE COMMERCE. Following are their conclusions on the question of fixing rates and the necessity of a commission: - - It is no longer a question as to whether this vast power shall be supervised and reg- ulated by law. The real question is how shall this be done wisely and well, so as to be just to the people and do no wrong to the roads? - * It is suggested that the commissioners should not be empowered to fix a tariff of rates absolutely binding on the roads without appeal to the courts. They should be given ample power and the means to make a full inspection of the roads and their business, and to publish the same, that the citizen may know his rights and the methods by which the roads are operated. * After careful investigation and revision, the commissioners should provide such a tariff of charges as they consider reasonable and just to the public and the roads, and the enforcement of this should be left to the courts and juries, with liberty to the roads to prove their charges reasonable and just. * -- A commission is the only practicable method yet devised for the effective regula- tion of railroads. General statutes for this purpose have been virtual failures. And perhaps no better evidence of both the utility and necessity of commissions can be given than the fact that they have been adopted in Europe, where railroads had their Origin, and by more than half of the American States, while others are now consider- ing the propriety of adopting the same method. .** - In a supplemental report the situation is explained as follows: The real and important contention between the roads and the State is made upon the words in their charters, which are as follows: “The company shall haye the ex- clusive right of transportation or conveyance of persons, goods, merchandise, and produce over the said railroad by them to be constructed: Provided, That the chârge of transportation or conveyance shall not exceed 35 cents per 100 pounds on heavy articles, and 10 cents per cubic foot on articles of measurement for every 100 miles, . and 5 cents a mile for every passenger.” The railroads contend that they have a right to charge the maximum mentioned in their charters. The State insists they never had a right to charge more than a reasonable sum for the services rendered; and that the provision or limitation iu the charter is not a repeal of the comuon law, confining the charge to a reasonable sum. It was a simple precaution to guard the people against gross extortion and high-handed robbery, which the legislature feared might be committed by these powerful corporations. § * * * * Judge Baxter, in llis opinion, did not discuss the vital question in the suit aforesaid, to wit, “the power of the legislature to regulate the charges within the maximum mentioned in the charter,” otherwise than as above shown, which opinion is plainly against the railroads on this point. The injunction granted is upon verbal omissions and technical objections, all of which can be met and rem- edied by proper amendments. (See 6 Federal Reporter, p. 426.) It appears from the statement of General George W. Gordon, one of the railroad commissioners, who caume before the committee at Memphis, that the case against the commission was not heard on its merits. A preliminary injunction restraining the board from revising the rates of Certain companies was granted, mainly because of defects in the statute and of objections to its phraseology, but the proceedings went no far- ther. The question of regulation became a party one, and at the elec. tion in November, 1884, the commissioners then in office were defeated by the candidates of the minority party, although their own party car- ried the State as to other offices and controlled the legislature, which at the next session (1885) repealed the law creating the commission, leaving in force only a general statute against discrimination. General Gordon was very positive in the belief that the popular sentiment in Tennessee was overwhelmingly in favor of railroad regulation, with the INTERSTATE COMMERCE. 131 exception of certain sections still greatly in need of railroads, and through which railroads had been projected, where the people feared that regulation might interfere with the construction of new roads. The considerations which influenced the abolition of the commission, and which made it possible in the peculiar situation of affairs at the time, are indicated in the following extracts from his testimony: - The CHAIRMAN. What were the causes which led to the repeal of the railroad com- mission law in your State? - Mr. GoRDON. One of the causes was that railroad regulation was made a party ques- tion in Öur last State canvass, and another was the bitter opposition of the railroad corporations to any railroad commission law. The desperate efforts of the companies, through their officials, employés, agents, attorneys, newspaper Organs, and in the legislature, were a powerful factor in bringing about the repeal of the law. There was also some opposition to the law in those localities where new railroads were wanted. But, uninfluenced by the causes I have mentioned, my judgment is that the overwhelming sentiment of the people is in favor of railroad regulation by a commis- sion (Testimony, p. 1390). It appears, therefore, that in Tennessee, the only State in which the commission system of regulation has been abandoned in recent years, the abolition of the Commission was due to the opposition of the rail. roads, which were enabled to bring about this result by an unusual com- bination of circumstances. - * * - º TEXAS. No uniform method of railroad regulation has been adopted by the State of Texas, and reliance has thus far been had upon such statutory enactments as circumstances seemed to demand. The general railroad incorporation act of August 15, 1876, prohibited the consolidation of parallel or competing roads, or consolidations with companies organ- ized under the laws of other States or the United States, and the legisla. ture reserved the right to regulate rates. The act of April 19, 1879, limits freight charges to 50 cents per hundred pounds per hundred miles, requires the charges on each class and quantity of freight to be uni- form, and makes it prima facie evidence of unjust discrimination for any company to charge One person a greater compensation than another for the transportation of freight of the same class in equal or greater quan- tities for the same or a less distance, but for distances of fifty miles or less a charge not exceeding 30 cents per hundred may be made. The act of July 9, 1879, authorized the attorney-general or district or county attorneys to institute proceedings against any railroad com- plained of as charging an extortionate rate or refusing to draw the cars of another company. By the act of April 14, 1882, passenger fares, which had been previously limited to five cents per mile, were reduced to three cents per mile. Another act passed at the same session re- pealed all laws granting lands to any Corporation for the construction of railroads, and another prohibited railroads from charging a greater sum than the amount of charges specified in the bill of lading, and re- quired delivery on payment of such charges. An act approved March 28, 1885, requires the railroads to maintain public offices in the State where transfers of stock can be made and claims settled, and requires annual reports to be made to the Comptroller or governor. An act approved March 27, 1885, sets out that, on account of the stringency of the money market, many railroad companies have failed or will fail to comply with the statutes requiring the completion of a certain number of miles of road annually, under penalty of forfeiture of 132 . INTERSTATE COMMERCE. , , their corporate existence, and that no good can result t;O the State from the forfeiture of their charters, wherefore all limitations as to time con- tained in the statutes have been suspended until January 1, 1887. UTAH TERRITORY. There is no legislation for the regulation of railroad tariffs in force in |Utah Territory, the only laws on the subject being those in relation to organization, construction, &c., and the rates to be charged are not limited by statute. •. -- - - - .” - VERMONT. The railroad commission of Vermont dates back to 1855, when an act was passed providing for the election biennially by the legislature of a railroad commissioner, whose salary was assessed upon the rail- roads. This system prevailed until 1884, when the law was so amended as to provide for the appointment of the commissioner by the governor for a term of two years, and the payment of his salary by the State. It is the duty of the commissioner to inquire into and report biennially to the governor any neglect or infringement of the laws for the regulation of railroads, the physical condition of each road, its financial manage. ment, and what further legal provisions should be adopted. He is au. thorized to establish a uniform system of accounts and prescribe the returns-to be made by the railroads. He may examine their books and papers and witnesses under oath. - The general incorporation law authorizes railroads to establish tolls, but provides that the Supreme court may, on the application of three freeholders, alter or reduce such tolls, establish the rates to be charged, and give judgment to the applicants for their costs and damages. The act prohibited a greater charge for a short distance than for a longer distance within the State. A short-haul law was approved November 29, 1882, which requires the railroads to give equal and reasonable terms to all and equal facili- ties of interchange to connecting roads. - **.. - * * The second Section reads as follows: 2. Two or more corporations, whose roads connect, shall not charge or receive for the transportation of freight to any station on the road of either a greater sum than is at the time charged or received for the transportation of the like class and quan- tity of freight from the same original point of departure to a station at a greater dis- tance on the road of either of them in the same direction. - In the construction of this section the sum charged or received for the transportation of freight shall include all terminal charges, pro- vided that this section shall not be construed as affecting the right of any railroad company to establish such rates on freights shipped over their line in car-load lots from points outside the State to points beyond the State as may seem for their best interests. - It is also provided that the act shall not apply to excursion, mileage, and Commutation passenger tickets. * -* VIRGINIA. The constitution of Virginia (1867) provides that the credit of the State shall not be granted to or in aid of any corporation, that the State Shall not subscribe to or become interested in the stock of any corpo- ration, and that it shall not be a party to or become interested in any INTERSTATE COMMMERCE. - 133 work of internal improvement or engage in carrying on any such work, otherwise than in the expenditure of grants to the State of land Or Other property. - -- By an act approved March 31, 1877, the general assembly provided for the election by that body of a railroad commissioner, to hold office for two years, and be paid a salary of $3,000. The next legislature fixed the salary at $2,000. The salary of the commissioner and his assist- ants, and the expenses of the office, are assessed upon the railroads in proportion to their gross income. The Commissioner is given general supervision of all steam railroads in the State, and it is his duty to “ex- amine the same, and keep himself informed as to their physical condi- tion, and the manner in which they are operated, with reference to the security and accommodation of the public, and the compliance of the several corporations with the provisions of their charters, and the laws of the Commonwealth.” The next sections provide that— • , 3. Whenever, in the judgment of the railroad commissioner, it shall appear that any such corporation has violated any laws, or neglected in any respect or particu- lar to comply with the terms of its charter or with the provisions of any of the laws of the Commonwealth, especially in regard to the connections with other railroads, the rates of toll, and the time schedule, he shall give notice thereof, in writing, to such corporation; and if the violation or neglect is continued after such notice, the commissioner shall make report of the facts to the board of public works; and such board shall, if upon inquiry into such facts it deems it proper or necessary, direct the said commissioner to make application to a circuit court, or a judge thereof in vaca- tion, for an injunction to restrain the company complained of from further continu- ing to violate the law or the terms of its charter. + - - 4. Whenever, in the judgment of the railroad commissioner, it shall appear that -- repairs are necessary, upon any such railroad, or that any addition to the rolling stock, or any enlargement of or improvement in the stations or station-houses, or any modification in the rates of fare for transporting freight or passengers, or any change in the mode of operating the road and conducting its business, is reas onable and ex- pedient in order to promote the security, convenience, and accommodation of the pub- lic, he shall give information in writing to the corporation of the improvements and chain ges which he adjudges to be proper; and if the said company shall fail, within sixty days, to adopt the requirements of said commissioner, he shall make report thereof to the board of public works, for such action as it may deem expedient. The commissioner is required to investigate the causes of accidents : resulting in the loss of life, and also to examine the physical condition and operation of any railroad upon the complaint and application of the mayor and aldermen or Council of any city or town, or trustees of any town, or the judge of any county court. If he shall adjudge the complaint well founded, he shall inform the corporation of his adjudi- cation, and should the company fail within sixty days to remove the cause of complaint he shall make report to the board of public works, for such action as it may deem expedient. The railroads are required to furnish the commissioner with any information required by him upon request, and to make annual reports. The commissioner is required to make an annual report to the legislature of his doings, including such statements, facts, and explanations as will disclose the actual working of the system of railroad transportation in its bearing upon the busi- ness and prosperity of the commonwealth, with such suggestions as to the general railroad policy of the commonwealth, or as to the condition or conduct of any railroad Corporation, as may seem to him appropriate. An act approved March 28, 1879, requires the commissioner to cause to be posted at each depot such portions of the statutes regulating the .” 134 - INTERSTATE COMMERCE. tolls of railroad corporations and otherwise prescribing their duties as he may deem proper, with such explanations and suggestions as will inform the public of their rights under such statutes, and will best en- able any person who may complain of any violation of such statutes to have such violation properly inquired into and punished. An act approved April 2, 1879, requires steamboat, canal, and rail- . road companies doing the business of a common carrier within the State to furnish the owner or consignee of any freight shipped or trans- ported over its line, at the time of its delivery, a bill plainly stating the class to which such freight belongs, the weight thereof, and the rate charged for transporting the same. The penalty for failure or refusal to deliver such bill when the freight is delivered is three times the amount of the freight charges, to be recovered before a justice of the peace or county court, and the company loses its right to collect such charges. Officers or agents receiving freight charges without furnish- ing such bill shall be deemed guilty of a misdemeanor and be liable to a fine not exceeding $20. * - At the session of 1883–84, the house of delegates passed a bill sub- stituting a board of railroad commissioners for the present commis- sioner, and changing the duties and powers of the commission, but this measure failed of passage in the Senate for want of a constitutional majority, although receiving 17 votes to 10 against it. Horace G. Mof. fett was elected railroad commissioner at this session, succeeding George A. Martin. - The present commissioner informs the committee that the working of the law in Virginia has not been entirely satisfactory, because the powers of the commissioner are limited, and adds: wº The railroad commissioner has only supervisory control over the railroads. None of his decisions are final, and in case of differences between himself and the railroads that cannot be adjusted he reports to the board of public works, and that in turn to the legislature. The question of enlarging the powers of the commissioner was discussed by the last legislature, but nothing was done. The same question will likely come before the present legislature, now in session, as a change of some kind in the present law seems to be demanded by the people. - - WASEIINGTON TERRITORY. In Washington Territory an act to prevent extortion and unjust dis. crimination was passed in 1873, but this was repealed by an act ap- proved October 18, 1881. WEST WIRGINIA. The constitution of West Virginia (1872) provides that railroad cor- porations doing business in the State shall make annual reports to the auditor of public accounts or some officer to be designated by law. Railroads are declared to be public highways and free to all persons for the transportation of their persons and property thereon, under such regulations as shall be prescribed by law; and the legislature is required to pass laws, applicable to all railroad corporations in the State, estab- lishing reasonable maximum rates of charges for the transportation of passengers and freights, and providing for the correction of abuses, the prevention of unjust discriminations between through and local or way freight and passenger tariffs, and for the protection of the just rights of the public. The consolidation of parallel or competing roads, or the obtaining control of such road by another, without the permission of the legislature, is prohibited. The incorporation act enacted in 1873 prohibited the incorporation of any company for the purpose of connecting two other roads, and thereby INTERSTATE COMMERCE. 185 abandoning as through routes any city or town which is the terminus of either or both of said railroads, without the consent of such city or town. The act declares void all stock dividends or other fictitious in- crease of capital stock or indebtedness, and is very complete in the usual geueral provisions. - .. ~ - In accordance with the requirement of the Constitution an act was passed December 27, 1873, to establish maximum rates and to prevent unjust discriminations and extortion. This statute classified the roads according to their gross annual earnings per mile on the following basis: Class A included railroads earning $10,000 or more per mile an- nually; Class B, roads earning from $8,000 to $10,000; Class C, from $4,000 to $8,000, and Class D, less than $4,000, with a similar division for narrow-gauge roads based on earnings from $5,000 down. A differ- ent scale of passenger rates for each class was established, the act specifying the rate to be charged per mile for any distance less than 50 miles, for distances between 50 and 100 miles, and so on. An elaborate classification of freights was also incorporated into the act, specifying the articles belonging to six different classes and a number of special rates. For each of these classes the rate to be charged per ton per mile for distances not exceeding 50 miles, for distances between 50 and 100 miles, and so on, were specifically established. There was a “short- haul” provision to the effect— • That such railroad corporation shall not be permitted to charge for the transporta- tion of freight and passengers, or either, a less sum from one terminus of their road to the other than from any intermediate station to either terminus thereof, nor a greater um for the transportation of freight and passengers, or either, from any intermediate station to either terminus of road, or from either terminus to an intermediate station, or from one intermediate station to another, than from any intermediate station to either terminus, or from either terminus to any intermediate station, or from one in- termediate station to another, where the distance is less. A railroad was made liable to forfeit its franchises for any willful violation of the act, and penalties for its violation by employés were provided. - - This statute remains in force; but that it has not proved any more effective than the similar inflexible enactments made in several Western States about the same time, but since repealed, is indicated by the statement of Governor E. W. Wilson, of West Virginia, who writes to the committee, under date of November 21, 1885, that, “Our railroad act of 1873 amounts to nothing in the way of protection against discrimina- tion, and is not worth the time it would take to write out its features.” In 1881 the house of delegates appointed a committee to investigate railroad charges, the subject of discriminations, and the measures neces- sary to carry into effect the provisions of the constitution. The com- mittee reported the testimony taken, which indicated the existence of discriminations similar to those complained of in other States by wit- messes who came before this committee, but made no formal report, and no change in the laws followed. - - - . WISCONSIN. It appears from the statement of Commissioner Haugen (Testimony, p. 1341) that— - The Wisconsin law provides in general terms against discrimination and extor- tion; not by using the word “discrimination,” however. It provides that railroads shall charge one person or company no more than any other person or corporation for the same service. And then afterwards it refers to the provision as “discrimination.” The commission has no absolute powers, - - 136 - INTERSTATE COMMERCE, — There is but one commissioner, appointed by the governor, and his powers are advisory. If complaint is lodged with him he is required to investigate it, and, when well founded, to report the facts to the attor- ney-general, who shall prosecute, at the expense of the State, for the benefit of the party aggrieved. When complaints are made the prac- tice is to call upon the railroads to adjust them with the shippers. Commissioner Eſaugen, who has been in office three years, states that but fifteen or twenty complaints as to shipments are received in a year; that the railroads have uniformly adjusted such complaints when notified of them, and that since the estabhishment of the present commission, in 1876, there has never been a case reported to the attorney-general. The commissioner is required to inspect the condition and manner of management of the railroads, and to examine into their financial man- agement. Provision is also made for securing returns of their receipts, earnings, and business. The revenue of the State is derived princi- pally from railroads in the shape of license fees based upon their earn- ‘ings, licenses being issued by the State treasurer. In 1874, during the “Granger” agitation, the Wisconsin legislature enacted very stringeut laws for the regulation of railroads, and estab- lished a commission of three members. Within two years, however, the usual reaction came, the laws were amended, and the commission reduced to one member. As it now stands, the law fixes maximum rates on two railroads in the State. It applies to these two by name, the new roads being built at the time having been exempted from the general legislation. The commissioner stated in his examination that discrimi- nations against places were practiced by the railroads of Wisconsin, but that the construction that has been given the law from the start has been that it does not apply to places. In his report for 1884 the com-- missioner says upon this subject : - Very few complaints as to clarges would be heard if shippers were all treated alike, and no discrimination made between places. The fixing of rates cannot at present be said to rest on any fixed principle, unless it be to charge that rate which will pro- duce the most revenue for the time being. Discriminating in favor of one locality at the expense of another creates more dissatisfaction than any other one thing con- nected with railroad management. It is not excessive rates that shippers complain of as much as discrimination. “It does not make. So much difference to shippers what the absolute rates are; the comparative rates are of more importance.” To protect the small interests—and these are always in the majority—the rates per car- load should be the same to those shipping one car-load as to those shipping a thou. Sand. - - * * The present method of giving special rates to large shippers inevitably tends to drive the small manufacturer, the Small merchant, the small business man of every description out and to throw business into the hands of the few. Make the car-load the unit in freight values, and give all an equal éhance. The superior advantage of large capital is all that those doing a small business can contend against, and the difference in rates may at times exceed their profits. - It is difficult to say what are and what are not reasonable rates. Chicago is to-day favored at the expense of cities to the east, and all territory tributary to Chicago, embracing Wisconsin, has to some extent the benefit of the low ra!e from Chicago to the seaboard. But in many cases this is more than overcome by high local rates. As railroads are originally built for the local traffic, they might be expected to nurse and favor it. On the contrary, they carry competitive business at little or no profit, while local rates are expected to make up losses on through traffic, interest on bonds , and dividends. This drives business and manufactures away from the local stations to competing points, where the traffic, formerly local and enjoyed by one company at INTERSTATE COMMERCE. 137 & remunerative rates, must be divided between several competitors at less paying or non-paying rates. This would indeed seem short-sighted policy, and it is difficult to ascribe any other reason than the love of conquest. Would not concessions in local rates tend to both harmony and prosperity ? * * * The whole question of rates is so complicated, so many and various influences surrounding it, that any legislation for its control should be most carefully considered. In my opinion no more should be charged for the shorter than the longer haul over the same line, without special, cause showing necessity therefor. But no State legislation on the subject would meet all requirements, without Federal legislation of a similar character to support it. The unnecessary expense involved in building needless parallel lines does not tend to lessen the charge of transportation, and good sense would seem to dictate that where one road can well do the work required, no parallel line be permitted to be built. It takes less income to pay interest and dividends on one line than on two; and pro- tecting the original investment would strengthen the arguments for lower rates. WYOMING . TERRITORY. Up to the present time there appears to have been no legislation re- stricting the charges of railroad companies enacted in Wyoming Terri- tory. - - THE COMPARATIVE volumE OF STATE AND INTERSTATE TRAFFIC–RETURNS FROM LEADING RAILROADS SELOW- ING T LIEIR BUSINESS TEIUS DIVIDED. The committee deemed it important to ascertain, if possible, how large a portion of the total traffic upon the railroads of the United States was interstate business and under the control of Congress. It was known that the railroads had not previously been called upon to furnish this information, and that their records were not kept in such a way as to supply it readily. Inasmuch, however, as there were absolutely no sta- tistics upon which to base even an estimate of the relative proportions of State and interstate business, because the returns of “through '' and “local " traffic afforded no criterion by which these proportions could S be estimated, it was decided to at least make an effort to obtain the information. Letters were accordingly written to the leading interstate roads asking for a statement of their business, divided so as to show the proportions of freight and passenger traffic which were State and inter- state, both as to volume of business and earnings, or for the best esti- mate that could be made if exact figures could not be given. - While no returns have been received from some companies, most of them manifested a desire to comply with the request of the committee as far as practicable, and, as the statements here with submitted show, a number of the companies forwarded returns which it required weeks of labor to prepare and which involved considerable expense in their com- pilation. •. - - - + w From these returns the percentages desired have been figured and are given in the table which follows. While they are not sufficiently com- plete to cover the railroad business of the country, they are of value as indicating the extent of the interstate traffic upon each road, considered by itself, and afford an idea, at least, of the importance of the interstate business of the United States, 138 x- INTERSTATE COMMERCE. Ereight. Passengers. º Interstate. State. Interstate. State. Name of railroad. gº º g g d5 d5 d d Q d5 § | 3 # É | # | 3 | # à | # # g KD º: QC) § KD § Q ſº P- R. P- dº P- Up P- G Q O q) cº CD ck; go H p3 H £d P+ p3 P+ £d Atlantic and Pacific------------------------------... 79 87 21 13 65 88 35 12 Boston and Albany. ----- -------------------- * = * * * * * | * * * * * * 54 |------ 46 l.----- 35 ------ 65 Boston and Providence----------------------------. 75 80 25 15 18 60 82 40 Burlington, Cedar Rapids and Northern. -- - - - - - - -. 74 73 26 27 24 || 51 76 49 Central Railroad of Georgia ----------------------- 53 48 47 52 ||-----. 16 ||-----. 84 Chesapeake and Ohio. ------------- - - - - - - - - - - - - - - - - 83 84 17 16 14 55 86 45 Elizabethtown, Lexington and Big Sandy.-----| 72 56 28. || 44 35 58 || 65 42 ICentucky Central -------------- - - - - - - - - - - - - - - - 35 58 65 42 65 43 || 35 47 Chicago and Alton. -------------------------------. 30 || 63 70 37 13 40 87 60 Chicago and Atlantic -----------------------------. 92 94 8 6 48 86 52 14 Chicago, Burlington and Quincy. -----------------. 68 77 32 23 17 43 83 57 Chicago and Eastern Illinois.----- • - - - - - - - - - - - - - - - - I - - - - - - 66 1. - - - - - 34 | . . . . . . 40 ||------ 60 Chicago, Milwaukee and Saint Paul”... . . . . . . . . . . . . 66 66 34 34 33 50 67 50 Chicago and Northwestern” . --- - - - - - - - - - - - - - - - - - - - I - - - - - - 60 l.-----|------|------ 60 l------|------ Chicago, Rock Island and Pacific. -- - - - - - - - - - - - - - - - 68 77 32 23 7 55 93 45 Cincinnati, Indian:, polis, Saint Louis and Chicago. , 90 83 10 17 19 47 81 53 Cincinnati Southern (Cincinnati to New Orleans) - - 82 90 | . ].8 10 37 70 63 30 Cleveland, Columbus, Cincinnati and Indianapolis. 58 61 42 39 12 32 88 68 Dayton and Union. -----------------. - - - - - - - - - - 55 39 45 61 5 9 95 91 Indianapolis and Saint Louis.----------------- 78 82 22 18 20 s 52 80 48 Cincinnati and Springfield.-------------------. 40 53 60 47 4 12 96 88 Delaware and Hudson. --- - - - - - - - - * * * * * * * * * * * * * * * * * 26 19 74 81 4 16 96 || | 84 Denver and Rio Grande. --------------------------. 20 23 80 77 15 26 85 74 I) enver and Rio Grande Western.----------------- 38 |- - - - - - 62 | . . . . . . 85 |------ 15 ------ Fitchburg Railroad. --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - 64 55 36 45 3 || 19 97. 81 Illinois Central (whole system). ------------------- 46 61 54 39 8 39 2 61 JKansas City, Fort Scott and Gulf. -- - - - - - -...------. 82 76 18 24 37 69 63 31 Kansas City, Springfield and Memphis ------...- 70 77 30 23 33 65 67 35 Lake Erie and Western. --- - - - - - - - ---------------. 46 35 54 65 7 24. 93 76 Lake Shore and Michigan Southern. -----. . . . . . . . . 89 |s. 90 11 10 75 85 25 15 JLouisville and Nashville” ... - - -------------------- 60 50 40 50 ------|------|------|------ Missouri Pacific.---------------------------------. 36 60 64 40 7 34 93 66 Mobile and Ohio ---------------------------------- 79 89 21 11 33 47 67 53 New York, Chicago and Saint Louis. ... -- - - - - - - - - - 92 96 8 4 I3 47 87 53 New York and New England". --------...----. -----|--|--|--|-----. 80 l.-----|------|------|------|------ Northern Pacific --------------------------------- 68 i.-- - - - 32 ------ 81 |------ 19 |------ Old Colony system -------------------------------. 11 26 89 74 6 27 94 73 Passumpsic Railroad” - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 70 60 80 l 40 l.-----|------|------|------ Pennsylvania Company (lines east of Pittsburgh. - and Erie) . . . . .----- ------------------- * * * * * * 57 64 43 36 18 47 82 53 Savannah, Florida and Western -...--. . . . . . . . . .----. 42 36 58 64 23 54 || 77 46 Charleston and Savannah - - - - - - - - - - - - - - - - - - - -. 75 55 25 45 32 67 68 33 Shenandoah Valley -------------------------------. 25 43 75 57 26 56 74. 44 Southern Pacific system -----------...-------------. 25 53 75 47 2 49 98 51 Toledo, Cincinnati and Saint Louis. ---...- ... --.....l.----. 65 |. ----. 35 | . ----- 7 ------ 93 Wabash, Saintiouis and facific ................I. 46 || 59 || 54 || 41 || 12 | 40 | 88 || 60 *Approximate. See statement following. TELE RETURNS IN DETAIL. º º g * * , , Herewith follow the detailed returns in full, as received from road: - ATCHISON, TOPEKA AND SANTA Fé RAILROAD. each J. F. Goddard, assistant general manager of the Atchison, Topeka and Santa Fé Railroad Company, in reply to the request of the com- mittee, said: Our system, extendin g as it does through numerous States and Territories, is oper- ated as a whole; and our ačcounts have not been kept by States, or with a view of showing business in that manner, simply for the reason that it would entail a very INTERSTATE COMMERCE. i89 - - | heavy additional expense to our already numerous accounts. I may add that the subject of changing our present system of accounts is under consideration. - The fact is that we have nothing to base the information upon which you desire, which fact I much regret. I hope that another season we may be in position to give you at least an estimate of the business, divided as you wish. - ATLANTIC AND PACIFIC RAILROAD. D. L. Gallup, auditor of the Atlantic and Pacific Railroad Company, Writes: - In compliance with your request, I take pleasure in inclosing here with statement for the first six months of 1885, showing volume and percentages of our interstate and within State traffic for such months, also the revenue per cent, all of which will, I trust, be sufficient for the purposes of your committee: - sº Revenue. Freight. Passengers. | Revenue. Toms, .ſ’e)' cemt. P90° cent. Number. | Per cent, Per cent. Interstate --- - - - - - - - - - - - - - - 56, 912.86 79. 01 86. 51 9,755 65. 1] 87.61 Within State . . . . . . . . . ------ 15, 121. 18 20. 99 13. 49 5, 228 34.89 12. 39 - 72, 0.34.04 100. | 00 14, 983 | 100 | 100 * - BOSTON AND ALBANY RAILROAD. W. E. Barnes, general manager of the Boston and Albany Railroad Company, forwarded th ber 30, 1885: e following estimate for the year ending Septem- IPassengers. Freight. State commerce Interstate commerce & * * s = * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * s = s. as * * s º is sº * * * * * * * * * * * * * * * * * * * * g º an º an e º e º sº * * * * * * * * * * * * * * * * $1,988,777 71 1,082, 485 43 $1,715, 108 00 2,050, 820 74 3,071,263 14 3,765, 928 74 Yes w BoSTON AND MAINE RAILROAD. Wm. J. Hobbs, auditor of the Boston and Maine Railroad, writes: it would be difficult to give a correct answer to the inquiry of the committee, but he estimates that the uumber of passengers carried to other States would be, say, 5 to 10 per cent., and the tons of freight from 10 to 15 per cent. The business of the road is largely in Massachusetts. - - * BOSTON AND PROVIDENCE RAILROAD. A. A. Folsom, superintendent of the Boston and Providence Railroad Corporation, stated that the proportion of the total freight and passen- ger traffic of that road during the year ending September 30, 1884, which was interstate was: - Passengers: Number of passengers, 18 per cent. ; income, 60 per cent. Freight: Number of tons, 75 per cent.; income, 85 per cent. BURLINGTON, CEDAR RAPIDS AND NORTHERN RAILWAY. J. C. Broeksmit, auditor of the Burlington, Cedar Rapids and North. ern Railway Company, submitted the following statement: - FREIGHT TRAFFIC. - Through tonnage, from one State into or through another, 1,293,063 tops; earnings on same, $1,561,639.39. . Local tonnage, 453,325 tons; earnings on same, $586,480,54. 140 INTERSTATE commRCE. PASSENGER TRAFFIC Through passengers, from one State into or through another, 130,904; earnings on same, $343,732.99. - - # - Local passengers, 419,468; earnings on same, $329,831.61. --- CENTRAL RAILROAD OF GEORGIA. W. F. Shellman, traffic manager of the Central Railroad and Bank. ing Company of Georgia, submitted the following statement of the local and interstate traffic of the roads named, operated by that company: [Central Railroad (Savannah Division); Central Railroad (Atlanta Division); Southwestern Rail. - road; Upson County IRailroad; Savannah, Griſlin and North Alabania Railroad; Eufaula and Clayton Railroad ; Moutgomery and Eufaula Railway ; Columbus and Western Railway; Port Royal and Au- gusta Railway; Augusta and Knoxville Railroad.] - - Tons. Revenue. <> * - Local freight --------------------------------------------------------------- 580, 105 || $1,621,701 27 Interstate freight ---------------------------------------------------------. 667, 326 | 1, 525, 589 00 Local passage ------------------------------- -------------------------------|------------ - 812, 363 77 Interstate passage.---------------------------------------------------------|-----------. 152, 650 72 Total ----------------------------------------------------------------- 1, 247, 431 || 4, 112, 304 76 O CEIESAPEAKE AND OBIO RAILWAY. C. W. Smith, general manager of the Chesapeake and Ohio Railway Company, submitted the following: - The proportion of interstate traffic is about as follows, viz: For the Chesapeake and Ohio Railway : - - Freight : 83 per cent. of tonnage, or 84 per cent. of revenue. Passenger : -14 per cent. of travel, or 55 per cent. of revenue. For the Elizabethtown, Lexington and Big Sandy Railroad : I’reight: 72 per cent. of tonnage, or 56 per cent. of revenue. Passenger : 35 per cent. of travel, or 58 per cent. of revenue. For the Kentucky Central Railroad: Freight: 35 per cent. of tonnage, or 58 per cent. of revenue. Passenger : 65 per cent. of travel, or 43 per cent. of revenue. These figures are (discarding decimals) the actual results from a careful working out of one of the Jargest traffic months this year. - UHICAGO AND ALTON RAILROAD. Charles H. Chappell, general manager of the Chicago and Alton Railroad Company, in forwarding the statement furnished by his com- pany, said: This statement is based upon the closest estimate we can make, as we keep no rec- ords that slow our business thus divided. - - In this counection I would call the committee's attention to the fact that these figures, and in fact almost any statistics, are very unreliable. For instance, the busi- ness we report as interstate comprises tonnage to and from every State from the At- lantic to the Pacific. Every road over which this business passes will report this identical tonnage as interstate, thus multiplying many times the actual tonnage tha should be classed as through business. • INTERSTATE COMMERCE. - 141 / In explanation Of the statement herewith printed Mr. Chappell wrote: On the C. and A. R. R. the “tonnage” and “number of passengers carried,” inter- state in Illinois and Missouri, are the same. To illustrate: Apassenger from Chicago to Kansas City is a passenger interstate to Illinois, and the same is again interstate to Missouri. Now let the statement read as follows: Passengers. Freight. - Number. Per cent. Tong. Per cent. Illinois local--------------------------------------------- 1, 3).9, 376 68.88 2,403, 509 66, 80 Interstate -------------------------. --------------------- 248, 026 13.05 | 1,082, 544 30.08 Missouri local ------------------------------------------- 339, 184 18. 07 112, 231 03. 12 Total.------------------ º ºr ºn s is as a ºn e º sm is ºn at at tº e s sº a s = * * * * * 1, 907, 486 100. 00 3, 598, 284 || 100.00. Statement of passenger and freight earnings, number of passengers, and tom8 of freight car- ried, divided between State and interstate traffic, for the year 1884. Passenger. INumber. | Per cent. Earnings. Per cent. Illinois local ----------------------------------------- 1, 319, 376 68. 88 || $1,103, 327 55 48. 43 Illinois interstate------------------------------------ 248,926 13.05 75,249 15 20, 85 Total earnings in Illinois.--...----------...----. 1, 568, 302 81.93 1,578,576 70 || 69.28 Missourilocal.-------------------------------------. 339, 184 18. 07 254,857 31 11. 19 Missouri interstate ---------------------------------. 248, 926 13.05 444, 995 13 19, 53 Total earnings in Missouri.----...-- … 588, 110 31. 12 699, 852 44 30. 72 Grand total.---------------- * * * * * * * * * * * * * * * * * * * 1,907, 486 100.00 2, 278, 429 14 100.00 f Freight. Tonnage. Per cent. Earnings. Per cent. Illinois local.--... -------------------------- * * * ~ * = • * * 2, 403, 500 66.80 $2,042, 880 46 33. 64 Illinois interstate. --------. -----------.> - - - - - - - - - - - - | 1,082, 544 30.08 || 2, 252, 105 22 37.08 Total earnings in Illinois . . ... ---...----------. 3,486,053 96.88 4,294,985 68 || 70.72 Missouri local - - - - - - - - - - -------------------------- II, 231 Tº.12 208,084 09 3.42 Missouri interstate ------. ----------------...--------. 1,082, 544 30.08 1, 570, 604 84 25. 86 - Total carnings in Missouri.----------.......... 1, 194,775. 33.20 | 1,778,688 93 29.28 Grand total -----------------------------------. 3,558,284 in 00 6,073,674 61 100.00 CHICAGO AND ATLANTIC RAILWAY. Frederick Broughton, general manager Chicago and Atlantic Railway Company, forwarded the following statements signed by J. D. Kershaw, the auditor: • * .* Statement of volume and eawnings of passenger traffic for year 1884–85. Number. Revenue. Volumo of and revenue derived from traffic originating and ending in Ohio. . . . . 44, 247; $23,814 22 Volume of and revenue derived from traſlic originating in and passing out of Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .------------. 50, 104 157, 940 29 Völume of and rºsvenue derived from traffic originating in and ending in Indiana 54,016 21, 434 50 Voluºre of and revenue derived from ti aſic originating in and passing out of …” Indiana * * * *, * * * * * * * * * * * * * * . . . . . . . * - - - * - - - - * * * * - - - 15, 6333 21, 632 76 Yo, unro of anºl revenue derived ſ on traffic originating and cºnding in Illinois...} 11,444; 4, 450 03 Vºlume of and revenuc derived from traffic originating in and passing out of º Illinois.--------. . . . . . ^ ----------------------------------------------------- 35,485 118,600 59 Total passcnger traffic for year onding June 30, 1885 . . . . . . . -..........| 210,930% 347, 872 39 - 142 INTERSTATE commERCE. Statement of freight traffic and earnings for year 1884–85. Tonnage. Revenue. Tº of and revenue derived from freight traffic originating and ending & - in Ohio------------------------------------------------------------------. 98, 777,636 $37,385 81 Tonnage of and revenue derived from freight traffic originating in and pass- ing out of Ohio.----------------------------------------------------------- 466,765, 396 || 278,907 74 Tonnage of and revenue derived from freight traffic originating and ending in Indiana.----------------------------------- - - - - - - - - - - - - - - - - - - - - * - - - - - - - 37, 178,387 14, 144 56 Tonnage of and revenue derived from freight traffic originating in and pass- ing out of Indiana------------------------------------------------...----- 213,677, 316 96, 619 96 Tonnage of and revenue derived from freight traffic originating and ending in Illinois. ------------------------------ .* - - - - - - - - - - - * * * * * * * * * * * * * * * * * 3,886, 849 1,667 03 Tonpage of and revenue derived from freight traffic originating in and pass- - º ing out of Illinois------.... ---... - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 981, 406, 253 499,020 91 Total tonnage and revenue for year ending June 30, 1885. -----------. 1,801, 691,837 927, 746 01 CHICAGO, BURLINGTON AND QUINCY RAILROAD. Thomas J. Potter, first vice-president of the Chicago, Burlington and Quincy Railroad Company, submitted the following statement showing the local and interstate business handled by that company during the year 1884: and Quincy Railroad. Statement of local and interstate business for 1884 upon lines of Chicago, Burlington Passenger business. Freight business. Interstate. Local. Interstate. Local, Illinois : Illinois - Fares ------------ 241, 129 | 2,499,636% Tons ------------ 1, 723,810 1,761, 554 Per cent...... 8. 8 | 91. 2 Per cent..... 49, 4 50. 6 Amount. ------...-- $657, 394.40 ($1,435,406. 31 Amount -------- $4,775, 526.21 $2,553, 373.86 Per cent...... 31.4 68. 6 Per cent..... 65. 1 34.9 Iowa : Iowa: Fares ------------ 298,358% 907, 2473 Tons ------------ 1, 546,420 341, 558 Per cent.----. 23. 6 76. 4 Per cent..... 81, 9 18, 1 Amount---------- $657,430.77 || $725,913. 30 Amount. -------. $4,194, 313.81 $685,852.66 e Per cent...... 47. 6 52.4 Per cent----. 85.9 14.1 Nebraska: Nebraska: Tares ------------ 229,017 640, 170 Tons ------------ 1, 578. 539 291,881 Per cent.----. 26.2 73. 8 Per cent..... 84.4 15. 6 Amount---------. $696,700.05 || $883,349.77 Amount -------- $3,888,289.36 $701, 424.67 Per cent.----- 44. 1 55.9 Per cent... --. 84. 7 15. 3 Colorado: Colorado: Fares ------------ 20,019 3, 808 Tons ------------ 142,806 2,861 Per cent...... 88.4 11. 6 Per cent... --. 98.0 2, 0 Amount. --------. $155,412. 21 $9,100. 14 Amount. -------- $439,820. 30 $13,527. 57 Per cent...... 94.5 5, 5 Per cent. ---. 97. 0 3. () Ransas Ransas: Fares ------------ 48, 149 22,814 Tons -----------. 72, 948 2,995 Per cent...... 67. 8 82.2 Per cent..... 96.2 3. 8 Amount---------- $39,000. 89 $14,331.57 mount. -------- $54,444.38 $7,842.91 Per cent.----. 73. 1 26.9 Per cent..... 87. 4 12. 6 CEIICAGO AND EASTERN ILLINOIS RAILROAD. O. S. Lyford, general superintendent of the Chicago and Eastern Illi- nois Railroad Company, gives “the approximate proportion of inter- state business, both freight and passenger, for the last fiscal year,” as folllows: * Total. Interstate. Freight earnings ------------------------------------------------------. $1,213, 148 28 $798, 223 00 * * * * is tº s ºf sº º tº gº e º º ºs º ºs e º is sº ºn s sº º use ºs me tº sº sº sº tº º sº º # * * * * * * * * * * * * * * * 113,828 00 Passenger earnings 282,364 54 INTERSTATE COMMERCE. 143 CHICAGO, MILWAUKEE, AND SAINT PAUL RAILWAY. Joseph F. Tucker, assistant general manager of the Chicago, Milwau- kee and Saint Paul Railway, writes as follows: Our statistics are not, and it is not easy to imagine how they could be, kept so that a correct reply could be given to your inquiry. This reply must be considered, there- fore, problematical. - Should estimate two-thirds freight tonnage and earnings, one-third number of pas- sengers, and one-half passenger earnings might fairly be placed under the heading of “interstate.” CHICAGO AND NORTHWESTERN RAILROAD. The percentages given in the table for this company are simply 3,10. approximation based upon the statement of Marvin Hughitt, the gen- eral manager, as follows: - We have not heretofore kept our accounts so as to be able to state what propor- . . tions of our earnings have been derived from “State’” as contra distinguished from “interstate’’ traffic; consequently it will not be possible for us to give you the infor- mation you desire. However, I would say the larger proportion of this company’s business would be affected by laws governing interstate traffic. CHICAGO, ROCK ISLAND AND PACIFIC RAILWAY. Warren G. Purdy, secretary and treasurer of the Chicago, Rock Island and Pacific Railway Company, submitted the following comparison be- tween the interstate and local business over that road : - Local. | Interstate. T’assenger traffic : JPer cent. | Per cent. Passenger carried - - - - - - - - Y- - - - - - - - - - - - - - - - - - - - - - - - - - * * * * * * * * * * * * * * * * * * * * - - - - 93. 13 (j. 87 ſevenue ------------------------------------------------------------------ 44,262 55. 38 Treight traffic : s f Tonnago carried.----------------------------------------------------------- 32. 09 67.91 Revenue-------------------------------------------------------------------- 23. 21 76. T9 By the term “local" used above, is meant business which originates and ends in the same State, and includes commutation passenger business. w CINGINNATI, INDIANAPOLIS, SAINT LOUIS AND CHICAGO RAILWAY. M. E. Ingalls, president of the Cincinnati, Indianapolis, Saint Louis and Chicago Railway Company, submitted the following statement Showing the proportion of the business of that company that Originated and ended in the same State and that passed from one State into or hrough another for the year ending with June, 1885 (estimated): 144 INTERSTATE COMMERCE. ^ Statement showing the proportion of business that originated and ended in the same State, and that passes from one State into or through another , for year ending with June, 1885 (estimaled). - FREIGEIT. Ohio. Indiana. * Weight. jº. IRevenue. Weight. §: ... Revenue. Business that origi. nated and ended in the same State. . . . 46, 163,211 | 1,860, 000 $24,273 88 || 334,697, 600 13, 280, 000 $197, 540 73 Business that passes floum one State in- * to or through an- t other -------------|------------ 20, 550, 000 || 174, 115 29 |-|----- - - - - - - - - 120, 608, 590 076, 468 70 Total. -------------------- 22, 410,000 198, 389 17 |. ---...--...--. 133,888, 590 1, 174,009 43 Illinois. Total. e Tons car- - Tons Car- Weight. ||rieſ inje. Revenue. Weight. ri. Revenue. Business that origi. - Af nated and ended in e the same State --. 63,477, 100 || 2,460,000 $34,252 45 444, 337,911 17,600,000 $256,067 06 Business that passes - from one State in- to or through an- - other -------------|------------ 15, 850, 000 136,468 32 2,440,987,799 || 157,008, 590 | 1,287, 052 31 Total ---------|------------ 18, 310,000 170,720 77 (2,885,325,710 174,608, 590 1,543,119 37 PASSENGER. Ohio. Indiana. Passengers * * - Passengers Passengers. carried 1 IRevenue. Passengers. carried 1 Revenue. mile. mile. Business that origi- nated and ended in the same State. - 28,500 2,400,000 $55, 175 00 746,923 14, 850, 000 $343, 926 43 Business that passed - from one State * into or through - another -----------|------------ 2,580,000 58, 200 00 |. ------------- 11,714, 758 251,966 92 Total ---------|------------ 4, 980, 000 || 113, 375 00 ||-------------- 26,564,758 595, 893 35 Illinois. Total. Passengers - Passengers Passengers. carried 1 Revenue. Passengers. carried 1 IRevenue. mile. mile. Business that origi- nated and ended f in the same State - 7, 500 1,250,000 $23,850 00 782, 923 18, 500,000 || $422,951 43 Business that passed - º from one State into or through e - f another ----------|-----------. 2,950, 000 62, 500 00 181,065 17, 244, 758 372, 666 92 Total ---------|------------ 4, 200, 000 86, 350 00 964, 888 | 35, 744, 758 795,618 35 *. INTERSTATE COMMERCE. 145 sº OINOINNATI AND SPRINGFIELD RAILWAY COMPANY. Statement showing the freight and passenger traffic originating and terminating in each State g and the interstate traffic for the year 1884. Freight. Passenger. Per Fer | Passen- || Per Per Tons. cent. Revenue. geºt. j cent. Revenue. ce. Ohio ------------- 503, 181 59.5 $230,449 62 46.8 || 751, 734 95.8 $329,986 82 87. 9 Interstate. ------ 342, 501 40. 5 261,964 10 53.2 32,957 4.2 45, 424 81 12. 1 Total ------ 845, 682 100.0 492,413 72 100.0 784,691 100.0 375,411 63 100.0 | - CINGINNATI souTHERN RAILWAY. President Frank S. Bond furnished the following statements cover. ing the business of his lines between Cincinnati and New Orleans, and wrote as follows concerning them : It would give me great pleasure to furnish the information asked for, but it would take a very long time to do this properly, and it would necessarily be at a very consid- -erable expense to our companies, as it would require the services of additional clerks, our regular force not having the time to devote to the work. But for the sake of furnishing you early information Ihave had our people make up a statement-showing separately the State and interstate-traffic of three of our lines, i.e., the Cincinnati, New Orleans and Texas Pacific Railway (Cincinnati Southern), from Cincinnati, Ohio, to Chattanooga, Tenn., 336 miles, extending into or through three States; the Alabama Great. Southern, from Chattanooga, Tenn., to Meridian, Miss., 295 miles, extending into or through four States; and the New Orleans and North- eastern Railroad, from Meridian, Miss., to New Orleans, La., 196 miles, extending into or through two States. - This statement is made to cover the months of October, November, and December, 1884, which are three full average months, and they show as follows: [Cincinnati, New Orleans and Texas Pacific Railway (Cincinnati Southern), from Cincinnati, Ohio, to Chattanooga, Tenn., 336 miles.] f State. Interstate. Freight traffic : g Number of tons transported ------------------...--------------------------. 71,345 178,481 Freight revenue ---------------------------------------------------------. $63,887 $431, 802 Passenger traffic: Number of passengers carried.------------------------------------------- 94, 402 55,844 Passenger revenue-------------------------------------------------------- $46,350 $120, 288 Pxpress, classed as interstate-------------------------------------------------|------------ $12, 130 Mail, classed as interstate ----------------------------------------------------|-----------. $14,169 Miscellaneous, classed as interstate ------------------------------------------|-----------. $798 Total revenue for 336 miles.-------------------------------------------------. $110,237 $579, 187 The two amounts aggregating for three months, $689,423. S. Rep. 46 10 146 s INTERSTATE COMMERCE. IFor the Alabama Great Southern Tailway, extending from Chattanooga, Tenn., to Meridian, Miss. 295 miles. Ståte. Interstate. Freight traffic: --- Numilier of tons transported ---------------------------------------------- 15,062 161,727 Freight revenue----------------------------- tº º e º º ºs ºº e º s º ºs º dº e s e º s is as a ſº tº tº sº e s sº e $23,500 $214, 534 I’assenger traſtic: & * Number of passengers carried..................... '• - - - - - - - - - * * * * * * * * * * * * * 38, 766 20,044 T’assenger revenue----------------------------------------* * * * * * * * * * * * * * * * e $28, 670 $52,709 Txpress, classed as interstato ---...------------------------. -----------------|------------ $1,229 Mail, classed as interstato ---------------------------------------------------|----------- $7.944 Miscellancous, classed as interstate -------------------------...----------------|------- ----- $158 Total revenue ſor 295 miles - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $52,188 $300, 874 The two amounts aggregating for three months, $362,062. [For the New Orleans and Northeastern Tailroad, extending from Meridian, Miss., to New Orleans, La., 196 miles, a new road opened for through traffic that year.] State. Interstate. Freight traffic: Number of tons transported.--------------------------------------------. 4, 266 84, 935 I'reight revenue ----------------------- * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * $11,244 $100,045 Passenger traſlic : Number of passengers carried -------------------------------------------- 1ſ;, 045 11, 512 Passenger revenue-- - -------------------------------------------------. $11,852 $33. 105 ICxpress, classed as interstate ------------------------------------------------|----------- $2,311 Mail, classed as interstate ..... ----------------- • gº e º ºs e º e º ºs e º e. & & e ºs e º is gº tº º sº, º ºs s = e º º sº * * * * * * * * * * $3.306 Miscellaneous, classed as interstate ------------------------------------------|------------ $308 Total revenue for 196 miles -----------, --------------------------------------. $23,096 $238, 156 The two amounts aggregating for three months, $261,251. A recapitulation of these statements shows, on the three roads, with an aggregate mileage of 827 miles, extending from Cincinnati, Ohio, to New Orleans, La., the following: - # - State. Interstate. Total. Number of tons of freight transported was ...................... 91, 573 425, 143 516, 716 Freight revenue was...-----------------------------------------. $08, 630 $875, 381 $974, 0-0 Number of passeugers carried ....................... ------...----. 140, 2:3 87, 400 236, G13 Passenger revenue was ------...----------------------------------. $86,881 $206, 193 $203,074 Express, assumed to bo all interstate -------------------...------...----...----. $18,609 || $18, 699 Mail, assumed to be all intº Tstate -------------...----------------|------------ $–5, 479 $25,479 Miscellaneous, assumed to be all interstate ..................... * * | * * * * * * * * * * * * $1,454 $1,404 Total revenue ------------...--. .* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * $185, 521 $1, 127, 21G | $1, 312, 739 The figures are for three months, October, November, and December, 1884, and if multiplied by four will very accurately represent the business of the line for twelve months. I will add that the statements do not include transportation of fuel or material for use of the railway companies; only commercial business proper. They show that for 827 miles of what is practically a north and south road extend- ing from the Ohio River to the Gulf of Mexico, the gross revenue was at the rate of $6,349 per mile per annum, of which $897 per mile, or 14.13 per cent., was from domes- tic trade or traffic originating in one. State and confined within the territoral liumits of the same State, and $5,452 per mile, or 5.87 per cent., was from interstate traffic that originated in one State and was transported into or through one or more other States. , Nº These figures would seem to indicate the need of a proper law to be passed by Con- gress for the regulation and for the protection, while in transit, of this large volume of interstate traffic that State legislation cannot be made to cover, as in Congress INTERSTATE COMMERCE. ^- 147 alone is vested the power under the Constitution “to regulate commerce with foreign nations and among the several States.” It is evident that some legislation is required in the interest of the public and also of the railway companies, and I hope your committee will be successful in formulat- ing such a bill as will protect the rights and interests of all. CLEVELAND, CoLUMBUS, CINCINNATI AND INDIANAPOLIS RAILWAY. General J. H. Devereux, president of the Cleveland, Columbus, Cin- cinnati and Indianapolis Railway, submitted, for the information of the committee, the following statements, viz: (1) The Cleveland, Columbus, Cincinnati and Indianapolis TRailway, (2) Cincinnati and Springfield Railway, (3) Indianapolis and Saint Louis Railway, (4) Dayton and Union Itailway, showing, respectively, the freight and passenger traffic originating and terminating in each State and the interstate traffic upon each of said roads for the year 1884. In explanation of the manner in which these statements were to be prepared, General Devereux wrote: Itailroad accounts as kept do not furnish or remotely indicate the value and amount of interstate tonnage. It would occupy the entire time of sixty men for a month to examine the separate way-bills for our freight figures in the matter in seeking close results, and such proceeding would be impracticable. But we can make an approxi- mate showing, and one coming very near the actual facts, by selecting two months of the calendar year, viz, May and November, and from their operation average the year's amount of interstate traffic in tonnage and revenue. I am sure no other plan would come nearer the truth in securing the information for your committee. Our situation in this matter is neither peculiar nor exceptionable. No other railway can specifically ſurnish such information, nor in obtaining it, approximate more nearly to accuracy of result than will be found in the report to follow this. Following are the statements referred to, which were certified to by P. A. Eſewitt, the auditor: Statement ellowing the freight and passenger traffic of the Cleveland, Columbus, Cincinnati and Indianapolis IRailway Company originating and terminating in each State and the interstate traffic for the year 1884. Freight. Passenger. Ter Per | Passen- | Per IPer Tons. cent. IRevenue. Cent. gers. Cent. Revenue. cent. Ohio ------------- 010, 943 38.8 $926, 945 35 36.8 595, 102 63.4 || $482, 996 41 53.7 Indiana --------. 68,086 2.9 6.5, 400 70 2.6 234, C62 25. 0 130, 418 03 14.5 Interstate ------- 1, 368,763 58.3 1, 52G, 437 10 60. G | 108,883 11. G 2–6, 020 22 31.8 Total -----. 2, 347,792 || 100.0 2, 518,873 24 100.0 938, 647 100.0 899, 434 66 100.0 Statement showing the freight and passenger traffic of the Dayton and Union Railway Company originating and terminating in cach State and the inter-State traffic for the year 1 Freight. Passenger. w IPor Per | Passen- Pop Tºor Tons. cent." Revenue. cent. gerS. CeLt. IRCvenue. cent. & Ohio. -----------. 54.060 45.5 $11,273 52 60. 7 | 122,079 95. 1 $57,550 20 90.9 Interstate ....... G4, 754 54.5 26,722 39 39. 3 6, 290. 4. 9 5, 704 33 9. 1 Total ...... 118, 814 || 100.0 67,905 01 100.0 | 128, 360 | 100.0 G3, 344 65 100.0 148 INTERSTATE COMMERCE. Statement showing the freight and ):assenger traffic of the Indianapolis and Saint Louis . Railway Company originating and terminating in each State and the interstate traffic for the year 1884. ...” I'reight. Passenger. Per Per | Passen- || Per Pop Tons. deit. Revenue. ceni. gºs. geºt. Revenue. cent. Indiana ---------. 131,684 8, 7 $84,202 88 6.3 | 129,491 22.8 $62,278 29 13.4 linois ---------. 199,797 13. 2 152, 367 12 11.4 || 327, 704 57.7 158, 949 07 34. 2 Interstate ------. 1, 182, 132 78.1 | 1,099,983 70 82.3 110, 750 19. 5 243,536 01 52.4 Total -----. 1, 513,613 100.0 | 1,336, 553 70 100.0 567,945 100.0 464, 763 37 100, 0 DELAWARE AND HUDSON CANAL COMPANY. J. White sprong, comptroller, furnished the following statement of the through and local business for the year ending September 30, 1885, of the Northern Railroad Department of the Delaware and EIudson Canal Company: Through. Local. Total. Number. Earnings. Number. Earnings. Number. Earnings. Albany and Susquehanna Ičailroad. Number passengers carried. 21, 541 ------------ 518, 80% ||------------ 539, 745 |. ----....... Number passengers carried one mile ------------------ 2,499,821 || $41, 311 59 12, 902, 271 #329,896 91 || 15,402,092 || $371,208 50 Number tons freight car- ried. . . . . ----------- ----- 675,954 |.----------- 1,411, 109 |------------ 2,087,063 |.----...---- Number tons freight car- º ried one mile - - - - - - - - - - - -. 92,194,944 418,479 54 |115,721, 870 1,183,307 30 |207,916, 814 |1,601,786 84 Rensselaer and Saratoga, Railroad. Number passengers carried. 80, 806 |- - - - - - - - - - - - 1, 948, 403 ||------------ 2,029, 209 |.----------. Number pºssengers carried g one mile------------------ 3, 679,387 100,057 26 27,087, 148 710,486 69 30,766, 535 $810, 543 95 Number tons freight car- ried. --------------------- 280, 886 ||------------ 1,050, 827 |------------ 1, 331,713 ||------ ----- Number tons freight car- ried one mile .------------ 9,736,972 | 126,851 08) 52,241, 207 1,020,003 42 | 61,978, 179 [1, 146,854 50 New York and Canada Rail- road. Number passengers carried. 30, 322 ||------------ 121, 184 |-----------. 151, 506 |............ Number passengers carried - one mile . . . . . . . . . . . . . . . 2, 673,698 || 76, 19572 4,355,793 || 140,772 19 || 7,029,491 216,967 91 Number tons freight car- ried --------------------. 38,502 |-----------. 395, 729 |............ 434, 231 ||------------ Number tons freigh. car- Iied one mile ------...------ 4,019, 166 37,413 87 24,810,899 || 320, 142 09 || 28,830,065 || 357,555 96 Through business, between the State of New York and other States; local business, originating and terminating in State of New York. INTERSTATE COMMERCE. 149 DENVER AND RIO GRANDE RAILWAY. ~ W. S. Jackson, receiver of the Denver and Rio Grande Railway, in forwarding the statement prepared by the auditor, E. R. Murphy, said that it embodied the best information they possessed, and added: It is necessarily estimated in part, as we don’t keep a separate record and could not now pick out the information except at great expense. Indeed, it is doubtful if better results could be given than Mr. Murphy's letter contains, at any expense, since our data were not based on any expectation of such information ever being re- quired. - sº Mr. Murphy's letter herewith follows: Referring to information asked for by the Special Committee on Interstate Com- IOleITC0 : .* We do not keep up this information. i The most careful estimate I can make without considerable expense, I furnish below : Freight. w t Passengers. Tons Tons 1 mile.| * * Passengers Passengers | Gross earn- ſº e ings. gers: T 1 milē. ings. Local to Colorado. -- 806, 309 97, 337,831 |$3,098,072 04 197, 436 15,079,260 $752, 587 20 Interstate ---...----. 197,357 38, 155, 593 929, 794 81 36, 612 8, 289, 930 271, 181 77 Total --------. 1,003, 666 || 135,493, 424 || 4,027,866 85 234,048 || 23, 369, 190 1,023,768 97 The above earnings and statistics are for the period July 12, 1884, to June 30, 1885. I) ENVER, AND RIO GRANDE WESTERN RAILWAY. D. C. Dodge, manager of the Denver and Rio Grande Western Rail- way, writes as follows: From an estimate of our freight and passenger traffic, I find that of the freight business the local or “State” will average 62 per cent., and interstate 38 per cent. Of the passenger, local or “State” is 15 per cent., and interstate 85 per cent. FITCHBURG RAILROAD. John Adams, general superintendent of the Fitchburg Railroad Company, forwarded the following statement: Total passengers carried year ending September 30, 1884-------...----- 3,542,936 Estimated number to and from other States.------------------------- 123,955 Gross income from passenger business------------...------------------- $992,441 36 Estimated income from passengers to and from other States----- - - - - - 186,493 06 Total tons of freight hauled year ending September 30, 1885---------- 2, 112, 155 Estimated number of tons to and from other States ,----------------- 1, 343, 366 Gross income from freight business ---------------------------------- $1,775,247 76. Estimated income from freight to and from other States-------------- 978,823 16 150 INTERSTATE COMMERCE. ILLINOIS CENTRAL RAILROAD, J. C. Clarke, president of the Illinois Central Railroad Company, submitted the following statement, showing the company’s business in the State of Illinois, both local and interstate, and said: To give you a similar statement for the other States that this company's lines run through, viz, Iowa, Kentucky, Tennessee, Mississippi, and Louisiana, would take a great deal of time and labor, and I imagine this statement will answer all the pur- poses of the committee: Statement showing freight and passenger business in Illinois—local to the State, interstate, and total. - I'reight. Passenger. Tºrni Number of marri Tons. Darnings. passengers. Earnings. Interstate ------------------------------- * * * * * * 1,004, 300 || $1, 106,500 00 180, 567 $388,780 76 Local.-----------------------------------------, 1,920,627 2, 3.3, 103 78 3,701,002 | 1,048, 735 75 Total.----------------------------------- 2,030,027 3,519, 603 78 3,971, 659 | 1,437, 516 51 At the request of the committee, however, Mr. Clarke had the ſol- lowing statement prepared, showing approximately the entire inter- state and local business of the company, and said it was the best he could do: Statement 8howing freight and passenger business, whole line, 1884, local to the State, in- - terstate, and total. IFreight. Passenger. w 2n ºr i No. of pas- gº Tons. Larnings. Sengers. Darnings. Interstate-------------------------------- -----. 1, 827,776 $4,853, 548 84 384,476 $1,083, 101 92 Local-----------------------------------------. 2, 136,027 3,048, 403 78 || 4,463, 664 | 1,666, 837 87 Total -----------------------------------. 3,058,703 7,902,042 62 4,848, 140 2,749, 930 79 INDIANA, BLOOMINGTON AND WESTERN RAILWAY. C. E. Henderson, general manager of the Indiana, Bloomington and Western Railway, stated that it would be “almost impossible for us to give the information desired without the expenditure of a large sum of money, as We do not keep our accounts in such a way that we can read- ily give the information.” IANSAS CITY, FORT SCOTT AND GULF RAILROAD. George H. Nettleton, general manager of the Kansas City, Fort Scott and Gulf Railroad Company, submitted the following statements as to the business of that company for the year 1884: INTERSTATE COMMERCE. 151 (1) Iansas City, Fort Scott and Gulf Railroad. Freight: Interstate tonnage--...---. . . . - - - - - - - - - - - - - - - - ------------tons-- 054,859 ſ Earnings on interstate tonnage---------------------------------- $1,212, 529 59 State local tonnage----------------------------------------tons-- 210,749 Earnings on local tonnage------------ tº m e º ºs º º dº tº sº tº * * * * tº ºr º gº tº gº º is tº dº º º $386,788 65 £assenger: Number of interstate passengers carried ------------------------- 225,385 Earnings on interstate passenger business ----------------------. $392, 406 43 Number of State local passengers-------------------------------- 383,832 Earnings on State local passenger business----------------------. $175,204 55 (2) Iſam&as City, Springfield and Memphis I?ailroad. * Freight: Interstate tonnage.--------------------------------------- tons.. -313, 177 Earnings on interstate tonnage---------------------------------- $736,562 15 Stuto local tonnage ------------------------- - - - - - - - - - - - - - - tons.- 135, 138 Earnings on local tonnage--------------------------------------- $220, 578 80 Passenger: Number of interstate passengers carried -------...----...--...--. 40,067 Earnings on interstate passenger business.-----------------...--- . $137,385 06 Number of State local passengers--------------...----------------. 383,832 Earnings on State local passenger business -----...----..... ------ $73,313 99 The details of the foregoing will be found in the accompanying papers. Statement of interstate and local freight traffic of the ſamsas City, Fort Scott and Gulf Itailroad Company, and the percentage of each to the total, for the year 1884, tonnage and 7°60)0???06. -- Tons. Itevenue. - INTERSTATE, From Kansas to Missouri. ---------------------------------------------------. 371,421 $463, 541 82 From Missouri to Kansas.---------------------------------------------------. 163,085 248,277 86 From ICansas to Kansas through Missouri.----------------------------------. J4, 180 0, 685 72 From Missouri to Missouri through Kansas ----------------. ---------------. 406, 173 || 491,024 19 Total interstate------------------------------------------ * - º 'º º ſº e º ºs ºn tº º ſº gº º 954,859 1, 212, 529 59 STATE LOCAL. —I- From Kansas to Kansas ----------------------------------------------------. 150.053 285, 371 46 From Missouri to Missouri.-------------------------------------------------. 60, 606 || 101,417 10 Total local.------------------------------------------------------------. 210, 749 386,788 65 Total ------------------------------------------------------------------. 1,165,008 || 599,31824 PERCENTAGES. Tonnage. Revenue. INTEIRSTATE- Per cent. Per cent. Kansas to Missouri and Missouri to IKansas.................................. 45.86 44. 51 Ransas to Kai-sas through Missouri, and Missouri to Missouri through IXansas. 36. 06 31. 30 Total interstate, or all traffic from one State to the other and from each w State to the same State through the other --------------------------. 81.02 75. 8t STATE LOCAL. Local to IKansas and local to Missouri ------...-------...--...--...----....... 18 08 24. 10 Total.-------------------------------------------------."---------------- 100.00 100.00 152 INTERSTATE COMMERCE, Statement of interstate and local passenger traffic of the Kansas City, Fort Scott and Gulf Itailroad Company, and the percentage of each to the total, for the year 1884, passengers .* and revenue. Passengers. Revenue. DNTERSTATE. From Kansas to Missouri.--------------------------------- dº º ºs e º ºs s is sº dº sº s º is º ºs ºs º ºs 90, 750 || $113, 311 68 JProm Missouri to Kansas. ---------------------------------------------------- 98, 542 139, 142 51 From Kansas to Kansas through Missouri.------------...--------- - - - - - - - - - - - 7,479 9, 262 10 Trom Missouri to Missouri through Kansas ---...------- '• - - - - - - - - - - - - - - - - - - - - - 28, 614 || 130, 690 14 Total interstate.-------------------------------------------------------- 225, 385 392, 406 43 sº STATE LOCAL. From Kansas to Kansas --------------------------------------------- * * * * * * * * = 261, 007 | 128,570 83 From Missouri to Missouri --------------------------------------------------- 122, 825 46, 633 72 Total local------------------------- ------- tº sº tº as ºr e º 'º º sº a sp º ºp e º us is sº sº e º ºs e º 'º e º is sº 383,832 175, 204 55 Total.--...-------------------------------------------------------------. 609, 217 | 567,610 98 PERCENTAGES. Passengers. Revenue. INTERSTATE, Per cent. | Per cent. ECansas to Missouri and Missouri to Kansas --- - - - - - - - - - - - - - - - - - - - - - - - - -...--. 31. 07 44. 4 Ransas to Kansas through Missouri, and Missourito Missouri throughlKansas. 5.93 24. 65 Total interstate, or all traffic from one State to the other and from each - State to the same State through the other ............................ , 37.00 69. 13 STATE LOCAL. Local to Kansas and local to Missouri . . . . . . . . . . . . . . . . . . tº e s tº sº e º se s sº e º ºs e º as a tº se e s e 63.00 30. 87 Total -----------------------------------------------------------------. 100.00 100, 00 Statement of interstate and local freight traffic of the Kansas City, Springfield and Mem- phis Railroad Company, and the percentage of each to the total, for the year 1884, tom- mage and revenue. Tons. Revenue. INTERSTATE. From Missouri to Arkansas -------------------------------------------------- 21, 196 || $42,390 92 From Arkansas to Missouri -------------------------------------------------- 98, 602 | 162,720 14 From Arkansas to Tennessee. -------------------------------------------...-. 26, 607 42,878 12 Prom Tennessee to Arkansas. --------------------------------------------.... 11, 515 32, 190 31 From Missouri to Tennessee, through Arkansas.-----. . . . . . - - - - - - - - - - - - - - - - - - 129, 136 || 359, 920 89 From Tennessee to Missouri, through Arkansas. ----------------...-......... 26, 121 96, 461 77 Total interstate-------------------------------------------------------.. 313, 177 | 736,562 15 STATE LOCAL. From Missouri to Missouri--------------------------------...-.--~~~~ we as e s as: 127, 121 205, 248 93 From Arkansas to Arkansas. --------------...---------...-- ------------------- 8,017 15, 329 87 Total local-------------------------------------------------------------- 135,138 220,578 80 Total ------------------------------------------------------------------. 448, 315 957, 140 95 INTERSTATE COMMERCE. Statement of interstate and local phia Railroud Company, &c.—Continued. freight traffic of the Kansas City, Springfield and Mem- *. --- PERCENTAGES. Tonnage. Revenue. \ - INTERSTATE. * Per cent. | Per cent. Missouri to Arkansas and Arkansas to Missouri. ----------------------------- 26, 72 21. 43 Arkansas to Tennessee and Tennessee to Arkansas -------------------------- 8. 51 - 7.84 Missouri to Tennessee and Tennessee to Missouri, through Arkansas - - - - - - - - 34.63 47.68 Total interstate--------...----------------------------------------------- 69.86 76.95 STATE LOCAL. Local to Missouri and local to Arkansas -------------------------------------- 30. 14 23. 05 Ö 100, 00 100.00 Statement of interstate and local passenger traffic of the Kansas City, Springfield and Mem- phis Railroad Company, and the percentage of each to the total, for the year 1884, passen- gers and revenue. Passengers. Revenue. INTERSTATE. From Missouri to Arkansas ---------------------...--------------------------. 5,908 || $18,165 62 From Arkansas to Missouri -------------------------------...----------------- 6,488 20, 692 18 . From Arkansas to Tennessee. ------------------------------------------------ 8,502 12, 892 32 I'rom Tennessee to Arkansas. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 9, 155 14, 543 01 From Missouri to Tennessee through Arkansas -------------...--...------...--. 5, 121 36,200 29 From Tennessee to Missouri through Arkansas ---------...----------...--...--. 4,893 34,890 74 Total interstate--------------------------------------------------------- 40,067 || 137,385 06 STATE LOCAL. From Missourito Missouri---------------------------------------------------. 49,053 55,732 51 . From Arkansas to Arkansas.------------------------------------------------- 34,026 17, 581 48 Total local.------------------------------------------------------------ 83,079 | 73,313 99 Total.------------------------------------------------------------------. 123, 146 210, 699 05 IPERCENTAGES. Passengers. Revenue. INTERSTATE. Per cent. | Per cent. Missouri to Arkansas and Arkansas to Missouri ----------------------------. 10. 07 18. Arkansas to Tennessee and Tennessee to Arkansas-------...-------------...-. 14. 34 13.02 Missouri to Tennessee and Tennessee to Missouri, through Arkansas -------. 8. 13 33.74 Total interstate------------------------------------- g = m e º sº me is a m = e ºs e = e s sº se a 32.54 65. 20 STATE LOCAL. Local to Missouri and local to Arkansas-------------------------------------- 67. 46 34.80 - 100.00 100.00 LARE ERIE AND WESTERN RAILWAY. A. J. Castater, auditor of the Lake Erie and Western Railway, has ſurnished the following statements, which he says “are as nearly cor- 1.ect as we can make the in from the records We keep ’’: 154 INTERSTATE COMMERCE. * Statement of freight and passenger traffic forwarded over the Lake Erie and Western Rail- way from July 1, 1884, to June 30, 1885, inclusive. º, I'reight. Passengers. Tonnage forwarded. Revenue. Number. Revenue. OIIIO. Qriginating in and dostined to points in Ohio ........ Originating in and received from railway connections in Ohio, destined to other States........-----...----- Total for Ohio ------------------------- -------. INDIANA. -> Qriginating in and destined to points in Indiana. .... Originating in and received from railway connections in Indiana, destined to other States ....... --...--.. Total for Indiana ----------------...------------. ILLINOIS. Originating in and destined to points in Illinois. . . . . Origin:ting in and received from railway connections in Illinois, destined to other States ................ Total for Illinois. ------------------------------ 2 1 38,230 $270,682 69 40, 590 110, 352 42 156,277 $98,258 80 5,033 20, 002 41 3 l I 78,820 387,035 11 162,210 | 118; 261 21 07, 203 || 150,624 63 02, 871 | 84,866 47 137,219 | 84,221 83 12,406 || 25.920 06 2 10,074 24,491 to 140,625 | 110 150 89 51, 616 || 05,774 77 00, 442 | 87,716 02 87,668 51, 468 00 8,030 28, 151 54 l 51,058 | 183,400 70 gºssº 96, 298 79, 620 44 LAIKE SHORE AND MICEIIGAN - SOUTHERN RAILWAY. C. P. Leland, auditor of the Lake Shore and Michigan Southern Rail- way Company, says that “a careful estimate has been made of the freight traffic, based chiefly upon information obtained from the larger stations. For passenger traffic we have relied upon our general knowl- edge of its character, as no exact information can be obtained. The following estimate is respectfully submitted: Freight. IPassengers. Tons car- tº Number e e & 918, :- 4 gS. riod. Larnings carried. Earnings State traffic--------------------------------- * = e s = s. s. s is Interstate traffic.-----...-----------.s" - - * * * * * * * * * * * * * ~ * Per cent. | Per cent. J 1 J0 89 e 90 IPer cent. | Per cent. 25 15 75 85 “The statement herewith attached, showing the number of tons for- Warded and received at stations in the several States during the six months ending June 30, 1885, will su centage of interstate traffic : ” ggest the cause of the large per- I'reight traffic for 8ic months ending June 30, 1885. States. - - Operated. Stations. I'orwarded. IRcceived. Miles. Number Toms. Tong. New York----------------------------------- 71. 0 14 425, 187 1, 2:38, 185 Jºhnsylvania ------------------------------- 10ſ). 2 17 - 203, 123 277, )80 Qhio * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * = a, sº as 420.4 74 1, 897, 011 1, 117, 501 Indiana * * * * * * * * * * * * * * * * * * * * is e s is a sº e s as sº a s e e s a gº as 221. 1 36 161, 750 132, 623 Michigan -----------------------------------. 513. 6 82 405,868 408, 56.3 liliuois -------------------------------------, 14.0 5 500, 201 418, 201 Total ------------------------- e is º ºs e º 'º me e 1, 340. 3 228 3, G53, 140 3, 653, 140 INTERSTATE COMMERCE. 155 | - LOUISVILLE AND NASHVILLE SYSTEM. Milton H. Smith, president of the Louisville and Nashville Railroad Uompany, replied as follows to the request of the committee: This company compiles elaborate statistics of its traffic; but the information is not arranged so as to enable it to furnish the information desired by your committee. Such information can, under existing conditions, only be obtained by the employ- ment of a large clerical force, for a long period, to compile it from freight manifests and ticket reports. I estimate that it would fully occupy the time of twenty expert clerks for six months. I regret that I cannot even make an approximate estimate. I can only express the opinion that the larger portion of the traffic handled by this company is interstate. In a later letter he wrote: The transportation lines controlled by the Louisville and Nashville Railroad Com- pany are, perhaps, more largely occupied in interstate traffic than any of the other extensive systems of the country; still, I think the percentage of interstate traffic which you suggest, too great. I think it would be more nearly correct to estimate the interstate traffic as being 60 per cent., and the revenue derived therefrom 50 per cent., of the total traffic and revenue. & MICEIIGAN CENTRAL IRAILROAD. II. 13. Ledyard, president of the Michigan Central Railroad Company, ill reply to the comin,ittee's request, Wrote: I would cheerfully comply with your request if it were practicable, but we do not keep our records in such a way as to show this information ; and as to an estimate, we have nothing on which to base the same to make it of any value whatever. MISSOURI PACIFIC RAILWAY. C. G. Warner, general auditor of the Missouri Pacific Railway Com- pany, submitted the following statement of the percentages of the inter- state and State business of that system : t Interstate. Not interstate. Tonnage. . . . . . . . . . .---------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 36.2 63. 8 Freight revenue---------------------------------------------------------- 50.9 40. 1 l'ass ingers -- - - -------------------------------------------------------. 7. 4 92.6 Passenger revenue ------------------------------------------------------- 33.7 66. 3 MIOIBILE AND OEIIO TAILROAD. George Layet, auditor of the Mobile and Ohio Railroad Company, forwarded the following statement of the State and interstate business of that road for the year ending June 30, 1885: QO \C •ą INTERSTATE * COMMERCE. ^）-l- -！^ ºg 188 ggg'ſ # 188 319 189 || $6.908!!!!...||9，9%!!!$$ | Ģģ Ķ Ķ6 | 999$3$ $9| co sog391 | 668 ggg g8 | ſg 180 ſg | #0.ggſ | $3 $$$$IŤ | !!8!$$$$g3 : [ ºſſºſºſ ř3 żři ſčíř J. || 6ğžģğğ） ſjºlºj" | 83 §§ 3. || gſſ ºgļſ£, ſ gº lºſ $\. | 888$$$ || 89 ĢģĶķĻ | 99}}}}}}} | Ģģ Ķ Ķ Ķ3. || $$$$$$$$） |II]]Jºgº}S #ě žģğ ºğžģ'I | čňś żšžºšğ8 || 56 g08‘III || 979 'ZLI'8ý | īſ ģiſ, 'i6 | 881'8ř0'0' | 8ý gì? 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Ig8 ,908 '666!3 #3},908 $39, | && &#ģ Ķ Ļ ļ ȘIȘ Șļ6 ŞI || 36 §§ 93 || || $@!!9!!!!! | $3 $9'001 || !$$$$$$9 []Kyſon.quºyI 06 gț¢Â‚‘Ggſšīſ ģ6żſſ | Og giò 8. || 99ĻĢ8$ | $3 $gg2. || 89|| $88$_ | Ģģ Īģ938 || !$@ $§$ $3 | $3 $$$$$I | Ž!!!$$$$$ | QË Qģļķ| | }}}}}}}, [[]]?????!!!??}} 69 880, ‘Ł8Iöğžģīğšķīſt | ſi žēšķūſ |ğģgżſſ | Ģģ ĶĒģ[ | ſſſſſſſſſ93 | $@ $@ $ | ģ0:ggſ | ¡ ¿ $¢. | ĢģĶķĻļģ | $9 $ $ $ $ | $$$$$$$$ |II]]}&#ffffff;ſ 39 02,9 °/,9Țišžºjºšē ‘ēſ," | 38 839 '6I. | zgI ºg Lý ‘II || 0), 88Z ‘8 | 82/, '6'， 'ț' || gſ. 909 ºg | 80Ť 'g60 ‘I | 81, Ø60 '9II || 830 ‘I98 ºpg | @I ŤOI ‘LI | 016 ‘189'), [ ' ~ ~ ~ ~ ~ ~ ~ ~ Bureau IV \ \ “EIÐ|[lORIHI, 98 lýg ‘Z6g369 ºg08 #28 | €g I68 ‘ZL | 296 '6gT ‘LZ | GI ÞET ‘I9 , Z9Ī ‘62), "Lº | IO 88）, 'ZOT | 856 ‘ZEZ “Iſ í Þ8 ILL ‘L9 I | † 1.9 ‘00g ºg T | 88 @@ '88 I | 390 ‘GWI '98 || ~ ~ ~ ~ ~• • • • [gļoȚ, • • • • • • • • •• • • • •• • • • • • • • • • •- - -> • • • • • • • • • • • • • • • •• • • •• • • • • • • • • • • • • • • • • • • • • • • •- • • • • • • • • • • ! - - - - - - • • • • • • H • • • • • • • • • • • • I • • • • • • • • • • • • • • I • • • • • • • • • • • • I • • • • • • • • • • •---------SțOUIȚILI ZL Z80 '8țLř0%99ſg || 89 zgſ ‘9 | 091 380 $ | 83 88ſ & | Ȃ$ | 18 §9%. | 880ſ!?!$ | $3 $$$ || 3 || QſQ!!!!!$91, †gſ 'OI || 988 ºgºz ºff |· · · · · · · · Kºlonnuð5ī 06 138 ‘9ţ $60 || 3 | $3 $99.9Į | 99$ $${} | §§ 93ļ Ș. || $6}}. || 9ģ Ķ ĻĢſ | $$$ $ $. ( §§ 584$. | }}{{9}}}8p 8SI ‘L | †g 1, '#ff0'，- - - - - - - 9øssou uøJ, g8 168 '8țýžiš ſēžģğg | Þý ğžģğť | 8ģžſgįſõI | ¡ ¿ $8, | ſºț ș8ļģI || 39 3ģ38 | §§ ffºſſiſ | $3 $$$$I || 999384$81 | ¡ ¿9ģ Ķ Ļ ļ ģĶķĻļ Șg [] !!!!!!$$$$$$ 68 108 ‘89$işg ºg i ‘ō | g[ I9）, '&$ | †0ý ‘gig ‘I | 18 LIý ‘LI$ | g18 '86ý ‘9 | 8I ț98 %$ | †80 'ZgI'ZZ | 88 0Øý ‘LĖ | 969 ‘663 ‘LgŤ Lig '048 | 887 '819 '83 || ~ ~~~~ ~~~~letu eqeTŲ ºrTWOOT ‘90, UI@A0}}[*spumo&I*@mu@A9ſ[*Spuſtio&TºomUIº A0 YI‘spumo&I·ømū9A9}I.*Spum0&I*9mū9A9;I*Spurno，T*9mÚIÐA9ſ[ºspūno （I '(?qoT /°S!OUIȚIII*K>[0mqu0yI‘90SSQUIUIOJ,‘ſddſssſssȚINI"euſeqaſſy •• • • • • • • • • • • • •• • • • • • •- - - - - - • * - - - • I • • • • •∞ → ← → • • • •*， *） ≤ ∞ √≠ ≤ ≥ ± • • • «-» ， ** * *） {->--------|------------------------------- spotrſ III Q! Ēģ8||9ſſºſ03 333 || || 136 ‘Igſ. 96/, 'Z I ZGI '866 989 ºg | gºl, ºff9I 983,98.,- • • • • • • • • • • • i - - - - - -------|---------------- Kaeſonquoyi QI 900 88 | 9Ļſ83 !!0!! Ț | 09810 099 "I | 9LL.Į6 Qğ8:08 | 499;&Ýžģ Ķ Ķ Ļ ļ ȘIl 309 gÇI,ȘI ,---------------- ąęssoutro L 03 g!!!80% | 109 #938Z 8ț8 “I | 8II •68 Ziff39†g 66], '0}{ | #69 '&gQ 848$$I || 999||61IĢ Ī Ķ Ķ Ļ | 1999||--------------- țđđţssſss!!JI 6g gg 1, '$1$ | 8@g “L801, ZŤ$8gĮ 09$†ZZ 9LI$#I09 610 '8$ | 61,1, ‘IZ6 90ý ‘II$ | 83/, ‘63--------- ---- ---- eta gqeſ ſy ș**IYOOT , 'ontIºA9&I |'8195ū9888ā| ºnU2A9ſ lºs Iºſuºsseā| rømū9A9;I lºs 1030，9sseā| renuº Aºyſ lºs Iežuºsseā| rømū9A9;I lºs 193ųosse）.|| ºnUQAøyI |·s-103u98sgāſ , TeļoI,ºsſouſ III •· Kyſon.quoyſ‘90S89UIUIOT,"yddſſssſssſſſſ*eu）ſeqet ſy ºoſ[ſv.ų.ae--> ºvisuomuſ pup9ņoņS 6w^{m0ų8‘9881‘08 9wm º 6 wypu9 8\\u0wſ 90.190m, …of ‘nuo…fº.1 { 9ųą 9mwºº9.ł pwp ºp p0.ņyogȚontopuo214ąoȚ øſ, ſo 8.106u088 od øųą po quoquºqpis 158 INTERSTATE COMMERCE. NEW YORK, CHICAGO AND SAINT Louis RAILWAY. D. W. Caldwell, receiver of the New York, Chicago and Saint Louis Railway Company, forwarded the following statements prepared by Auditor James P. Curry, and based upon the traffic of the road for the month of April, 1885: IFreight traffic. tº , s it tº y Interstate, or that Originating and > - 's----, º * T e * whicle passes from ending §al.” * one Stato into or Total. State. ~. through another. Tons. | Earnings. | Tons. Earnings. | Tons Larnings. New York. ----------------------. 282 $267 46 33,003 || $69,844 88 34,245 $70, 112 34 Pennsylvania --------------------. 185 24() 53 2,023 1,915 58 2, 208 2, 156 11 hio -----------------------------. 8,840 9, 127 60 41, 985 | 50, 604 40 50, 825 59, 822 09 Indiana --------------------------- 1,990 1,727 G4 25, 648 || 30, 940 05 27, 638 38, 667 69 Illinois --------------------------. 730 177 18 37, 785 | 96, 427 52 38, 5.15 96, G04 70 . Total ----------------------. 12,020 | 11, 540 50 141, 404 || 255, 822 43 153,431 207, 362 93 - SUMDMARY. Tons. Percent. Earnings. I’er cent. Freight traffic originating and ending in same State........ 12,027 7.84 || $11,510 50 4.32 Freight traffic interstate -------------...--------------------- 141, 404 92.16 255, 822 43 95.68 Total.----------------------------------------------. 153,431 100.00 | 267, 362 03 || 100.00 Passenger traffic. tº º ſº tº Interstate, or that Originating and e * tº tº which passes from ending sº 88.010 one State into or Total. State & through another. Passen- * Passen- || Torn; Passen- || Torn: gers. Earnings. gers. IEarnings. gers. Earnings. New York -----------------------. 781 $201 23 463 $1,211 32 1, 244 $1,502 55 Pennsylvania.-------------------. 1, 396 397 26 300 364 14 1,795 7(31 40 hio ------------------------------ 18, 970 6, 507:32 1,436 || 3,852 84 20, 406 10, 360 16 Indiana.-------------------------. 3,400 1, 377 85 864 1, 138 42 4, 324 2, 516 27 Illinois --------------------------. 590 208 70 509 1,329 27 1, 189 1, 537 07 Total ----------------------. 25, 107 8,782 36 3,761 7, 803 99 | 28,058 16,678 35 ° SUMMARY. Passen- e 4. tº * geI'8. Per cent. Earnings. | Per cent. Passenger traffic originating and ending in same State..... 25, 197 87.01 || $8,782 36 | 52.66. Passenger traffic interstate .......... * - - - - - - - - - - - - - - - - - - - - - 3,761 12.99 7, 895 90 47. 34 Total.----------------------------------------------- 28, 958 100 16,678 35 | 100 INTERSTATE COMMERCE. 159 NEw TVOIRIX AND NEW ENGLAND IRAILROAD. Charles P. Clark, receiver of the New York and New England Rail. road, made the following reply to the request of the committee: This road is located in four States, Massachusetts, Rhode Island, Connecticut, and New York, and it is not our habit to separate the items of revenue arising in each State, and it is therefore impracticable for me to give you definite information as to what proportion of the total freight and passenger traffic is interstate, or which passes from one State into or through another, as compared with that which is State or originates or ends in the same State. Our auditor estimates that at least four- fifths of our revenue is derived from interstate commerce. NEW YORK, LAKE ERIE AND WESTERN RAILROAD. John King, president of the New York, Lake Erie and Western Rail. road Company, forwarded a letter to himself from the comptroller, S. Little, who said, under date of September 9: 2' In regard to the request of the United States Senate Committee on Interstate Com- merce, I beg to say that our records are not kept in such manner as would enable us to furnish readily the information it desires, and to attempt to compile it, even ap- proximately at this juncture, would embarrass us in the preparation of our report for the fiscal year ending the 30th instant. NoFTHERN PACIFIC RAILROAD. Robert Harris, president of the Northern Pacific Railroad Company, forwarded the following statements, “giving the desired information as far as the method of keeping the accounts will permit,” viz: A.—Freight tonnage and earnings by States, showing shipments eastward and Westward, through and local, and rate per ton per mile. . B.—Statement showing tons carried in each State, separating the purely local from shipments to, from, or passing through, to, or from other States. C.—Statement showing passengers carried, local to each State, the interstate pas- senger part, and the passenger earnings. - The method of keeping the accounts is such that it is impracticable to show the earnings from each class of business in statement B by States. Statement of passengers carried on the Northern Pacific IRailroad during the year ending June 30, 1885. - - To– From— - - | Wis- || Minne- g } so Washing. w consin. Sota. Dakota. Montana. | Idaho. i."* Oregon. Total. Wisconsin ... --...----...--. | 3, 134 1. 028 43 3 -------- 4 |-------. 4, 212 Minnesota ----------------. 957 213,022 22, 112 6, 777 31 8,320 3,038 254, 266 Dakota ---------------- - - - 18 22, 511 126,764 | 1, 238 2 486 | . . . . . . 150,929 Montana------------------|---, --- 5, 308 1,012 60, 732 441 3, 281 717 | 80, 581 Idaho. --------------------|-------. 27 ---------. 413 | 1, 238 2,046 2 3,726 Washington --------------- 5 6, 816 46 2, 118 1,964 76. 332 8, 821 96, 102 Oregon -------------------- 1 841 4 315 32 13, 238 5, 44 l 19,872 Total ---------------. 4, 115 249, 643 140,891 80, 596 | 3,708 | 103,716 | 18, 0.19 609, 688 BY STATES. Local • * * * * * * g e º º is is sº * * * * * * * * 3, 134 213,022 126,674 60,732 1,238 76 332 5,441 495, 573 To other States ............ 1,078 41, 244 24, 255 10, 849 2, 488 10. 7.70 || 14,431 || 114, 115 From other States ......... 981 36,621 23, 217 | 10,864 2, 4' 0 || 27, 384 12, 578 114, 115 Through. Castward ........]. --...--. 24 13, (.88 7, 740 || 10, 146 1, 193 |. ------. 32, 191 Through, Westward. . . . . . . . ...----- 50 18, 182 11, 890 15,855 3, 757 ... ----. 49, 734 Total ---------------- 5, 193 290,961 | 205, 416 111,075 || 32, 197 | 128,436 || 32,450 || 805, 728 160 INTERSTATE COMMERCE. Statement of passengers carried on the Northern Pacific Railroad during the year ending June 30, 1885—Continued. TRAFFIC AND MILEAGE STATISTICS.*~ Number. Mileage. Revenue. | Permile. Oents. Through, feastward----------------------------------- 5,740 10, 127, 749 || $267, 337 81 2. 64 Through, Westward-----------------------------------. 9,724 || 17, 304, 668 406,749 68 2.35 Local, eastward.--------------------------------------- 297, 887 27,428,756 | 1,020, 158 23 3. W2 Local, Westward--------------------------------------. 296, 337 30,000, 428 1, 121,494 08 3. 74 Total.-------------------------------------------- 609, 688 84,861, 601 || 2,815,739 80 3,32 * Company's classification. Wash. Statement showing tommage local to State or Territory and interstate on Northern f Railroad line for fiscal year ending June 30, 1885. f Through means traffic between points east of Bismarck and points west of Wallula Junction, Pacifio Local to State or Territory. Interstate. A' State or Territory. Lastward. | Westward. | Total. Eastward. | Westward. | Total. e Tom 8. Toms. Tom 8. Tong. Tom 8. Tom 8. Wisconsin ----...----------- 8,530 8, 686 17,216 45,413 11,069 56,482 Minnesota -------. ------...--. 195, 038 108, 376 303, 414 211, 746 241,483 453,229 akota --------------------- 23, 209 14, 700 37, 909 257,678 203, 422 461, 100 Montana . ------------------ 42,076 51,573 94, 449 88,941 115, 520 204,461 Idah9:---------------------- 106 75 181 37,967 74,924 112, 891 Washington ---------------. 14, 216 239, 640 253,856 52, 882 93,524 146, 406 Oregon --------------------. 19 241 437 9, 479 28,994 38,476 Statement showing freight transportation over line of Northern Pacific Railroad and branches through the below-named States and Territories, fiscal year ending June 30, 1885. * JEast bound. "West bound. :- - § § . Divisions. T T # T T # OD18 On 8 One || 32 On 8 OlS OIlê Go * caj, | Revenues. mile. #5 | c. Revenue. mile. a; GD GO GD GO 3 P. 3 P. p3 Ø4 Cents. * |Oents. Wisconsin . . . . . 53, 943 $9,227 22 294, 864 || 3. 13 19,755 $7,327 48 338, 168 2. 16 Minnesota. . . . . . 406, 784 |1,465, 324 27 | 93, 927, 276 | 1.55 349,859 [1, 385,505 41 || 62,496, 533 2.22 akota. ------. 280, 887 598,602 86 || 43,004, 762 | 1.39 218, 122 1,040, 453 11 ||50, 327,978 2.07 Montana. ------ 131, 817 | 623, 100 30 38,785, 946 | 1.61 | 167,093 1,064,739 31 || 59,325, 326 | 1.79 Idaho.----...--. 38,073 || 51,271 63 || 3, 162, 925 | 1.62 || 74,999 || 69,725 92 || 5,907, 904 | 1.18 Washington ... 67,098 || 201,725 57 || 7, 746, 568 2.60 || 333, 164 412, 115 03 || 24, 215, 513 | 1,70 Oregon ---...--. 9,675 6, 585 91 349,056 | 1.86 29, 235 | 19,923 06 | 1, 185, 379 | 1.68 Totals...} 988,277 (2,955,837 76 |187,271,397 | 1.57 |1, 192, 227 |3,999,789 32 |203, 796,801 | 1.96 INTERSTATE COMMERCE. 161 Af Statement showing freight transportation over line of Northern Pacific Railroad and branches through the below-named States and Territories, &c.—Continued. IRECAPITULATION. Rate per & e g Tons Tons one Average Directions. carried. Revenue. mile. tº* haul. 0. East bound: ` - - Oents. Mile8. Through -------------------------. 13,226 $260,811 03 22,765, 670 1. 14 1,721.2 Way -------------------- - - - - - - - - - - 538, 445 2,695,026 73 164, 505, 727 1. 64 305.6. Total.--...---------------------- 551, 671 2,955,837 76 187,271,397 1. 57 339.4 West bound: i Through , -------------------- ----. 32,406 717, 360 38 55, 939, 505 1.28 1,728. 1 Way -----------------------------. 672,803 || 3,282,419 94 147,857, 296 2 22 219.8 Total.--------------------------. 705,209 || 3,999,789 32 203,796,801 | 1.96 288.9 Grand total --------------------- 1,256,880 6,955,627 08 || 391,068, 198 1. 78 31.1. 1 NoTE.—By “through freight” traffic is meant freight passing between points east of Bismarck and west of Wallula Junction. OLD COLONY SYSTEM. In forwarding the following statement, C. F. Choate, president Of the Old Colony Railroad Company, said: The Old Colony Railroad is wholly within the State of Massachusetts, except the line from Fall River to Newport, R. I. The Old Colony Steamship Company runs its steamers between Fall River, Newport, New Bedford, and New York. The Fall River and Warren Railroad is a short line (10 miles) between Fall River and Warren, R. I. The Union Freight Railroad is a street railroad in Boston between the freight stations of the railroads terminating in the city. - - The statement sent you is as accurate a one as can be made of the freight and passenger traffic upon the Old Colony system transported by it from one State to another. Of course there is a considerable amount of freight included in this state- ment which is local upon our lines, but which is carried by other companies across the State lines. It would be difficult if not impossible to determine from our books the amount of this, but I presume the returns of those transportation companies which transport it over the line will include it. Interstate commerce of the Old Colony 8y8tem of transportation. Total passenger business on the Old Colony Railroad, Fall River, Warren and Provi- dence Railroad, and Old Colony Steamboat Company for twelve months ending May 31, 1885: * Number of passengers carried------------------------------------ 8,237, 116 Earnings of passenger department ------------------------- * * * * * * $3,134,970 81 Passengers carried on our lines from one State into or through another for same time Number of passengers ---------------------- tº º ºs e º ºs e º º sº - - - - - - - - - - - 498,722 Earnings from Same------...- * * * * * * * * * * * * * * * * * * * * * * * = * * * * = • * * * * * * * $857,427 71 Total freight business on the Old Colony Railroad, Fall River, Warren and Provi- dence Railroad, Union Fort Railroad, and Old Colony Steamboat Company for twelve months ending May 31, 1885: Tons freight carried.---------------------------------- ---------- 1, 197, 490 Earnings of freight department---------------------------------- $2,475,820 42 Freight carried on our lines from one State into or through another for same time: Tons freight.----. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ----- 228,369 Earnings from Same.-------------------------------------------- $646,008 77 .S. Rep. 46——–11 162 INTERSTATE comMERCE. OREGON RAILWAY AND NAVIGATION COMPANY. C. H. Prescott, manager of the Oregon Railway and Navigation Com- pany, furnished the committee with the following information covering the lines of the company in Oregon: It is estimated that the freight tonnage on business originating and ending in the State was, for the year ending Juue 30, 1885, 226,263,239 pounds, on which the earn- ings were $592,687.33. On interstate business for same period the tonnage was 406,405,647 pounds, on which the earnings were $1,268,812.14. The number of passengers carried originating and ending in the State was 45,940, earnings for same being $182,941.20. On interstate passenger traffic the number of passengers carried was 40,948, earnings for same date being $416,441.16. PASSUMPSIC RAILROAD. H. E. Folsom, superintendent of the Passumpsic Railroad, informed the committee that he was unable to give exact figures, and that the best estimate he could make was that 60 per cent. of the revenue and 70 per cent. of the volume of the freight and passenger traffic Over that road was interState. . . PENNSYLVANIA RAILROAD. John P. Green, vice-president of the Pennsylvania Railroad Company, submitted the following statements covering the business of the lines of that company east of Pittsburgh and Erie: Statement of the business of the Pennsylvania Railroad Company’s limes east of Pittsburgh and Erie (except Northern Central Railway, Baltimore and Potomac Railroad, Alexandria and Washington, and Alexandria and Fredericksburg Railways), during the year 1884, divided 80 as to show the interstate traffic separate from other traffic. INTERSTATE TRAFFIC. Freight. Passenger. Road. . Tons Earni Passen- I. Total. wº a TIllingſS. gers car- £arnings. carried. s' Tied. | g Pennsylvania Railroad and branch- | $2, 126,958 55 68 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11,015, 269 |$12,731, 876 57 644, 554 $14,858, 835 12 TJnion Railroads of New Jersey - Division------------------------- 7,399, 204 || 6, 855, 692 44 2,433,947 2,782, 970 74 9, 638,663 18 Philadelphia and Erie Railroad. ---| 3,086, 976 1, 891, 345 41 127, 488 65, 669 45 | 1,057, 014 86 Philadelphia, Wilmington and Bal- 4, 181, 599 57 timore Railroad ---------------.. 1,640,751 2, 177,653 18 || 1, 353,053 2, 003, 945 89 West Jersoy Railroad;...:--------- 274,733 241,731 91 9, 0 33, 322 43 275, 054 34 Camden and Atlantic Railroad. - - - 68, 770 60,521 20 24, 377 6, 760 18 67,281 38 Total.-----------------------. 23,485,793 23,958,821 21 || 4,672,503 || 7,019,627 24 || 30, 978,448 45 OTHER TRAFFIC. Pennsylvania Railroad and branch- - CS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11,568, 556 |$10,001, 452 51 |10, 775, 222 $3,764, 580 99 $13,856,033 50 TJnion Railroads of New Jersey Division.------------------------ 1,745, 531 687, 204 08 |10, 230, 103 || 2,336,237 03 || 3,023,442 01 Philadelphia and Erie Railroad . . . 1,817, 035 984, 729 69 || - 942, 817 505,781 41 | 1,490, 511 10 Philadelphia, Wilmington and Bal- - f : timore Railroad ------...--...----. 360,792 347,033 55 3,958, 0.49 894, 337 48 1, 241, 371 03 Yest Jersey Railroad. -----. . . . . . . 164,937 134, 372 23 1, 73], 0.25 | . 790, 316 88 924, 689 11 ° Camden and Atlantic Railroad. .. 81,475 67, 308 82 | 1,040,081 263,210 47 330, 510 29 Total.----------------------. 15,738, 326 | 12, 312, 101 78 * 677,297 | 8,554,464 26 |20,866,566 04 NOTE.—The above figures include only the railroad business, the earnings of Jersey City Ferry, Wine Street (Philadelphia). Terry, and Atlantic City horse-cars not being included. INTERSTATE 163 COMMERCE. Statement of freight tonnage and earnings on the 8everal roads named below for the year 1884. *> Name of road. Interstate traffic. " Other traffic. Total. Tons. Earnings. •l Tons. Earnings. Tons. Earnings. Northern Central Railway ...|2,935, 472 ($1,976,989 96 Ealtimore and Potomac Rail- and branches ----------- 4,854,997 $2,204,451 52 290,051 | 116,007 59 734 ... 101 10 8,547 5,701 59 7,790,469 || $4,181,441 48 772,782 433, 569 91 259,231 13,513 26 230,868 44,780 49 road ------ * - - - - - - - - - - - - - - 482,731 317, 502 32 Alexandria and Washington - • . . Railroad ------------------ 258,497 13,412 16 Alexandria, and Fredericks- - . . burg Railway.-----------. 222, 321 39,078 90 Total --------------- ..p.s.º.º. 2 sº a 5, 154, 329 2, 326, 321 80 9,053,350 4, 673, 305 14 Statement of passenger traffic and earnings therefrom of the 86veral roads shown below for the year 1884. Name of road. Interstate traffic. . Other traffic. . Total. Passengers. Earnings. Passengers. Earnings. Passengers. Earnings. Northern Central Rail- way and branches------ Baltimore and Potomac Railroad.----- ... ------ Alexandria; and Washing- ton Railroad.---------.. Alexandria and Freder- icksburg Railway------. 309,931 tº,702 5i 1,040,272 592, 961 25 598,624 25,922 54 456,693 | 72,765 14 3,342,132 [$553,432 67 502,771 76, 432 43 1, 09: 99 12 17, 617 8,272 15 3,852,053 $1,019, 1851 1,543,043 | 669,393 68 599,720 26,021 66 474, 310 81,037 29 2,605, 510 |1,257,35144 3,863,616 || 638,236 37 6,469, 126 1,795, 587 81 PEORLA, DECATUR AND EVANSVILLE RAILWAY. George L. Bradbury, general manager of the Peoria, Decatur and Evansville Railway Company, submitted the following report of the State and interstate traffic of that road for the year ending June 30, 1885, saying that it “is a very close approximation, not being able to give exact figures”: * Statement of traffic and revenue derived during year ending June 30, 1885. FREIGHT. / Tonnage. Revenue. J - Average earn- . ings per ton. Tons. | Per cent. Total. Per cent. Interstate -------------. s = * * * * * * * * * s m = * * * 339, 996 78.76 $259, 188 00 57 $0.76% local.----------------------------- * - - - - - 91, 691 21. 24 195,930 00 43 2, 13 Ç - PASSENGERS. Passengers. |Revenue. - - * Average earn- . ings per Number.|Percent. Total. Percent. Passenger. Interstate ------------------------------- 18, 510 7 $31, 121 64 21 $1 68 Local.-----------------------------------| 235,036 93 259, 188 00 79 25.11% This road has 217 miles in Illinois and 37 miles in Indiana. 164 INTERSTATE COMMERCE. SAVANNAH, FLORIDA AND WESTERN RAILWAY. , W. B. McKee, comptroller, submitted the following “statement of freight tonnage and passengers carried, with revenue derived from same, over the Savannah, Florida and Western Railway, and the Charleston and Savannah Railway, showing proportion of same which was interstate Commerce:” - SAVANNAH, FLORIDA AND WESTERN RAILWAY COMPANY. Proportion Local. Interstate. . . Total. of interstate. Tons freight transported, 1884. ---........ --. 328, 709 237, 155 565, 864 . 419 Revenue, 1884 -----...----. ... -...----....... $749, 307. 14 || $420, 368. 42 $1,169, 675. 56 . 359 Number of passengers carried, 1884 ... -----. 267, 481 |. 78, 301 345,782 . 226 Revenue from passengers carried, 1884 -----...] $324, 587. 98 || $383, 206. 24 $307, 794.22 . 541 CHARLESTON AND SAVANNAH RAILWAY COMPANY. . Tons freight transported, 1884............. s. 30, 616 92, 542 123, 158 . 751 Revenue, 1884 -------------------. ----------. $68, 004. 96 $84,462.71 || $152,467.67 .553 Number of passengers carried, 1884 -----. . . . 131,043 60,797 191, 840 . 316 Revenue from passengers carried, 1884...... | $66,013.76 || $137, 507, 16 $203, 520. 92 . 675 SEIFNANDOAH WALLEY RAILROAD. Q. G. R. W. Armes, treasurer of the Shenandoah Valley Railroad Com- pany, submitted the following “statement showing passengers and rev- enue, local and interstate, carried over the Shenandoah Valley Railroad for the year commencing July 1, 1884, and ending June 30, 1885. Also statement showing tonnage.and revenue, both local and interstate, car- ried over the Shenandoah Valley Railroad for one year, beginning July 1, 1884, and ending June 30, 1885,” which statements were prepared by E. E. Portlock, the auditor: - Statement 8howing passengers and revenue, local and interstate, carried by the Shenandoah Valley Railroad for the year commencing July 1, 1884, and ending June 30, 1885. Local. gº Interstate. Total. Months. IP P P 3886.Il- 38.880 Il- 3.SSCIl- gerS. Revenue. gel's. Itevenue. gerS. IRevenue. 1884. - July ------------------------------ 15, 103 || $6,683 30 6,783 || $13,077 73 || 21,886 || $19,761 03 August --------------------------. 20, 959 || 14,703 95 10, 941 16, 172 62 31, 900 30, 876 57 September ------------------------ 14,443 || 9,786 66 6,449 || 12, 256 92 | 20, 892 22,043 58 October --------------------------- 14, 549 || 11, 252 01 2, 524 7, 395 19 17,073 | 18, 647 20 November -----------------------. 8,092 6, 851 49 1, 558 4, 714 25 | 9, 650 11, 565 74 December. ------------------------ 9,083 4, 307 09 1,664 6, 325 02 10, 747 10, 632 11 1885. - - January -------------------------. 7, 597 6, 141 13 1, 956 7,758 50 9, 553 13, 899 63 February ------------------------- 5,725 4,061 50 1,695 6,480 58 7,420 10, 542 08 IMarch ---------------------------. 7, 534 || 6,646 61 3,013 | 8, 249 72 | 10, 547 || 14, 896 33 April ----------------------------- 7,408 || 6, 140 72 2,019 10, 201 50 10, 327 | 16,432 22 May ------------------------------ 10,278 6, 873 30 3, 186 10, 579 89 13,464 17,453 19. June -----------------------------. 9,934 || 7, 142 97 3, 224 || 8,991 09 || 13, 158 || 16, 134 06 Total ----------------------. 130,705 90, 500 73 || 45,912 || 112,293 01 || 176,617 | 202,883 74 Percentage of passengers, interstate to total.-------------------------------------------------------. 26 Percentage of revenue, interstato to total.---------------------------------------------------------. 56 A. INTERSTATE COMMERCE. 165 / Statement showing tonnage and revenue, both local and interstate, carried by the Shenandoah Valley lailroad for one year, beginning July 1, 1884, and ending June 30, 1885. Local. Interstate. Total. Months. . * - - Tons. Tevenue. Tons. Revenue. Tons. Revenue. 1884. July ----------------------------. 17,865 $35,720 11 5, 631 $21,799 44 23,496 $57,519 55 August.-------------------------- 35, 140 57,284 43 8,860 29, 577 99 44, 000 86,862 42 September ------------------------ 38,566 | 68,403 87 11,923 || 43,028 73 50, 489 111,432 60 October--------------------------. 33, 596 || 70,713 17 | 10,393 || 38,496 40 || 43,989 109,209 57 November. --. -------------------. 22,990 || 38, 302 19 9, 383 || 34,292.36 32, 373 || 72, 594 55 December ------------------------ 25, 268 34,040 90 9,252 33,074 81 34,520 | 67,115 71 - 1885 * January -------------------------. 26, 368 28,034 48 10, 257 || 35, 399 77 36,625 63, 434 25 Fobruary ------------------------- 17, 188 23, 307 14 8, 295 30, 326 39 25,483 53,633 53 March ---------------------------- 16,650 27, 403 26 7,023 27, 554 95 23, 673 54,958 21 April ----------------------------. 17,805 28,661 85 7, 203 || 25, 113 13 25,008 || 53,774 98 MaV ------------------------------ 24, 901 29, 274 97 5, 947 20, 013 91 30, 848 49, 288 88 Juno. ----------------------------- 32,222 || 35, 188 34 5, 869 20, 589 36 38,091 55,777 70 Total ----------------------- 308,559 || 476,334 71 || 100,036 || 359,267 24 | 408, 595 || 835, 601 95 Percentage of tonnage, interstate to total Percentage of revenue, interstate to total * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * The proportion of revenue to tonnage being greater on interstate business is due to a longer haul. SOUTHERN PACIFIC SYSTEM. A. N. Towne, general manager of the Southern Pacific Company, or the “Pacific system,” including the Central Pacific, Southern Pacific, and other roads, submitted the following statements giving information in regard to the interstate freight and passenger traffic on the lines of the company for the year 1884: * Commercial pounds. Amount. Company freight. ~ State: Freight originating in California to points in Cali- fornia, Interstate: * * * * * * * - - - - - - tº sº, º is sº e - - - - - * * * * * *-* - - - - - - e = * * * * *- * Freight originating in California and passing into other States and Territories - - - - - - - - - - - - - - - - - - -. - West-bound through freight.” State: Freight originating in Nevada to points in Nevada .. Interstate : Freight originating in Nevada and passing into other States and Territories State: * - - - - - - - sº sº * * * - - - - - - - sº e s = * - - Freight originating in Utah to points in Utah. . . . . . . . Interstate: I'reight originating in Utah and passing into other States and Territories State: ". * - - - - - - - e. e. g., e = ** - - - - - - - s = * * * * - Freight originating in Arizona to points in Arizona. . Interstato: Freight originating in Arizona and passing into other States and Territories ; 3, 459,740, 380 490, 339, 920 413, 905,730 10, 280 40, 916, 240 96, 316,000 12, 425, 560 18, 936, 370 19,866,690 $5,347,668 00 3, 415, 953 30 2, 597,709 90 ; 90, 699 70 164,959 50 23, 093 50 73,772 50 56, 503 00 710,313,880 61,791,490 * * * * * * * * * * is 75, 898, 280 7, 166,050 34, 318, 380 93, 468, 180 9,880, 920 State: e - - - - - - - e º sº e º 'º - - - - - - - e s = e - - - Freight originating in New Mexico to points in New Mexico Interstate: es ºf a - - - - - - e s = * * * * - - - - - - - s = * * - - - - - - e, e s a se tº º - Freight originating in New Mexico and passing into other States and Territories. --...--...... --...-- - * * 74, 138, 200 44, 833, 180 69,877,430 73,789 00 98,015 20 106,339 70 4, 677, 420 2,604,640 30, 373, 670 * This º: originates in States, and Territories east of Ogden via Union Pacific and Denver and ailroads; east of Needles, via Atlantic and Pacific Railroad; east of Deming, via Atchi- son, Topeka and Santa Fé Railroad; and east of El Paso, via Texas and Pacific and Galveston, Eſar- Rio Grande Tisburg and San Antonio Railroads, and passes through to terminal points in California. 166 * INTERSTATE COMMERCE. * Passenger traffic of the Central Pacific Railroad and leased lines in States of California, Ne- vada, and Teacas, and in Territories of Utah, Arizona, and New Mexico for year 1884. * Passengers. Earnings. Originating and terminating in California.--------------------------------- 8, 588,051 $3,528, 230 01 Originating in and passing out of California. --...--. ----------------------. 50,945 1, 309, 517 37 Total.----------------------------------------------------------------- 8, 638, 996 || 4,837, 747 38 Originating and terminating in Nevada -------...--------------------------- * * 21, 124 59,933 80 Originating in and passing out of Nevada ---------------------------------. 15, 349 210,482 95 Total......... * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ------------------------. 36, 473 270,416 75 Originating and terminating in Utah.-------------------------------------- 3,889 11, 625 65 Originating in and passing out of Utah. --...-------------------------------- 4,007 149, 918 5ſ. Total.----------------------------------------------------------------- & 7, 896 161, 544 15 Originating and terminating in Arizona ------------------------------------ 13,066 75, 343 90 Originating in and passing out of Arizona ---------------------------------- 7, 154 209,613 66 Total ----------------------------------------------------------------- 20, 220 284, 957 56 Originating and terminating in New Mexico. ----------------------...------- 2,700 12,824 00 Originating in and passing out of New Mexico ----------------------------- 4,025 77, 600 36 Total.---------------------------------------------------------------- 6, 725 90,424 36 Originating at El Paso and passing westward out of Texas - - - - - - - - - - - - - - -. 3, 106 89, 476 73 Total passenger traffic originating in above named States and Terri- ories--------------------------------------------------------------- 8,713, 416 5,734, 566 93 Westward-bound through passenger traffic; Originating east of Ogden and terminating in California. --...--...... --. , 33,238 821, 160 38 Originating east of Ogden and terminating in Nevada. --- ?------------- • 992 20, 827 37 Originating east of Ogden and terminating in Utah--------------------- 64 302 50 Total via Ogden-------------------------------------------------- 34,294 842, 290 31 Total via the Needles and terminating in California.----...--...--------- 5, 912 89,863-57 Originating east of Deming and terminating in California. -------------. 9, 568 276, 937 96 Originating east of Deming and terminating in Arizona. --------------- 1, 198 22, 634 21 Originating east of Deming and terminating in New Mexico ----------- 49 - 282 91 Total via Deming. ------------------------------------------------ 10, 815 299, 855 08 Originating east of El Paso and terminating in California ---...------ : . 8,493 249,661 57 Originating east of El Paso and terminating in ATizona---------------- 327 7, 941 98 Originating east of El Paso and terminating in New Mexico ----------- 596 2, 391 50 Total via El Paso.----------------------------. * es tº gº as ºn s is e º sº as e º s tº º is sº * 9,416 259, 995 05 Total west-bound through traffic terminating in above-named States and Territories ------------------------------------------------------- 60,437 1,492,004 01 Total passenger traffic over Central Pacific Railroad and leased linesin year - 1884. --------------------------------------------------------------------- 8,773,853 || 7,226,570 94 4 ºf ToLEDO, CINCINNATI AND SAINT LOUIS RAILROAD. C. S. Anthony, auditor of the Toledo, Cincinnati and Saint Louis Rail- road, furnished the following statement showing the amount of inter- state business done by that road during the year ending June 30, 1885: Trevenue. Total. Local. Interstate. Passen ©ſ- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $114,805 70 $8,255 25 $123,120 95 Freight ---------.T- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 179, 844 11 96, 316 55 276, 160 66 INTERSTATE COMMERCE. 167 COMPETITION BETWEEN WATER-WAYS AND RAILROADS —WATER, ROUTES THE MOST EEFEOTIVE REGULATORS OF RAILWAY OEIARGES_TEIE EMANCIPATION OF TEIE WATERS A NATIONAL NEOESSITY. * The committee was directed by the Senate to report upon the sub- Jeet of transportation by water routes in connection or in competition with railroads, and throughout the entire investigation attention has been given, in a general way at least, to the relations of the water- routes of the United States to the question of transportation, and, espe- cially as to the extent to which they affect and regulate railroad charges. The amount of labor imposed upon the committee in connection with the other branches of its inquiry lias made it impracticable to thor- oughly investigate the subject of transportation by Water or the various systems of internal improvements which the General Government is asked to undertake, but the testimony collected will be found to con- tain Valuable information as to the importance of maintaining and de- Veloping a national system of internal water communication as the most certain and effective method of regulating railroad rates and of insuring to the people the advantages of cheap transportation. Attention is invited to the concurrence of views upon these questions indicated in the testimony, and a few extracts are here given from the Opinions expressed to the committee in order to reflect the public senti- ment upon the subject. Mr. Albert Fink, in his capacity as commissioner of the Associated Trunk Lines, has for years been dealing with the matter of establishing railroad rates, and has had occasion to appreciate the influence of wa- ter competition. He testifies that the Mississippi River is an important regulator of railroad transportation rates, and says: A Under ordinary circumstances the Lake, the Erie Canal, and Mississippi River are the great regulators of railroad transportation charges. (Testimony, p. 123.) Mr. Simon Sterne said: It unquestionably is important that the Government should maintain a system of water-routes. The rate of charges on the Erie Canal largely determines the railway rate all the year round throughout the United States. The rate from New York to Chicago is substantially the pattern rate for charges throughout the country, and that rate from New York to Chicago is largely fixed by competition with the canal; and under these circumstances the only one other element of competition we have is that of our internal Water-routes, which to care for and develop I claim to be one of the first functions of the Government. (Testimony, p. 80.) Mr. F. B. Thurber said, in his statement: Canals should be modernized. For twenty-five or thirty years they have remained just as they were. . .” “, “ . The water lines are, I may say, the salvation of this Country, and should be developed and extended in every possible way. While enor- mous improvements have been made in railroad transportation during the past twen- ty years, little or no improvements have been made in our system of American water- ways. Steel rails, more powerful locomotives, improved freight cars which will carry two tons of paying freight for each ton of dead weight in rolling stock, as against the old rule of ton for ton, improved methods of handling freight, improved signals and labor-saving appliances in every department of railroad operation, have enormously reduced the cost of railroad transportation during the past two decades, While little or nothing has been done to improve our system of water ways. This is tº: largely to be attributed to the adverse influence of railroad corporations in egislation. in Pennsylvania and other States they have bought up the canals and abolished them. Whenever a river and harbor bill is pending in Congress the railroad repre- sentatives will vote millions for improvements which do not materially affect them, 168 & INTERSTATE COMMERCE. | but when it comes to an item like the Hennepin Canal, which promises to be of value in extending our system of water-ways, the railroad representatives, whether Democrats or Republicans, are found voting solidly against it. Can there be any better illustra- tion of the necessity for the people to insist upon the extension and in provement of our country's water-ways? " * * Our canals, connecting the great lakes with the ocean, which are really national highways, ought to be as much a recipient of the na- tional bounty as the isolated trout streams, muddy bayous, and petty harbors for which liberal appropriations are provided each year in the river and harbor bill. A comprehensive system of improving our principal water-ways should be undertaken upon a scale which will enable steam, the great motive power of the world, to be ad- vantageously used, and thus reduce the cost of water transportation in the same pro- portion that the same motor has reduced the cost of transportation on land. (Testi- mony, pp. 283–4). - Mr. Charles Randolph, for many years secretary of the Chicago Board ôf Trade, said, in his paper: I hardly need enter on a discussion of the importance of the Government's aiding in developing the fullest capacity of water-ways wherever practicable. These more than anything else tend to cheapen freight rates, and their influence is felt at points far removed from their course. (Appendix, p. 62.) - . Mr. Charles Ridgely, president of the Springfield Iron Company, said: I do not think that too much emphasis can be given to the importance of developing and maintaining a system of water routes for the transportation of freight in the West. All of the freight rates in this section of country have always been controlled pri. marily by the rates on the Great Lakes and the Mississippi River. The influence of these great water-ways in fixing rates has been as beneficial as it has been constant. A similar influence has been exerted by the canals, and this can be extended and in- creased by the opening of new canals in such directions as will bring large and impor- tant scopes of territory under their influence. The cost of such improvements would come back to the people many times over, in the reduced rates of freight which they would secure, even if all the freight went, as now, by rail, and the canals were unused. (Appendix, p. 68.) a - In the paper submitted by the Toledo Produce Exchange, the follow- ing Statement will be found : The great water routes of this country, which are being improved yearly by the General Government, and on which transportation is thereby cheapened, are mature's highway for the great agricultural country West and Northwest. It has been here- tofore, and must continue to be, the great regulator of rates of transport of the heavy commodities passing east and west. Without this potential and conservative element rates of freight would at once be enhanced and Western values depreciated. By a free water navigation of 1,000 miles grain is transported at 6 cents per bushel, and against that no railway can compete. And yet there is no antagonism between the . railways and the water. The grain products of the country, lumber, timber, staves, and coal, seek the water in the season of navigation, while flour, provisions, live stock, and the great and growing variety of other products seek the rail, and underfair rates of freight the railways have prospered during that period as highly as in any other. The necessity of this water transportation is more directly realized in the very active competition that now exists between the agriculturists of this country and those of India, Australia, Russia, &c. In supplying the wants of the importing states of the º yº and in this contest, every one-fourth of a cent per bushel counts. (Appen- (lix, p. 73. * * General George B. Wright, of Indianapolis, expressed his opinion as follows: * It is undoubtedly for the interest of the country and the people that the water routes should be maintained and further developed as the necessities of the country may require. They are very powerful in their conservative influence upon the rates of fare and freights of railroad companies. As the country improves and increases in population these lines of communication will become in many localities more and more important. It is the cheapest means of transportation that can be had in many barts of the country, and in many places the people are wholly or in part depend- ent upon them. While they are rivals or competitors in many cases of the railroad companies, that fact need not be a serious injury to the general railroad interests. They are often used in connection with railroads in forming lines of through traffic, and can be used to great advantage in transporting many articles of commerce that Will not always bear transportation by all rail. (Appendix, p. 92.) # INTERSTATE COMMERCE. 169 The position of the Anti-Monopoly League of New York is shown in the following statement: • . It is found that those of its waterways which are sustaified at public expense and open to common use free, yield the most satisfactory results, and the steady gravita- rtion in this and all countries is to such free use. t The waterways furnish the cheapest rate, and affect and regulate railway rates most favorably in the interest of the shipper, and being open on common terms to all who choose to use them need no other legislation than will make them free and secure ac- cess to them to all users alike; it is necessary that sufficient landings should be acces- sible to all upon the same and reasonable practicalle conditions. (Appendix, p. 106.) J. J. Woodman, master of the National Grange, deelares that— Water routes are nature's great thoroughfares, and it should be a fixed policy of the Government to keep the channels of these great arteries open, that the life blood of commerce may flow freely. Water routes are indispensable in maintaining cheap transportation. (Appendix, p. 109.) Isaac H. Sturgeon, of Saint Louis, who for many years was engaged in constructing and operating railroads, after speaking of the impor- tance of developing and maintaining a system of inland water routes, refers as follows to other national enterprises: Permit me to say in this connection that I feel that the interests of the country do- mand the construction of a canal to connect the Illinois River with the lakes at Chi- cago, which would give the country west of Saint Louis a water route east as well as South by the Mississippi River; and may I submit further for your thought the great and, as it seems to me, overwhelming importance of the earliest possible construction of a free ship-canal by our Government across the Isthmus of Panama, free to the vessels of the United States, with a reasonable charge on foreign tonnage. Let us build and own and control this canal, free from all entangling alliances, as a gift to our maritime tonnage. I am confident it would be wise, and would do more to enable our country to successfully-compete with the commerce of Asia, Australia, and the islands of the Pacific Ocean than anything else we could do. If I read the news aright, at this day the European powers are considering the question of making the Suez Canal free ; but whether so or not, it is clearly our in- terest, as it seems to me, to build this canal with the least possible delay, so as to accommodate the largest vessels with the fewest possible number of locks and dams, thereby at once giving access to our vessels to all the west coast of North and South America, the people of the islands of tho Pacific Ocean, Australia, and Asia. The construction of this free ship-canal would, by cheapening the rates of freights espe- i. give to our country greater advantages than the imagination can Well compre- end. - -- I think it is well understood that the building of our first transcontinental railway precipitated the building of the Suez Canal as a counter-project, which, owing to the high rates of freights maintained over our Pacific roads, causes all commerce for Eu- rope and our own country to take that route, as it is cheaper and more expeditious. Give us the free ship-canal and we may hope to fully realize the benefits that we ex- pected to accrue to us from the building of our transcontinental railways, but in which we have largely been disappointed. (Appendix, pp. 164–5.) Hon. Thomas Updegraff, of McGregor, Iowa, says: The history of transportation between Chicago and the seaboard establishes the value of water routes. The water routes from the Atlantic to Chicago should be ex- tended to the Mississippi by means of the Hennepin or other similar canal at what- . ever cost; and wherever a water routo can be developed which, in proportion to its cost, can offer to railroads one-half of the competition of which such a canal as the Henllepin is capable, it should be opened and maintained by the General Government. The bulk of interstate commerce runs in a few general directions converging on to a very few lines. If the General Government can by a few water routes give relief here, may not the States, constitutionally, be equal to what is left to be done? I have more faith in water routes as cheapeners of transportation on interstate com- merce than in all other suggested means. (Appendix, p. 188.) - - Henry C. Haarstick, president of the Saint Louis Merchants' Ex- change, referring to the transportation of freights on the Mississippi Tiver and the railroads running south from Saint Louis, stated that— The river usually makes the rate. The railroads try to get the difference between the river rates with the insurance added. They make it that much higher. The 170 INTERSTATE COMMERCE. river carries more than three-fourths of all the business from Saint Louis to New Orleans, ſor New Orleans proper. When it comes to points east of that, and it has to be reshipped to New Orleans, then the river does not carry as much, because that is under the control of the railroads, and they can make their rates accordingly. (Testimony, p. 861). ** Jabez Burrows, a farmer in Nebraska, expressed the conviction that— There is no question whatever but that the maintenance of water routes would be of immense value to this Western country, because, while it would be a very valuable thing for us to become manufacturing States, we are for a long time going to be ex- . porting States of agricultural products. As such, the low rate to the seaboard and to foreign countries is of vast importance to us. Senator HARRIs. Valuable not only as a means of transportation, but as a regu- lator of railroad transportation ? Mr. BURROws. Yes, sir; I believe the Hennepin Canal, if it is practicable, if there is a ſeeder at the highest point that would make it a practicable canal, should be constructed by the General Government. It would give us water transportation from the Mississippi River to the East. Of course it would open an immense exit out of the Mississippi Valley. (Testimony, p. 1179.) Oliver Dalrymple, the great Dakota wheat-raiser, made the following statement: I would regard the waterways of the country as the people's highways, and I would follow the example of Canada in opening the Saint Lawrence from Quebec up to Montreal. I would make the Erie Canal a national work. I would enlarge it and deepen it, and make it a national property instead of a State property, and give an uninterrupted commerce from the West to the East that would make it impossible for Mr. Wanderbilt or any other man to double or quadruple his stock by watering or any other process. I would meet the great corporations of the country in that way. The CHAIRMAN. When you did that, would that be sufficient 3 Mr. DALRYMPLE. Just as long as we can, as now, carry freight on the great water courses of the country at a mill a ton per mile We can beat with the steam-barge the steel rail, which costs a cent a ton a lnile to move the freight. We do not ask any odds. We can take care of ourselves. The agriculturist of the West can lay his prod- ucts down into the hands of the consumer as against the great corporations of the country. (Testimony, p. 1332.) TEIE EFFECT OF WATER COMPETITION UPON RAII, ROAD CEIARGES. The evidence before the committee accords with the experience of all nations in recognizing the water routes as the most effective cheapeners and regulators of railway charges. Their influence is not confined with- in the limits of the territory immediately accessible to water communi- cation, but extends and controls railroad rates at such remote and in- terior points as have competing lines reaching means of transport by water. Competition between railroads Sooner or later leads to combina- tion or consolidation, but neither can prevail to Secure unreasonable rates in the face of direct competition with free natural or artificial water rOuteS. & º The conclusion of the committee is, therefore, that natural or arti- ficial channels of communication by water, when favorably located, ade- Quately improved, and properly maintained, afford the cheapest method of long-distance transportation now known, and that they must con- tinue to exercise in the future, as they have invariably exercised in the past, an absolutely controlling and beneficially regulating influence upon the charges made upon any and all other means of transit. THE ERIE CANAL. Governor Horatio Seymour, of New York, whose letter will be found on page 46 of the Appendix, referring to the Erie Canal, says: The tonnage of the canal has not been much increased by the policy of low tolls or no tolls, but the cost of carrying grain from Chicago to New York is cut down to about one-third of the former charges. * * * It is strange that many regard with complacency plaus Tor ship-canals which will enable vessels to sail around our country from New York to California, only touching INTERSTATE COMMERCE. 171 at a few point, while they denounce improvements across our country, giving pros- perity to all points on their lines in our own country, while the ship-canals across the isthmus are for the benefit of other lands as well as our own. Canals as regulators of transportation will soon be appreciated. Water routes are the only reliable protections against undue charges for carrying. The people will soon learn that fact, In this letter Governor Seymour refers to one published by him two years ago, in which he quoted the following table the Bureau of Statistics, and said: In thirty-eight years before 1876 our exports to Europe, with some exceptions, were less than our imports. * s from the reports of When by a series of reductions we cut down the tolls to a low rate, which reductions were followed by the railroads and other routes, our exports were enormously increased. trade against us before tolls were cut down and the balance in our favor since the low-tolls policy was adopted: * º # ' The following tables show the balance of Balance of trade against us from 1866 to Value of the exports and imports 1875 under high tolls. with low tolls. TV ear. Year. s Excess of im- IZxcess of ex- JExports. Imports. ports over Exports. Imports. ports over .” exports. 3× imports. 1866. ... $348, 859, 522 || $434, 812, 066 || $85,952, 544 || 1876. . . . . . . $540, 384, 6713460,741, 190 $79, 643, 481 1867. --. 204, 506, 141 395, 761, 096 || 101,284, 955 || 1877....... 602,475, 220 451, 323, 126; 151,145,094 1868. --. 281, 952, 809 || 357,436, 440 || 75, 483, 541 || 1878. . . . . . . 694, 865, 766 437, 051,532 257,814, 234 1869. - - 286, 117,697 || 417, 506,379 || 131,388, 682 || 1879. -----. 710, 439, 441| 445, 777, 775. 264, 661, 666 1870. ...| 392,771,768 435,958,408. 43, 186, 640 || 1880. ...... 835,638,658 667,954,746. 167,683, 912 1871. . . . 442, 820, 178 || 520, 223, 684 77, 403, 506 || 1881. - - - - - - 902, 377, 346 642, 664,628, 259,712,718 1872. ...| 444, 177, 586 626, 595,077 | 182, 417,491 || 1882....... 750, 542,257| 724,639, 574 25, 902, 683 1873 . . 522,479,922 || 642, 136, 210 | 119, 656,288 || 1883 (9 mo)|823, 839, 402 723, 180,914 100, 658, 488 1874. --.' 586, 283,040 || 567, 406,342 . . . . . . . . . . . ; - * ºsmºss ºsmºsºme 1875....| 513,442,711 || 533,005, 436 19, 562,725 1, 307, 229, 276 836, 306, 372 18, 876,698 Balance against usin ten years... 817,429,674 There was an excess of exports over imports in 1874 of $18,876,668. Balance in favor of this country, $1,307,229,276 under low tolls. - ** The reasons for this great change in our favor will be seen by looking at the changes in freight rates during the past sixteen years, Average freight charges per bushel for transportation of wheat from Chicago to New York since the year 1868, and also from New York to Liverpool for the same time: Average rates per bushel. e Ur Chicagº New New York to Liverpool. Year. s iling- By lake | By lake | By all | Steamer | *...; and canal. and rail. rail. Irates. vessel Irates. 1868. ----------- & s gº º tº e º º sº sº as as e º e º ºs º ºs e s is ºs º ºs e º ºr s = e º ºs º º & 25, 3 29. 0 42, 6 14.36 |.----. . . . . 1869------------------------------------------------ 24, 1 25. 0 35. 1 12.98 |.--------- 1870------------------------- e - - - - s - - - - - - - - - - - - - - - - - 17. 5 22. 0 83.3 11. 56 - - - . . . . . . . 1871------------------------------------------------ 21, 6 25. 0 31. 0 16, 32 1. --...----- 1872. ---------. º s s = * * * * * * * * * * * s º ºs e s = sº sº e s sº e º sº e = * * * * * * 26, 6 28. 0 33.5 15, 28 1. --...----. 1878------------------------------------------------ 19, 2 26, 9 33, 2 21, 12 19, 82 1874. ---------- tº a ºn is a s is sº e s m me s is sº e s is a sm s = e s m is s ºf s is as º ºs s = * = 14, 2 16.9 28, 7 18. 16 15. 66 1875----------. tº e = * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * = * 11.4 14.6 24.1 16, 14 14. 24 1876.----------------------------------------------- 9. T 1]. 8 16.5 | 16. 04 15. 28 1877----------------- tº sº as a s a m = ± e º ºs m is e º sº tº as º ºs e s sº * * * * * * * 7, 5 15.8 20.3 13. 80 13. 52 1878.---------------------------------------------- 10.1 11.4 17.7 15, 22 14, 18 1879----------------------- tº sº as a sº º ºs ºs sº me • * * * * * * * * * * * * * * 13, 0 13, 3 17.3 12. 40 11. 80 1880----------------------------------------------- 13. 2 15. 7 19, 7 11. 76 10. 20 1881. ----------------------------------------------- 8. 6 10.4 14.4 8, 16 9. 50 1882.----------------------------------------------- 8. 7 10. 9 14, 6 7. 76 l. - - - - . . . . . 1883-----------------------------------------------. *9, 16 * 12. 0 * 16. 1 *0.08 fl2. 50 * January 1 to November 1. i Six months, January 1 to July 1. 172 INTERSTATE COMMERCE. This table shows that the water routes have always led in reductions. The lake and canal rates include charges at Buffalo. Since 1868 the freight charges for a bushel of grain from Chicago to Liverpool have been cut down over 20 cents. * . * * A false and mischievous idea has grown up in our country that Europe de- pends upon us for food. This is not true. They can get all they want from many parts of the world; from India, South America, and Australia. In South America Vast herds of cattle are killed merely for their hides. The carcasses are left to decay. Great Britain, which buys more of our provisions than any other country, is building railroads in Northern India to cheapen transportation, and is sending farming tools into that region to improve its agriculture. This policy has been followed by a great increase in its production of grain. Within a few years the exports of wheat from India have grown up to many millions of bushels. The governments of Europe are trying to lessen our exports as they give us such heavy balances against them. For this reason, Germany and France shut out our pork, and other governments show great uneasiness, as we disturb their relationship to their people. Our only course is to undersell other countries; as labor is higher here than elsewhere, we must de- peud upon Smaller charges for carrying. That region is fast becoming one of our strong competitors. We only sell to Europe because we have cheaper modes of send- ing our products to their markets. We have been able to do this because we have cut down the cost of carrying. Our exports grow up as carrying rates are cut down. Railroads have always followed lower rates upon water routes, but the last are the cheapest, as is shown by the table of rates in the report on commerce and navigation of the General Government. Our agricultural interests are the most important of all. When water routes are closed by winter, railroad rates go up; when they are opened in spring, rail rates go down. * * * We are now able, if we-are wise, to overcome the greater cost of production in our country, owing to our higher wages, by our cheaper transportation. We are to have a hard struggle to keep our lead as a food- supplying country, and we must give up the delusion that Europe depends upon us for food. It will only buy of us if we can deliverit to them at the lowest cost. The de- lusion that the Old World depends upon us for food stimulates extravagance in Con- gress and corruption in legislatures. If we fail to uphold our water routes as pro- tection against unjust and unwise charges for transportation, we shall suffer in the future. It appears from the report of the State engineer of New York (Jan- uary 20, 1885), that during 1884 the average rate of freight on the New York Central, the Erie, and the West Shore Railroads was .740 of a cent per ton per mile, against.845 of a cent per ton in 1883, while the average rate of canal freight was .270 of a cent perton per mile against .340 of a cent per ton in 1883. The figures given show that the business of the canals shared in the depression common to all industrial movements and enterprises during 1884. Not only did the volume of canal freight diminish, but the rates of freight were unprecedentedly low, and in both these respects the canal business suffered in common with the railroads Which compete for the same freights, in consequence of the railroad warfare, which brought into effect the lowest freight tariff ever known. The report in question contains the following table, showing the an- nual tonnage of the Erie Canal and of the railroads competing with the canal for a period of twenty years: TVear. Canal. . Railroads. Year. Canal. IRailroads. Toms. Toms. Toms. Toms. 1865 ---------------------. 4, 729, 654 3,609, 640 || 1875 . . . . . . . . . . . . . . . . . . . . . 4, 859, 858 | 12, 241,900 1866 -----. ---------------. 5, 775, 220 || 4, 844, 989 || 1876 . . . . . . . . . . . . . . . . . . . . . 4, 172, 129 12, 776, 498 1807 -----------...-------- 5, 688, 325 5, 152,472 || 1877 - - - - - - - - - - - - - - - - - - - - 4, 955, 963 12, 533, 807 1868. --------------------. 6, 442, 225 5, 754, 842 || 1878 - - - - - - - - - - - - - - - . . . . . . 5, 171,320 | 13,845, 981 1869 ---------------------. 5, 859, 080 | 6, 594, 094 || 1879 ... - - - - - - - - - - . . . . . . . ..] 5, 362, 372 17, 228, 394 1870 ---------------------. 6, 173, 769 || 8,974, 505 || 1880 . . . . . . . . . . . . . . . . . . . . . 6,457,652 | 19, 248,930 1871 - - - -----------------. 6, 467, 888 9, 376,264 || 1881 . . . . . . . . . . . . . . . . . . . . . 5, 179, 192 22,678,202 1872 ---------------------. 6, 673, 370 9, 958, 239 || 1882. - - - - - - - - . . . . . . . . . . . . 5,467,423 || 23, 225, 631 1873 --------------------- 7, 364,782 | 11, 835, 426 || 1883 - - - - - - . . . . . . . . . . . . . . . 5, 664,056 24, 503,063 1874---------------------- 5, 804, 588 12, 478, 954 || 1884 - - - - - - - - - - - - - - - ... . . . 5, 009,488 22, 123,895 Af INTERSTATE COMMERCE. 173 h In explanation of these statistics the State engineer says: It must be borne in mind that the average haul of rail freights is much shorter than those by canal; the former on the through New York lines average considerably less than 200 miles, while the canal freights, being mostly through, are at least twice as long, so that a table of gross tonnage does not fairly represent the comparative business of the routes and favors the railroads to the extent of about 50 per cent. The State of New York, having made the Erie Canal free to all com- merce, both interstate and State, is now engaged in a discussion as to the propriety of further improving and enlarging the canal. A canal convention, called for the purpose of considering various plans for enlarging and improving, was held at Utica in August last, at which, after full consideration of the whole question, it was decided to urge upon the State Legislature the necessity of proceeding to elularge and improve the Erie Canal by doubling the length of the present locks and deepening the channel. By this improvement two boats, running together as consorts, can be locked through at the same time, thereby greatly shortening the time between Buffalo and the Hudson River. By deepening the clannel one foot, each boat can be made to carry a much larger load and thus materially reduce the cost of transportation through the canal. By some it is believed that the cost can be reduced fully fifty per cent, but as to this the committee is not able fully to judge, but it has no doubt that the proposed improvement will be of Very great benefit to commerce passing through the Canal. The plan as proposed is considered to be entirely feasible by the best engineers who are acquainted with the Erie Canal. Many of the citizens of New York believe that the Federal Government should pay the cost of this im- provement, and also a considerable portion of the yearly expense of the Erie Canal, so long as it is maintained free to all the commerce of the Country. Upon this point the committee does not feel called upon to express an Opinion. TEIE MISSISSIPPI RIVER AND ITS TRIBUTARIES. The importance of improving the Mississippi River and its navigable tributaries is so fully appreciated by the people and has been recognized in so many substantial Ways by Congress that it has not been deemed advisable by the committee to enter upon the consideration of the sub- ject. All needed information concerning these river improvements is accessible in the official reports of those connected with the work of developing these great commercial highways, and the committee desires only to record its belief that the public interest demands and requires such further expenditures upon these avenues of commerce as shall best promote their usefulness and add most effectively to the facilities they afford in the Way of cheap transportation. THE PROPOSED HENNIEPIN CANAL. * The only proposed national enterprise to which the attention of the Committee has been formally directed is the construction of what is known as the Hennepin Canal, and reference is here made to the very able papers which have been submitted in advocacy of this improve- ment, one by Edward Russell on behalf of the Michigan and Mississippi Canal Commission (Appendix, p. 199), entitled “A plea for the regu. lation of freight rates between the Upper Mississippi States and Lake Michigan,” and the memorial prepared by Governor William Bross, and signed by a large number of the most prominent business men of Chi- cago (Appendix, p. 207). 174 INTERSTATE COMMERCE. The facts cited, the detailed information contained, and the argu- ments so clearly presented in these papers entitle: them to the most thoughtful consideration by Congress, and show that the commerce of the nation would derive fresh and continued advantages from the con- struction of this canal. - - Cheap transportation between Chicago and the seaboards is assured by the line of free water communication open through the Great Lakes, the Erie Canal, and the EIudson, and no method has been suggested by which the controlling influence of that water competition could be ex- tended over so wide, populous, and productive a territory at so moderate an expense as by constructing this short canal of 74 miles, which would give to the people of the Upper Mississippi States direct Water transit connection with all the States of the Atlantic Seaboard and with Eu- rope. The necessity of this improvement is made more urgent by the high and oppressive rates of freight prevailing between the grain-pro- ducing States of the Northwest and Chicago, as compared with the charges made between that point and the Atlantic coast. By the con- struction of this canal these charges would be materially reduced, and the grain-producing States would be given that cheap transit which has now become necessary to enable them to successfully place their surplus products in a foreign market. TEIE EMIANCIPATION OF TEIE WATERS. There are several other similar and important internal improvements which must soon be undertaken by the General Government if the . United States are to keep step with the leading nations of the world in the grand march of progress. France, Germany, and Russia are making large expenditures to secure new and cheaper outlets for their commerce by water transit, and the great European powers appear to be engaged in an earnest and determined contest for commercial suprem- acy. In this contest we must not be left behind. We cannot afford to assume the position of a non-combatant. We cannot afford to be side-tracked, but must engage in the race for cheaper transportation with all possible energy and vigor. . The cheapest mode of transportation known is by water. The rail- roads have accomplished wonders, but no railroad can successfully Com- pete With a free and unobstructed water route, so far as the cost of Carriage is concerned. Therefore, to secure the blessings of cheap transportation, and to hold our place among the nations of the earth, We must develop our natural water-ways to their fullest capacity, and give the benefits of lake, river, and canal communication to the people of all the States as far as practicable. The distribution of land and water throughout the United States is admirably adapted to the successful accomplishment of this purpose. The chief defects of the present water-routes of the country, as a whole, are that they are too long for successful competition with the railroads, and that they are too isolated and disconnected for successful co-opera- tion. The obvious and only possible remedy for these defects is to shorten them and to white them. This can be done by means of such improvements as the construction of a ship canal across the peninsula of IFlorida, the enlargement of the Erie Canal, the building of the EIennepin Canal, and the continued im- provement of the Mississippi River. By thus shortening the existing lines of Water communication and reudering them navigable for steam INTERSTATE COMMERCE. 175 vessels of large carrying capacity, the cost of freight service could be reduced to the lowest possible minimum, not only between a few great centers of trade, as now, but between interior points in almost every part of the country which are now practically without competing lines of transportation. - . . - A comprehensive system of internal improvements such as has beell here briefly outlined would develop to their utmost extent the inex- haustible resources of the United States, would give new life and healthy activity to trade throughout the length and breadth of the land, Would put bread in the mouths of thousands of men now seeking employment. without success, would avert the dangers to be appreheuded from rail road combinations to control the commerce of the country, and Would secure rates of transportation that would always enable the surplus prod- ucts of the nation to find a profitable market. The manifest destiny of our country points unerringly to this émanoi. pation of the waters as its next great work, a fitting sequel to the emanci. pation of the slave, a destiny not of war but of beneficence and peace, to which the heart of the nation turns as spontaneously and resistlessly as the waters of its great river flow to the Gulf. THE NECESSITY OF NATIONAL REGULATION OF INTER - - STATE COMMERCE. The two propositions which the committee has kept prominently in view throughout the entire investigation have been whether any legis- lation for the regulation of interstate transportation is necessary or ex- pedient, and, if so, in what manner can the public interest be best sub- served by legislation on that Subject. - - The consideration of the first proposition may seem to be a work of supererogation, for it is the deliberate judgment of the committee that upon no public question are the people so nearly unanimous as upon the proposition that Congress should undertake in some Way the regulation of interstate commerce. Omitting those who speak for the railroad in terests, there is practically no difference of opinion as to the necessity and importance of such action by Congress, and this is fully substan. tiated by the testimony accompanying this report, which is a fair con- sensus of public sentiment upon the question. The committee has found among the leading representatives of the railroad interests an increasing readiness to accept the aid of Congress in working out the solution of the railroad problem which has obstimately baffled all their efforts, and not a few of the ablest railroad men of the country seem disposed to look to the intervention of Congress as promising to afford the best means of ultimately Securing a more equitable and satisfactory adjustment of the relations of the transportation interests to the com- munity than they themselves have been able to bring about. The evidence upon this point is so conclusive that the committee has no hesitation in declaring that prompt action by Congress upon this important subject is almost unanimously demanded by public senti- ment. - - This demand is occasioned by the existence of acknowledged evils incident to and growing out of the complicated business of transporta- tion as now conducted, evils which the people believe can be checked and mitigated, if not wholly remedied, by appropriate legislation. The 176 INTERSTATE COMMERCE. committee recognizes the justice of this demand, and believes that ac- tion by Congress looking to the regulation of interstate transportation is necessary and expedient, for the following reasons: 1. The public interest demands regulation of the business of trans- portation because, in the absence of such regulation, the carrier is prac- tically and actually the Sole and final arbiter upon all disputed ques. tions that arise between shipper and carrier as to whether rates are reasonable or unjust discrimination has been practiced. * \ It is argued by railroad representatives that arbitrary or oppressive rates cannot be maintained; that they are adjusted and sufficiently regulated by competition with rival roads and with water routes, by commercial necessities, by the natural laws of trade, and by that self- interest which compels the corporations to have due regard to the wants and the opinions of those upon whom they must depend for business; that such discriminations as exist are for the most part unavoidable; that the owners and managers of the property are the best judges of the conditions and circumstances that affect the cost of transportation: and should determine the compensation they are entitled to receive ; and that, in ally event, the common law affords the shipper an adequate remedy and protection against abuse or any infringement of his rights. This answer fails to recognize the public nature and obligations of the carrier, and the right of the people, through the Governmental au- thority, to have a Voice in the management of a corporation which per- forms a public function. Nor do the facts warrant the claim that com- petition and self-interest can be relied upon to secure the shipper against abuse and unjust discrimination, or that he has an available and satis- factory remedy at common law. - . If it is found that the common law and the courts do not, in fact, af. ford to the shipper an effective remedy for his grievances, we have no need to inquire to what extent grievances may exist. The complicated nature of the countless transactions, incident to the business of trans- portation make it inevitable that disagreements should arise between the parties in interest, and it is neither just nor proper that disputed Questions materially affecting the business operations of a shipper should be left to the final determination of those representing an opposing financial interest. When such disagreements occur the shipper and the carrier are alike entitled to a fair and impartial determination of the matters at issue, and by all the principles governing judicial proceed- ings the most fair-minded railroad official is disqualified by his personal interest in the result from giving such a determination. If, however, there existed animpartial tribunal to which the shipper could readily ap- peal, he would find less occasion for appealing from the decision of the carrier, and differences between shipper and carrier would be more likely to be adjusted amicably without such an appeal. The simple fact that the shipper is now obliged to submit to the ad- judication of his complaint by the other party in interest, the party by whom he supposes himself to have been aggrieved, is in itself sufficient to demonstrate the necessity of such legislation as will secure to the shipper that impartial hearing of his complaints to which he is entitled by all the recognized principles of justice and equity. . Evidence is not wanting to prove that the remedy at common law is impracticable and of little advantage to the ordinary shipper. It has been found So by the people of the States in dealing with their local INTERSTATE COMMERCE 177 traffic, and, as has been shown, their recognition of the fact has been authoritatively recorded in nearly every State in the Union by statu- tory enactments, and in many of them by the establishment of commis- Sions, in the effort to provide for the shipper that prompt and effective remedy which it has been found by experience that recourse to the com- mon iaw has failed to afford. The reasons for this failure apply with even greater force to the more complicated transactions of interstate commerce than to State traffic, because the former involve more per- plexing questions and are affected by a greater diversity of varying con- ditions. The legislation of the States, the reports of the State commis- Sions, the records of the courts, the evidence of shippers, and, in short, the whole current of testimony, is to the same effect; and the fact stated is also admitted by Some of the highest railroad authorities. Mr. Fink SayS: In many cases where small amounts are involved, which do not justify legal pro- ceedings against the company, the aggrieved parties are prevented from prosecuting their claims. * * * Ordinary courts are not properly constituted for that purpose, and the time required for the adjudication of claims is so long and the expenses so great as to defeat the very object for which proceedings are instituted. (Testimony, p. 107). Leaving out of consideration the natural disinclination of the average shipper to engage-in litigation with a corporation which may have the power to determine his success or failure in business, and to enter the lists against an adversary with ample resources and the best legal talent at its Command and able to Wear out an opponent by the tedious delays of the law, it is plain that the shipper is still at a great disadvantage in seeking redress for grievances under the common law, which places upon the complaimant the burden of proof and requires him to affirma- tively establish the unreasonableness of a given rate or the fact of an alleged discrimination. What such an undertaking practically involves is indicated by the following extract from the statement of Mr. Kernan, the chairman of the New York commission, which sums up the whole C&S62 i - Assuredly there have been and do exist unreasonable rates and unjust discrimina- tions. This much will be admitted by all; it will not be denied even by any carrier. Why, then, have not the courts enjoined the continuance of the wrongs and enforced the payment of damages? Why, again, is it that substantially no such suits ever have been brought and that so few decisions in this country exist It is not because of de- ſects in the law or in the constitution of the courts, but it is because the subject is one which neither client nor lawyer, judge norjury, can unravel or deal with intelligently within the compass of an ordinary trial and with such knowledge of the matter as men generally well educated possess. Let a man take the testimony in five volumes before the Hepburn committee; read one hundred pages of the clear and able state- ments of Mr. Blanchard, for instance; con over the facts and figures he gives, and then let him try to reach a conclusion upon the question under discussion. Some con- ception will thus be obtained of what a lawsuit is which involves the reasonableness of rates, or the existence of an unjust discrimination, or a local rate as compared with a through rate. As the onus is upon the complainant, add to his difficulties the fact that his adversary has nearly all the evidence in his possession, locked up in books and in the memory and intelligence of experts who have made the subject their study. The expense involved, the uncertainty to be faced, and the difficulties to be overcome in an ordinary suit at law have made that remedy obsolete and useless, (Appendix, p. 19.) - - S. Rep. 46—13 178 INTERSTATE COMMERCE. All these considerations, fully corroborated as they are by the evi- dence submitted, have satisfied the committee that the Common law wholly fails to afford an effective remedy against unreasonable or dis- criminating rates, and that, without additional legislation, the carrier is practically the sole and only judge of the rights of the producer and shipper in respect to transportation. 2. It is the duty of Congress to undertake the regulation of the busi- ness of transportation, because of admitted abuses in its management and of acknowledged discriminations between persons and places in its practical operation—evils which it is possible to reach and remedy Only through the exercise of the powers granted by the Constitution to Con- gress, and against which the citizen is entitled to the protection and relief the national authority can alone afford. - - e G - Attention will be called hereafter to these causes of complaint; and it is perhaps only necessary to suggest here that the railroad argument against legislation on the ground that competition, the laws of trade, and an “enlightened self-interest” afford all needful protection and the most effective regulation, is predicated upon the conditions which pre- vail at the great commercial centers and in favored localities where competition is most active, and applies more particularly to the larger shippers, who are always able to take care of themselves and at such points can usually depend for protection and fair treatment upon the eagerness of the corporations to capture all the business possible. But it should be the aim of the law to protect the weak, and it is at the great number of non-competitive interior points, scattered all over the land, at which even the protection elsewhere afforded by competitive in- fluences is not found, and where the producer and shipper are most com- pletely in the power of the railroads, that additional Safeguards are most needed. r º 3. National legislation is necessary to remedy the evils complained of, because the operations of the transportation system are, for the most. part, beyond the jurisdiction of the States, and, until Congress acts, not subject to any governmental control in the public interest. $. } The States have no power to regulate interstate commerce, and it ap- pears from the evidence that even their control of their own domestic traffic is restricted and frequently made inoperative by reason of its in- timate intermingling with interstate commerce and by the present free- dom of the latter from any legislative restrictions. Some of the diffi- culties of effective State regulation in the absence of national legislation have been pointed out elsewhere in this report, and illustrations have been given of the greater Volume and importance of interstate as com- pared with State traffic. National supervision would supplement, give direction to, and render effective State supervision, and is especially necessary as the only method of Securing that uniformity of regulation and operation which the transportation system requires for its highest development. - - - The clearly-established fact that, by reason of the constitutional divis- ion of powers between the States and the General Government, the States have been able only to partially control the business of trans- portation within their own borders has been the principal inciting cause of the popular demand for national regulation, and is sufficient, in the judgment of the committee, to call for such action by Congress as will make effective the means of regulation found necessary and adopted by the States. ,” INTERSTATE COMMERCE. . 179 4. National legislation is also necessary, because the business of trans- portation is essentially of a nature which requires that uniform system and method of regulation which the national authority can alone pre- scribe. ~, - - The key-note to all the decisions of the United States Supreme Court concerning the power to regulate commerce is found in the declaration made in Cooley v. Board of Wardens, and frequently referred to in other cases, that “whatever subjects of this power are in their nature national, or admit only of one uniform system or plan of regulation, may justly be said to be of such a nature as to require exclusive legis- lation by Congress;” and, as is said by the court in the late case of Gloucester Ferry Company v. Pennsylvania, “it needs no argument to show that the commerce with foreign nations and between the States, which consists in the transportation of persons and property between them, is a subject of national character, and requires uniformity of reg- ulation. Congress alone, therefore, can deal with such transportation.” 5. The failure of Congress to act is an excuse for the attempts made by the railroads to regulate the commerce of the country in their own way and in their own interests by whatever combinations and methods #hey are able to put into operation. Through the absence of national legislation the railroads of the United States have been left to work out their own Salvation. The practical results of their efforts have been by no means encouraging, as hhe present depressed condition of the railway interests bears witness, nor do they claim to have made any Substantial progress during the past fifteen or twenty years. It is true that in this period the railroads have accomplished wonders in reducing the cost of transportation, in removing the limitations of distance from trade between remote local- âties, and in building up and widely extending the general commerce of the country. But, notwithstanding all these marvelous achievements, for which due credit should be given, the solid fact still claims consid. eration, that the inequalities and discriminations which characterize £he operations of the system in its entirety are now as pronounced as $n the earlier stages of its development. - - In the recognized existence of these evils and in the failure of th national authority to offer any remedy, railroad managers have found their justification for seeking a remedy through methods which have not commended themselves to the public judgment and which have threatened even greater dangers to the body-politic. In the absence of national legislation, the railroads have naturally resorted to the only methods by which they could unaided secure any degree of stability and uniformity in their charges—consolidation and confederation. The final outcome of continued Consolidations would be the creation of an organization more powerful than the Government itself and perhaps beyond its control. The same result might follow the successful de- velopment of the policy of confederation or pooling, if unrestricted by Governmental supervision, and either would be inimical to the public interest. But while this would be the logical outcome of the existing tendency of railway organization and management, there are satisfactory reasons for believing that it will not be the actual result, and that this policy has substantially reached the limit to which it can be carried. In a sense it may be true that the railroad properties of the country are to-day largely within the control of a comparatively small circle, yet the 180 INTERSTATE COMMERCE. colossal combinations which have been effected find other gigantic com- binations equally as powerful successfully contending for the traffic of the territory they seek to control. The vast geographical extent of the country, its immense resources, the diverse interests of different sec- tions, the abundance of capital, the commanding influence and the en- terprise of the great commercial centers, the impossibility of controlling 35,000 miles of free water-routes—all these considerations lessen the dangers to be apprehended from future consolidations and combina- tions, and at the same time show how difficult it will be for the railroads to work out the problem alone and unaided. - Experience and investigation have up to this time failed to indicate how the inequalities and discriminations complained of, which have grown into and become a fundamental part of the system upon which the business of the entire country is conducted, are to be done away with without a serious disturbance of every individual and public busi- ness interest. To equalize through and local rates, and to give them that degree of uniformity and stability So greatly needed, must neces- sarily involve a complete readjustment and reconstruction of the com: mercial relations and business methods of the whole country. EIow this is to be accomplished is the Secret which underlies the satisfactory solution of the railroad problem. That a problem of such magnitude, importance, and intricacy can be summarily solved by any master-stroke of legislative Wisdom is beyond the bounds of reasonable belief. That the railroads, unaided or unre- strained, can or will eventually Work out its solution seems highly im- probable, judging from past experience, and cannot reasonably be ex- pected. That a satisfactory solution of the problem can ever be secured without the aid of wise legislation the Committee does not believe. THE CAUSES OF COMPLAINT AGAINST THE RAILROAD % SYSTEM. The complaints against the railroad system of the Uriited States expressed to the committee are based upon the following charges: 1. That local rates are unreasonably high, compared with through rates. - 2. That both local and through rates are unreasonably high at non- competing points, either from the absence of competition or in conse- quence 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 traf. fic Will bear.” 4. That unjustifiable discriminations are constantly made between in- dividuals in the rates charged for like service under similar circum- StanceS. 5. That improper discriminations are 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, - e INTERSTATE COMMERCE. 181 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 pre- vent free competition in many lines of trade in which the item of trans- portation is an important factor. . 8. That such favoritism and secrecy introduce an element of uncer. tainty 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 rail- roads are able by various devices to avoid their responsibility as car- riers, 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 thereto. 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 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 divi- dends 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 in which 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 unnecessary expenditure of large sums in the maintenance of a costly force of agents engaged in a reckless strife for competitive busineSS. ... -- 182 INTERSTATE COMMERCE. THE ESSENCE OF TEIE GOMPLAINTS." It will be observed that the most important, and in fact nearly all, of the foregoing complaints are based upon the practice of discrimina- tion in one form or another. This is the principal cause of complaint against the management and operation of the transportation system of the United States, and gives rise to the questions of greatest difficulty in the regulation of interstate commerce. - It is substantially agreed by all parties in interest that the great desideratum is to secure equality, so far as practicable, in the facilities for transportation afforded and the rates charged by the instrumentali- ties of commerce. . The burden of complaint is against unfair differences in these particulars as between different places, persons, and commodi- ties, and its essence is that these differences are unjust in comparison with the rates allowed or facilities afforded to other persons and places for a like service under similar circumstances. . The first question to be determined, apparently, is whether the ine- qualities complained of and admitted to exist are inevitable, or whether they are entirely the result of arbitrary and unnecessary discrimination on the part of the common carriers of the country; and the considera- tion of this question suggests an inquiry as to the proper basis upon which rates of transportation should be established. RAILROAD RATES.–TEIE PRINCIPLES UPON wRICH TELEY SEIOULD BE ESTABLISHED, AND THE LIMITATIONS WITEIIN WEIICET DISCRIMINATION MAY BE JUSTIFIABLE. Neither experience nor investigation have satisfactorily settled the many perplexing questions that are encountered in attempting to deter- mine the principles upon which a schedule of charges should be ar- ranged, either for a single railroad or for the entire system. Differences in rates between railroads differing greatly in their earning capacity can readily be accounted for and understood, and yet the reasons which justify these variations are equally potential in enforcing differences in rates between different commodities upon a single railroad, and render it impossible to base rates entirely upon the cost or value of the service rendered in all instances. Inequality must exist unless uniformity is possible. Complete uni- formity would require the transportation of all classes of freight over any number of roads at the same rate per car load, or per hundred pounds, somewhat on the same principle that correspondence is handled by the Post-Office Department. Any approach to such a degree of uni- formity in the operation of the hundreds of independent railroad cor- porations, each with conflicting interests, and in their charges for the transportation of the innumerable variety of commodities which are shipped over the 125,000 miles of railway in the United States, is obvi- Ously entirely out of the question under existing circumstances. It could only be made possible by the General Government obtaining pos- Session of all the transportation lines of the country and operating them as a unit in the same manner that the postal service is conducted. Nor would it then be found advisable or entirely practicable, if we may judge from the experience of those European nations in which attempts have been made to apply these principles under the system of state ºp and management, and hence under the most favorable con. itions. - - . - - INTERSTATE COMMERCE. 183 { * It is sometimes argued that any discrimination on the part of the common carrier is necessarily unjust ; that there can be no such thing as just discrimination. This is not the theory or principle of the com. mon law, which is that all who are situated alike must be treated alike. But all cannot be situated alike, and the rule, therefore, only holds good when limited to transactions of the same character, conducted under similar circumstances and conditions. In the practical management of a railroad, whether by the strongest government or by a corpora- tion, it is found impossible to avoid the exercise of discrimination, and, in consequence, the courts have always recognized the distinction be. tween justifiable and unjust discrimination. Whether the discrimination practiced in any given instance was allowable or unwarranted is a ques- tion that can be fairly determined only by understanding the trade coin- ditions and special circumstances that influence and govern the action of the railroad managers in that particular transaction. These are of almost infinite variety and frequently beyond the observation of those without practical experience in railroad management. It is sometimes found that discriminations complained of may be justified by reasons which suggest themselves only to those having expert knowledge and long training in the business of transportation. This the shipper Can- not have, and he is therefore not always able to judge whether the reasons advanced in justification of discriminations against him are Suf. ficient or merely misleading. Hence it becomes necessary to provide some method by which the shipper may ascertain whether discrimina- tions that seem to him inequitable can be justified, in order to protect him against the arbitrary exercise by the carrier of the power of deter- mining those questions, often of the greatest public importance. Discriminations are common in commercial transactions of every de- scription. They are as inevitable as are the differences in the charac- ter and appearance of individuals. The merchant is not under obliga- tion to treat all his customers alike, and may discriminate between them in the prices charged for similar articles, having regard only to his own interest, as he views it. EIe is free to make prices “to develop business.” He may offer “bargains” to bring trade. He may sell some articles “at cost,” and charge 100 per cent. profit on others, if he can get it. In short, he is at liberty to charge whatever prices he thinks his customers will stand. - Under the policy of private ownership, and in the absence of legisla- tive regulation, the railroad business of the country has from the be- ginning been built up and conducted upon much the same principles. A railroad corporation has been looked upon by its managers as an as- sociation of individuals engaged in the furnishing and selling of trans- portation for their own advantage and free to conduct the business in their own way, as individual mercantile enterprises are conducted. They have been slow to recognize the public nature and public obliga- tions of the corporations under their control, and to realize the fact that these obligations impose restrictions upon their management that do not affect the freedom of action rightfully conceded to the individual trader. The natural result of their disregard of these obligations and of their independent action has been that the railroad business is in- extricably involved in a complicated network of discriminations, sanc- tioned by custom and so well established that it is now extremely difficult, in many instances, to draw the line between discriminations that are justifiable and those that are unwarranted. 184 INTERSTATE COMMERCE. * CHARGING “WHAT THE TRAFFIC WILL BEAR.” A frequent source of complaint is the fact that the charges tºpon shipments of articles similar in character, bulk, or value for similar distances vary more widely than the apparent difference in the cost of performing the service in each case. There would be no excuse for any difference in charges under such circumstances, unless there was an actual difference in the cost of the service performed, if the railroads could establish such rates as they saw fit, but the equality and uniformity which would be practicalle un- der such conditions cannot be secured. It is plain that they must ac- cept a rate at which any given commodity call be moved from the place of production to the place of consumption and leave a margin of profit to the shipper, otherwise that article of freight will not be transported, or it will seek other means of carriage. The movement of that particular commodity by rail is determined by considerations wholly independent of and not affected by the cost of the service to be performed. It is de- termined absolutely and solely by those economic conditions which gov- ern the exchange of commodities, by those trade changes within natu- ral limits which are constantly going on in all nations, and by the laws of supply and demand which establish values. These conditions and laws place the first limitation upon the free will of the carrier in the construction of a tariff of charges, and exercise a potential influence in their determination which has, whenever the attempt has been made, rendered it impossible to base rates of transportation entirely upon the cost of the service in every case. The maximum rate it is possible to obtain within these limitations varies with different commodities, and differences between them become inevitable on whatever principle the rates may be arranged. They are inevitable, because on some articles the maximum rates that can be secured are but little above the actual cost of their movement, and be. cause the same percentage of profit on the whole business would not Prºduce sufficient revenue for the successful operation of the road. This is the case with cheap and bulky commodities; and the most rigid tariffs established by State or foreign governments, even when avow- edly based upon the cost of the service, have violated that principle, and made an exception in the case of necessaries like coal. The only alternative, evidently, is to vary the relative rates upon dif. ferent articles in such a manner as to admit of the movement of each class of freight, and at the same time secure the necessary revenue. This is discrimination, but it is made necessary by circumstances wholly beyond the control of the carrier or the law-making power, and is justi- fiable so long as a reasonable relation is preserved between the rates established upon similar commodities, and when exercised within cer- tain limits which are too often ignored. - A given amount of revenue being required, the problem daily pre- sented to the railroad manager is to determine the contribution towards that sum total which should equitably be made by each shipment. It is evident that each should first contribute at least the actual cost of its movement, for otherwise a loss would be incurred which would un- justly increase the assessment upon less favored shipments. The car- rying of freight at a rate below the actual movement expenses is plainly an illegitimate transaction, which must necessarily involve either im. position upon and extortion from shippers not thus favored or loss upon the stockholders, and it is wholly indefensible if done at the expense of the Shippers discriminated against. INTERSTATE COMMERCE. - 185 This, then, fixes the minimum amount that should be collected upon each shipment. The maximum is determined by the considerations heretofore indicated. It is only within the limits thus plainly defined that discrimination in the adjustment of rates may be equitably prac- ticed by the carrier, and the variations must always be confined to that portion of the charge which is in excess of the actual cost of movement to be equitable and justifiable. - When each shipment has contributed its proportion of the operating expenses, there yet remains to be provided for the larger portion of the revenue required. This includes the amounts necessary for the pay- ment of interest, for repairs and the maintenance of the property, for the general expenses of management, and for a fair profit to the stock- holders. It is estimated by Mr. Fink “that upon an average of $1 earned by all the roads in the United States for a certain Service, 40 cents are required to pay 43 per cent. interest on the bonds and Stock, 35 cents to pay the mere movement expenses above referred to, and, say, 25 cents to pay for the maintenance of the roadway and the gen- eral expenses of the organization.” According to this calculation, even when each shipment has paid the cost of its movement, but 35 per cent. of the revenue necessary has been secured, and the burden of paying the remaining 65 per cent. legitimately needed for the support of the road should be shared by the whole traffic, and distributed between the different shipments as equitably as circumstances may permit. It follows, therefore, that a just and equitable rate on any particular shipment is one which covers the actual expense to the carrier of that particular transaction, plus a proportionately fair contribution towards the sum total of the fixed charges; and that any discrimination which goes beyond these limits is unjust and indefensible. - The capacity of each commodity to contribute to the payment of the fixed charges is measured by the extent to which the cost of its trans- portation fixes its market Value and determines the question of its movement. In the case of commodities such as coal, stone, ore, beef, corn, lumber, &c., the freight charge constitutes the principal item of the cost to the consumer, and however small may be his contribution to the general burden, it is relatively greater than that made by the consumer of high-priced articles, such as clothing or dry goods, for in- stance, the selling price of which is not appreciably affected by the freight charge, even though unreasonably high. This principle, which applies to every article of shipment, has been justly made odious by the railroads, because they have pleaded it in justification of unreasonable discriminations, and they have applied it in such a manner that it has become known as “taxing the traffic at what it will bear.” Fairly construed and applied, it does not justify the exaction of the highest rate that can be obtained, as the popular state- ment of the principle would indicate, but only the exercise of such dis. crimination as is unavoidable because rates on many articles are limited by “what the traffic will not bear.” It is this limitation which occasions variations in the rates charged upon different articles when transported equal distances in like quanti- ties under similar circumstances, and which necessitates the classifica- tion of freights. - TEIE CLASSIFICATION OF FREIGHTS. The purpose of the classification is to determine the relative differ- ences in the contributions which different articles should make towards the payment of the fixed charges, and to simplify the difficulty of rate. 186 INTERSTATE COMMERCE. making by grouping together those which are handled at about the same average expense, and should rightfully make the same contribu- tions towards the general burden. The freight classification is an essen- tial part of the tariff or schedule of rates. The tariff fixes the rate upon the articles in each class for given distances and quantities. The classi. fication, by grouping every known article of shipment into classes, de. termines in that way the rates to be charged upon each. Therefore, a change in the tariff affects the rate on all the numerous articles included in the class or classes to which the change applies, while a change in the classification of any article is limited in its effect to the particular ar- ticle thereby transferred to a lower or higher class. - Classification implies variation, and the discrimination which perme- ates the entire system of railroad rates may fairly be said to have its foundation in the classification of freights. In the arrangement of a classification all the conditions that necessitate Variations in rates may rightfully receive consideration. These are of almost endless variety, and too numerous to be readily stated. Nor is it easy to concisely in- dicate their nature and extent. Even before arbitrary discriminations are resolted to, variations based solely on differences in the cost of the service will be found necessary, which will often appear unduly discrim- inating, for the reason that the rates do not merely cover the expense of hauling the freight from one point to another, but include what are usu- ally called terminal charges, or the expenses of loading, unloading, and handling, and of the station service at the two points. Some curious results were shown by an investigation made by Mr. O. Chanute, a civil engineer, into the time actually employed and the expense for labor there- by incurred in unloading and loading freight at one of the depots in Jer- sey City. While his figures are only approximate, they indicate that the influence of the shape and weight of the package upon the cost of hand- ling is much greater than would be supposed. Rolling freight, it was found, was unloaded much more cheaply than any other. For instance, the tally kept showed that the cost of unloading tierces was 4 cents per ton and of barrels 6 cents, as against 24 cents per ton for light boxes. The increased cost of handling, occasioned by increased size and weight, was illustrated in the case of marble, the cost of unloading blocks of me- dium size being 54 cents per car and of large blocks $1.88 per car. A still greater difference was exhibited in the case of leather, the cost of unloading a car of leather in rolls being given at 81 cents and of leather in loose sides at $5.76. The classification, therefore, may properly take into account the shape in which freight is offered for shipment and vary the charges on the same articles accordingly. - - * There are many other differences that may fairly be considered as affecting the cost of the service performed. On articles easily damaged and requiring special care in handling, or on those of high value, the carrier is entitled to additional compensation on account of the risk incurred in assuming the responsibility for their safe transshipment. When all these considerations, and many others that could be men- tioned, have been fairly taken into account, it will be found that some articles will pay several times as much as others of similar weight and value, although apparently they can be handled at no greater expense, and that the cheaper and heavier commodities have probably taken as high a rate as they can stand even without any arbitrary discrimination against them. - That the classifications now in use have been fairly arranged with due regard to all the considerations which have been alluded to cannot be justly claimed by the railroad authorities. In many instances it is dif INTERSTATE COMMERCE. 187 ficult to ascertain the principles upon which they have been adjusted or the reasons that originally dictated the marked differences that have often characterized the rates upon articles of a similar character. Dif. ferences have been preserved by custom for which the original reason, if any existed, has been forgotten, with the result that they now appear arbitrary and unreasonable. The tariffs of the present day are a great advance upon those of a few years ago, but there is yet ample room for improvement. They have been a gradual growth, modified and im- proved from time to time as the principles that should govern their ad- justment have become better understood, and as circumstances have seemed to make changes expedient, but they are yet too largely arbi- trary. - - . Under existing methods the railroad officials are the sole judges of the weight that should properly be given to the almost endiess variety of conditions and circumstances which influence variations in rates. Upon such questions disinterested persons will honestly disagree, and there is ample room for differences of opinion. Is it any wonder, then, that the judgment of the officials should often prove imperfect, and that in the hurry of business mistakes should be made 7 Or is it to be wondered at that the shipper, having had no voice in the determination of the ques- tions involved, and not informed as to their nature, should be disposed to complain of variations which he is, from his point of observation, unable to comprehend or account for except on the ground of unjust discrimination? - - - The committee has at considerable length pointed out the great di- versity of elements that enforce variations in rates, not to justify or ex- cuse the inequalities which exist, but to call attention to the almost unlimited opportunities for arbitrary and unreasonable discriminations which are afforded the railroads by the fact that differences in rates must exist, that they are the only judges of what differences are neces- sary, and that it is difficult, if not impossible, to determine when the differences they establish at their own discretion are purely arbitrary and when they are justifiable, without fuller knowledge of the circum- stances than the shipper is able to obtain. The difficulty of obtaining this information, even without regard to the intricacy of the subject, is greater than would at first thought ap- pear. It should be remembered that the vast majority of shippers must deal with subordinate agents, whose only duty is to carry out their in- structions, and who are unable to give the desired information even if disposed to do so. Nor is it always easy for the ordinary shipper to reach the officials in control of a great corporation, nor do their inquiries and complaints always receive attention and consideration, as they would, if communicated through authorized representatives of the public. w TJNIFORMITY OF CILASSIFICATION. This is particularly the case with regard to the questions involved in the classification of freights. These present so many opportunities for arbitrary discrimination, that the committee believe it essential that any method which may be decided upon for the prevention of unjust discrimination should include the regulation of the classifica- tion, which begins and ends upon a basis of discrimination. Listinct classifications were originally used by almost every rail- road, and the great advance made in recent years by the adoption of uniform classifications by the various pooling associations furnishes the best evidence that could be desired that further improvement is 188 INTERSTATE COMMERCE. possible. Marked differences have been found in the classifications in use in different parts of the country for which no satisfactory reasons have been given by the railroad officials, and which are accounted for \ only by the fact that the different classifications arearranged independ- ently and that the judgments of men differ upon these matters as Widely as upon any other. t This want of uniformity may be made the means of extortion and overcharge, and is in any event a fruitful source of misunderstanding, especially when, as is the case on the trunk lines, different classifications are used for east-bound and west-bound shipments. Uniformity in this respect has been asked for almost unanimously by shippers. It is cer- tainly much to be desired, and the committee believes that it is entirely practicable as to the commodities composing the great bulk of the inter- State shipments, but the difficulty encountered has been how to provide for or to require uniformity without specifically prescribing the classifi- cation that shall be adopted, or without giving a commission authority to establish a classification, which would be equivalent to authorizing such commission to fix rates. Inasmuch, however, as the accompany- ing bill makes provision for the publication of classifications, as well as tariffs, under the direction of the proposed commission, it is believed that this requirement will secure greater uniformity, and as any unreas- onable charges resulting from an inequitable classification can be regul- lated under the general provisions covering those questions, no specific enactment in relation to uniformity of classifications has been deemed necessary. DISCRIMINATIONS IBETWEEN PERSONS. Differences in rates between different commodities of a similar char- acter are often unavoidable and justifiable, as has been shown, but no excuse can be offered for any discrimination in the charges made by a common carrier as between persons similarly situated for whom a like service is performed under similar circumstances. This is the most flagrant and reprehensible form of arbitrary discrimination. Individual favoritism is the greatest evil chargeable against the management of the transportation system of the United States. The evidente before the Committee shows that it has come to be considered by railroad offi- cials as an indispensable feature of the system upon which their busi-. iness is now carried on, and reveals its existence to an extent that im- peratively demands additional legislation to protect the people in their common-law rights and to insure them the equal enjoyment of the advan- tages of transportation. - - One reference to the testimony must suffice to illustrate the univer- sality of individual favoritism, the reasons which influence the railroads in favoring one shipper to the ruin of another, and the injustice of the system. Mr. C. M. Wicker, of Chicago, a former railroad official of many years' experience, was asked if he knew anything of discriminations upon the part of transportation companies as between individuals or lo- Calities, and testified as follows: Mr. WICKER. Yes; I do. And this discrimination, by reason of rebates, is a part of the present railroad system. I do not believe the present railway system could be conducted without it. Roads coming into the field to-day and undertaking to do business on a legitimate basis of billing the property at the agreed rates would simply result in getting no business in a short time. - Senator HARRIS. Then, regardless of the popularly understood schedule rates, pra0- tically it is a matter of underbidding for business by way of rebates? Mr. WICKER. Yes, sir; worse than that. It is individual favoritism; the building up of one party to the detriment of the other, I will illustrate. I have been doing it myself for years, and had to do it, INTERSTATE COMMERCE. 189 Senator HARRIs. Doing it for yourself in your position? Mr. WICRER. I am speaking now of when I was a railroad man. Here is quite a grain point in Iowa, where there are five or six elevators. As a railroad man, I would try and hold all those dealers on a “level keel,” and give them all the same tariff rate. But suppose there was a road 5 or 6 or 8 miles across the country, and those dealers should begin to drop in on me every day or two and tell me that that road across the country was reaching within a mile or two of our station and drawing to itself all the grain. You might say that it would be the just and right thing to do to give all the five or six dealers at this station a special rate to meet that competition through the coun- try. But, as a railroad man, I can accomplish the purpose better by picking out one good, Smart, live man, and, giving him a concession of three or four cents a hundred, Tet him go there and scoop the business. I would get the tonnage, and that is what I want. But if I give it to the five, it is known in a very short time. * * * When you take in these people at the station on a private rebate you might as well make it public and lose what you intend to accomplish. You can take hold of one man and build him up at the expense of others, and the railroad wiſi get the tonnage. Senator HARRIS. The effect is to build that one man up and destroy the others? Mr. WICKER. Yes, sir; but it accomplishes the purposes of the road better than to build up the six. - - *. Senator HARRIs. And the road, in seeking its own self-preservation, has resorted to that method of concentrating the business into the hands of one or of a few to the destruction of the many? - Mr. WICKER. Yes, sir; and that is a part and parcel of the system. Senator HARRIS. Is that system continued up to this time? Mr. WICKER. Yes, sir. . g - Senator HARRIs. That is the method by which transportation is being conducted at this time by the railroads? - Mr. WICKER. Very largely. Where they form a pool and maintain that pool they do away with that method. So, I say, the pool is to the advantage of the public; it puts everybody on an even keel. - The CHAIRMAN. Provided it is lived up to by the railroad companies? Mr. WICKER. Yes, sir. Then put a commission over that pool to see that the rate is just and right, and I think you have approached nearer to justice than by any other way. (Testimony, p. 778.) - - That personal discrimination is unavoidable is not claimed and can- not be admitted. Competition does not prevent it, for the evil is most conspicuous when and where competition is most active. Pooling has not prevented it, although that, is claimed to be one of its objects, for the most rigid pooling compacts have not enforced general adherence to agreed and published rates. Begulation, therefore, seems to be the only remedy that can be relied on. -r The practice prevails so generally that it has come to be understood among business men that the published tariffs are made for the smaller shippers and those unsophisticated enough to pay the established rates; that those who can control the largest amounts of business will be al- lowed the lowest rates; that those who, even without this advantage, can get on “the inside,” through the friendship of the officials or by any other means, can at least secure valuable concessions; and that the most advantageous rates are to be obtained only through personal in- fluence or favoritism or by persistent “bulldozing.” It is in evidence that this state of affairs is far from satisfactory, even to those Specially favored, who can never be certain that their compet- itors do not, Cr at any time may not, regeive even better terms than themselves. Not a few large shippers who admitted that they were re- ceiving favorable concessions testified that they would gladly surrender the Special advantages they enjoyed if only the rates could be made public and alike to all, - # 190 - , INTERSTATE COMMERCE. This suggests the remedy that should be applied, and the question of securing publicity of rates will be considered hereafter. The secrecy which attends these transactions is the only evidence that is needed of their injustice. The uncertainty as to the rates actually charged which the system of personal favoritism occasions is demoralizing to all legiti- mate business, and is calculated to encourage Only that Which is purely speculative. . . - - The methods by means of which personal favoritism may be indulged in are limited in variety only by the ingenuity and inventive capacity of the railroad officials. Its most common manifestation is in the form of special contracts, special rates, rebates, underbilling, and other secret devices for evading the schedule rates; but it is possible to accomplish the same purpose in so many different ways, when desired, that the ab- solute prevention of the practice will be attended with no little difficulty. Tully appreciating these difficulties, the committee believes that every effort possible should be put forth by Congress to secure equality between man and man in respect to the matter of transportation, and that one means to that end would be the prohibition of personal pref. erences under suitable penalties, which should be supplemented by proper provisions for Securing publicity of rates. Commerce can and does adjust itself to inequalities of every description, but it cannot pros- per or be carried on legitimately while individual favoritism control the distribution of the advantages of transportation. . CONCESSIONS TO LARGE SEIIIPPERS. Discriminations between shippers similarly situated on account of Quantity and distance are universal, and as to these a great difference of opinion has been found to exist. Such discriminations are defended by the railroads on the ground that large shipments for long distances are in the nature of wholesale business; that they are handled at less ex- pense, and are more desirable at a smaller average profit than an equal Quantity of miscellaneous shipments, for the same reasons that it is preferable to transact business on a large scale with a limited number rather than on a small Scale with many customers, and that the more active competition for business of this character compels the acceptance of relatively lower rates. . - - Railroad usage has made the car-load the unit of shipment, and cus- ton) has sanctioned the allowance of reductions varying from 10 to 150 . per cent. On the car-load rate from that charged upon less quantities of the same commodity. The higher rate on the smaller shipments is claimed as compensation for the Supposed greater cost of handling and the possible loss of Space by not having a car so well filled. In actual practice all freight except live stock is shipped by weight and charged for by the hundred pounds, because of the great differences in the size of the cars used. The cars built in recent years are much larger than formerly, and every road has in use cars of so many different sizes that it is impracticable to establish a standard. A car-load may mean 20,000, 30,000, 40,000, or even 60,000 pounds, while a car-load of wool would mean perhaps 7,000 or 8,000 pounds. Therefore when a car- load rate is established on any commodity it applies to that commodity When shipped ill car-load lots, or in quantities that usually constitute a car-load. One car may contain 20,000 pounds of that commodity and the next one 30,000 or possibly even 40,000 pounds, and the classi- fication frequently specifies the minimum weight that shall be en- titled to a car load rate. As freight is virtually now shipped by the hun- dred pounds in most instances, it has been urged that that should be Inade the unit of shipment instead of the car-load. Reference is made. INTERSTATE COMMERCE. 191 to the testimony of Mr. C. M. Wicker, commissioner of the Chicago Freight Bureau (Testimony, p. 759), in which this question is fully dis- cussed, and to the reasons advanced by the jobbers of Des Moines, whose business would be seriously affected by the proposed change, for the continuance of the present system of car-load rates. A more unjust form of discrimination on account of quantity is ex- hibited in the concessions made by all roads to shippers handling large, amounts of freight in car-load lots. While it may be more convenient to manage a train-load destined to one consignee for one shipper than an equal number of cars forwarded by twenty-five shippers to as many consignees at the same point, there is apparently little if any difference in expense to the carrier. Besides, such shipments are the exception, not the rule; and in the great majority of cases where concessions to large shippers are excused on this ground, as a matter of fact but a few cars are forwarded at a time, and discriminations are made in favor of men whose shipments are handled in exactly the same way as their com- petitors, but who contract to forward a larger number of cars in a month or a year; and they are enabled to control the market and make these largershipments because they secure such contracts and such concessions. The committee, however, does not deem it necessary to recommend any legislation for the determination of the unit of shipment, believing that unreasonable discriminations on account of quantity should be in- vestigated and can be dealt with in the same manner and by the same methods that will be suggested for the prevention of unjust discrimina- tion in any other form. w We are, however, emphatically of the opinion that, while the car- load remains the unit, the rates upon one car-load or upon any greater number should be the same; that any concessions allowed on account of quantity should be made as public as the established rates, and that the discriminations universally practiced in favor of the larger ship- pers are unjust and prejudicial to the public interest, because their tendency is to unduly concentrate the control of commerce in the hands Of the few. º DISCRIMINATIONS BETWEEN PLACES. Universal complaint has been made to the committee as to the dis- criminations commonly practiced against places and as to the conspic- uous discrepancies between what are usually termed “local” rates and what are known as “through” rates. - . - There can be no controversy as to the fact that the differences shown to exist in these particulars are unequal, unreasonable, and in many places Oppressive. The proper adjustment of these inequalities, occa- sioned, as they are, by differences in the advantages and facilities en- joyed by different localities, by the varying effects of competition at different points, and by the allowances generally made on account of quantity as well as distance, is not easily determined in the case of a single railroad considered by itself, and the difficulties are vastly in- creased when an effort is made to determine the principles that should govern the differentiation of rates upon the component parts of the entire railroad system of the United States. All the considerations which contribute to produce inequalities in rates upon each separate road gain irresistible strength through the controlling influence of com- petition in effecting differences between the comparative charges made upon the hundreds of lines of varying earning capacity which compose the entire System. Tº. Competition has been looked upon as a safeguard against extortion, and in this respect it has proved effective where it has existed and when 192 INTERSTATE COMMERCE. its operation has not been unduly restricted. But experience has shown that it is no safeguard against discrimination. It cannot accomplish both purposes; but, on the contrary, where it prevents extortion it pro- duces discrimination, for the reason that the same degree of competi- tion cannot exist at all points. t - It is not unreasonable that there should be a considerable disparity between the charges made upon short local hauls and those upon the transportation of the food products of the country across the continent; but the inequality made necessary for the common Welfare does not jus- tify arbitrary discrimination against local shipments or the carrying of transcontinental traffic at less than cost at the expense of the former. The simple fact that differences exist which, to the local shipper, seem unreasonable, does not necessarily establish the charge of unjust dis- crimination against him. If it were possible to establish rates upon all the railroads of the United States based strictly, upon the cost of the service in every case, it is not improbable that many lines in the West and South would be obliged to make as great an aggregate charge for carrying grain a hundred miles as the great trunk lines, with their su- perior facilities and immense Volume of business, Would make for carry- ing the same commodity a thousand miles, Each railroad is entitled to reasonable rates, aud all that can be re- Quired of it is that they shall be reast nable. What is a reasonable rate on one does not necessarily determine what is reasonable upon another less favorably situated and of lesser earning capacity. Equality in the charges made upon the same commodity for equal distances by differ- ent limes in the East, in the West, and in the South cannot equitably be required, nor is it the province of legislation to attchmpt to place those remote from a market and poorly supplied with transportation facilities upon an equality with those within easy reach of a market and enjoy- ing every facility in the matter of transportation. It is not practicable to secure uniformity of rates as between places differently situated upon the hundreds of railroads within the United States, nor has it been pos. sible to secure such equality even within the limits of a single State. In New Hampshire, for example, the railroad commissioners have fixed the maximum rate per mile that may be charged for the transportation of passengers upon each railroad in the State. (See p. 117.) With full power to say what the rates upon each road should be, the commis- Sioners allow one railroad to charge its passengers $1 per Inile, while Others are restricted to a charge of 2; cents per mile. It is true that this is an extreme case, but it illustrates in a striking Way the circum- stances that may justify variations in rates for similar distances upon different roads, and the principle remains the same, even When the dif. ſerences of condition are not as apparent as are those between an aver- age road and that running up the steep sides of Mount Washington, and depending upon passenger traffic for its support. It is plain, also, that the proper and equitable adjustment of the ex- isting differences between through alld local rates should be determined with reference to their influence upon the whole internal and foreign consmerce of the United States rather than With regard only to their effect upon the immediate local interests of a particular State or com- Inunity. The general considerations of this character which may right- fully be taken into account are suggested in the following paragraphs from the statement received from the railroad commissioners of Kansas : Two CLASSES OF INTERSTATE TRAFFIC. There aro two classes of interstate traffic over railroad lines, viz: Conumerce from and to points in the interior to and from the Seaboard, and commerce that crosses State lines but is still local. In the former case the great bulk of the commerge i8 INTERSTATE COMMERCE. - 193 carried over great distances, crossing a number of State lines, and employing sev- eral connecting roads to complete the transit. In the other the freight is carried from a point in one State to a point in an adjoining State. It is obvious that rates adapted to the hauling of heavy and bulky products, comprising the leading pro- ductions of the country, over great distances, either for Eastern consumption or for- eign export, would furnish no criterion or basis for a system of rates for the trans- portation of the same products comparatively short distances between points in ad- joining States in the interior. These products must of necessity be moved at very low rates, at rates that do not remunerate the companies engaged in the work of transportation, but only furnish a small margin of profit over the bare expenses in- curred in the performance of the service, from the fact that they are moved very great distances. The great cereal crops raised in the Mississippi Valley and the meat products in the trans-Mississippi, in the continued production of which the country is vitally interested, can only be maintained by a system of rates for their transpor- tation to the seaboard which, while they involve no absolute loss but rather a small margin of profit, would, if the same rates were obligatory upon them as to all traffic carried over their lines, consign every road engaged in the business into absolute bankruptcy. It is a fact known to every man who has given any thought to the subject that the rates now prevailing upon that part of interstate commerce which is concerned with the movement of Western products to the Eastern seaboard are very much lower than were ever before devised by any railroad in the world, so low, in fact, that were rates on their local traffic proportioned or adjusted to these transcontinental rates there is no road now in existence in this country that could derive sufficient revenue from its business to pay, in addition to its operating expenses, its fixed charges. TEDE TWO ALTERNATIVES., To devise a system of maximum rates, covering every species of interstate traffic, on the basis of rates for long hauls from the extreme West to the East would par- alyze every railroad engaged in the business. On the other hand, to equalize the rates as between long and short hauls, i. e., to introduce a proportionate equality in the rates between local and continental interstate traffic, would, if railroad property is to be preserved and its efficiency maintained, advance the rates on great distances to such an extent as to put an embargo upon the movement of the cereal crops of the extreme West or the trans-Mississippi region, a result which would be little less dis- astrous to the East than to the West. - - It has been rendered possible for the great West to reach a rapid and prosperous development by a system of low rates upon the movement of the leading productions of that region to tide-water. The attractions of the West, enhanced and made avail- able by the unparalléled creation of railroad facilities, have induced a movement of population from the East to the West, thus relieving an overb urdened labor market and reducing those causes of discontent and restlessness among the employed laborers of the country that eventuate in serious disturbances to her established industries and frequently threaten the public peace. - ... ' On the other hand, the abundant production of food, by the utilization of the West- ern lands, and its cheap distribution by railway lines to remote distances, lighten the burdens of the laborer and increase the ability of the country to carry on its indus- trial development. - - It will be seen that the benefits derived from the low system of rates prevailing on the great movements of food products, as compared with rates upon movements more local in character, are shared by each section of the country. And since these bene- fits are felt alike in every part of the country, it is no unjust discrimination to dis- criminate in the charges made upon long and short hauls. - It may be further remarked that this differentiation in rates is a result that has been brought about by no conventional or voluntary arrangement between compa- nies operating interstate lines of railway. But it has been forced by the natural laws of commerce operating upon geographical lines, and which cannot be thanged without changing the distribution of land and water on the continent, or by annihi- Jating distance without the aid of steam ; and any attempt by the law-making power to contravene these natural laws, thus necessitated by our geographical situation, would end in disastrous derangement of our commercial system. (Appendix, p. 3.) --- tº- - - _º º 194 - INTERSTATE COMMERCE. THE FIXING OF RATES BY LEGISLATION IMPRACTICABLE. When all these considerations have been given due weight the Con- clusion seems irresistible that a very considerable disparity in charges upon different railroads is inevitable, and that it would be inexpedient and impracticable to attempt to adjust existing inequalities by any sys- tem of rates established by legislation, as many witnesses have Sug- gested. It has certainly been shown that one uniform tariff for all inter- state railways would not be equitable, nor is it possible to conceive how one could be framed under which they could all be operated success- fully without unduly increasing the charges and profits of those most favorably situated. If the expedient should be adopted of attempting to devise a limited number of tariffs for groups of roads it would be found that the same exact knowledge as to each would be required to classify them fairly as to construct a distinct schedule for each, and their conflicting interests would sooner or later make the latter plan necessary. In either case it would be impossible to avoid taking into account the considerations which absolutely enforce inequalities in rates, and the inevitable result of any attempt to establish rates by legislation would be, as it always has been, the adoption of tariffs arranged upon the Same general principles as those now in use, and perpetuating the sys- tem of differential rates now in force. The most that could be gained, then, would be a revision or modification of existing interstate tariffs, While no reductions could be effected upon the local rates most com- plained of, except when they applied to shipments for short distances Which happened to cross State lines. --- But another serious difficulty presents itself. It is obviously imprac- ticable for Congress to resolve itself into a railroad freight office, and undertake to establish schedulesfor the hundreds of interstate lines in the United States. Those who have asked the adoption of this plan of regulation have suggested the establishing of rates by a commission, but it is questionable whether a commission or any similar body of men could successfully perform a work of such magnitude, involving, as it Would, infinite labor and investigation, exact knowledge as to thousands of details, and the adjustment of a vast variety of conflicting inter- eStS. - The committee is unable to see that sadvantages would accrue to the public from the prescribing of a system of maxima rates upon interstate traffic, and is forced to believe that the only result of a maximum rate high enough to admit of the successful operation of the poorest roads Would be to justify the others in charging more than they now do when favorable opportunities were presented. Nor has it been made to ap- pear that the establishing of a minimum rate would be of advantage, While consideration has made it clear that the difficulties attending the adjustment of such a rate would be no less formidable than those en- Countered in establishing complete schedules for every interstate road, and that the only effect of a minimum rate would be to increase the Charges for long-distance transportation. -- Believing that railroad rates should be established in the first instance by the railroad officials, and that any attempt to provide for their es- tablishment by legislation would at the best end simply in securing a revision of the existing tariffs, the committee is convinced that the Same purpose can be better accomplished and greater advantages to the public be Secured with less friction by other methods of regulation, INTERSTATE COMMERCE. - - 195 RATES ON LONG AND SHORT HAULS. The most popular remedy proposed for the prevention of unjust dis- criminations between places and persons on account of distance has been what is called a “short-haul law,” or the prohibition of a greater aggregate charge for a shorter than for a longer distance as between shipments of the same kind over the same road and going in the same direction. - . No question connected with the problem of railroad regulation has given the committee more perplexity than that relating to the utility and expediency of legislation prohibiting a carrier from charging more for a shorter than for a longer haul under any circumstances, not that We have any doubt as to the injustice of such a charge under most cir- cumstances, but because it seems inexpedient to enforce such a regula- tion under all circumstances. e Palpable discriminations, peculiar to no State or locality, but too common, apparently, to all, would seem to be remedied by such a pro- Vision. It is asked for and urged to preclude the carriers from reim- bursing out of local rates and shippers what they lose by reckless and needless competition upon through rates. It is too plain to be made plainer by argument that, within certain limits and under certain oft- occurring conditions, the provision would be a useful and fair one. It does not seem as if there could be any justification for charging one shipper more for hauling a car of grain 50 miles than he or another is at the same time charged for hauling another car of grain 100 miles Over the same road and in the same direction. The unfairness of the greater charge for a shorter distance is apparent, and yet when careful consideration is given to such instances and illustrations as have been cited to the committee it is difficult to avoid the conclusion that, while the principal that no greater charge should be made for a shorter thar for a longer distance is just and right, exceptions to the general rule may sometimes be warranted, even in the case of individual roads. And when the effect of the proposed prohibition is considered with reference to the whole internal commerce of the United States, and especially with reference to thr necessity of preserving the prevailing cheap rates for long-distance transportation, there is reason to fear that the result of rigidly enforcing the proposed regulation would be to stifle competition in numberless cases where it now exists and is to the general public interest, and perhaps to deprivé the country of the benefits of the low through rates now and for years given to and from the tide-water, with. out practical or appreciable advantage to intervening points. The purpose to be accomplished by prohibiting greater charges for shorter than for longer hauls is to equalize the existing differences be- tween through and local rates. It is intended for the protection of those most in need of protection, the shippers at interior non-competi- tive points, and to prevent corporate carriers from charging such ship- pers unreasonable rates in order to recoup the losses sustained in reck- less rate Wars and by carrying through freights at less than cost. The accomplishment of the purpose aimed at is a “consummation most devoutly to be wished,” and the necessity of remedying the discrimina- tions complained of is apparent. The real question to be considered is, therefore, whether an absolute prohibition of a greater charge for a shorter than for a longer distance would accomplish the result desired by those who favor such legislation. * - One phase of this vexed question is admirably illustrated by the statement of Mr. George W. Parker, the general manager of the Cairo 196 INTERSTATE COMMERCE. Short Line. (Testimony, p. 906.) The road connects Saint Louis and Cairo, and is paralleled on one side by the Saint Louis and Cairo Railroad and the Mississippi River and on the other side by the Louis- ville and Nashville Railroad. The situation of this railroad is, in some respects, peculiar, and yet all others are more or less affected by similar competitive conditions and influenced by the same considerations. Mr. Parker called attention to the decided distinction between local and through rates, and the fact that different considerations affect their determination, and said: - One is a home question. It is a matter between the railroad and its patrons living upon its line, the men upon whom it depends for its regular traffic and regular in- come—its bread and butter, so to speak. The other is largely a territorial question, and is a strife, not so much between railroads as between trade centers—common points. The railroads are used, not so much to make profit for themselves in that case, as they are used as sinews of war by the trade centers upon which they depend for business, and where they terminate. So that any comparison between through and local rates cannot be intelligently made, unless you bear in mind this distinction and these dif- ferent incentives and necessities that create the one and the other. One is based on Cost of service; the other on the necessity of the case regardless of expense. ** Referring to the fact that his railroad was in direct competition with the river substantially, all the time, that it was built primarily to accommodate the local territory through which it runs, and that it was dependent mainly upon its local patrons for its support, Mr. Parker said: - About 33% per cent. of the operating expenses of this road is continuous, regardless of whether the road is earning much or little, and it therefore requires a certain vol. ume of business to meet these fixed expenses. In most cases, and especially in some Seasons of the year, the local business of the road of itself is not of sufficient volume to make up paying trains, nor is it sufficient to make the earnings over and above current expenses sufficient to meet the fixed charges against the road. So that in order to run paying trains we generally, after we have built the road to accommodate the local territory, endeavor to get a connection for through business to be superadded to the local business. Then when we make up a train of ten or fifteen cars of local freight to go over our line from Saint Louis, we can attach fifteen or twenty cars more of strictly through business. We can take the latter at a very low rate rather than go without it. We are justified in doing so, as one does no prejudice to the other. We would thereby have a good paying train. Yet half of it would be made up of very low-grade freight, taken at a low rate. The road would be justified in taking it, for the reason that it would cost very little more to perform the service, and it would operate no injustice to the local patrons of the road who were paying a higher rate on the local freight. This would only apply to competitive freight. Being asked what would be the effect upon the local charges of the road if it was prohibited from taking such through freight at relatively lower rates, Mr. Parker replied that it would be necessary to increase the local rates, because it was simply a question of aggregate earnings, and if they could not earn enough from one source to float the company they must from another. In this connection he said: If you limit its earning resources to a small volume of business, that small volume of business must pay a correspondingly larger rate. Therefore, whilst there is quite a difference between local and through rates, both are benefited, in that.the roads, by taking through business at low rates, are thereby enabled to make up good paying trains, and are by force of circumstances and the drift of events in the management of a road influenced to reduce their local rates, so as to make their earnings as a whole correspond somewhat to their financial necessities. Many branches of local business require and receive as low rates as through business. -* INTERSTATE COMMERCE. 197 # Another illustration of the relation between through and local rates was furnished by Mr. H. S. Haines in his statement (Appendix, p. 130), as follows: - Railroads are built to accommodate communities dependent for transportation upon water-courses, turnpikes, or public roads. They furnish cheaper and more conven- ient facilities than such communities before possessed, but still it costs something to maintain and operate them. If no charge was made for using them this cost would have to be met by taxation. But whether met by taxation or by charging freight and passenger rates, it is a tax at least upon the communities which have no other road to market. If it costs $600,000 per annum to keep up a road, then the money must come out of the freight and passengers that are obliged to pass over it. Whether the amount of business be small or large, the money to keep up the road must be forthcoming, or it will go to decay. If 100,000 bales of cotton were the only freight that passed over a road which carried no passengers, that cotton would have to pay a freight of $6 per bale if it cost $600,000 per annum to maintain the road, and no legislation could make it otherwise. . But if the quantity of cotton to be transported could be increased to 200,000 bales, then the cost of transportation could be fixed at $3 per bale, to the great joy and relief of the shippers of the first 100,000 bales; and yet the $600,000 required to operate the road would be forthcoming. Now, suppose that the community which raised this second 100,000 bales had a water route to market and said to the railroad company, “It only costs a dollar per bale to ship our cotton by water, but we prefer to ship it by rail at the same price,” who would be benefited if the company took the cotton at a doliar per bale? Who but the local shippers themselves, for without this addition to the business of the road they would have to pay $600,000 per year, or $6 per bale, to keep up the road, while with the $100,000 obtained from the other 100,000 bales of competitive or through cotton they would have to pay but $500,000 or $5 per bale on their own cotton. Should they turn around upon the managers of the railroad and say that it was unjust to the local shippers to charge only a dollar per bale on the through cotton? No, it is not only just, but to the benefit of the local shippers, that the railroad which they are obliged to use should get all the business it can from those who are not obliged to use it, and at any rate the latter choose to pay, provided, and it is a very import- ant provision, that such competitive business adds something to the net revenue of the road; or, in other words, if it be carried at anything above the actual cost of transportation. These illustrations make manifest the difficulty and danger of framing a law rigidly regulating the rights and duties of the corporate carriers engaged in the business of inter-state commerce which shall efficiently guard against the evils of which the people complain, and at the same time certainly possess the elasticity requisite by reason of the varying circumstances and elements, almost without limit, which enter into the business. The committee is convinced of the necessity of some legislation upon the subject of long and short hauls. Many arguments of apparent strength are urged against Such regulations by those who have given the question the most thoughtful consideration, but, after all, the con- tentions for and against the proposition rest on theory, and so must rest until tested by experience. Such legislation must of necessity be largely experimental, and its effects cannot be accurately determined in advance. To guard against the dangers apprehended and predicted in case such legislation should be enacted, the committee has deemed it wise to propose that a greateR. Charge for a shorter than a longer haul shall be declared presumptive evidence of an unjust discrimination, and that Such charges shall be prohibited whenever they shall constitute an un- just discrimination. This, we believe, will place the determination of the relative difference between local and through rates upon a just and 198 INTERSTATE COMMERCE. equitable basis, because in such determination the real question to be decided is not so much whether the through rates are too low as whether the local points are unjustly discriminated against. It is also proposed to place the burden of proof upon the railroads, where it properly be- longs, and to compel them to justify any violation of the general prinº ciple that no greater charge should be made for a shorter than for a longer haul. A large majority of the witnesses examined by the committee have urged the incorporation in the bill of a provision as to long and short hauls: We are satisfied that the sentiment of the country demands some regulation upon this subject, and with the safeguards provided in the bill here with reported we recommend the enactment of the legisla- tion proposed, well knowing that if, upon fair trial, the provision shall be found unfair to the carrier or against the true interests of the ship- per, the people will, through appropriate legislation, promptly apply the Corrective. - PUBLICITY THE BEST REMEDY FOR UNJUST DISCRIMINA. TION_TEIE POSTING OF RATES UNDER THE DIRECTION OF A COMMISSION RECOMMENDED, . In the judgment of the committee one of the chief purposes of any legislation for the regulation of inter-State commerce should be to se- cure the fullest publicity, both as to the charges made by common car. riers and as to the manner in which their business is conducted. The business of a common carrier concerns practically the whole public, and the carrier exercises in some respects a public function. The people rightly feel that its charges should be public and open to all alike, and that they should be fully informed as to its financial condi- tion, its methods of operation, and the net results of its buisness, to the end that an intelligent judgment may be formed as to whether the charges made, which are in the nature of a tax upon commerce and in. dustry, are reasonable and equitably adjusted. They rightfully de- mand the opportunity to procure this information, and it is believed that the methods of regulation suggested by the committee in the accompanying bill will provide the means by which such information can best and most readily be obtained. It is agreed by all who have given the subject of railroad regulation attention that the maintenance of stable and reasonably uniform rates is of the first importance and greatly to be desired. Neither result, it is also agreed, can be secured without publicity, which is the surest and most effective preventive of unjust discrimination. Whenever rates are fluctuating and not alike to all, it is the rule that some por- tions of the commercial community obtain secret advantages over the remainder. When unjust discrimination is practiced by the carrier, Success in business depends more upon favoritism (if nothing worse) than upon intelligence, integrity, and enterprise. The effect is de- moralizing in the extreme. Business is conducted upon a false basis, false standards of commercial honor are erected, and a premium is offered to corruption. Worst of all, the advantages of unjust discrimi- nation are, as a rule, enjoyed by those who least need outside aid, and the inevitable effect of this indefensible practice is to build up the larger dealer and crush out the smaller, to foster monopoly, and, in short, to encourage the existing tendency, already too strong, towards the con- *ation of Capital and the control of commerce in the hands of the OW. INTERSTATE COMMERCE. 199 CASES TEIAT PUBLICITY WOULD UNCOWER. The desirability of publicity as a safeguard against unjust discrimi- nation is generally conceded, but the committee cannot refrain from illustrating its necessity by alluding to an instance which has recently attracted its attention. - - It is well understood in commercial circles that the Standard Oil Company brooks no competition; that its settled policy and firm deter- mination is to crush out all who may be rash enough to enter the field against it; that it hesitates at nothing in the accomplishment of this purpose, in which it has been remarkably successful, and that it fitly represents the acme and perfection of corporate greed in its fullest development. A recent public exposition of its methods comes from Ohio, where the corporation operates the Macksburg Pipe Line, which carries oil to the Cleveland and Marietta Railroad. This road is in the hands of a receiver appointed by the United States circuit court. Com- plaint having been made to Judge Baxter of that court, he investigated the rates charged for the transportation of oil by the receiver, which resulted in his prompt removal by the court. It was found that, while the receiver was charging all independent shippers 35 cents per barrel, the rate to the pipe line in question was but 10 cents per barrel. It ap- peared that the Standard Oil Company owned the pipes through which oil is conveyed to the road from Wells owned by individuals, with the exception of certain pipes owned and used by George Rice and carrying oil from his wells. To get rid of this competition the assistance of the receiver was sought and obtained. The company offered to give the railroad $3,000 worth of business each month, while Rice could give but $300 worth. If its demands were not complied with it threatened to extend its pipe line from Macksburg to the river at Marietta, What those demands were was stated as follows in a letter filed by the receiver as part of his defense: . ... • , - The Standard Oil Company threatens to store and afterward pipe all oils under its control unless you make the following arrangements, viz: You shall make a uni- form rate of 35 cents per barrel for all persons excepting the Standard Oil Company; you shall charge them 10 cents per barrel for their oil, and also pay them 25 cents per barrel out of the 35 cents collected of other shippers. No comment is needed upon this most impudent and outrageous proposition. If matters have reached such a pass that this enormously wealthy corporation, not content with the advantage of paying less than 30 per cent. of the rates charged its occasional competitors, is in a posi- tion to demand of a railroad which may desire the privilege of carry- ing oil for others 70 per cent. of the revenue received in that way, the least that Congress can do is to insist upon publicity or rates, and make effective provision for letting in the full light of day upon arrangements Of this character. - - No reason has appeared why the fullest publicity as to the methods of management and the financial operations of inter-State carriers can- not properly and successfully be obtained by the appointment of a na- tional railroad commission empowered. to thoroughly investigate all such matters, but difficulties have been suggested which have seemed to render impracticable a full compliance with an enactment requiring railroad companies to publish all their rates and maintain them during fixed periods. A large majority of the witnesses examined by the committee have advocated publicity of rates, but they have not agreed in recommend- 200 . INTERSTATE COMMERCE. ing that changes without notice should be prohibited. Even Mr. O'Don- nell, the chosen representative of the New York Board of Trade and Transportation and the Anti-Monopoly League, upon the New York railroad commission, who may fairly be considered as radical on the subject of railroad regulation, hesitated to say that changes without no- tice should be prohibited. Upon this question Mr. O’Donnelſ said: The publication of rates has been a success in England and on the Continent. It is yet to be tested with the Yankee was of doing business. Along a line of country that has rival routes, I am not prepared to say whether a prohibition of changes of Tates without public notice will benefit the shipper or result in combinations that will hurt him. sº WEIAT TEIE POSTING OF RATES WOULD MEAN. The posting or publication of railroad rates would be of no advantage to the public unless the law contemplates and requires that the sched- ules established and posted are to be strictly adhered to. If variations from the published rates are to be permitted, it would be useless to have them posted. So far as that is concerned, information as to the established or ostensible rates is now sufficiently accessible to the public, and posting them would only impose a needless annoyance and useless expense upon the corporations. w The posting or publication of rates, to be a preventive of unjust dis- Crimination, must mean that the railroads shall be operated under a System of fixed rates, established by themselves, but just as inflexible as if the rate upon each article of shipment, for given distances or be- tween places named, should be prescribed by statute (not the maximum or minimum, but the exact rate to be charged), and any deviation there- from should be declared unlawful, except when the schedule is changed in such manner as may be provided. A compliance with such a require- ment, it is plain, Would occasion a complete revolution in existing methods of business and of railroad management. A change as great as this would be—one making necessary almost a complete readjustment of the commercial relations of the railroad to the community—cannot be effected easily or without friction and opposition. The latter must be expected whenever it is undertaken, but the revolution to be accom- plished would be of incalculable advantage to the public, and cannot be brought about any too soon. Publicity of rates is insisted upon and practically Secured in other countries, and there can be no doubt that it should obtain in the United States. - TEIE QUESTION OF POOLING. In view, however, of the active competition which exists at the great commercial Centers, the successful enforcement of legislation requiring the Operation of the entire transportation system upon a basis of fixed rates Would seem to depend upon a general predetermination of the rates to be established by the carriers interested. It seems necessary, therefore, to leave a way open by which such agreements can be made, in Order to avoid the constant friction that would otherwise be occa- Sioned. - If competition is to have full sway, as it does now, the constant changes it would necessitate would render it impossible to maintain fixed rates, just as it is now. It should be understood, therefore, that a statute requiring the posting of rates and prohibiting changes with- out notice must of necessity operate in restraint of competition if en- INTERSTATE COMMERCE. * 201 forced. It would not destroy the benefits of legitimate competition, but it would place a wholesome restraint upon reckless competition, and in that way lessen unjust discrimination, which is developed in its most objectionable forms under the nourishing influence of unrestricted competition. - , , For these reasons the committee does not deem it prudent to recom- mend the prohibition of pooling, which has been urged by many ship- pers, or the legalization of pooling compacts, as has been suggested by many railroad officials and by others who have studied the question. The prohibition of pooling is asked only to prevent the evils incident to the operation of the system as it has been conducted, and to avert the political dangers apprehended from combinations of aggregate corpo- rate power Its legalization is asked because pooling has thus far failed to accomplish its purpose by reason of the impossibility of enforcing the compacts made. The ostensible object of pooling is in harmony with the spirit of regulative legislation, but it is admitted that it has failed to accomplish its avowed purpose. The effect of pooling under a wise system of regulation cannot, per- haps, be fairly judged by its operation in the past under entire freedom . from legislative restrictions, nor can it be safely assumed that it would be subject to the same objections and give rise to the same complaints under legislative regulation—as it has under the conditions which have heretofore governed its operation. * It is believed that the evils, which have been complained of can be largely remedied under the method of regulation proposed in the bill here with reported. If this should prove to be the case, the prohibition of pooling is unnecessary. If it should not, this defect in the system of regulation can readily be corrected by additional legislation. But, in any event, the evils to be attributed to pooling are not those which most need correction, and, if agreements between carriers should prove necessary to the success of a system of established and public rates, it would seem wiser to permit such agreements rather than by prohibiting them to render the enforcement and maintenance of agreed rates impracticable. The majority of the committee are not disposed to endanger the success of the Inethods of regulation proposed for the pre- Vention of unjust discrimination by recommending the prohibition of pooling, but prefer to leave that subject for investigation by a commis- Sion when the effects of the legislation herein suggested shall have been developed and made apparent. TELE PROEIIRITION OF CEIANGES WITEIOUT NOTICE. The practical effect of a requirement that rates should be posted and not changed without notice would be the same as if the statute de- clared that the existing tariffs should be considered as showing both the maximum and minimum rate at the same time; in other words, the actual charging rate. All railroads now make and print such tariffs for the guidance of their agents and the information of the public, but they are not intended to cover all shipments, and are varied as the exi- gencies of business or competition may require. It would not be to the general interest to have railroad rates made so inflexible that they could not be varied under any circumstances, except at long intervals, and the question of determining how changes may be permitted when necessary Without losing the advantages of posting has been found a troubleSome One. - 202 INTERSTATE COMMERCE. Some have urged that changes should only be allowed upon the sub- stitution and posting of a new schedule five, ten, twenty, or thirty days before it should take effect. Others have suggested that rates should not be raised without notice, but might be reduced at discretion, on the ground that notice of a proposed reduction would stop all shipments until the reduced rates went into effect, and this consideration is not Without force. - - - It really matters very little how many days' notice may be required, except that it should be long enough to answer its purpose, and short enough to give some flexibility to the tariff. In the ordinary course of business it would require at least one or two days to post schedules at all the stations on an inter-State road, after they had been arranged and printed, so that the requirement of a few days' notice, added to the time needed for making the change, practically amounts to a pro- hibition of changes at pleasure, and makes rates open to all instead of only to a favored few, which is the end desired. It is believed that the time Suggested in the accompanying bill would be reasonable and Suf- ficient notice and not unduly oppressive. - DIFFICULTIES IN THE WAY OF ENEORCING PUBLICITY. On the part of the railroad authorities the advantages of publicity have been freely admitted even by those who have suggested difficulties which they believed made it impracticable to secure it. Their position is illustrated by the following extracts from the examination of Mr. Fink: The CHAIRMAN. Would you or not by law say unequivocally that every railroad should publish a tariff of rates? Mr. FINK. It is not always possible for the railroads to publish tariffs upon all their traffic, but they can do so upon the large bulk of it, especially upon the great inter- State traffic. They are actually doing this to-day, and they can continue to do so. But there are some cases, for example, when railroads directly compete with water- transportation lines, where it would not be just to compel them to publish their tariffs unless-the competing water line is compelled also to do so. This is hardly practicable, or if practicable, might not be desirable. Therefore, a certain discretion must be exercised, and it would not be just to pass a law unequivocally to publish their tariffs. The experience and practice of the past would, however, form a guide showing where it is practicable and where it is not. I think this question would regulate itself by the competition between the railroads. For example, the existing organizations pub- lished tariffs covering a very large part of the inter-State traffic, and they would have to continue to do so. It is one of the difficulties of this problem that you cannot establish a fixed law covering the whole ground; you unfortunately meet with so many exceptional cases in which a general law would work mischief. * The CHAIRMAN. An act of Congress could not very well say “You must publish your tariff in agreement with other roads,” could it? - Mr. FINK. I am inclined to think that if the Government should find it necessary for the public good it could require all roads whose tariffs are interdependent to es- tablish joint tariffs. It would not force any road to make any particular tariff. The road that desires to make the lowest tariff would, of course, regulaté the other roads, as is practically the case now. . The CHAIRMAN. But Congress could not say that every road should publish its tariff of freight and passenger charges? Mr. FINK. Yes; I think as a general rule, and if such a law was passed it would indirectly force the roads to agree upon tariffs. (Testimony, p. 109.) - & INTERSTATE COMMERCE. 203 & Mr. Fink further said: I Sometimes despair that we ever can accomplish anything by voluntary agreement, although this would be the proper way to do. If we cannot, and the Government cannot step in and make those necessary tariff agreements binding in the same way as it enforces all other legitimate contracts, then I do not know what is to become of the railroads of this country. I am just as anxious to formulate a law that would reach the evil as you are; but at the same time I canuot see my way clear to any law that would be effective and operate justly to all interests. I can see my way clear this far: that when railroad companies do come together and publish a tariff, they ought to be made to adhere to it; but the question is how to get them together if one or the other wishes to stay out. I do not exactly know how that can be done, but I would recommend that if any legislation is to be had at all this experiment should be tried of forcing roads to publish and maintain tariffs. * * * w Now, if that outside road were also obliged to publish its tariff and to adhere to it under the Government law, as the associated roads would be, then it would have no advantages, and this would induce it to join the other roads and agree upon a tariff, so that a law requiring all roads to publish tariffs might have the desired effect of bring- ing about an agreement between all the roads, and thus secure the maintenance of tariffs. I am, therefore, in favor of forcing railroads that hold themselves out as public inter-State carriers to publish and strictly maintain their tariffs. At the same time I See a great many difficulties in the way of enforcing such a general law. Con- gress has no control over the tariffs of roads that are exclusively located in one State. I will refer for illustration to the effect of such a law upon the relations between the New York Central and Erie Railroads. The former is located in one State and not subject to Congressional law, while the latter passes through several States and is subject to Congressional legislation. We will suppose a tariff was agreed upon be- tween New York and Chicago, and published as the official tariff of all roads. The New York Central could readily evade the law by making a lower rate between New York and Buffalo by which the established and published through rate could be re- duced without violating the law of Congress, and it could take all the business away from the Erie Railroad, which is obliged to adhere to the published tariff. The diffi- culty is that you cannot control the tariff on the railroads that are located in one State. And yet these roads are potent factors in the establishment of proper tariffs on inter-State traffic. - - - - By reference to Mr. Fink's statement (Testimony, p. 112), his expla. nation of the methods by which the law might be evaded under such circumstances will be found. He also suggested a difficulty in the case of the Canadian roads, as follows: The Grand Trunk Railroad is as important a factor in the maintenance of just and reasonable tariffs throughout the States as is the New York Central or the Penn- sylvania Central. Yet the Grand Trunk Railroad is not under your jurisdiction. It can make any tariff it chooses between Chicago and Montreal. The rates from Chr. cago to Montreal affect the rates to all the seaboard cities in the United States. If the American roads are obliged to publish and maintain their tariffs, all that the Grand Trunk Railroad will have to do is to make a rate somewhat lower and secure all the business, or as much of the business as it can carry, and take it away from the American roads and the American ports. How can that difficulty be got over? The CHAIRMAN. Some portion of the road is in the United States. Can you not. reach the difficulty on that account? *. Mr. FINK. I do not see how you can pass a law by which you can compel the Grand Trunk Railroad to observe a through rate from Chicago to Montreal, which is a com- peting point, and affects the rates from Chicago to New York. From Chicago the Grank Trunk runs to the Detroit River. It is an American road, subject to your laws; but when they cross the Detroit River have you any jurisdiction over that portion of 204 INTERSTATE COMMERCE. the road from Detroit River to Montreal, and can the Grand Trunk not make what- ever tariff it pleases? Under the proposed law they would have to publish a tariff from Chicago to Port Huron only. When the road leaves this country they may carry. freight for nothing. Can you compel them to observe the tariff in Canada? They may have conformed to it in this country. By this illustration you will see how difficult it is to require the railroads in the United States to publish and maintain tariffs when foreign competitors are not subject to the same laws. And Mr. George R. Blanchard, referring to the same difficulty, said: The Grand Trunk Railroad Company, operating mainly in and through Canada, has access, under our reciprocities, to the territory of the United States, where originates and terminates a great bulk of its through carrying traffic. It is built upon 3% to 5 per cent. bonds, with cheap steel rails, which paid no import duties, and it is being operated by labor which has not reached the prices paid to our own. This parallel foreign carrier, if water was not present, would in itself regulate through American railway charges to the seaboard. No legislation contemplated or recommended by your committee, and none taken by the Senate or Government of the United States, can determine, alter, or regulate the rates of that great railway in Canada. And that I beg the committee to remember as a most important point in its recommendations as to railway legislation. Mr. Reagan, with whom I have had repeated discussions on this subject, flips it away as a boy would toss a cent for heads or tails on the pave- ment. But it cannot be so dismissed, or it will always be heads for Canada. It is a factor that will inevitably affect to ruin the ultimate business competition with the railways of this country if you surround our railroads with cast-iron conditions of legislation and let parallel foreign rail carriers go free. The Canadian Pacific and the - Grand Trunk and all these lines can get English capital for the great improvement of their systems under their own management, regulations, and laws for 3 per cent., if their capital was protected by a United States law that injured our own railways. (Testimony, p. 156.) * In the course of his argument Mr. Blanchard advocated publicity of rates in case the Canadian and State roads could also be controlled. The following statements show his position: * - Publicity will do very much but not everything, and publicity is often relatively harmful. I cannot see, for example (first taking a State illustration as outside your immediate jurisdiction), why one railway company should publish the rates at which it carries the iron from a furnace to a given point, if its rival in another State does not state its rates to the same or a rival point. It is giving a weapon all the time to the company that does not practice publicity. The same thing is internationally true in the Grand Trunk illustration I have before spoken of. If, for example, as is claimed by Mr. Reagan, a rate was published by all the American lines from Chicago to New York to-day, and it could not be changed for ten or thirty days without public notice, While the Grand Trunk could change its rates within ten or thirty minutes, it would Joe the easiest thing in the world for the Canadian road to keep one cent per 100 pounds under the American railway rates, and decamp with the controllable busi- ness. This is too plain a statement to be questioned. Senator MILLER. Let us suppose that by a Federal law all through rates were com- pelled to be published and not to be changed without ten days' notice. What diffi- culty would there be in compelling any Canadian railroad which received freight within our borders to publish its rates and adhere to them the same length of time as to notice? Mr. BLANCHARD. Nothing, if you can regulate the whole length of its line, in Can- ada as well as in the Union. For example, if you will compel the Grand Trunk, un- der a general law of our National Legislature, to publish and adhere to its rates all the way through to and via Montreal, very well. But if it publishes its rates only to Detroit and observes them to that point, and then makes all its changes and conces INTERSTATE COMMERCE. - 205 * sions and inducements, concealed or otherwise, east of Detroit, on that part of its route which is outside of our national jurisdiction—which they certainly would do if they did any tortuous thing—then you regulate only a small piece of a large line, and the regulation would have no more effect than if you did not regulate any part of it. The chain is no stronger than its weakest link. - - - Senator MILLER. We could pass a law which would compel them to publish rates for all through freight received in our territory, and, failing to carry that out, they could be stopped. - - - Mr. BLANCHARD. If that can be done it ought to be done. In other words, what- ever limitations are put upon the American railways clearly ought to be put upon the competing Canadian railways, and specific limitations should not be put on one with out the other. r Senator MILLER. Undoubtedly. It cannot be done without it. Mr. BLANCHARD. No; it cannot be justly done without it. This being settled, the question of publicity is, in my judgment, the one in which you will find the princi- pal cure for the ills of discrimination. * * * As to the rates generally charged to the public between principal points on staple products, I have often said that they ought to be posted in every station, both freight and passenger, and in every Gov- ernment building in the United States at the point at which the railroad and traffic originate. There should be, for example, in the post-office and custom-house of Chicago a list of the actual rates which the people are to be charged by rail, pre- cisely as the rates of postage are posted. The CHAIRMAN. And not require that at the railroad office? Mr. BLANCHARD. Require it at the railway offices as well as at such public build- ings. It is a very easy matter for each company to have its form. It now spends an enormous sum of money in passenger advertising which is of no practical value, and this would be of more value in every way to them and to the public. (Testimony, p. 160.) - A SYSTEM OF LICENSES. Patient consideration has been given by the committee to the serious difficulties which have been met with. It is apparent that great injus- tice would be occasioned by a rigid requirement as to publicity which did not apply alike to all carriers of inter-State freights, and especially , if great corporations like the Grand Trunk Railroad and the New York Central Railroad should be able to evade its provisions by reason of the advantages of their geographical position. The United States Supreme Court, in construing the power of Con- gress to regulate commerce, has declared, in Mobile vs. Kimball (see p. 33), that “That power is indeed without limitation. It authorizes Con- gress to prescribe the conditions upon which commerce in all its forms shall be conducted between our citizens and the citizens or subjects of other countries, and between the citizens of the several States, and to . adopt measures to promote its growth and insure its safety.” - This is assuredly conclusive as to the authority of Congress to “pre- scribe the conditions” upon which common carriers may engage in inter- State traffic, and its authority over foreign commerce is unquestioned. The two are so intimately intermingled that inter-State commerce cannot be effectively regulated without also regulating to some extent the trans- portation of foreign commerce from and to the several States, and the purpose of the provisions of the accompanying bill, which relates to international commerce, is to meet this exigency. It is hoped and believed that these provisions will place all carriers engaged in inter-State traffic in any way upon an equality; but if they should in practice be found to operate unequally or be ineffective, the *> 206 INTERSTATE COMMERCE. committee would suggest that the difficulty can be overcome by “pre- scribing the conditions” upon which inter-State and international traf. fic shall be conducted, and by prohibiting any carrier from engaging therein until it has received a license So to do from the national com- misson, to be renewable annually, and to be suspended or revoked for violation of the regulations prescribed. ANOTHER OBJECTION. An objection frequently strongly urged against a statute requiring the posting of rates and prohibiting changes without notice is that it would prevent one road from meeting cuts made by another, in order to protect its business. It is argued that the road which managed to post its rates last would by making concessions have a monopoly for the pe- riod during which they must remain unchanged; that sharp manage- ment to secure that monopoly would be the most successful manage- ment; that a new temptation to trickery would thus be introduced, and a far more powerful one to the cutting of rates than now exists, because, if successful, extraordinary advantages would be expected from it. This argument is plausible and staggers many who would otherwise favor publicity and fixed rates; but it is easily answered. In the first place, it must be remembered that a schedule thus posted by a road desiring to cut rates would not take effect at once, but only after the required notice. As each railroad has its telegraph service and agents at every competing point, the others would be immediately ad- vised of the proposed “cut,” just as they are now of any similar move, and could take action at once. And changes necessary under such circumstances could be telegraphed to each station, so that new sched- ules could be printed and posted not more than one day later perhaps than those of the other road. Not more than a day or two would nec- essarily be lost in this way, and as the public would be advised that both roads had made the change, it is unreasonable to suppose that a railroad would be placed at any great disadvantage in the manner in- dicated. On the contrary, they have always been fully competent to protect themselves, and there is no reason why they should not be under the proposed statute. Each railroad knows far better than the public now can what other roads are doing. WEIAT RATES SEIOULD BE POSTED" Still another objection to legislation of the character proposed has been that, while it would of course be practicable for a railroad to post at every station the rates to every other station upon its line, it cannot post rates to points on the line of connecting or other roads: first, be. . cause it does not know what rates the other road will accept, and, sec- ond, because it would be difficult to find space in an ordinary station in which to post the rates on thousands of articles to hundreds or thou- sands of different places. - - In the first place, all that is necessary to accomplish the purpose de- sired is to require the rates from each station to other stations to be posted. This would secure the publicity and permanency of all rates, and the labor and expense involved in the preparation of a separate Schedule for each shipping point is all that ought to be required. So far as the rates upon each individual road go there is nothing to pre- Vent publicity and posting, as all railroad managers admit. When it comes to the innumerable number of through rates between INTERSTATE COMMERCE. 207 points on connecting lines the difficulties are greater. These rates are not ascertained by adding to the local rate from the point of shipment to the junction point the local rate on the other line from the junction to the place of delivery. On the contrary, the through rates are usually much less than the sum of the two local rates in such a case. If they were not, there would be very little through business. No one desires to prohibit through shipments, and these must therefore either be excepted from the provisions of the statute, or some plan must be adopted by which through rates can be arranged and posted. It will not do to ex- cept them, for the discriminations resulting from low through rates are those most complained of and those it is desired to prevent. It is evi- dent, therefore, that the through rates must be a matter of bargain and agreement between connecting roads and those forming links in through lines. The objection that one road cannot control the rates of another, and does not know what rate the other would accept, does not seem to the committee to be a tenable one. The committee does not see how the situation would be changed from what it is to-day by requiring through rates to be posted. No railroad can now make a through rate over its own and other lines without an understanding or agree- ment with those lines as to what such rates shall be and the propor- tions to which each shall be entitled. The joint tariffs of through rates could be arranged exactly as they are now arranged, by Common agree- ment, and as the law would in effect prohibit shipments being made except to points to which rates were posted, if posting at such points was required, it need not be feared but that agreements and joint tariffs Would be made. . tº - Some railroad men have insisted that an ordinary station Would not afford enough space for the posting of all rates by the larger roads, and have suggested that through rates should only be.posted to places con- taining, say, 10,000 inhabitants, arguing that, as the rates to the larger places would be public, the enactments against unjust discrimination would sufficiently protect the smaller places. The committee appreciates the force of the objection raised as to the multiplicity of through rates that must be made to all parts of the United States by any railroad having a large general business, and it is not deemed practicable to put in operation such a system of fixed rates as is proposed at all points and upon all lines at One and the same time by a positive requirement to that effect. Any railroad is liable at any time to be called on to accept shipments and make rates from any station upon its line to any one of twenty thousand other stations in the United States, and it is plaim that such a positive requirement as that suggested could not possibly be enforced, because it would be a practical impossibility. Such a revolution in ex- isting methods of railway management as it is desired and proposed to bring about must be proceeded with cautiously. We do not believe that Congress is competent to designate the places at which or to which rates should be posted, and we therefore recommend that the proposed commission be authorized to prescribe the manner in which and the extent to which rates should be published, and thus provide for putting the new system of publicity into effect by degrees and for gradually extending its operation, as may be found practicable. º It is rarely the case that any business honestly conducted can be in- jured by having its methods and operations made known to the World. Secret transactions by railroad companies are not necessarily disbonest, but dishonest transactions are always secret, or intended to be. The fact that a rate is secret is prima facie evidence that it gives the receiver 208 INTERSTATE COMMERCE. an undue advantage or injures his competitor. The experience of the State railroad commissioners has demonstrated the advantages of pub- licity in dealing with the railroads. As Mr. Rogers, of the New York commission, expressed it: - ~ - It appeared to be the idea of railroad managers to operate their roads in a myste. rious way. All sorts of secret compacts were made, and the very fact that there was secrecy gave rise to the opinion that there might be some great abuse. That secrecy revealed, and the veil pulled aside, a large proportion of the grievances, or the sup- posed grievances, disappear spontaneously. While it is impossible to foresee the exact effect of legislation requir- ing the operation of the transportation lines of the Country upon a sys- tem of fixed rates, such an enactment appears to be the most effective remedy for the prevailing evils of unjust discrimination, and the com- mittee believes that the experiment should be tried. If the publicity of rates and the prevention of unjust discrimination can be secured, a long step forward will have been taken, and the people will wait pa- tiently until evils of less importance can be remedied. - A NATIONAL COMMISSION.—ITS ESTABLISEIMIENT RECOM. MENDED FOR THE ENFORCEMENT OF TEIE LEGISLATION PROPOSED. In the prosecution of the inquiry with which the committee was charged the following questions was included in the interrogatories pro- pounded by circular to those invited to express their views in writing, and was also in substance asked those who were examined in person: In what manner can legislation for the regulation of inter-State commerce be best enforced? Should a commission or other special tribunal be established to carry out the provisions of any law Congress may enact 3 An examination of the testimony and written statements accompany- ing this report will show that nearly all of those who expressed an opinion on the subject favored the creation of a national commission or other special tribunal, or of a govermental department, to be charged with the duty of carrying out and enforcing whatever legislation may be enacted for the regulation of inter-State commerce. It may fairly be said that there is a substantial agreement in favor of the establish- ment of a national railroad commission on the part of the large number of persons whose views upon the proposition were ascertained by the committee. The unexpected unanimity of the testimony in favor of the creation of such a commission, the reasons assigned in advocacy of such a tribunal, and the general current of opinion in that direction, are sat- isfactorily shown by the following brief extracts from statements made by gentlemen representing every interest, all parts of the country, and every shade of opinion on the subject of railway regulation. - Mr. John D. Kernan, chairman of the New York railroad commis- Sion, said: - There is no more effective agency than a railroad commission for the purpose of aid- ing the courts in carrying out any law on this subject. I believe that you have got to have, to aid in carrying out the principles of the statute suggested, a national railroad commission, and for these reasons: The subject is one requiring special study in order to acquire that knowledge which enables legislation to be enacted or judi- cial authority to be effectively exercised. I think a commission invested with the power of ascertaining the facts without expense to shippers, keeping investigations progressing all the time in reference to this subject, and enlightening the people and & INTERSTATE COMMERCE. 209 the legislature and Congress, is essential in order to determine how far railroads are complying with the statute which you pass upon this subject. * * * I do not think any statute you pâss upon the question would be of any effective benefit unless you provide for a commission. (Testimony, pp. 19 and 20.) - Mr. William E. Rogers, of the same board, said: I think if such a commission were created, from the experience it would get in the course of a year or two, most valuable results would follow. I do not see how the information can be obtained in any other way than from the every-day experience resulting from the complaints brought before it. (Testimony, p. 32.) * Mr. Simon Sterne, of New York, in reply to a question as to the effect of a law for the regulation of the railroads without a commission, said: That would be a bull against the moon. I speak advisedly upon that subject, be- cause it is not merely my opinion, but you will find that in report after report of the English railway committees, from 1854 down to 1873, they say that the Cardwell act and the other acts are not self-enforcing. * * * The ordinary courts are all open theoretically, but they are closed practically to the individual man who has a grievance, and there are two reasons for that. The first, already mentioned, is the expense; and the second, which is a still stronger impediment, is the fact that the individual trader does not want to incur the enmity of an instrumentality which he is compelled to use from day to day. (Testimony, p. 63.) . Mr. Albert Fink said: I am in favor of having a competent commission appointed for the purpose of col- lecting information, in order to help to a proper understanding of this intricate sub- ject, such commission to be empowered to receive complaints and to investigate the same, and to act as a mediator and counselor between the railroads and the public. Much good can be done by a competent commission, not only in bringing about a proper understanding between the railroads and shippers, but in actually remedying a great many causes of complaint. (Testimony, p. 123.) Mr. George R. Blanchard stated that— ` Recognizing, perhaps, a little in advance of some of my fellow railroad officers, the right and interest, 6f the public in the deliberation and discussion and decision of these questions; I have advocated a national railway commission for five years. (Testimony, p. 187.) e • Mr. Jackson S. Schultz, a prominent merchant of New York, who represented the Chamber of Commerce before the committee, after de- tailing unlawful practices by the railroads within his knowledge, was asked what remedy he had to suggest. His answer was: I say the remedy is a commission; I go so far as to say that iſ the commission had not any more power than our State commission, and that is to report and keep the public advised on what is being done, had not the right to send for persons and pa- pers and examine the books, so far as I am personally concerned I am willing to limit the powers in the first instance to the commonest powers and duties. (Testimony, pp. 263, 264.) Ex-Governor Claflin, of Massachusetts, said: My own idea is to establish a United States commission to regulate these things as far as it can ; and then what further is to be done must be a matter of growth. As you find abuses those abuses must be brought to the attention of Congress, and laws will be passed which will correct them. If there is no abuse, if the commission is not needed, the people of the country will find it out. It is not a great experiment to try. * * * I believe that a commission can be established which would give satisfaction to the people all through the country. The commission certainly has given satisfaction in this State. There was just as much doubt with the people of this State at one time, in regard to the establishment of a State commission, as there is with the people of the United States now in regard to the establishment of a na- tional commission. (Testimony, pp. 388 and 392.) Mr. Frank J. Firth, of Philadelphia, president of the Erie and West- ern Transportation Company, said: - I am of the opinion that there should be a national board of commissioners created, and that the duties assigned to this board should include the investigation of ques- S. Rep. 46——14 210 INTERSTATE COMMERCE. tions connected with inter-State commerce, the determining of admited facts with reference to current transportation practices, the recommendation of the legislation that these facts seem to make necessary, and the Serving as arbitrators to decide questions that may be voluntarily submitted. (Testimony, p. 464.) Mr. George W. C. Clarke, of Philadelphia, stated: I have taken so far as I could a consensus of the views of merchants and manu- facturers from Maine to California upon this question, and actually, in those two States, and the general direction of the mercantile community, so far as I have been able to gather, is in favor of Congress establishing a commission. (Testimony, p. 490.) Mr. Robert Elliott, a grain merchant of Milwaukee, referring to the necessity of regulation, said: The majority of opinions favor its being done through a commission that would be vested with power to fight the battle of the aggrieved party, so that he should not be compelled to go into court and wrestle with this matter. The burden of the fight should be upon the commission. They should bring the delinquent road into court. If that were the case, you would not lave any such delinquents. They would desist from any such practices, and the citizen would only have to lay his claim before the commission, and the commission would only need to call the atten- tion of the delinquent road to the fact, and the wrong would be promptly corrected. I have great faith in the efficacy of legislation upon the general question and in the Workings of a commission. (Testimony, p. 694.) • * Mr. George M. Bogue, of Chicago, for six years a member of the Illi- nois railroad commission, and now arbitrator of the railroad pools west of Chicago, expressed himself as follows: I think that if a commission were instituted with advisory or arbitrative duties conferred upon it, similar to those conferred by the Massachusetts law and the ad- visory feature of the Iowa law, good could be accomplished. By the hearing of com- plaints, and the treating of those complaints as between the individuals or communi- ties and the railroads themselves, I think a vastly greater amount of good could be accomplished with a board clothed with such authority than could be accomplished by a board clothed with authority to fix rates. (Testimony, p. 746.) William H. Miller, secretary of the Board of Trade of Kansas City, thought that— - A railway commission should be empowered to enforce any law that might be en- acted by Congress for the government of railroads. The method of business and the rules laid down for the railroads to observe in that matter should be enforceable by the commission. The power of the commission should extend to a supervision of the whole matter; that is, all investigation of the whole matter, and to listen to and hear complaints of the people that Imay be made of discriminations and unjust arrange- ments. (Testimony, p. 900.) - - | Judge McDill, of the Iowa railroad commission, stated that— I have thought for years that the only method by which there could be any intelli- gº nd sufficient control would be through a national commission. (Testimony, p. 948.) * Mr. Peter A. Dey, chairman of the Iowa commission, on being asked if he thought inter-State commerce could be regulated without a com- mission, replied: - No, sir, I think not. Let me explain my idea. I think there are no two cases that are presented where there is not some difference between them; and my impression is that you have to examine each case by itself. I do not think you can make any gen- eral law that will cover all cases. (Testimony, p. 958.) - Mr. J. M. Joseph, a farmer of Iowa, said: I think there ought to be a national board of commissioners, with power to employ experts on all the various branches. I see no reason why the General Government, or even the State, should not have the benefit of the knowledge of experts in railroad matters just as well as railroads. These matters are all arranged, if I understand it, by experts who are merely employés of the companies. (Testimony, p, 1029.) INTERSTATE COMMERCE. 211 Mr. Jabez Burrows, a farmer of Nebraska, stated: I'am in favor, and have been growing more and more in favor, of a national com- mission; and I believe that that is the general opinion of the country, and especially of the farmers. (Testimony, p. 1167.) . Mr. Charles Francis Adams, jr., now president of the Union Pacific |Railway Company, expressed himself as follows: I have always thought that if Congress would provide for a commission of men who were at once honest, intelligent, and experienced, whose business it should be to observe this question very much as a physician would observe the progress of disease, the results of their observations might be of value in leading gradually to the build- ing up of legislation. But beyond that I do not believe it would be within the power of human wisdom to formulate a law which would greatly affect, except to impede and hamper, the present course of events. I think such a commission could observe the condition of affairs, and very likely a system of law would gradually build itself up, as the result of experience and observation, which would be of value; but it would take time. (Testimony, p. 1208.) - Mr. William B. Dean, a merchant of Saint Paul, representing the • Jobbers' Union of that city, referring to the creation of a commission, said: Upon that point the Jobbers' Union is emphatically favorable. We believe the rail- road question is comparatively in its infancy and is an exceedingly complex one. We believe that the laws which will ultimately govern it have hardly begun to come to the surface, and that those laws would be evolved and made equal more quickly through a commission whose attention would be directed to the examination of com- plaints and the suggestion of remedies than by any method now in vogue. (Testi- mony, p. 1292.) - - Mr. Oliver Dalrymple, the great farmer of Dakota, thought that— The time has come when a national commission, with its identity and features the same as the part of the Government that has charge of the currency and the customs and revenue laws, should have an existence and identity, and Congress should look after these great interests. (Testimony, p. 1332.) - Mr. Datus E. Meyer, a farmer of Minnesota, representing the Farm- ers' Alliance of that State, said: * - I would put a commission between the farmer and the railroads that would see that he obtains justice. That is what I would have done, and what the farmers desire shall be done. You can depend upon that. (Testimony, p. 1337.) Mr. J. P. Thompson, chairman of the Kentucky railroad commission, stated: tº The best plan I can suggest is a national commission, composed of men of broad, liberal views, who will be impartial toward the transportation interest as well as the shipping interest. * * * A law with no one charged specially to see to its execu- tion would be almost a dead letter. Everybody’s business is nobody’s business. The railroad commissioners would be constantly watching the transportation interest. They would constitute a tribunal to which the transportation companies could appeal to settle differences among themselves and to which the people could appeal without cost or expense. (Appendix, p. 14.) The railroad commissioner and deputy commissioner of Michigan say: Should legislation be perfected by Congress for the purpose of regulating inter- State commerce, its provisions will unquestionably have to be carried into effect by a commission to be organized for the purpose. (Appendix, p. 46.) In the paper submitted by the Produce Exchange of Toledo, Ohio, it is stated: * We believe the only good and reliable method of regulating inter-State commerce in this country is by the establishment of a transportation or railway bureau, with a commission of a suitable number of competent and experienced gentlemen, with power to regulate and establish systems of railway rates and travel throughout the country. Before this commission complaints should be made, or to its individual members, and these commissioners should have the power to compel the railways to deal fairly by 212 INTERSTATE COMMERCE. shippers. No individual shipper can contest a case with a railroad company without being confronted with a final decision in the United States court at Washington, and any city or trading point would, of course, expect the same delay and result. A com- mission to hear complaints and employ the power of the Government to prosecute . such as are reasonable is the salient feature to be embodied in any bill for the protec- tion of the rights of shippers. (Appendix, p. 73.) - • The Traders and Travelers' Union of New York express the belief that— - -- - Legislation for the regulation of inter-State commerce can best be enforced by a national commission. (Appendix, p. 101.) Mr. Cyrus G. Luce, master of the Michigan State Grange, says: My own opinion is that a regulating law should be passed restricting and fixing rates so far as possible consistent with justice, and that then a tribunal or com- mission should be established to enforce the law; and in addition to this it should be clothed with discretionary power to enforce necessary rules to insure the desired results. (Appendix, p. 111.) - Mr. W. H. Nelson, master of the Tennessee State Grange, says: Much has been said against commissions, but most of these arguments might be turned with equal propriety aginst any public trust or office. We are decidedly in favor of a commission, but without any grant of arbitrary powers to militate against the rights or interests of corporations. We think that the commission should have power, and be instructed, to co-operate with State commissions, and shonld be re- quired to enforce the laws by advisory consultation, if possible, but through the courts if necessary. (Appendix, p. 114.) Mr. Milton George, secretary of the National Farmers' Alliance, thought that— - A commission or other tribunal should be established to enforce legislation for the regulation of inter-State commerce. (Appendix, p. 118.) Mr. E. A. Giller, master of the State Grange of Illinois, is of the opinion that— - § - In order to enforce legislation there ought to be authority of some kind, so that those having grievances could make the same known and have the matter attended to without expense to the complainant. (Appendix, p. 121.) Mr. J. L. Neal, master of the Kentucky State Grange, believes that— Legislation for the regulation of inter-State commerce can best be enforced by a commission composed of one good man from all the leading interests except agricult- ure, and as that is the greatest of all interests we should have two on the commis- Sion. (Appendix, p. 122.) Mr. J. D. Lyman, lecturer of the New Hampshire State Grange, Writes: x - The best method of preventing extortion and unjust discrimination is by the best laws that can be devised and wise and just commissioners with large powers. (Ap- “pendix, p. 123.) - - Mr. Miles Norton, secretary of the Farmers' Alliance of Wisconsin, SayS: . The regulation of inter-State commerce can best be enforced by law of Congress through commissioners. (Appendix, p. 123.) Mr. S. C. Carr, master of the Wisconsin State Grange, believes that— Legislation can best be enforced by good officers, and a commission should be es- tablished to carry out the provisions of any law Congress may enact. (Appendix, p. 125.) Mr. Frank W. Tracy, president of the Central Illinois Coal Company, Writes: I have advocated a commission throughout, and do not believe a law can be made a success without a commission, who can reduce the amount of friction between the public and corporations, until they understand that the interests of each are indenti- cal. If for no other reason than this, a commission would be a great public blessing. (Appendix, p. 176.) A INTERSTATE COMMERCE. - 213 It appears from the evidence that the opposition to the establishment of a national commission is confined to a small minority of those whose views upon the subject have been recorded, and as expressed to the committee their opposition seems to have been based largely upon the erroneous supposition that a commission is proposed as a substitute for specific regulation by statute. This misapprehension is perhaps due to the fact that some of the earlier commission bills presented in Congress provided simply for the organization of a body whose principal function was to be to investigate the subject and report as to the necessity of legislation, but the time for seriously entertaining such measures has now gone by. One of the favorite arguments of the opponents of a special tribunal has been that the contemplated commission is a mere subterfuge, in- tended as a harmless concession to the popular demand for legislation, designed to be of no advantage to the citizen with a complaint and no disadvantage to the corporations concerned, and that the commission scheme is simply a procrastinating device invented by the railroads, which if adopted would leave the people more completely at their mercy . than they are now. . No such proposition could receive the approval or indorsement of this committee. The commission proposed in the bill here with re- ported is not designed to be a substitute for specific regulation, but it is designed and believed to be a valuable auxiliary agency in facilitat- ing and securing the enforcement of whatever regulations may be pre- scribed by Congress. The sum and substance of the proposition was tersely stated by Mr. F. B. Thurber, of New York, one of the best know advocates of railway regulation, when he said: - We need first a specific prohibition of practices generally admitted to be wrong, together with an Executive to see that the laws are executed. Laws without a po- lice force, or a police force without laws, are equally useless. (Testimony, p. 273.) In the light of all the evidence and the facts before it, the committee has become satisfied that no statutory regulations which may be enacted can be made fully effective without providing adequate and suitable machinery for carrying them into execution. “What is everybody's business is nobody’s business,” and the conclusion seems irresistible that specific enactments must inevitably fail to remedy the evils they are designed to cure unless an executive board be organized for the special purpose of securing their enforcement. Such enactments cannot possibly be self-enforcing, and whenever attempts have been made to control or regulate commercial transactions it has been found necessary to do so through a special instrumentality. Whatever policy of regu- lation may be adopted, whether it be the most conservative or the most radical that can be suggested, and from whatever point of view the question of regulation may be regarded, we are convinced that the pro. posed commission will prove equally essential and valuable in carrying into effect such remedial legislation as may be enacted for the protec- tion of the people against the grievances of which they complain. It will be said that the only proper and satisfactory remedy for wrong- doing on the part of transportation companies is to be found in the pro- hibition of unjust practices and the enforcement of these statutory re- strictions by the courts, and this will be supplemented by the statement that every citizen should have an opportunity to enforce his rights by judicial proceedings in his local courts, and not be compelled to rely upon a special tribunal located at the Inational capital and practically beyond his reach. 214 INTERSTATE COMMERCE. What do these declarations actually mean? . It is true that reliance must ultimately be had upon the courts in any event for the final remedy. Unless the commission itself be constituted a court, which the committee does not consider expedient, the final determination of all contested proceedings instituted under any laws that may be passed by Congress must rest with the courts of the United States. No other courts can assume or can be clothed with jurisdiction in proceedings arising under Congressional enactments, which cannot in any way affect the local tribunals of the States. Nor is it proposed to compel any citizen to rely solely upon the com- mission recommended by this committee, or to debar him from seeking redress for grievances from the judicial tribunals of the United States, if he shall prefer to have recource to them. On the contrary, it is ex- pressly provided that be shall be free to pursue his remedy at common law or under the statute herein recommended, at his own discretion. It is not proposed to in any manner restrict the choice of remedies now available, but it is proposed to provide additional means of obtaining redress with much less difficulty and expense, and to render those already existing very much more effective. This can best be accomplished, it is believed, by making the reports and recommendations of the commission prima facie evidence as to the facts found in all cases which it investigates. This would do more towards placing the shipper upon an equality with the carrier in a legal , controversy than anything else that has been suggested, and would to a considerable extent obviate the almost unsurmountable difficulties now encountered by the shipper. (See pp. 168, 169.) With such a change in the rules of evidence a favorable report by the commission would substantially establish the case of the complainant, should judicial proceedings become necessary, as it would lift from his shoulders the burden of proof and transfer it to the carrier. By thus placing the carrier upon the defensive and by relieving the shipper of the most serious disadvantage under which he now suffers, the acqui- escence of the corporations in the findings of the commission would be practically assured, while the people would be given the benefit of the investigations made by the commissioners in their behalf. The experi- ence of the States which have adopted this plan justifies the belief that a national commission organized as proposed would succeedin satisfactorily adjusting most of the complaints lodged with it without expense to the shipper, without delay, and without resort to litigation. In fact, the shipper would have much to gain and nothing to lose by appealing, to such a commission, and even should he fail to secure satisfaction would be in no Worse Condition than before. - But the value of the proposed commission must not be measured solely by its probable success, or want of success, in adjusting differences be- tween shipper and carrier. Other wide fields of usefulness would lie open before it. In undertaking the regulation of inter. State commerce Congress is entering upon a new and untried field. Its legislation must be based upon theory instead of experience, and human wisdom is in- capable of accurately forecasting its effect upon the vast and varied interests to be affected. The magnitude of these interests and every consideration of prudence and justice demand that provision should be made for an intelligent investigation of the operation of the regulations prescribed, in order that Congress may be kept advised as to the results of its action. Without such a precaution experimental legislation of this character would hardly be justified. - The proposed commission would also serve a useful purpose in col. INTERSTATE COMMERCE. 215 lecting and giving publicity to accurate information concerning the affairs and transactions of the corporations engaged in inter-State com- merce. The commissioners should be given ample authority and every facility for acquiring information. They should be empowered to pre- scribe the manner in which such corporations shall keep their accounts, and to require of them uniform reports at such times as they may desig- nate and upon such subjects as they may deem of public interest. This work intelligently performed would year by year remove “the railroad problem ’’ farther from the realm of conjecture and specula- tion, and would make it possible to gradually build up a system of reg- ulation upon the safe and enduring foundation of certain knowledge. Many other important duties would devolve upon the proposed com- mission, and when it is brought into existence, as it assuredly will and must be, sooner or later, the final solution of the difficult problem of regulation will have been greatly hastened. The committee believe with Judge Cooley that this final solution is “likely to be found in treating the railroad interest as constituting in a certain sense a section by itself of the political community and then combining in its manage- ment the State, representing the popular will and general interests, with some definite, recognized authority on the part of those imme- diately concerned, much as State and local authority are now combined for the government of municipalities. Something of the sort would Ineither be unphilosophical nor out of accord with the general spirit of our institutions.” (Appendix, p. 12.) TEIE COMMITTEE'S BILL. The committee has given the subject-matter of the inquiry with which it was charged careful examination and consideration, and the bill re- ported here with embodies its most deliberate judgment, with the best light it has been able to obtain, upon the varied and complex questions involved. This measure is not offered as a panacea for all the evils growing out of the management of the transportation system of which the people have for years complained, and fort which they are disposed to seek a legislative cure. Indeed, as we have already said, “That a problem of such magnitude, importance, and intricacy can be sum- marily solved by any master-stroke of legislative wisdom is beyond the bounds of reasonable belief.” Neither is it simply a tentative measure intended to pave the way for additional legislation. Its prac- tical application, if it should become a law, may demonstrate that some of its features are inexpedient, or unjust to the corporate carriers of the country, or prejudicial to the public interests. While there have nat- urally been differences of opinion among the members of the committee as to certain of the less important features and provisions of the bill in its entirety, and in its general scope, purposes, and methods, it rep- resents 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 inter-State traffic. The provisions of the bill are based upon the theory that the para- mount evil chargeable against the operation of the transportation sys- tem of the United States as now conducted is unjust discrimination between persons, places, commodities, or particular descriptions of traffic. The underlying purpose and aim of the measure is the pre- vention of these discriminations, both by declaring them unlawful and adding to the remedies now available for securing redress and enforcing 216 INTERSTATE COMMERCE. punishment, and also by requiring the greatest practicable degree of publicity as to the rates, financial Operations, and methods of manage- ment of the carriers. The committee has been unable to fully cover the wide field of in- 'quiry opened up by this investigation, and has necessarily omitted or dismissed with an incidental reference subjects and matters of interest which could not well be passed in review ; but its general conclusions and recommendations, as set forth in this report and in the accompa- nying bill, include the consideration of the questions deemed of most importance in connection with the legislation proposed. In conclusion, the committee desires to express the hope that the in- formation contained in this report and the accompanying testimony and the views expressed by the committee may prove of some value to the Senate and to the country in contributing to an enlightened solu- tion of the great problem of justly yet effectively regulating the cor- porate carriers engaged in transportation. APPENDIX. STATEMENTS AS TO THE REGULATION OF INTERSTATE COM- MERCE BY CONGRESS SUBMITTED TO THE SENATE SELECT COMMITTEE ON INTERSTATE COMMERCE. tº Following is a copy of the circular issued by the committee soon after its appointment, in response to which the statements herewith submitted have been received : . [Committee: Shelby M. Cullom, Warner Milº ſºme EI. Platt, Arthur "P. Gorman, Isham G. - à l'I’ls. - 3- UNITED STATES SENATE, SELECT COMMITTEE ON INTERSTATE COMMERCE, c Washington, April 10, 1885. DEAR SIR A select committee has been appointed by the United States Senate to investigate the questions involved in the regulation of interstate commerce by Con- gress, and has been especially instructed to investigate and report upon the subject of the regulation of the transportation of freights and passengers between the several States by railroads and by water routes in connection or in competition with said railroads. - In carrying out these instructions the committee propose to take testimony at some of the conumercial centers of the country, and to give representatives of every interest affected an opportunity to be fully and fairly heard; and in order to make the testi- mony taken as valuable and compact as possible, it is desired that the various organ- izations, associations, corporations, and branches of trade and production concerned in legislation upon this subject shall officially authorize one or more persons to rep- resent them before the committee and puesent their views either in person or in Writing. ~ * & - As the chief object of this investigation is to obtain information that will be of practical value to Congress in framing legislation for the regulation of commerco between the several States, it has been deemed advisable to direct the attention of those willing to aid the committee in its undertaking to the line of investigation which it is proposed to pursue and to some of the subjects upon which information is especially desired. . * * - The general purpose of the investigation is to ascertain what substantial grounds of complaint now exist in any part of the United States as to the methods of opera- tion of transportation companies engaged in interstate commerce, and as to their relations with those who have dealings with them, and to what extent and in what manner legislation by Congress can remove these grounds of complaint. This inquiry will involve the consideration of a number of incidental questions that may be briefly outlined as follows: - t 1. The best method of preventing the practice of extortion and unjust discrimina- tion by corporations engaged in interstate commerce. . 2. The reasonableness of the rates now charged by such corporations for local and through traffic. ^ - - - - 3. Whether publicity of rates should be required by law; whether changes of rates . without public notice should be prohibited, and the best method of securing uni- formity and stability of rates. - - - 4. The advisability of establishing a system of maximum and minimum rates for the transportation of interstate commerce. * g 5. The elements of cost, the conditions of business, and the other factors that should be considered in fixing the tariffs on interstate traffic, , , 16232 AP 2 INTERSTATE COMMERCE. 6. Should any system of rebates and drawbacks be allowed: If so, should such .. transactions be regulated by law and be subject to official inspection or approval? Or should they be entirely prohibited ? * - 7. Should pooling contracts and agreements between railroads doing an interstate business be permitted, or should they be entirely prohibited by law # If they should be regulated by law, would it be sufficient to require the terms of such agreements to be made public and subject to official approval % # 8. Should provision be made by law for securing to shippers the right to select the lines and parts of lines over which their shipments shall be ti ::::: ; orted ? 9. By what method can a uniform system of rates for the transportation of passen- gers tºd freights by all the corporations engaged in interstate commerce be best se- cured w 10. Should corporations engaged in interstate commerce be permitted to charge a lower proportionate rate for a long than for a short haul ? Does the public interest require any legislation on that subject 3 *~ 11. Should any concessions in rates be allowed to large shippers except such as represent the actual difference in the expense of handling large shipments over small shipments, and should such concessions be made known to the public 3 12. Should corporations engaged in interstate commerce be required to adopt a uni- form system of accounts? * - g 13. Is it desirable that such corporations should be required to make annual re- ports to the Government ? If so, what information as to their earnings, expenses, and operations should such reports contain } . 14. In making provision for securing cheap transportation, is it or is it not im- portant that the Government should develop and maintain a system of water routes? 15. In what manner can legislation for the regulation of interstate commerce be best enforced 3. Should a commission or other special tribunal be established to carry out the provisions of any law Congress may enact 3 The committee will not be prepared to hold formal sessions to take testimony for several weeks yet. In the mean time attention to this circular is respectfully re- quested, and it will greatly facilitate the work of the committee if those to whom this circular is addressed will submit in writing their views in relation to the subjects covered by the above inquiries, and forward them to the chairman at Springfield, Ill., as soon as convenient before the 10th of May Inext. Respectfully, - S. M. CULLOM ſº § y Chairmam. THE RAILROAD COMMISSIONERS OF KANSAS, Statement by Messrs. James Humphrey, L. L. Turner, and Almerin. Gil- lett, composing the board of railroad commissioners of the State of Ransas, addressed to the chairman. We have heretofore been deterred from entering upon a discussion of the subject of your circular, embracing numerous questions pertain- ing to the subject of interstate-commerce legislation, from the number and comprehensiveness of the questions propounded. To answer them, or even a part of them, adequately, would involve great labor, and pre- suppose a knowledge of a very great and difficult subject which we can- uot pretend to possess. To your late invitation to state to the commit- tee, in a general way, our views upon such of the matters referred to in the circular as we deem of most importance to the public We feel in- clined to respond. --- - MAXIMUM RATES IMPRACTICABLE. In the first place, we are of the opinion that a national commission should be established, vested with certain supervisory powers over the subject of interstate commerce. Generaliy these powers should be . confined to the function of regulation, and not to the management of the business of interstate commerce. In this connection it may be - INTERSTATE COMMERCE. - 3. observed that, in our judgment it would serve no useful or practical purpose to give to such a commission the power to establish maximum rates, for either passenger or freight traffic, over interstate lines of rail- ways. The subject is too large and intricate to be intelligently dealt With by a single body of men, even though composed of men trained in the study and business of railroad affairs. This largely results from the fact that the situation or conditions in which railroads engaged in interstate traffic are found and are operated are quite different in - almost every State. * * . - Itates of charges upon railroad traffic, when they become the subject of public or State interference, should, in order to conform to the com- mon law requisite of reasonableness to the carrier as well as to the shipper, have relation to the cost of construction and of bringing the works up to their present condition, in all cases at least where the ex- penditures for betterments or cost, subsequent to original construction, have become capitalized in the debt or stock of the road; the Volume and character of traffic, both local and interstate, which each road is able to command ; the expenses incident to the operation and manage- ment of the works; and the amount of net revenue derived from the business available to meet the necessary or fixed charges, and to answer reasonable demands upon the company for fair dividends to stock- holders. - To fix maximum rates without reference to these elements and condi- tions would involve the exercise of arbitrary power on the part of the State, and in so far as it defeated the fair and just expectations of those whose means had been invested in these important enterprises, they would suffer a despotic invasion of their legitimate interests. Such is the diversity of conditions existing among the numerous railroads of the country engaged in interstate traffic, both in respect to physical condition, character, and amount of business, and their respective abili- ties to earn money, each road, in fact, possessing a development pecu- liar to itself, that any attempt, either by Congress or a commission under its authority, to establish maximum rates for the regulation of interstate traffic would result in fixing rates sufficiently high as to enable the less favored class of roads to operate under them without detriment to their permanent prosperity; and this would be necessary if the principle of reasonableness of rates were to prevail, in which case the rates would be wholly inoperative and furnish no criterion to the more favored class of roads of the amount to be charged for a service rendered, or else would result in prescribing rates which, though not unfair to the last- named class, would be unjust to the former class of roads. A result so undesirable could only be obviated by establishing a sepa- rate tariff for each of the numerous roads in detail, adapting the tariff to the situation and conditions existing upon each line. This would be a Work of such gigantic proportions that no single body of men, no matter how expert they might be in the work, could undertake it with the slightest hopes of success. Yet something like this would have to be attempted if the rate-making power were given to a commission. TWO CLASSES OF INTERSTATE TRAFFIC. "There are two classes of interstate traffic over railroad lines, viz: Commerce from and to points in the interior to and-from the sea-board, and commerce that, crosses State lines, but is still local. In the former case the great bulk of the commerce is carried over great distances, crossing a number of State lines, and employing several Connecting 4 INTERSTATE COMMERCE. • roads to complete the transit. In the other the fleight is carried from * , a point in one State to a point in an adjoining State. It is obvious that rates adapted to the hauling of heavy and bulky products, comprising the leading productions of the country, over great distances, either for eastern consumption or foreign export, would furnish no criterion or basis for a system of rates for the transportation of the same prod- ucts comparatively short distances between points in adjoining States. in the interior. These products must of necessity be moved at very low rates, at rates that do not remunerate the companies engaged in the work of transportation, but only furnish a small margin of profit over the bare expenses incurred in the performance of the service, from the fact that they are moved very great distances. The great cereal crops. raised in the Mississippi Valley and the meat products in the trans- Mississippi, in the continued production of which the country is vitally interested, can only be maintained by a system of rates for their trans- portation to the sea-board which, while they involve no absolute loss but rather a small margin of profit, would, if the same rates were ob- ligatory upon them as to all traffic carried over their lines, consign every road engaged in the business into absolute bankruptcy. It is a fact, known to every man who has given any thought to the subject, that the rates now prevailing upºn that part of interstate com- merce which is concerned with the movement of Western products to the Eastern sea-board are very much lower than were ever before de- vised by any railroad in the World; so low in fact that, were rates on their local traffic proportioned or adjusted to these transcontinental rates, there is no road now in existence in this country that could derive sufficient revenue from its business to påy, in addition to its operating expenses, its fixed charges. e - TEIE TWO ALTERNATIVES. To devise a system of maximum rates, covering every species of in- terstate traffic, on the basis of rates for long hauls from the extreme West to the East; would paralyze every railroad engaged in the business. On the other hand, to equalize the rates as between long and short hauls, i. e., to introduce a proportionate equality in the rates between local and continental interstate traffic, would, if railroad property is to be pre- served and its efficiency maintained, advance the rates on great dis- tances to Such an extent as to put an embargo upon the movement of the cereal crops of the extreme West, or the trans-Mississippi region, a result which would be little less disastrous to the East than to the West. It has been rendered possible for the great West to reach a rapid and prosperous development, by a system of low rates upon the movement of the leading production of that region to tide water. The attractions of the West, enhanced and made available by the unparalleled creation of railroad facilities, have induced a movement of population from the East to the West, thus relieving an overburdened labor market, and re- ducing those causes of discontent and restlessness among the employed laborers of the country that eventuate in serious disturbances to her established industries, and frequently threaten the public peace. On the other hand the abundant production of food, by the utiliza. tion of the western lands, and its cheap distribution by railway lines to remote distances, lighten the burdens of the laborer and increase the ability of the country to carry on its industrial development. - It will be seen that the benefits derived from the low system of rates prevailing on the great movements of food products, as compared with INTERSTATE COMMERCE. * * , 5 rates upon movements more local in character, are shared by each sec- tion of the country. And since these benefits are felt alike in every part of the country it is no unjust discrimination to discriminate in the charges inade upon long and short hauls. * - . It may be further remarked that this differentiation in rates is a re- sult that has been brought about by no conventional or Voluntary arrangement between companies operating interstate lines of railway. But it has been forced by the natural laws of commerce operating upon geographical lines, and which cannot be changed without changing the distribution of land and water on the continent, or by annihilating dis- tance without the aid of steam ; and any attempt by the law-making power to contravene these natural laws, thus necessitated by our geo- graphical situation, would end in disastrous derangement of our com- mercial system. - - - - It would draw out this paper to an undue and tedious length to point out in detail the evil consequences which would attend an attempt to force upon the carrying business of the country a system of maximum uniform rates applying to interstate traffic. It would appear to be sufficient to say such a scheme would be utterly impracticable. The reasons already stated, we think, render this obvious, but others might be given, as, for example, that a system of rates for interstate traffic over trunk lines operating between great commercial centers like New York and Chicago, where the volume of traffic bas reached a maximum limit, and the most economical terminal facilities have been provided for the cheap and expeditious handling of freights, would be unadapted to roads farther west whose traffic was of less volume, whose hauls were shorter, and whose terminal facilities were inferior. The imprac. ticability, thea, of establishing a system of uniform maximum rates to apply to all interstate commerce would necessitate, if the power to make rates was conferred upon a national commission, the making of differential rates substantially conforming to those systems now in ex- istence, and this would involve the minute study of so vast a variety of interests, the adjustment of so many conflicting rights, and such an in- finitude of detail as to render such a project chimerical. • The rapid decline in rates within the past five years, especially those pertaining to interstate traffic, carried on over the leading lines of the country, coupled with the fact that the causes which have brought about the reductions are still operating with undiminished energy, Would seem to obviate any necessity of conferring upon a national rail- road Commission the rate-making power. The rapid development of immense wheat areas in India and Australia, and cheap ocean trans- portation, from these new sources of supply to common points of con- Sumption of the surplus of wheat-producing regions, supply additional factors of competition to those already existing. TEIE FUNCTIONS OF A COMMISSION. While the power to establish maximum rates to govern interstate traffic could not, as we believe, be wisely or usefully employed by a national railroad commission, such a body might usefully exercise the function of entertaining complaints from shippers of undue or ulīreason- able charges on the part of railroad companies, and judge as to the reasonableness or otherwise of the charges complained of. In this Way a prima facie case might be made for the courts. * Whether or not any given rate or charge for a specific service is a reasonable charge is frequently a question depending upon a great va- 6 - INTERSTATE COMMERCE. riety of facts, many of which are not readily accessible, and the perti. nency and value of which can only be adequately judged, by experts, so that if the shipper is left alone to pursue his ordinary remedy at law, without the preliminary aid which a commission may afford to him, the remedy in most cases is impracticable and valueless. Complaints of alleged extortion and of unjust discriminations might be investigated in like manner, and where evils of the classes named were found to ex- ist, and remained uncorrected in accordance with the judgment of the commission, an adequate and appropriate remedy could be invoked through the courts, the remedy being greatly facilitated and rendered practicable by the previous investigation of the commission. Nearly all causes of complaint on the part of shippers, arising in the busi. ness of transportation, except those wherein unliquidated damages are involved, might usefully be committed to the investigation and correc- tion of such a commission, and we feel safe in expressing the opinion, based upon the experience of State commissions, that cases would sel. dom arise in which coercive power would have to be invoked to make the correction effectual. • UNIFORMITY AND STABILITY OF RATES. There is one other question embraced in the circular that we will touch upon, but rather by way of suggestion than argument, viz: The importance of maintaining uniformity and stability in rates. We have already pointed out the unpracticability and the undesirability of es- tablishing uniform rates, or rates proportioned to the number of miles hauled of any given product, covering every species of interstate traffic. but this reasoning will not apply to rates for the transportation of freight between two given points—between Chicago and New York, for example. The maintenance of uniform and stable rates upon all the leading mercantiſe products moved to and from common commercial Centers is a matter that deeply concerns the public as well as the railroad com- panies engaged in the carrying of those products. These evils are greatly aggravated where the rates are not required to be operú and public. It is plain that where such a state of things exists a portion of the commercial community, obtain secret advantages over the rest. Their business is placed upon a more easy and lucrative basis. They are enabled by this means in periods of sharp competition to undersell their less favored competitors, or, when the rates rapidly fluctuate, as is generally the case where instability is the rule, and the temporary reduction fails to affect the price of the article, the profits of the more favored class of tradesmen are unduly swollen. Indeed, in periods when rates are unstable the benefits of temporary reductions are sel- dom shared with the consumer, but they are so much added to the profits of the middle-man. - Another evil growing out of this element of instability is the tempta- tion which is offered to merchants to take undue advantage of femporary reductions to overstock themselves, frequently involving themselves in the toils of embarrassment. This is the source of perhaps the worst forms of unjust discrimination and introduces into legitimate business the element of gambling. -- Besides, what are called rate wars among railroads are not under- taken with any view of subserving any public good, and whatever of temporary benefit they may bring to a few is more than offset by the injustice and Wrong done to the rest and the disturbances they entail INTERSTATE COMMERCE. • 7 upon legitimate business. But the main object is to disable competitors from engaging in fair competition for a share of the business which a few seek to grasp, the ultimate object being, not to bring about perma- Dent reductions in rates, but to fasten themselves more securely on the country as an unchecked monopoly. - - - Railroads engaged in interstate commerce are employed also in local traffic. The communities which they immediately serve cannot dis- pense with them. They must have a source of maintenance or cease to exist, or exist with a greatly impaired usefulness and efficiency. Inso- much as their legitimate support is wasted in destructive rate wars, a . higher standard of local rates must prevail, necessarily. Either this alternative must be accepted, or, what is worse, the destruction of the efficiency of the road. It is easy to perceive that this state of things gives rise to grievous complaints by local shippers of excessive charges and unjust discriminations. - While it is true that a very considerable disparity must of necessity exist between rates for local hauls and those for transcontinental traffic upon the food products of the country, for the reason that these, to con- tinue to be produced at a living profit, can, bear but a limited trans- portation charge, no matter how great the distance hauled, yet the difference should not be so great as to give rise to just complaints of unjust discrimination. It is probably not within the competence of legislation to wholly eliminate from the business of transportation all the evils that are incident to it or grow out of it. But that they may be checked and mitigated by Wholesome provisions and vigilant admin- istration it may with reason be assumed. * The business of a common carrier concerus the whole public, and it is in the nature of a public function. All rates should be required to be made public. The granting of secret rebates or drawbacks, or other advantages to One shipper or a particular class of shippers over others similarly situated, should be prohibited under penalties. - - THE LEGALIZING OF TRAFFIC AGREEMENTs. Since the violent fluctuations of rates, consequent on rate wars be- tween rival lines, result, usually, in discriminative benefits to a few at the ultimate expense of the public, means should be taken to at least moderate this disturbing element to the business interests of the coun- try. As a means to this end, we venture to suggest that contracts or agreements between rival companies to carry on interstate traffic upon given rates, providing those rates are reasonable and just, should be invested with a legal status and be enforceable with appropriate sanc- tions. Such agreements should in all cases be first submitted to a com- mission established by Congress, whose judgment as to the reasonable- ness of the rates agreed upon should be requisite to give such agree- ment validity. By this means the public would be guaranteed against unreasonable or excessive rates upon interstate commerce and the railroad companies be afforded some protection against practical pro- ceedings amongst themselves and against each other. This suggestion is made upon the assumption that for a service rendered a railroad company is entitled to a fair and reasonable remuneration, and that it is neither fair nor good policy to ask that it be done for less. Upon this basis, and with proper guarantee that this condition be secured, it is difficult to conceive what fundamental objection could exist to the enforcement of this character of contract. 8 INTERSTATE COMMERCE. ARBITRATION BETWEEN RAILROADS AND THEIR EMPLOYſs. We wenture to refer to another matter, though it is not embraced in your circular. The organized combinations among the various classes of railroad employés, through which claims are made upon the compa- lies and compliance With these demands coerced by Strikes, entailing serious losses both on companies and the public by arresting the opera- tion of railways affected, give promise of greater trouble in the future unless some method can be devised to settle disputed claims Without resort to strikes. Some of the organizations have adopted rules which hamper and interfere with the company’s right to manage its own prop- erty and business. They assume for these organizations the right to sit in judgment upon and revise and reverse the action of the manager or other executive head appointed by owners of the property in mat- ters pertaining to the employment and pay of employés. In thus de- nying the right to the company of freedom of contract, these organiza- tions, so far as they are concerned or affected, assume a joint manage- ment of the business in their own interests. While companies may, for the time, yield to superior force embodied in these organizations, they cannot recognize the claims or assumptiQns on the part of their employés as valid. - On the other hand, working men feel that so long as they remain faith- ful and efficient in the line of their employment they ought to be able to feel secure in the permanency of such employment ; that when liable to be discharged, either for or without cause, at the arbitrary will or pleasure of -one man, a man who practically commands their means of sustenance, they, to a certain extent, Surrendered their own rightful freedom. . The strikes that most frequently occur take place upon interstate lines of railway, the striking combinations extending into two or more States. It is submitted that to a national railroad commission might be entrusted the power to arbitrate and settle disputes arising between the companies and their employés under such legal regulations as might be appropriately provided, and under which such arbitration should be compulsory. - ſº . . . JUDGE CJ JLEY'S STATEMENT. Letter to the chairman from Judge T. M. Cooley, of Ann Arbor, Mich. Your letter to me respecting the questions which your committee has under consideration finds me with my time so completely engrossed with engagements which cannot be put aside that it is quite out of my power to do more in reply than to touch hastily upon a few topics. The general subject, when broadly considered, is perhaps as import- ant as any now before the American people. An immense aggregate of capital has been invested in railroads, ostensibly for the benefit of the public on the one side and of the investors On the other. A very large proportion of this capital is now found to be unremunerative, and so far as the investors are concerned is sunk and lost. When capital invested in a useful business is thus lost, the loss does not fall wholly upon the owners, but the aggregate property of the State is to that ex- tent diminished, and in various ways the loss is felt by the Whole com- munity. But While the investors have been losing an impression has INTERSTATE COMMERCE. - 9 been growing and strengthening in many quarters that the public, be- cause of bad management, has been deprived of much of the benefit that was reasonably to be counted on, and that injurious combinations are formed and monopolies created to the public prejudice. This im- pression, whether well founded or not, is a serious evil, because it breeds serious consequences. Moreover, railroad managers, in the minds of large classes of men, stand as the representatives of capital in antago- mism to productive industry; and whatever tends to increase the hos- tility to railroad managements tends also, in some degree, to strengthen a troublesome, if not dangerous, feeling of antagonism to acquired Wealth. & DIFFICULTIES IN THE WAY OF WISE LEGISLATION. Some of the feeling against railroad management is well founded ; some of it is baseless prejudice. To discover what is just and what unjust I suppose is one part of your duty as a committee. To devise remedies for such evils as may be found to exist, is the other and more troublesome part. It is the more troublesome because, in the first place, the whole business of railroad management is still new. Rail- roads have existed in the country but fifty years, and in that time the aspect of what in general terms we speak of as the railroad problem has been assuming from time to time new phases; so that it has been impossible for the public mind to settle down upon the best methods. What was thought wise even thirty years ago is known now to be in some respects absurd; and the very best railroad managers have up to. this time only been feeling their way along, in the hope of reaching at length the true policy. In the second place, the want of popular in- formation on the general subject is seriously in the way of wise legisla- tion. The demand for regulation is to a large extent inconsistent with itself, but the inconsistency is not apparent, for the simple reason that the complications of the subject are not readily perceived and under- stood. There is a demand, for example, for legislation that will secure at the same time steadiness of rates and unrestrained and even active competition, things which necessarily kill each other; and those who make the demand, if compelled to choose between the two, would be almost certain, in the present state of public opinion, to choose that which was least beneficial. I shall venture to say, also, that there are in the country two distinct and very dissimilar classes of railroad men, one of which would manage the roads So as to make them legitimately useful to both the stockholders and the public, while the other em- braces men who find their profit in the manipulation of stocks, whether at the stock board or elsewhere. The two characters may of course be combined in the same man, but the stock speculator is supposed to carry into his road management an inordinate and unscrupulous greed, and he stands in the public mind as the representative of all, and is assumed to be a man of great wealth, which, by tricks and extortiou, has been taken from the pockets of the public, and requiring legisla- tion to hold him in check. But it is matter of public notoriety that this second class has thriven rather from the handling of wrecks than of substantial properties, and that their business has largely consisted in possessing themselves of failing or bankrupt concerns and loading them by consolidation or otherwise upon better enterprises, to the ruin, in many cases, of those thus loaded. But the main who finds his profit in “systems into ruin hurled,” where the stockholder and the public are alike sufferers, may feel little or no interest in better management than now exists. - 1() - INTERSTATE COMMERCE. WISE LEGISLATION MUST BE CAUTIOUS LEGISLATION. These are some of the difficulties in the way of wise legislation, and they are so serious that no one can afford to overlook or disregard them. Lack of sufficient experience; lack of general information ; prejudice, to some extent well founded and very inveterate : What impediments to safe legislation could be more serious than these ? The danger is more imminent that if legislation were to be adopted which should be intended to be comprehensive and final, it would be over-legislation, and perhaps introduce more evils than it would cure. Useful legislation at this time, when so many who must participate in it have given the subject no study whatever, and when even the wisest have doubts on many points, must, necessarily, be cautious legislation. A priori reasoning, not yet tested by experience, is perhaps as likely to prove erroneous if given effect by legislation now as it would have been a quarter of a century ago. And we know that such a solving by legislation as the railroad problem could have had at that time would long before this have come to be justly regarded as in the higest de- gree oppression. Railroad projectors and managers were then the pub- lic favorites, and the people were ready to let them shape the laws to suit themselves. Unreasoning antaganis now may be no further wrong than unreasoning confidence then, but permanent legislation that shall be meant for a finality can spring neither from the one nor the other. Every year more knowledge is being acquired respecting the natural laws which affect transportation, and if legislation proceeds cautiously we shall no doubt after a time have a system which best and most use- fully harmonizes with those natural laws. - RATES MAY B.E.OPPRESSIVE, EVEN WHEN TOO LOW. Among the complaints most often made by the public is one of ex- orbitant rates. That as a rule the rates are not too high would seem evident from the fact that they do not enable a majority of the roads to pay dividends. Nevertheless, as the rates are adjusted and imposed they have in a great many cases the effect of excessive rates, and the complaints made against them are well founded. And this is one of the anomalies of railroad business, that rates may be oppressive even when too low. I have occasion to procure a certain article of manufacture made a hundred miles away. I order it, and it is delivered to me at a cost for railroad transportation no greater than the drayman charges for taking it from the station to my house. It seems a marvel of cheapness, and when I reflect that the charges for railroad service have been steadily going down for many years, the first impression naturally is that a very satisfactory condition of things exists in this regard. . On meeting with the manufacturer, however, I find that the condi- tion of things is far from being satisfactory to him. On the contrary even these low rates may be ruinous. In the first place there is no stability to them. The manufacture is one in which competition is very sharp, and the margin for profits is so small that a difference in the railroad rates, such as is made in some of the changes, might exhaust it. Without stability there is a want of the requisite certainty for the mak- ing of contracts. But what is perhaps worse is that a rival competes for the supply of the same territory, and though the roads which carry the goods of the two respectively charge nominally the same rates, he finds as matter of fact that the rival obtains concessions which are sufficient to enable him to control the market. INTERSTATE COMMERCE. 11 . If the complaint is well founded there is a serious wrong which may demand legislation. The evil springs from a want of steadiness in rates, and from the Secret cutting of rates. The latter is necessarily incident to a State of unrestricted competition, and many persons are impressed that somehow the public is benefited every time the rates are put down, Whether Secretly or publicly, and that Jegislation ought to be so shaped as to favor rather than check unrestricted cutting. But a policy that is injurious to business interests is necessarily injurious to the public; the damaging consequences distribute themselves through the whole Community even when we are not able to trace them. This is coming to be more generally understood than formerly, and though by no means universally accepted as a truth in political economy, yet more and more every year it is perceived that there is a desirability in steadiness of rates, which inay often be greater even than very low rates. THE PUBLICATION OF RATES. Railroad managers have themselves endeavored to secure that object by their joint arrangements, but their contracts are without legal force, and the temptations to break away from them are so numerous and Operate upon SO many persons and so continuously that the results are very unsatisfactory. But it is thought by many that a complete remedy could be found in legislation that should require rates to be made pub- ic, and adhered to for a definite time without change, under penalty, and that should at the same time prohibit the common understandings that the railroads now endeavor to harmonize upon. The prohibition would necessarily destroy the remedy; that is to Say, the attempt at such a remedy would be more mischievous than beneficial, unless it had for its basis a general predetermination of the rates. Such most certainly would be the case as to all the business in respect to which rates are now so unsteady as to make legislation important; that, namely, in respect to which there is competition, which of course is the major part of all. As to such business the road that could manage to fix the rates last would have a monopoly for the period during which they must remain unchanged, and sharp management to Secure that monopoly Would be the most successful management. A new temptation to trickery would thus be introduced, and a far more powerful one to the cutting of rates than now exists, because, if success- ful, extraordinary advantages would be expected from it. METEIOIDS OF ESTABLISEIIING RATES. Two remedies to secure fairness naturally present themselves: One that the State fix all rates, and the other that the railroad companies agree upon them. If any one should be inclined to regard the first as a practical method, it would be useful for him to take the tariffs for freight of the leading trunk lines and endeavor to so adjust them as to make charges which would be fair as permanent charges at all points. It would probably surprise him to find how complicated a problem he had in hand, how diverse the interests, how difficult the questions for even the fairest mind, and at how many points there was opportunity for favoritism and unjust discrimination, not between railroads merely, but between towns and sections of country. Nothing is hazarded in saying that if the State were to adopt this course as a policy the Sub- ject would have complications hitherto unknown, and that railroads would be brought into politics in a way to make them more trouble- 12 º INTERSTATE COMMERCE. * ºf some than ever. Every road in all its claims would have a local back- ing, and in many cases towns and sections would seem to be more, vitally interested than the roads themselves. There would be a very simple way of avoiding this complication ; that, namely, of establishing definite rates by mileage. - - But while that mode would be very simple, it would not get rid of difficulty or complaint ; it would only change their ground, Uniform rates by mileage would give all competitive business to the shortest line and would practically annihilate some long and useful roads which now very successfully compete for business with shorter rivals. In contrast to this would be an agreement as to rates by the roads them- selves, With legal sanction therefor when not manifestly unjust. The question then presents itself whether the final solution for the “ railroad problem" is not likely to be found in treating the railroad interest as constituting in a certain sense a section by itself of the polit- ical community and then combining in its management the State, rep- resenting the popular will and general interests, with some definite, recognized authority on the part of those immediately concerned, much as State and local authority are now combined for the government of municipalities. Something of the sort would neither be unphilosophical nor out of accord with the general spirit of our institutions, and it is there- fore likely at some time to be taken into serious consideration by law- makers. If the State reserves to itself the necessary authority to pro- tect the public against unfair practices, she may well leave the roads to Quarrel over the infinite variety of detail in the adjustment of rates, taking care, however, that their adjustment shall not be, as it often is now, purely nominal, but one to be adhered to. TEIE EFFECT OF REBATES. Should some policy like that indicated ultimately come to be accepted as wise, the popular authority would be likely to insist upon a total pro- hibition of rebates. They are now made use of to some extent as a means of unfairly cutting lates, which, I assume, Would then, as far as possible, be prevented. But a more influential fact would be the effect that customary rebates have on competition. Rebates assume a very plausible form when they are allowed as an inducement to the estab- lishment of a new business. Thus, a man goes to a railroad manager and says: “I will establish a large manufactory at town A on your line, which will benefit you and the public, provided you offer the proper inducements. The proper inducements will be a concession in rates in respect to the business I thereby bring to you.” The railroad man- ager assents to this; the concession to be made is agreed upon, and the business is established. The parties thus agree that what they do, while a benefit to the railroad company, is also an important public benefit. It calls into existence a new business that would not other- wise have been established, and tends to build up and enrigh the town and the country dependent upon it. This seems plausible, and if the railroad manager were conducting a business exclusively private in its character, it might be conclusive. Dut that is not his position, and it is necessary for him at all times to bear in mind that he is supplying a public convenience, and is under obligation to do so in such a way that benefit to one shall not be injury to another. He cannot look at the side of benefit exclusively and ignore the other side. There may be cases in which such a concession to a Inew business would wrong no one; but they must be very uncommon. Generally the concession is needed only to give the new business an INTERSTATE COMMERCE. 13 \ advantage over established rivals, and the benefit received is at the expense of others. It does not follow that in such a case there is any advantage to the general public. The new enterprise calls no new capital into existence; it simply changes capital from one thing to another, and if one establishment is injured by the granting of impor- tant special favors to another, the harm may fully neutralize the advan- tages. . But more generally rebates are an allowance in consideration of ex- ceptionally large amounts of business. Here the argument for the allowan)ce is the same that prevails in other business, the customer re- ceives favors measured by the extent of the business he brings, and this is supposed to be justified by the advantages received from him, and also by the fact that the cost and trouble of handling freight is relatively less when the amount is large. But here we have again, as the practical effect, that with the assistance of the road one dealer is built up at the expense of others. But in consideration of the larger amount of business the large customer is likely to obtain other advan- tages also; a side track, for example, which saves him the cost of cartage, The steady tendency of these advantages to build him up at the cost of weaker concerns is inevitable, and the effect may be conclusive. Indeed, it is not impossible, in some lines of business, for some single -establishment to crush out all competition and establish a complete monopoly. It may be said, and is sometimes said, that this would be beneficial ; that the public would be better served, production would be less expensive, and prices lower. It may be so; but I do not subscribe to the doctrine that the public is necessarily benefited when prices are put down ; to assume that is to take a partial view, without considering the incidental consequences. There are several considerations involved which are of no small importance, and one of these concerns the effect upon the imaginations of men of seeing large establishments thus re- morselessly crushing out the smaller by the mere force of advantages derived from a public convenience which has been nominally called into existence for the common and equal benefit of all. It is a great public calamity when people in a free country are brought to believe that the tendency of public institutions is to make the strong stronger and the Weak weaker. Other things, they think, have a sufficient tendency in that direction without any aid from Government, or the institutions the Government may control. - . In my patronage of the post-office I find the general rule to be that there shall be uniformity of charges, regardless of the extent of business of customers. A hundred persons who receive little mail may each cause the postmaster as much labor as the one who receives and sends as much mail as they all; but nevertheless the officer is not permitted to make any charge for the additional labor. Nobody complains of this; it is undoubtedly best it should be so. The Government appoints ad- ditional clerks without complaint, and the postmaster performs, as of course, the additional labor imposed upon himself. The analogy between his case and that of the railroad manager is not perfect; but with the principle established that the railroad is to be held in law a public convenience, it must be expected that in legislation it will be treated much as those are which are stipplied exclusively by the State. It does not follow that it will be prejudicial to the roads. If it results in better relations between them and the public than could otherwise exist there will be a positive gain ; and if the roads are not unfairly treated in any legislation respecting rates their compensation may in the aggregate be equally good, though differently distributed, 14 INTERSTATE COMMERCE. GENERAL CONCLUSIONS. What I have already said sufficiently indicates my opinion that in the matter of rates and running arrangements the railroad companies must take the initiative. Legislation will then be needed to compel them to observe their contracts. But the difficulties inherent in the subject will even then disappear only gradually and slowly. If the roads had unlimited power to-day to fix, rates and make running arrangements they would not all agree in doing so. So long as We have bankrupt roads we shall always have roads to compète recklessly, and plenty of bankrupt roads we shall continue to have so long as Schemers may build roads anywhere, regardless of the need of them. If one or more roads for any reason refused to concur in fair rates, and expected through strategy to find, a profit in the refusal, it would be necessary. in the interest of fairness to provide against the others being so tied up to rigid rules as to be at their mercy. - Some of the problems suggested by your circular are such as Con- gress cannot solve, because they concern local traffic, and must be dealt with by the States. In some localities serious Wrong is done by impos- ing unfair burdens upon local freights; but Congress could give no re- dress unless indirectly, and what it could do indirectly would only be in the direction of relieving local freights by imposing a larger share of the burden of carriage upon freights carried for long distances. But any attempt in that direction would be likely to prove abortive, because the people of the larger part of the country would think it prejudicial to their interests. Conjoint Federal and State legislation would be es- sential, and I know of no reason for believing it could be obtained. The railroad problem would be much more simple than it is if the inter- ests of all sections of the country were identical, and if the power of control was vested in a single body. As it is, if a man Were ever so wise he might in some cases be powerless for good, for he might find that the effective means of redress were in the hands either of parties who lacked the competency to legislate wisely or Were interested against legislating effectively to reach the real evils. • TELE KENTUCKY COMMISSION. Statement by J. P. Thompson, chairman of the railroad commission of ICentucky. - I think the law-making power ought to interfere with transportation as little as possible. Irregularities and inequalities of trade and commerce are best regulated by time and experience. I think there has been, and will continue to be, gradual improvement in facilities and rates of trans- portation. The best plan I can suggest is a national commission, com- posed of men of broad, liberal views, who will be impartial toward the transportation interest as Well as the shipping interest. The commission ought to be clothed with advisory powers only. The chief reliance ought to be in public opinion. That is the great regulator after all. My exper- ience is that railroads and transportation companies have great respect for the public, and are very anxious to appear just. Annual reports made by the commissioners to the President Would exhibit the conditions and workings of the various lines engaged in interstate commerce; every com- INTERSTATE COMMERCE. - 15 pany would strive to merit and receive a favorable notice in the com- missioners' report. A law, very broad and general in its terms, against extortion and unjust discrimination ought to be enacted. Violations of this law ought to be prosecuted by the commissioners. The variations in rates of transportation are so great that no general law can be en- acted fixing minimum and maximum rates that would be effective or just. A law with no one charged specially to see to its execution would be almost a dead letter. Everybody's business is nobody’s business. The railroad commissioners would be constantly watching the trams- portation interest. They would constitute a tribunal to which the trans- portation companies could appeal to settle differences among them- selves, and to which the people could appeal without cost or expense. Uniformity of rates on all the railroads in the country would be mani- festly unjust. A road the construction of which cost from $50,000 to $100,000 per mile, one that traverses mountains and large streams, is entitled to receive more per ton per mile than another road that does the same amount of business which cost $15,000 per mile. No general law fixing rates would be jtist. I had hoped that your committee would call a meeting of the various railroad commissioners and the represent- atives of the transportation companies, and have an interchange of views, which would certainly have proven mutually advantageous. JOHN D. KERNAN's STATEMENT. Supplementary Statement by John D. Kerman, chairman of the New York railroad commission (see testimony, p. 3), with draft of proposed bill. When I had the honor of appearing before your honorable body in May last, it was without opportunity for such preparation and thought as the importance of the subject deserved. I therefore avail myself of your kind invitation to further answer the inquiries proposed in your circular, dated April 10, 1885, which are these: - [Here follow the interrogatories elsewhere printed.] The railroad answer to these questions is that to-day interstate or through commerce rates are too low, and that the consequent destruc- tion of railroad investments threatens the efficiency of transportation service and indirectly injures general business prosperity; that there is substantially no extortion or unjust discrimination to be prevented; that the sole duty on the part of the Government calling for its action and legislation is such as will raise alid maintain through rates to a reasonably fair basis; that when so raised and maintained, inequalities and apparent unjust discrimination will disappear, and railroads, under the corrective influences of public opinion, water, and other healthful competition, will of themselves properly adjust the relations of through and local tariffs, and that the management of railroads will impartially discharge the duty of arbitration between the railroad owner and in- vester and the public; that the present “pooling” system is skillfully devised to maintain just and reasonable rates and to prevent unjust discrimination, extortion, Secret rebates, &c.; that its legalzation is at present the shortest practicable road to the end sought by Congress; that the common law and its remedies afford all the redress needed by the shipper to protect himself against arbitrary and unreasonable rates, rules, conditions, &c.; that the limit of legislation by Congress 16 INTERSTATE COMMERCE. in the public interest ought to be the establishment of a commission to acquire and disseminate information, to act as an advisory board only, and to suggest from time to time additional legislation. - The facts stated are contradicted on behalf of the public to a greater or less extent, more particularly at the vast number of non-competitive points in the country. The theory underlying the railroad answer to this question is, that railroads should be permitted, as pooling aggre- gations, or as separate proprietors, to alone arbitrate between them- selves and the public under what they regard as proper competitive and other influences, subject to the common law control of the courts. This theory, which is opposed not only by extremists, but even among the large mass of conservative thinkers, is not altogether approved. The beginning of the solution of the question must be sought in a cor- rect analysis of the situation. The history of the contest upon this question between the people and railroads, in various States and coun- tries, is first essential. In a report which was adopted by the board of railroad commissioners of New York, and which was transmitted to the State senate on April 11, 1884, a phase of the question is presented (see Second Annual Report, beginning at page 53). The conclusions reached were these (page 90): . . 1st. The pro rata freight bill as proposed, or as amended in the communication to the board, ought not to become a law. e - 2d. There is no form of specific rate fixing legislation which can be at present recommended. Such legislation should not be attempted in this State until it is established that all proper modifications in rates and correction of existing wrongs cannot be obtained under existing laws. * 3d. Any form of contract or any kind of discrimination against shippers which compels citizens to refrain from freely using the canals of the State in preference to railroads is against a sound public policy, and ought not to be permitted. . . 4th. Railroads should not as a general rule charge more between a terminal and an intermediate point for a like class and quantity of freight than is charged be- tween such terminal and a more distant point, even though at such more distant point there be railroad or water competition, unless railroads can affirmatively es- tablish such circumstances governing such competition as justify the-higher charge for the shorter distance. .. - 5th. There should be entire publicity of railroad rates, whether the same be tariff or special rates. - - - - - Before recommending any legislation to correct the alleged abuses indicated, the board deems it better to submit this report to the consideration of the Senate, with the hope that railroads will, for their own interest, by reformatory action, obviate the necessity of any special legislation. - - - The conclusion that no form of specific rate fixing legislation can be re- commended is even clearer when such legislationis considered in reference to interstate commerce than when attempted within the narrow limits of a single State. The repeated failures to thus control railroads in the public interests and the reasons therefor noted in the report mentioned forbid the attempt to fix rates and classification by statutes or through Commissions for the vast and complicated business of those engaged in interstate commerce. Your honorable committee will agree that when one has become acquainted with the history of the question many crude ideas as to the usefulness and practicability of rate fixing, penal legislation, pro rata laws, maximum and minimum rate laws, &c., dis- appear, and it becomes clear that proposed legislation must be broader in its aims and less disturbing in its action than that beretofore at times much in vogue. The low through rates of to-day, pointed out by rail- roads as a reason why no legislation is needed, have little to do with the question. They are a phase of universal depression, intensified by reckless and needless railroad construction. Unnecessary railroads Sooner or later become public burdens; they are neither efficiently main- INTERSTATE COMMERCE. - 17 * - tained nor operated, nor do they permit competitors to fulfill their public obligations. Congress cannot apply the remedy chiefly needed. The State whose railroads are already sufficient in number and extent for public use at fair rates can and ought to enact: • 1. That no new roads should be chartered unless, upon the part of the State, a public necessity for the line is found to exist, as in Massa- chusetts, and as recommended by the New York railroad commission to the legislature. , - ~. 2. That at least 50 per cent. of the stock be paid in before eminent domain is exercised or construction begun, and that the issue of bonds shall bear a fair relation to the stock issued and paid in. 'The through low rates of to-day and the rates influenced thereby are not the trouble to be contended with. They are low, too low, probably. They are caused and at all times somewhat controlled and regulated by competition and other causes, even under an efficient working pool, just as railroads assert. It is at the local non-competitive points, which to competitive points are as ten to one, that friction exists, and where some protection for the shipper is needed other flºan that afforded by the uncontrolled arbitration of the carrier. It is safe to assert that there are a large number of such places where the influences causing low through rates have not sufficient force to prevent the existence of un- just discriminations and rates relatively too high. It frequently hap- pens that to an excessively low through rate an arbitrary rate is added from the trunk line connection to the way station on the local road, which causes grievous complaint. A case in point before the New York board will be found in its reports. - ... - - Now, the local rate may not be too high in many cases, and there may be no just cause for complaint, as the railroad representatives assert before you, but the peculiarity of the present situation is that the rail- road and its management act as judge and jury and decide the ques- tion. For reasons which will be stated, the court can do practically nothing, and thus the shipper is coerced out of the clear right of having the question between himself and the carrier fairly determined by an impartial arbiter. - - THE LEGALIZING OF POOLS OBJECTIONABLE. The railroads also insist that whatever exists of unjust discrimination will disappear, provided Collgress will so legislate as to enable carriers to compel each other to maintain just and reasonable through rates. Suppose this should be done, would not the difficulty suggested re- main } Upon disputed questions as to whether the rates were just and reasonable or not, or Whether unjust discrimination existed or not, the carrier would remain the sole judge, influenced more or less by circum- stances and a more or less broad view of the rights of the shipper, but still practically the sole judge and at the same time a litigant. It is not necessary to determine to how great an extent wrongs and unjust discrimination exist or is likely to exist. It is enough to know that among the many and complicated transactions of carriers there must always of necessity arise numerous instances of alleged wrong and un- Iust discrimination; that in all such instances the carrier is a party to the dispute, and hence that, despite all that can be said as to his supe- rior expert knowledge and just intentions, he is by all the rules goveru- ing the administration of justice disqualified from discharging the duty of final arbitration. - - The legalization of “pools” in their present form is objectionable for 16232 AP——2 - 3 18 INTERSTATE COMMERCE. . the reasons we have stated. . The “pool” of railroads would determine what are reasonable rates, and what is and what is not unjust discrim- ination. An impartial observer can concede all that is claimed by the advocates of “pools” as to the benefits which have resulted from their operation, and still he cannot shut his eyes to the fact that, as at pres- ent constituted, they absolutely, and without appeal to any tribunal, determine what are their duties and what are the transportation rights of the citizen. Every decision made by the “pool” may be right, in fact, compelled, as asserted, by competitive and other considerations, and yet be a wrong upon the citizen, because it is made by an interested party who is engaged in disputing the claim presented. The submission pretended by railroads in debate to the corrective influences of public opinion, the good-will of shippers, &c., is somewhat exaggerated. This is beside the question under present discussion, for whatever the influ- ences are about an arbiter it is a strange anomaly for a contestant to occupy that position. It may be well enough, however, to ascertain whether such influences are, after all, as controlling as is claimed. In Volume I of the first report of the New York commission, at page. 83, will be found the case of Foster & Thomson v. The New York Cen- tral, &c. The decision there made was clearly in the interest of New York railroads and of the entire grain shipping business of New York City, and was earnestly urged and sustained thereby. The New York Central, against whom the complaint was nominally made, admitted that it would be for its advantage to follow the decision. The “pool,” how : ever, said it should not be obeyed. Not only were the immense inter- ests involved unable to compel acquiescence in their just demand, but the New York roads had to yield obedience to this final decision of a tribunal put in place, maintained, and controlled by one of the two Gon- testants, who were the merchants, their business interests, and public opinion on one side, and railroads on the other. - - At page 148 of the same report will be found the report in the matter of the complaint of the Chamber of Commerce, sustained by the enor- mous dry-goods trade of New York, and Chicago, against the trunk lines. All the interests represented by the complainants, as well as public opinion, so far as ascertainable, commended the reclassification of cotton dry goods recommended by the board. The “pool” assumed to decide otherwise, and an alleged wrong was determined to be in fact right by the party against whom it was charged, in the face of as vigorous and influential an expression of public opinion as could be elicited on any question. These examples suffice to show that the railroad claim as to the sensitiveness of rail- roads to the complaints of their shippers and to public opinion is, as I lave stated, pictured too broadly by railroads, in debate, as a defense of their claim of the wisdom of continuing to permit them, absolutely, and without appeal, except to common law courts unable to aid the shipper as hereinafter shown, to fix the rates and conditions of trans. loortation, and to determine all questions concerning extortion and un- just discrimination. I believe they should be permitted to fix rates and classifications, terms and conditions, because I do not deem it practica. ble to fix them by statute, or through boards, officials, or commissions, but it seems very clear that the effort should be to provide some tribunal which shall determine disputes between shippers and carriers concerning the reasonableness of rates, classifications, &c., and before which charges of unjust discrimination can be tried before those who, at least, are not tainted with a direct financial interest in the decision. But railroads and their leading representatives have stated for years, INTERSTATE COMMERCE. 19 and have repeatedly stated before you, that just such tribunals as are needed exist in the courts, which are provided to administer the com- mon law, whereby rates, &c., must be reasonable, and unjust discrimina- tions avoided. Why have no actions been maintained in these courts 3 Assuredly there have been and do exist unreasonable rates and unjust discriminations. This much will be admitted by all ; it will not be de- nied even by any carrier. Why then have not the courts enjoined the continuance of the wrongs and enforced the payment of damages? Why again is it that substantially no such suits ever have been brought and that so few decisions in this country exist? It is not because of defects in the law or in the constitution of the courts, but it is because the sub- ject is one which neither client nor lawyer, judge nor jury can unravel or deal with intelligently within the compass of an ordinary trial and with such knowledge of the matter as men generally well educated possess. Let a man take the testimony in five volumes before the Hep- burn committee; read one hundred pages of the clear and able state- ... ments of Mr. Blanchard, for instance, con over the facts and figures he gives, and then let him try to reach a conclusion upon the question under discussion. Some conception will thus be obtained of what a lawsuit is which involves the reasonableness of rates, or the existence of an unjust discrimination, or a local rate as compared with a through rate. As the onus is upon the complainant, add to his difficulties the fact that his adversary has nearly all the evidence in his possession, locked up in books and in the memory and intelligence of experts who have made the subject their study. The expense involved, the uncertainty to be faced, and the difficulties to be overcomein an ordinary suit at law have made that remedy obsolete and useless. It is time that carriers who design to discuss this question fairly admitted that shippers cannot en- force their claims for reasonable rates and to be protected against un- just discrimination through the courts or under the common law any more than carriers can under the same common law and in the same courts prevent competitors from pursuing wrong and destructive poli- cies. The establishment of over tyenty commissions in different States . is, in each case, a declaration of this conclusion, and an effort to substi- tute some practical and just remedy for the defect. . There is another evil to be remedied which curiously results from the absence of some practical system under which fair and equal rates to all can be secured, and unjust discriminations prevented, as a matter of right and not as a matter of favor, or of chance, favorable location merely, or as the result of a just conception of his duty on the part of the carrier. The difficulty alluded to is the defective system of preventing losses and adjusting claims for property lost or injured in transporta- tion. In the first place, there is to a great extent failure on the part of carriers to hold employés responsible for damage done. Carriers are often careless in this respect with their employers, because under the present system shippers, especially large ones, do not dare to press their claims. The power that fixes their rates as at present is not to be of. fended by a Vigorous urging of claims. In this respect the trouble is not with the courts, but arises, as stated above, from the fact that a Shipper deemed unreasonable about his claims, can be subjected to much greater losses under the power to fix rates and classifications, for un- just treatment, in which respect he is, as we have shown, practically without remedy. Since the shippers are thus forced to be lukewarm in the matter of claims, the method of adjusting and paying them natur- ally inclines to be slow and uncertain. The fast-freight lines have as- sumed to make the legal remedy more difficult by inserting in their 20 - INTERSTATE COMMERCE. * shipping bills a provision requiring the shipper, in case of loss, to seek his redress from the road upon which the loss occurs, notwithſstanding that the fast-freight line takes the property and contracts for its trans- portation. . . . . - There has been great improvement in the method of caring for prop- erty and of adjusting and paying losses on the part of many carriers, but still the relative positions of the carrier and shipper are such, in the matter of rates and discriminations, as to present an opportunity to carriers which oftentimes enables them, if not to avoid the payment of just claims, at least to unduly delay the settlement. I will now assume that something needs to be done by Congress, bearing in mind that nothing has ever been done; that the subject is full of complications; that while correcting wrongs the rights of property must be respected; that unwise action will be full of danger to business and will ultimately fail, and that the regulation to be expected must, therefore, be a growth rather than a Creation. Pro rata freight, maximum and minimum rate laws, long and short haul provisions, mere enactments prohibiting rebates, drawbacks, &c., with penalties for violation attached, must be at once discarded, as I view the subject. The reasons for my judgment will be found in the special report to the senate of New York. Such legislation has gen- erally failed, and the wider the field of application the more conspicuous has been the failure. Such statutes are not broad enough for the foundation upon which to build up a system of national regulation of interstate commerce. As experience grows some of them may serve useful purposes, but at the outset they must be avoided as mischief breeders only. . - All agree that the principles of the common law are excellent if prop- erly and promptly enforced. They fully cover the carrier's duty, and, justly applied, are not onerous. Why not, therefore, enact them? Con- gress will thus provide that rates shall be reasonable; that undue or unreasonable preferences or advantages shall not be given, and that no one shall be subjected to unreasonable prejudice or disadvantage. Such a statute will cover the whole ground, and at the same time will be sufficiently flexible to deal with each particular case or combination of circumstances. The reasons which support a clear declaratory statute on the subject are too clear to make the objection available that these principles are the law already. Those reasons led to a similar statute in England, known as the railway and canal traffic act of 1854. That statute has been the subject of judicial construction ever since. We would have the advantage of the English decisions thereunder, not necessarily to be always followed, but at least as furnishing some guid- ance. In determining to follow the wording of a statute which has stood the test of time, the experience of Massachusetts has been con- sidered, and your particular attention is invited thereto. After some years' study of the questions the Massachusetts Commission recom- mended, and the legislature passed, an act regulating rates. U, n page 75, Vol. 1, of the second annual report of the New York commission a reference to this will be found, as follows: The first venture in this direction (specific legislation as to tariffs) was made on March 21, 1882. By chapter 94 of the laws of that year the following was enacted : “SECTION 1. No railroad corporation shall discriminate in charges for the trans- portation of freight against or in favor of any person, firm, or corporation, or demand or accept from any person, firm, or corporation for the transportation of freight, a higher or lower rate, or demand or grant terms more or less favorable than those de- manded or accepted from any other person, firm, or corporation for like service. “SEC. 2. Any railroad company violating the provisions of this act shall, in addi- INTERSTATE COMMERCE - 21 tion to liability for all damages sustained by reason of such violation, be liable to the penalty provided by section 19 of chap. 112.” . - ''The penalty alluded to was $200 for each offense. Under this act important rail- road corporations cut off, or threatened to cut off, special rates. They insisted that no other safe course was left to them, because courts and juries would invariably construe the words “for like service,” in favor of complainants and against corpora- tions. Under this threat the merchants and manufacturers of the State urgently asked the repeal or modification of the law. Under this pressure, and with the ap- proval of the board of railroad commissioners, the law was amended by chapter 225 of the same year, so as to read as follows: - “No railroad company shall, in its charges for the transportation of freight, or in doing its freight business, make or give any undue or unreasonable preference or advantage to or in favor of any person, firm, or corporation, nor subject any persons, firm, or corporation to any undue or unreasonable prejudice or disadvantage.” The reasons given by the railroad commission for this sudden change in the law can be found in the annual report for 1883. - - The moral is clear that the legislative bodies should beware of experi- mental statutes upon this subject, especially when framed with penal provisions, which, as the carrier justly observes, may impose severe punishment for acts done through an honest mistake in the application and construction of the statute. - The objection that under the general terms of such a statute a car- rier cannot know his duty will be hereafter discussed, and, as I think, is justly disposed of under the remedial parts of the proposed act. It should likewise be provided that carriers shall freely receive and for- ward each othei’s freight. This provision is very essential for the prompt and speedy conduct of interstate commerce. In order to fairly bring within the act all commerce properly interstate a provision should be inserted to prevent carriage designed to be continuous, from being treated otherwise by any such device as stoppage, interruption, &c. & THE PUBLICATION OF TARIFFs. - There has been much discussion in and out of Congress as to the pub- lication of tariffs. The system is an untried one in this country as to interstate commerce. Its result is therefore largely speculative. Pub- lic opinion favors the publication of tariffs. Foreign countries have adopted it. Under our different circumstances, however, we cannot accurately judge from their experience as to its probable operation in this country. The objections and precautions suggested by carriers ought to be seriously considered as coming from those in a position to best foresee the effect. Railroads insist that were such a rule adopted it ought to apply as well to water carriers as to railroads. It seems to me that this is true. It is doubtful whether those who represent rail- roads and water carriers, in making freight contracts, do not generally at all times know each other's rates. It is the shipper who is some- times in ignorance as to one or the other. Why should he not know what all rates are just as he knows what all taxes are. Secrecy favors unjust discriminations among shippers, as well as aids railroads in un- reasonably cutting each other's rates. Water carriers are generally at a disadvantage, even under most favorable circumstances, as against railroads, owing to the superior facilities of the latter. Were this pub- lication proposed to increase that disadvantage it would perhaps be un- wise in the public interest. It does not seem that it would have any such effect in view of the fact stated that each can now at all times sub- stantially know what is the rate of the other. Again, the Erie Railroad, for instance, insists that it will suffer be- cause it is so entirely an interstate road. It would be subject to the 22 *, INTERSTATE COMMERCE. law, while its competitor, the New York Central, being within the limits of a State, would not, as to shipments from New York to Buffalo. This being on the through line to the west would enable the New York Cen. tral to make and change its tariff at once as it chose to, while the Erie would be tied up as to that distance under a published tariff. The same kind of objection was urged by the New York Central against the es: tablishment of a commission in New York State. No disastrous ef. fects to it have resulted from the action of the commission act, and the road has, as successfully as before, continued its competition with the IErie. We have already agreed that the proposed act should forbid any break or interruption of an interstate shipment for the very purpose of preventing this evil. Were the New York Central to break or interrupt its interstate business at Buffalo, as suggested, for the purpose of evad- ing the act requiring publication, it would violate the law, and, under the remedial provisions to be hereafter suggested, could be compelled to stop the practice. . While to forbid railroads to charge more than the published tariff without notice is admitted to be right, it is urged that it would not do to prevent immediate reductions without the regular notice under some circumstances. This is true. A notice of reduction to take effect ten days in advance might, to some extent, suspend business during that period, and would consequently overcrowd the carrier when the reduc- tion would become operative. It would also prevent railroads from taking freights unable to pay the tariff rates. For instance, a man at Buffalo has one hundred cars of furnace cinder which can be used in a Chicago furnace provided it can be transported at once at a very low rate. Cars are running west from one third to one-half empty. The railroad can better afford to take it at any rate than leave it. No one is injured by this, but on the contrary the earnings of the road are some- 'what increased, and its other business consequently relieved. The ne- cessity of giving a five or ten days' notice of change of tariff would stop such transactions, and would be an injury. The provision forbidding lower than schedule rates at any times to be given ought not to apply to manufacturing interests. The relations between manufacturers and carriers throughout the country are generally very satisfactory. Lower rates are generally needed and given to manufacturers than to others. This is not objected to by our citizens, who, realize the public and local benefit of having our manufactures successful, and who concede the wis. dom and justice of permitting the present harmonious relations to con- tinue. The incentive of building up manufacturing interests along their lines is almost universally sufficient to secure from carriers to manu- facturers such rates as their business requires. - To meet these objections, and to permit the publication of tariffs to be tried in such a Way as not to disturb transportation methods too roughly, there should be inserted in the law permission to carry under Special contracts at lower than schedule rates, provided that the terms thereof and the names of the parties to whom given, or when given to all shippers at a shipping point, or to a class of shippers, the name of such place or class are plainly posted as a part of the published sched- ule before the shipment is made. The provision that it shall not be an unjust discrimination would apply as well here as elsewhere. Full pub- licity would be accomplished, and that after all is the great point to be attained. Due consideration of the subject will generally convince those examining the question that to require a publication of rates, and to provide that, without a notice of specified length, no change could be made to a lower rate, would be too inflexible to answer the demands of INTERSTATE commeRCE. 23. commerce, although it might benefit railroads by preventing sudden cutting and reductions. - . * The question has been mooted whether such tariffs, before being pub- lished, ought not to be approved by the Governmentor by its represen- tative. This would be unwise and impracticable. It would be years before any board, unless exclusively composed of carrier experts, could judge intelligently in advance about the muſmberless tariffs submitted to them. It might be approved and yet, unknown to the board, be full of unjust discriminations and wrongs, which would only be de- veloped under its practical operation. There is too much of the foreign parental idea in the theory, When governments begin on that theory abroad they generally end by Owning the railroads as a matter of neces- sity. I do not believe in having the Government either own or operate railroads. This subject will be found to be discussed at pages 92, 94, &c., of the Pro Rata .Freight Reporter, hereinbefore referred to and herewith transmitted. Let each carrier fix his own tariff, under a statute requiring conformity to the principles which have been stated; let it be published and changed only on notice, with the exceptions above indicated; let its practical working develop its wrongs and then improve the administration of the law so that such wrongs may be speedily corrected. This, it is confidently believed, is all that can be safely attempted as a first step. If it can be accomplished, it will be a great advance toward the safe and just regulation of interstate com- IY) 6TC0. . - - ADMINISTRATION OF TEIE LAW. There are many who believe that a new and distinct tribunal needs to be created for the determination of cases involving transportation, la- bor, telegraph, telephone, and such like questions, with an appeal from the decision thereof to the Supreme Court. The: e are serious objections to such an increase of the judicial department of the Government. It may come in the future, but it is at present unnecessary. As has beeu shown. the fault lies neither in the common law nor in the courts; the One needs only to be clearly declared as the law with some supplem in tary provisions growing out of the changed aspects of the transporta- tion question in modern times; the other should have the help of a board with time and opportunity to unravel and clearly present the facts. The carrier can then know his duties, and the courts can enforce their performance when neglected. A commission is the most practica- ble creation for this purpose. Its operation in over twenty States and in England proves this to be true. The findings of such a commission upon all questions of fact should be accepted in all courts as prima facie true. The objections to this are futile. Such findings are the one thing most needed to make the courts available to shippers and to carriers as against each other. I have already pointed out how utterly impossible it is for a court and jury, intelligently and within the limit of their time, to dispose of Such intricate questions requiring expert knowledge and the Sifting and Weighing of many facts. Could shippers, upon com. plaints, have the facts ascertained without expense to them by a body experienced in the work, there would be need of little litigation, and in that which occurred the court could act promptly. It seems idle for a Commission to spend Weeks in accumulating evidence in order to ascer- tain facts and then to have its findings of no avail to any one in court. No injustice would be done to carriers since they would be at liberty to rebut the findings, and would have in their possession all the evi- dence with which to disprove them. There is a tendency among those 24 , INTERSTATE COMMERCE. carriers who really want nothing done to suggest that if the people must have something, to give them commissions with simply advisory powers. They all promise respectful obedience to such commissions, and in awe, wonder who would dare to disobey their suggestions when backed by public opinion. That they do follow this latter course has been shown in striking instances. There are carriers who are excep- tions, and who generally do obey such recommendations, none more notable in New York State than the New York Central and Hudson River Railroad Company. Some refuse compliance except when the recommendations accord with their own view of their own interests; others evade compliance because systematically opposed to any regu- lation over them. All should be made to comply when the facts found are sustained, and the conclusions drawn therefrom are found by the court to be just and according to law. The courts should be given power to enforce compliance by all, and for the reasons stated should be permitted to get at the matter practically by having before them as prima facie evidence the findings of fact of the commission. The powers of the courts should be to enforce prompt compliance with the act by injunction, mafidamus, order or decree, and, in case of willful violation, by penalties, and the imposition of costs. - Carriers object to a law in general terms prescribing that rates shall be reason- able, and that no unjust discrimination shall be practiced, and provid- ing such remedies and penalties for violation. They say that unless the law prescribes the rate, and defines the unjust discrimination, no carrier can know whether he is violating the act or not. They add, and it is generally conceded, that it is utterly impossible to fix rates by statute, or to define unjust discrimination. The objection is well taken, but it can be met and justly disposed of in another way. No action should lie in the courts provided the carrier within a reasonable time shall adopt the recommendations of the commission. “Thus after full investigation, and after a clear determination as to the unreasonable- ness of the rate, &c., the carrier could determine whether to contest or not, and even if lie does dontest the board findings, no penalty should be allowed unless his conduct is found by the court to be willful, and not the result of a fair and honest difference of opinion. TEIE COMMISSION. A commission ought to consist of not less than five members, with two, at least, of them having railroad experience. They should be most carefully guarded from the temptations of their position. They should not be permitted to be interested in the stock, bonds, or ownership of any carrier, nor to accept from carriers anything except the facilities heeded to discharge their duties. That they should not engage in any other business vocation whatever is a most essential feature, because all busi- ness has relations with carriers and absorbs time and attention. The duties will require all the time and attention which the best men to be found can give, and no conflict between their public duty and their private interests should ever exist. The salaries ought to be liberal, and would not be extravagant at $10,000, with a higher rate for the chairman, as in England. Carriers who are to pay the same under the bill submitted would prefer that the salaries should be such as to secure the most competent commissioners. Any railroad man fit for the place commands even a higher salary than this. It must also be remembered that no other public servant is so absolutely cut off from profitable in- - INTERSTATE COMMERCE. 25 vestment or employment as such commissioners must necessarily be in order to remove them from dangerous influences. If it can be done, a feature of the New York statu'e should be adopted, making the entire expense of the commission a charge upon the gross earnings of carriers. This is manifestly just, and in New York State. Operates without objection of difficulty. The powers of the commission in the Way of subpoenaing and examining witnesses, preserving order in their proceedings, compelling the production of books, papers, &c., and punishing for contempt, ought to be the same as possessed by the courts, subject to review on appeal. In no other way can such a body effectively prosecute its main work of ascertaing the facts and of con- pelling respect for it when discharging its duties. The details of the proposed bill, as to method of procedure, rules, power of investigation; annual report to Congress, &c., do not need discussion. The provision. of the New York act requiring the board, at the request of the governor, Senate, assembly, or committees of the same, or of railroads, &c., to have hearings for and against, and report upon proposed legislation, is a Wise one. A uniform system of accounts should be required to be adopted by carriers so ſar as practicable. The working out of such a system must necessarily be the work of time, to be done by the commission after full consultation with carriers. The form adopted by the New York commission, and the rules regarding the same, are here- with submitted. . - • - * ef LEGISLATIVE ACTION PROPOSED. . I bave prepared and here with present for your consideration an act drawn in accordance with the foregoing views. It is not intended to be other than the result obtained from careful examination of the differ- ent measures which have heretofore been proposed or tested, and the selection therefrom of the provisions deemed most just and practicable. I have thus answered to the best of my ability the questions submitted, numbered 1, 2, 3, 4, 6, 9, 11, 12, 13, and 14. ... -- * Second. In the fifth question you inquire as to the elements of cost, the conditions of business, alld the other factors that should be considered in fixing the tariffs on interstate traffic. - - Mr. Fink has fairly answered this question before you, in my judg- ment. e . - Third. Should pooling contracts and agreements between railroads doing an inter- state business be permitted, or should they be entirely prohibited by law Ż If they should be regulated by law, would it be sufficient to require the terms of such agree. lments to be made public and subject to official approval % In the pro rata report, hereinbefore referred to (N. Y. State Second Annual Report, p. 77), will be found a discussion of pools and their legal status, &c. Strictly considered they are by the common law illegal conspiracies. I believe the system, however, to be a wise one, properly administered under limited governmental regulation. Under the provisions of the act proposed carriers might be authorized with- out danger to enforce their traffic agreements against each other; still, it has seemed to me more prudent for the present to Jet, the subject await the consideration and study of a commission, if one is to be ap- pointed. It may, perhaps, be wise to leave the details of pooling arrange- ments to be further worked out by carriers. Under the act proposed the Commission can give publicity to all pooling agreements. Mere official approval of Such agreements would not be sufficient. Such approval, . given in advance, might legalize wrongs unknown and only to be de. 26 INTERSTATE COMMERCE. reloped after the agreement should become effective. To let the car. riers make their agreements subject to the rules of law is better, pro- vided the wrongs therein can, upon complaint, be speedily redressed. Fourth. Should provision be made by law for securing to shippers the right to se- lect the lines and parts of lines over which their shipments shall be transported? The New York commission has so decided as to first-class freight, in the conclusion of which decision I concurred. Under the act proposed such diversion, even by agreement, can be forbidden when it is unjust and unreasonable. I am not prepared to say that diversion of some classes of freight may not be made by agreement without injury, and therefore may not be permitted. There is some freight in the trans- portation of which time is not an essential. There may also be some ... cases where it is a just punishment for and preventive of secret special rates, rebates, &c. - - Fifth. Should corporations engaged in interstate commerce be permitted to charge a lower proportionate rate for a long than a short haul ? Does the public interest require any legislation on the subject 3 There is no question connected with transportation more troublesome than this. The just and proper rule has been the subject of much dis- cussion in the New York commission in the following matters: . . . Pro rata freight report (Second Annual Report, p. 85), p. 118, Utica and Black River Railroad case. Pamphlets. New York, Ontario and Western Case. There is pending before the board an act, proposed to be submitted to the legislature, which I regard as the proper legislation on the subject in New York State. The act reads as follows: - An act to regulate freight transportation and charges ther for upon railroads. The people of the State of New York, represented in senåte and assembly, do enact as follows: - SECTION 1. Every railroad corporation shall give to all persons or companies rea- sonal)le and equal terms, facilities and accommodations for the transportation of them- selves, their agents and servants, and of any merchandise and other property upon its railroad, and for the use of its depot and other buildings and grounds; and at any point where its railroad connects with another railroad, reasonable and equal terms and facilities of interchange. SEC. 2. No railroad corporation shall charge or receive for the transportation of freight to any station on its road a greater sum than is at the time charged or received for the transportation of the like class and quantity of freight from the same original . point of departure to a station at a greater distance on its road in the same direction. Two or more railroad corporations whose roads connect shall uot charge or receive for the transportation of freight to any station on the road of either of them a greater sum than is at the time charged or received for the transportation of the like class and quantity of freight from the same original point of departure to a station at a greater distance on the road of either of them in the same direction. No railroad corporation shall charge or receive for the transportation of freight from any station on its road to another station a greater suum than is at the same time charged or received for the transportation of the like class and quantity of freight from a station in the same direction and at a greater distance on its road to the same point of destination. Two or more raiſroad corporations whose roads connect shall not. charge or receive for the transportation of freight from any station on the road of either of them to a station on the road of the other a greater sum than is at the same time charged or received for the transportation of the like class and quantity of freight from a station in the same direction and at a greater distance on the road of either of them to the same point of destination. The rates upon freight shipped to or from points outside the State on a through rate divided on percentages, and in which one or unoro foreign roads have an interest, shall not be considered in determining the rates to be charged for short er distances under the provisions of this act. The provisions of this section shall not apply where the board of railroad commissioners shall approve of rates to be charged for the trausportation of freight or for terminal charges contrary to said provisions. SEC, 3. A railroad corporation which violates any of the provisions of this act, ill INTERSTATE COMMERCE. 27 addition to liability for all damages sustained by reason of such violation shall be liable for each offense for a penalty of $100, to be sued for and recovered for his own use by the party aggrieved, provided the action for such penalty be brought within one year from the (late of such violation. My reasons in favor of this act will be found in the above citations, particularly in the New York, Ontario and Western Railroad case. There ought to be no legislation on this subject by Congress at present. The true rule in cases presented could be determined and applied by the commission and the courts under the act submitted. Sixth. Should any concessions in rates be allowed to large shippers, except such as represent the actual difference in the expense of handling large shipments over Small shipments, and should such concessions be made known to the public? - That they should be made public I have no doubt, and have so pro- vided in the act before you. Whether the rule stated in the question should determine the concessions to be made to large shippers, I am not sufficiently experienced to answer. The act submitted forbids such concessions as would constitute unjust discriminations, &c., and the tribunals established by the act could determine in cases presented whether they were such in fact or not. No specific rule can be laid down on the question. . * - - . Seventh. In making provision for securing cheap transportation, is it or is if not important that the Government should develop and maintain a system of water routes? - * j - Such water routes effectually aid in preventing unreasonable rates by other carriers, and ought everywhere to be developed and maintained. The General Government should adopt the policy suggested as to all natural interstate water routes, such as the Ohio, the Mississippi, and their tributaries, or where the tide ebbs and flows, and Congress has jurisdiction. Artificial routes constructed within States, though used for interstate commerce, should be developed and maintained by the State. • • - On pages 180 to 191 of volume I of the report of the New York com- mission will be found the views of the commission as to the definition of the term “interstate commerce.” The act submitted has been drawn in accordance with the views of the majority, as there expressed. An act to regulate commerce among the Several States. - SECTION 1. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That for the purpose of developing an intel- ligent system of regulation of commerce with foreign nations and among the several States, a commission to be known as the - Board of Interstate Commerce Commis- sioners, is hereby created and established, to consist of five members, who shall be appointed by the President with the consent of the Senate, one of whom shall be appointed to hold office for four years, two for five years, and two for six years. Each of them shall take an oath to support the Constitution of the United States and to faithfully discharge the duties of his office. Two of said members shall be experienced in railroad business, two acquainted with commercial and agricultural interests, and one of approved legal attainments. Not more than three of Said coln- missioners shall be appointed from the same political party. Any commissioner may be removed by the President for incompetency or malfeasance in office. Each year that terms shall expire, appointments shall be made in the same manner for six years. If a vacancy happens by death, resignation, removal, or otherwise, appointments shall be made for the residue of the term. Such appointments shall be so made as to preserve in the board as nearly as possible the representation herein before men- tioned. No person in the employ of or holding any official relation to any common carrier covered by the provisions of this act, or owning stock or bonds thereof, or who is in any manner pecuniarily interested therein, shall hold either office. If after his appointment either commissioner shall by will, devise, or operation of law, ac- quire and become vested with any such interest as aforesaid, he shall within three months thereaſter divest himself thereof; and upon his failure to do so, or upon his * 28 INTERSTATE COMMERCE A voluntarily becoming employed or interested as a foresaid, his office shall become va- cant. Said commissioners shall devote their whole time and abilities to the duties of their office so far as necessary to propérly discharge the same, and shall not engage in any other business, vocation, or employment. No commissioner shall exercise the authority or powers conferred by this act in any hearing, proceeding, or matter in which be has any pecuniary interest whatever. Neither said commissioners nor any of their employés shall accept, receive, or request any pass, present, gift, or gratuity of any kind from any such common carrier as aforesaid, and the acceptance, receipt, or request thereof shall work a forfeiture of the office or position of such commis- sioner or employé, and shall be a misdemeanor and punishable as such. Said board shall be known as The Board of Interstate Commerce Commission, and shall have an official seal, which shall be judicially noticed. - g SEC. 2. Said board shall appoint a secretary, who shall keep a full and faithful record of the proceedings of the board, and shall file and preserve at the general office of the board all books, maps, documents, and papers intrusted to bis care, and shall perform such other duties as the board shall direct. - SEC. 4. Said board shall appoint an accountant, who shall be skilled in railroad books aud accounts, and who shall perform such duties as the board shall direct. SEC. 5. The board may appoint a stenographer and such additional clerical force, Inot exceeding in number, as may be necessary for the transaction of the busi- ness of the board, at salaries which shall not exceed in the aggregate dolſars. Such board shall appoint a marshal, whose duty it shall be to attend the board at its meetings and examinations, serve notices and papers, and perform such other duties as the board shall direct. Said board may likewise employ experts for such temporary service as may be required in conducting any examination or investiga- tion. All of the appointees and employés, hereiu before mentioned, shall serve dur- ing the pleasure of the board. - SEC. 6. The said commissioners shall each receive an annual salary of thousand dollars, except the chairman, who shall receive a salary of thousand dollars; the secretary and accountant, dollars each ; the marshal, dollars. The commissioners and their employés shall be paid monthly. The members of said board and their employés, hereinbefore mentioned, shall be transported over railroads and in drawing-room and sleeping cars, and in vessels and steamboats engaged in the business of common carriers as aforesaid, when in the discharge of the duties of their office, free of charge, upon passes signed by the Secretary of the Interior, and while so doing, shall have such facilities and accommodations as are necessary, and shall likewise have a right to enter and remain, during business hours, in the cars, offices, depots, vessels, steamboats, and other places of business of the said common carriers, and they shall have reimbursed to them monthly the expenses and disbursements they may have incurred when traveling in the discharge of the duties of the r office, which expenses shall not, however, exceed in the aggregate dollars per month. SEC. 7. The total annual expense of the said board, including salaries for commis- sioners, secretary, accountant, marshal, Stenographer, clerks, experts, printing, and all other expenses incident to said board, shall not exceed the sum of dollars. Such total annual expense shall be audited and allowed by the Secretary of the In- terior, and paid by the Secretary of the Treasury of the United States out of any un, appropriated funds, from time to time, remaining in the Treasury. The sum of dollars, or so much thereof as may be necessary; is hereby appropriated for the uses and purposes of this act for the fiscal year ending , eighteen hundred and eighty , , and the intervening time atterior thereto. Such total annual expense shall be borne by the common carriers covered by the piovisious of this act as apportioned among them by the Secretary of the Interior, who, on or before the thirtieth day of November in each year, shall assess upon each of said common carriers its just pro- portion of said expenses in proportion to its gross earnings for the year next preced- ing said September thirtieth in each year, and such assessment, as made by said Sec- retary of the Interior, shall stand as a debt in favor of f be United States. It shall be tho duty of each common carrier, covered by the provisions of this act, on or be- fore the thirtieth day of October, in each year, to make a report to said commission- ers showing the amount of its gross earnings for the year ending on the preceding September thirtieth. Such report to be verified by the president or chief financial officer, owner or manager. In case of failure to make such report as aforesaid, the Secretary shall ascertain and fix the amount of such gross earnings as he shall deem just. - - - SEC. 8. The boare shall have an office in the city of Washington, in rooms to bo designated, and supplied with necessary furniture, fixtures, postage, stationery, and appliances by the Secretary of the Interior. Said board shall meet there on the first Wednesday of every second month from the time of its appointment and confirma- tion. A record of its proceedings shall be kept at all official meetings and an ab- stract thereof shall be included in the annual report of the board. Said board may hold meetings at any time or place within the United States as may be necessary for the convenient transaction of its business, and for the purpose of such meetings - INTERSTATE COMMER.C.E. 29 shall be provided with suitable rooms and accommodations in buildings owned by the United States and used by the United States circuit or district courts. SEC. 9. Three of said commissioners shall constitute a quorum for the trans2ction of any of the business of the board. All examinations and investigations may be hekd and taken by and before one or more of said commissioners by direction of tho board; all examinations and investigations so directed before one or more of said commissioners shall be reported to the board for final action thereof. So far as nec- essary for the conduct of such examinations and investigations, the commissioners so directed by the board shall have all of the powers of the board. SEC. 10. The said board shall have general supervision over all common carriers engaged in interstate commerce, and shall keep themselves informed in relation thereto and in regard to the manner and method in which the same is conducted, and as to the rates thereon, and the rules, regulations, contracts, and conditions made in connection there with, and shall have the right to obtain from such common carriers full and complete information in regard thereto, and to conduct or to direct, beford one or more of its members, examinations and investigations in relation thereto at any time or place within the United States. SEC: 11. To the end of carrying out the purposes of this act, said board shall have full power to subpoena and examino witnesses upon subpoenas to be signed by the chairman of the board, or by its secretary under its direction. Such witnesses shall be paid the same fees as in the United States district courts, the same to be approved by the Yoard and to be audited by the Secretary of the Interior. Officers, directors, principals, and employés of such common carriers shall not be paid ally fees unless the same are specially allowed by the board. Such board shall also have the right to examine the books, records, and agreements of any such common carrier and to require the production thereof at the place where the principal office of said common carrier may be situated, or to require sworn copies thereof to be furnished to it at any time or place. For the purposes of compelling the attendance and examination of witnesses and the production of books, documents, and agreements, or the furnish- ing of sworn copies thereof, and for the purpose of preserving order and punishing contempt in proceedings before it, said board shall havé the same powers as are ex- ercised by the United States district courts, and the action of the board the eon shall be subject to review in like manner. - SEC. 12. I’very principal, officer, agent, or employé of any such common carrier as aforesaid, who shall refuse or neglect to make or furnish any statement, report, or information required by said board under the provisions of this act, or who shall will ſully hinder, delay, or obstruct said commission in the discharge of its duties, shall be guilty of a misdemeanor, punishable by fine not exceeding $5,000, or by im- prisonment not exceeding one year, or by both said fine and imprisonment. - SEC. 13. The said board shall have power to prescribe a year for such carriers, and the form of annual report to be made by such common carriers, and from time to time to make clanges and additions in such form, and also from time to time to prescribe the manner in which the books and accounts of such common carriers shall be kept. Neglect or refusal to make such annual or other reports as the commission may require, or to correct the same as required, within such time as the commission shall fix, shall subject such common carrier to a fine not exceeding $500 and $25 per day for each day that such neglect or refusal shall continue. • SEC. 14. The said board shall make an annual report to Congress on or before the first day of January in each year of their doings, including such facts, statements, and explanatious as will disclose the actual working of the various systems of inter- state commercial transportation, together with such suggestion as to the general policy of the United States, and such amendments or drafts of laws as may to it seen proper and Decessary. And it shall likewise be the duty of said board to take testi- mony upon and to have hearings for and against any proposed change of the laws re- lating to interstate commerce, when requested to do so by Congress or by the Com- mittee on Commerce of the Senafe or House of Representatives, or by the President, or by any common carrier covered by the provisions of this act, or by any incorpor- ated organization representing agricultural, commercial, or manufacturing interests, and said board shall thereupon report its conclusions to the source from which the request emanated. The said commission shall lave two thousand copies of its an- nual report printed for its use, and other copies thereof shall be distributed by the Secretary of the Interior as are other reports issued from the Interior Department. SEC. 15. The said board shall inquire into that method of railroad management or combination known as pooling, and shall have hearings for and against any legis- lation proposed to said board in relation thereto, and shall report to Congress in its alılıual report what, if any, legislation is advisable and expedient upon that subject. Every agreement and contract for “pooling” of freight transportation or business between such common carriers, or any of them, slºtill be filed in the office of said commission before the same shall go into cffect. Any party thereto failing to comply with this requirement shall be subject to a penalty not exceeding $1,000 and of $50 for each day that such party shall fail as aforesaid, provided, bow. . X- - \ 30 INTERSTATE COMMERCE. ever, that the filing of such contract or agreement by one of the parties thereto shall lye deemed a sufficient compliance with this requirement. SEC. 16. Copies of all reports, papers, and documents on file in the office of said board, when duly certified by the chairman or secretary of the board, shall be evi- dence in all courts and places equally and in like manner as the originals. SEC. 17. The said board shall charge and collect for certified copies of all official documents 10 cents for each folio of one hundred words, and shall pay all such fees collected into the Treasury of the United States quarterly to the credit of the general fund, together with a detailed statement thereof. - --- SEC. 18. The district attorneys of the United States in their respective districts shall at the request of said commission act for and represent it in all suits and pro. ceedings before the courts of the United States. ... * SEC. 19. All charges by common carriers covered by the provisions of this act shall be reasonable. No such carrier shall make or give any undue or unreasonable pref- erence or advantage to any particular person, company, firm, corporation, locality, or any particular description of traffic, in any respect whatsoever; nor shall any such carrier subject any particular person, company, firm, corporation, locality, or any particular description of traffic to any undue or unreasonable prejudice or disadvan- tage in any respect whatsoever; and every such common carrier having or operating a part of a continuous line of communication, or which has the terminus or station of the one at or near the terminus or station of the other, shall afford all due and reasonable facilities for receiving and forwarding all the traffic arriving by one of such common carriers by the other without any unreasonable delay, and without any such preference or advantage or prejudice or disadvantage as aforesaid, and so that no obstruction may be offered to the public desirous of using such common carrier as aforesaid as a continuous line of communication, and so that all reasonable accom- modation may by means of such carrier be at all times afforded to the public. No break, stoppage, or interruiption, nor any contract, agreement, or understanding shall . be made to prevent the carriage of any property from being and being considered as one continuous carriage in the meaning of this act from the place of shipment to the place of destination, unless such stoppage, interruption, contract, agreement, or understanding was made in good faith for some practical and necessary purpose, withdut any intent to avoid or interrupt such continuous carriage or to evade any ol the provisions of this act. * SEC. 20. Each common carrier covered by the provisions of this act shall by sched- ules to be adopted and kept posted as hereinafter stated, prescribe— First. The different kinds and classes of property to be carried. Second. The different places between which such property shall be carried. Third. The rates of freight and charges for all services connected with the receiv- ing, transporting, delivering, loading, unloading, storing, and handling of the same. Fourth. The conditions, rules, and regulations with respect to the receiving, trans- porting, delivering, loading, unloading, storing, and handling of the same, provided that any such condition, rule, or regulation shall cease to be valid, or further permit- ted, whether assented to by the shipper or not, if upon complaint to said commission the same shall be found by the commission, and adjudged by the court, to be unjust and unreasonable. - - Copies of such schedules shall be printed in large, plain type, not smaller than or- dinary pica, and shall be kept plainly posted for public inspection in at least two places, accessible to the public in every depot, or freight office, or vessel, where freights are received and delivered; and no such schedule shall be changed in any particular except by the substitution of another schedule containing the specifica- tions above required, which substituted schedule shall plainly state the time when it shall go into effect, and copies of which, printed as aforesaid, shall be posted, as above provided, at least five days before the same shall go into effect; and each schedule shall remain in force until another schedule shall, as aforesaid, be substi- tuted. A copy of each of said schedules shall, as soon as posted as aforesaid, be filed in the office of said board. And it shall be unlawful for any such common carrier, after the expiration of ninety days after the passage of this act, to charge or receive, directly or indirectly, or by means of rebates, drawbacks, or otherwise, more or less compensation for the carriage, receiving, delivering, loading, unloading, handling, or storing of any property than shall be specified in such schedule as may at the time be in force, except that special contracts for such services may be made at lower rates than stated in such schedules, provided that the terms thereof, and the names of the parties to whom given, or when given to all shippers, or to a class of shippers at a shipping lºoint, the name of such place or class, are plainly posted as afolesaid as a part of said schedules, at the place of shipment, before said service or any part thereof is rendered; and further provided that any such special contracts shall cease to be Jawful or further permitted, if upon complaint to said commission the same shall be found by the commission and adjudged by the court to violate the provisions of section 19 of this act. Any such common carrier who shall fai’, to comply with the pro- INTERSTATE COMMERCE. 31 visions of this section shall be liable to a penalty not exceeding $1,000 and not ex- ceeding $50 for each day that such violation shall continue. SEC. 21. That any person, firm, corporation, or association, complaining of anything done or omitted to be done by any common carrier covered by the provisions of this act in contravention of the provisions thereof, may apply to said board by petition in writing, which shall briefly state the facts. If the petition is signed by any board of trade or commercial body, or, when signed by an individual, if it bears the certificate of any district attorney of the United States, or any district or county attorney or officer corresponding thereto of any State or Territory, that he has examined the facts, and in his opinion the complaint is well ſounded, the board is hereby required to entertain and investigate the same. In all other cases the board shall decide whether or not the petition ought to be proceeded with. Before proceeding upon any such investigation, when founded upon a petition, a copy thereof slall be served upon the party or parties complained of, and an opportunity shall be given to answer the same in writing. Thereafter it, shall be the duty of the commission, if it shall think fit, to conduct such investigations in such manner, and by such persons and means, as it shall think proper, into all such matters of fact as may be deemed neces- sary to enable the commission to form a just conclusion in respect to the matter of such petition. The commission may establish general orders for the conduct of its proceedings, which shall secure to all persons interested reasonable notice and op- l'ort inity to be heard. If in any case in which an investigation shall be made by said commission it shall be made to appear to the satisfaction of the commission, citler by the testimony of witnesses or other evidence adduced before it, or by the report of any person to whom the commission may have referred the inquiry or any part thereof, that anything bas been douc or omitted to be done in violation of the provisions of this act by any such common carrier, it shall be the duty of such com- mission to make its report in writing in respect thereto, which report shall include the findings of fact upon which the conclusions of the commission are based, aud which findings so made shall thereafter be deemed prima facie evidence as to each and every fact found in all courts and places. Within a reasonable time, not to ex- ceed twenty days, after such report is made by Said commission it shall cause a copy thereof to be served upon or delivered to the said common carrier so found to have violated the provisions of this act, together with a notice to said common carrier forth with to cease and desist from such violation. SEC. 22, Unless said common carrier shall within twenty days after service upon it of said report and notice, or within such other time as said commission shall fix in said notice, cease and desist from such violation, it shall be the duty of the district attorney of the United States for the district in which the violation occurred, to apply by petition, in the name of the complainant before said board, or of the party ag- grieved, to the circuit court of the United States for such district, ſor, and if shall be the duty of such court to grant, an order for such common carrier to show cause wby it should not be enjoined and restrained against the continuance of such violation, and for such other order and relief in the premises as may be just and proper. For the purpose of making any such order or decree, final or otherwise, such court shall be always open, and the day on which any such order or decree is made shall be a special term of such court. Upon the service and return of such order to show cause, and notice to such parties as may be deemed necessary, said court shall proceed as specdily and summarily as possible to hear and determine the matters in controversy ; and whenever said court shall be of opinion that such common carrier has done as aforesaid, or is doing any act in violation of the provisions of f his act as in said report set forth, if shall then be the duty of said court forth with to issue a writ of injunction requiring such common carrier to desist and cease from such violation of the provis- ions of this act. Such court may enforce obedience to any such injunction, order, or decree by any such common carrier, or any officer, agent, or employé thereof, by fine, proceedings for contempt, and all other means within its lawful jurisdiction, sitting as a court of equity. Any person interested to restrain such violation may be allowed to appear and be heard in person or by counsel; and upon proof before said court that any district attorney has failed in any such case as aforesaid to apply for such order to show cause, the court may permit such application to be made and prosecuted by or in behalf of any person so interested. Such court may, in its discretion, award or deny costs to any party to such proceeding. In any case where the court shall adjudge that the violation of the provisions of this act by any such common carrier has been will ſully continued after the expiration of said twenty days, or after the expiration of the time fixed as aforesaid by said board, the court may award to any party injured such a gross sum, by way of costs, as will reimburse all his costs, charges, expenses, counsel fees, and disbursements to be paid by such carrier, and ahall also impose a penalty not exceeding $5,000, and not exceeding $100 per day for cach day that such violation shall continue after the expiration of the time afore- said. SEC, 23. The term “common carrier,” as used in this act, shall be deemed and & 32 INTERSTATE COMMERCE. taken to mean any corporation, association, company, individual, receiver, trustee, or partnership, owning, operating, ºr using any railroad or railroads, vessel or ves- sels, in whole or in part, and engaged in the business of transportiug, or of agreeing to transport, or to furnish transportation for, freight or property of any déscription ly railroad or by water, or partly by one and the other, from one State into or through another State or Territory or from any Territory into or through any State or other Territory, or engaged in the transportation of, or agreeing to transpºrt or to furnish transportation for, commerce innong the several States. - SEC. 24. Nothing in this act shall apply to the storage, handling, or transportation of freight or property wholly within one State or Territory and not destined for con- tinuous carriage-beyond such State or Territory, or to the storage, handling, or trans- portation of freight or property free or at reduced rates for the United States, or municipal governments, or for charitable purposes, or to or from fairs and expositions for exhibition thereat, nor to prevent the giving of special rates and facilities to . manufacturers; provided, bowever, that no such cominion carrier shall make or give any undue or unreasonable preference or advantage to any particular manufacturer as against his competitors or other mann facturers, nor subject any such manufacturer to any undue or unreasonable prejudice or disadvantage in any respect whatsoever as against his said competitors or other manufacturers; and further provided, that such rates, so given, are posted as hereinlefore required. * - .* SEC. 25. Nothing in this act contained shall to any extent or in any degree impair or affect the legal liability of any carrier for the consequences of its acts, or of the neglect or mismanagement of any of its agents or Servants. * THE MICHIGAN RAILROAD COMMISSIONERS. Statement by William McPherson, jr., the Commissioner of Railroads, and Wyllys C. Ransom, Deputy Commissioner, State of Michigan. The relations of Michigan to the general systems of inland transpor- tation are exceptional to those of most of the States. Nearly encir- cled by the great American lakes, we have a water front of 1,620 miles. At frequent intervals along such front Safe and capacious harbors afford facilities for the entrance of vessels, by means of which our varied, com- modifies and products are shipped, via lake, Canal, and sea, to the prin- :ipal markets of the World. Such medium of transportation, it hardly need be said, affords the lowest tariff of rates to shippers, and during the season of navigation virtually establishes the figures at which our freights are carried to tide-water points. - - Supplementing the facilities for water transportation which the State enjoys, it had within its limits on the 1st day of January last 5, 142 miles of railroad, reaching into every county of the lower peninsula save eight, and of the upper peninsula save two, and an average of 1 mile of track for each 11.16 square miles of its territorial area. The following statement, taken from the forthcoming annual report of this J)epartment for the current year, will best exhibit the gradual develop- ment of the railroad system of the State to its present proportions: Table showing progress of railroad construction in Michigan from 1838 to 1884, inclusive. Year. Miles. Yoar. Miles. Year. Miles. Year. Miles. i - • * 1838 - - - - - - - . . . . . 63 || 1850 - - - - - - - - - - - 380 | 1862 - ... --- - - - - 8] I iſ 1874. . . . . . . . . . . 3, 313 1889 - - - - - - - - - - - - 71 || 1851 . . . . . . . . . . . 421 iſ 1863. ----...--. 8] 2 || 1875 . . . . . - - - - - - 3, 347 J840 . . . . . . . . . . . 104 || 1852 . . . . . . . . . . 425 | 1864 . . . . . . . . . . 801 || 1876. . . . . . . . . . . 3, 4 () 1841 - - - - - - - - - - - 147 || 1853 - - - - - - - - - . . 425 || 1865 . . . . . . . . . . 931 iſ 1877. . . . . . . . . . . . 3, 455 1842 - - - - - - - - - - - , 147 || 1854 . . . . . . . . . . . 425 || 1866 - - - - - - . . . . . 943 || 1878. . . . . . . . - - - 3,564 1848 ---. . . . . . . . . J80 || 1855 - - - - - - - - - - - 462 || 1867 - - - - - - - - - - - l, (.66 || 1879. . . . . . . . . . . . 3, 657 1844 . . . . . . . . - - - - 220 || 1856 - - - - - - - - - . . 530 1868 - - - - - - - . . . . 1, 124 || 1880 - - - - - - . . . . . 3, 823 1845 . . . . . . . . . . . . 233 || 1857 . . . . . . . . . . . 579 : 1869 . . . . . . . . . . . I, 362 || 188] . . . . . . . . . * - . 4, 253 1846 - - - - - - - . . . . . 279 || 1858 - - - - - - - - - - - 703 || 1870 ----------. 1, 739 || 1882 . . . . . . . . . . . 4, 609 1847 - - - - - - - - - - - 279 || 1859 . . . . . . . . . . . 770 1871 - - - - - - - - - - . 2, 298 || 1883. . . . . . . . . . . . 4, 966 1848 ------------ 326 || 1860 ...... . . . . . 770 iſ 1872 - - - - - - . . . . . 3,822 || 1884. . . . . . . . . . . 5, 142 1849 ------------ 353 || 1861 ...... . . . . . 777 || 1873 ... -- - - - - - - - 3, 252 . - *. INTERSTATE COMMERCE. - '. 33 The original plan of internal improvinents for Michigan was formu- lated by the first administration of the State, which began the work of constructing three separate lines of railroad across the lower peninsula, from Detroit, Monroe, and Port Huron, on the eastern boundary of the State, to points on Lake Michigan, respectively. It was designed that these works, when completed, should be controlled and operated by the State. But after nearly ten years of adverse experience, the contem- plated lines being only partially completed, and that in an indifferent manner, and available resources for their further extension having been practically exhausted, the roads were sold to companies chartered for the purpose of purchasing and completing them; and the constitution adopted in 1850 inhibited the State from future connection with the building of railroads or other schemes of internal improvement. The roads planned by the State were long since completed. A fourth, reaching across the State, between Saginaw and points on Lake Michi- gan at Ludington and Manistee, with an “L” extending southwardly to Toledo, is in operation, and two other lines from the Straits of Macki- Inac, traversing the easterly and westerly water-sheds of the lower pe. ninsula, respectively, to the south boundary of the State, complete the system of “trunk lines,” and these, supplemented by local roads inter- secting the former at prominent points, afford facilities for traffic by rail under the most favorable conditions. These properties are included in large proportion by four systems, each With a separate management. First : The Michigan Central, having its eastern connections at De- troit with the Canada Southern, one of its leased lines, and at Toledo with the Lake Shore and Michigan Southern, and systems converging - at that point, its western terminus being at Chicago. On the 1st day of January last the system comprised within the limits of the State 1,024.34 miles of track. - - Second : The Lake Shore and Michigan Southern system, its termi- nals at Buffalo and Chicago, and having in Michigan on the first of the current year 513.56 miles of track in operation. . - - - Shese two systems, it is understood, are controlled by the same inter. est, and, although generally regarded as competitive lines, it is be: lieved by those most familiar with the relations between the two that neither would insist upon the traffic rates to the damage of the other. Third : The Grand Rapids and Indiana Railroad, having on the 1st of January last 380.76 miles of track within the limits of the State, and in reality forming a part of the great Pennsylvania system, with its eastern connection at Fort Wayne, in the State of Indiana. Fourth : The Grand Trunk of Canada system, having under its con- trol and in operation at the commencement of the year 577.96 miles of road in the State of Michigan, with outlets at Detroit and Port Huron over its Great Western division to eastern connections at Suspension Bridge, and its main line through the Dominion of Canada, to its ex- treme eastern terminal, at Portland, Maine. The foregoing systems are all limited in their operations to the lower peninsula. The upper peninsula finds the principal outlet for its im- mense mineral product over the tracks of the Chicago and Northwest- ern system, of which there are 308.49 miles within the limits of the State of Michigan. Such, briefly recited, is the situation of our railroad properties in their organized capacity for doing the inland transportation business of the State. It is possible that the detail is somewhat foreign to the purpose of the inquiry for which your Committee was appointed. But 16232 AP—3 34 INTERSTATE COMMERCE. as it is probably true that little dissatisfaction exists among the people . of Michigan over the present status of the transportation question so far as their interests are affected by the same, and also true that the average freight rate prevailing in the State, with a single exception, is the lowest of any in the Union, it will not be unprofitable for your Com- mittee to have before it such outline of our railroad system as will ena- ble it to more clearly determine what, if any, peculiar circumstances of situation or relation to connecting lines in other States have contrib- uted to bring about the satisfactory results indicated above, and also to institute comparisons with the systems and workings of other States, where complaints of discrimination and extortion exist. THE COURSE OF STATE LEGISLATION. First, it may be said that the legislatures of this State have manifested but little disposition to exercise control over the traffic operations of our railroads; in fact, practically they have been left to regulate their own rates of transportation as circumstances and volume of business seem to warrant. The first general railroad law of the State was not passed until 1855, there being at that time only 462 miles of track within our limits, all of which had been constructed under special charters, the traffic rates which the companies might charge being limited by the provisions of such charters. In such general law, among other rights and franchises granted to companies organizing under its pro- visions, was “that of regulating the time and manner in which pas- sengers and property shall be transported, and the tolls and compensa- tion to be paid therefor; but such compensation for any passenger and his ordinary baggage shall not exceed three cents a mile, unless by special act of legislature, and subject to alteration as hereinafter pro- Vidled.” . - The provision for alteration of rates above referred to was as follows: The legislature may, when any railroad organized under the act is opened for business, from time to time alter or reduce the toll, fare, freight, or other profits upon such road; but the same shall not without the consent of the corporation be so re- duced as to produce less than 15 per cent. per annum on the capital paid in, nor un- less on examination of the amounts received and expended, to be made by the auditor- general, he shall ascertain that the net income of the company from all sources divided by the company for the year then last past shall have exceeded an annual income of 15 per cent. upon the capital of the corporation actually pain in. Certainly a liberal provision, and one calculated to stimulate the investment of capital in railroad enterprises within the State. The act of 1855 remained in force without material amendments until 1871, when the legislature made a general revision of its provisions. The track mileage of the State had increased during the period of four- ...teen years from 462 miles to 2298, and many newly projected lines were in process of construction. By the provisions of the law of 1871 com- panies were permitted to charge passenger rates as follows: On rail. roads not exceeding 30 miles in length, for a distance not exceeding 5 miles, 25 cents; for a distance not exceeding 30 miles, 34 cents per mile. For the transportation of property the same rate authorized by the charter of the Michigan Central could be charged. It was further provided that all Companies should transport without delay, and in due order of time, without discrimination except as to classification, all freight offered for transportation and at uniform rates per mile; pro- vided that they should be allowed to charge and collect, in addition to A. INTERSTATE COMMERCE. . . - 35 . Such uniform rates per mile, for a distance of not more than 50 miles 100 per cent., for a distance not exceeding 25 miles 50 per cent., and for a distance not exceeding 50 miles 25 per cent. The restrictions prohibit- ing the legislature from reducing tolls until the annual earnings ex- ceeded 15 per cent. upon the amount of the capital stock actually paid in were continued in force. ... r • . In 1870 the following, to stand as a new article of the State consti- tution, was ratified by the people: . - The legislature may from time to time pass laws establishing reasonable maxi- mum rates of charges for the transportation of passengers and freights on the differ- ent railroads in this State, and shall prohibit running contracts between such rail- road companies whereby discrimination is made in favor of either of such companies as against other companies owning connecting or intersecting lines of railroad. - The intent of this last clause is somewhat ambiguous, but doubtless the purpose was to compel all roads forming parts of through lines, or in case of shipments from one road to another, to accept each their proportion of the through rate according to the uniform charge per mile as should be authorized by the law. * The law of 1871 was repealed by the legislature of 1873, and its pro- visions radically changed in many particulars. The rates of passenger fares remained practically unaltered—3 cents per mile, except in cer. tain unimportant cases otherwise provided for, and of no general im- portance. With regard to freight rates, all provisions of the old law were repealed, and a general provision adopted instead, authorizing the companies to charge and collect tolls, subject to the following proviso, which was intended to enforce the provisions of the constitution above quoted: - - * - Provided, That in-transporting freight by the car, loaded by the shipper and un- loaded by the consignee, no railroad company shall charge for transporting each of such cars more than eight dollars for any distance not exceeding ten miles, nor more than fifty cents per mile for the second ten miles, nor more than twenty-five cents per mile for the third ten miles; and for distances exceeding thirty miles in no case shall the charge between any two points on the said railroad exceed the minimum charge on the entire line. This provision shall not apply to the Upper Peninsula, nor to any company operating less than fifteen miles of railroad. The provision authorizing a reduction of rates when the earnings should exceed 15 per cent. upon the capital stock was not re-enacted, and the authority of our railroad corporations to fix their own freight rates, except as limited by foregoing proviso, is unrestricted. The leg- islature of 1879 added a new section to the law of 1873, forbidding dis- criminations, which, as slightly amended by legislation in 1883, reads as follows, and comprises all the legal enactments now in force in this State with regard to the subject : All railroad corporations shall grant equal facilities for the transportation of pas- sengers and freight to all persons, companies, or corporations, without discrimination in favor of any individuals, companies, or corporations, and shall, at all points of connection or intersection with the roads of other corporations, unite with such cor- porations in establishing and maintaining suitable platforms and station houses for the convenience of passengers desiring to transfer from one road to the other, and for the transfer of baggage or freight, whenever the same shall be desired by either cor- poration or ordered by the commissioner of railroads; the expense of constructing and maintaining such station house and platform shall be paid equally by such cor- porations. Such corporations connecting or intersecting as aforesaid shall also, whenevor desired by either of them or ordered by the commissioner of railroads, so unite and connect the tracks of said several corporations as to permit the transfer from the track of one corporation to the other of loaded or unloaded cars, designated [designed for transportation upon both roads. No railroad corporation shall in any manner discriminate in its rates of freight tariff in favor of any individual, company 36 ... INTERSTATE COMMERCE. or ( orporation doing business over its line [of] road, and shall grant the same rights . and privileges to all shippers, subject to the same rates and classification, without re- bate or any other special privilege or rate not extended to all other shippers in the same class who ship a like quantity or quantities. Any railroad corporation refus- ing to comply with any of the provisions of this section shall be liable to a ponalty not cyceeding five hundred dollars. , . . - Simple and comprehensive in its requirements, it seems to have ac- complished the purpose for which it was designed, and since its enactment not more than five complaints have reached the commissioner of a vio- lation of its provisions. At the last session of our legislature (1885) a bill for a law similar in its provisions and penalties to that now in force in the State of Illinois for the prevention of extortions and discrimina- tions was introduced and exhaustively considered, but after having passed the Senate and gone to the lower house for its action was re- called by the former and tabled, where it remained at the close of the Session. - * - The legislature of 1873 also passed an act providing for the appoint- ment of a commissioner of railroads, and defining his powers. The latter are mostly supervisory in their character, looking to the enforce- ment of police regulations, the inspection of railroad properties, the computation of the specific taxes upon gross earnings required by Our laws, and the exaction of annual reports from the companies, so that the commissioner in turn shall be able to report to the governor each year the condition of the property and affairs of each railroad, corpora- tion doing business in the State. He has no authority to revise or in any manner whatever to interfere with traffic rates, his only duty in that connection being covered by the following provision of the act creating lais office: - - g - Said commissioner shall, on or before the first day of January in each year, and oftener if required, make a report to the governor of his doings for the preceding year, or for the time intervening since his last report, containing such facts, statements, and explanations as will disclose the actual workings of the system of railroad transpor- tion of freight and passengers, and its bearings upon the business prosperity, personal convenience, and safety of the people of the State, with such suggestions in relation thereto as to him may seem appropriate, and particularly whether a classification of freights can be made, and if so, in what manner; also whether any railroad corpora- tions make any discrimination in the matter of freights between points intersected by coni peting lines and points not so intersected, and what change should be made in the law to promote the interests of railroads and the public. He shall also, at such times as the governor shall direct, or at any other time he (the said commissioner) shall deem advisable, examine any particular subject connected with the condition and imanagement of railroads, and report to the governor, in writing, his opinion and doings thereon and his reasons therefor; all of which reports shall be laid before the Legislature at its next regular or special session thereafter, . From the foregoing history of legislation on the subject of railroad control in this State, made at your suggestion, and with as much con. Giselless as an appreciable statement will allow, you will perceive that our legislation has been of a conservative character, and seemingly based upon the principle of reciprocity of interests between the people and the corporations, with the conviction that enactments oppressive to the latter would surely work to the detriment of the former. What the results flowing from the policy adopted in Michigan have proved you will be best able to judge from the following tables of traf. fic operations of companies doing business in the State, compiled from the records of this department for ten years commencing with 1874. } INTERSTATE COMMERCE. 37 - | - - PASSENGER TRAFFIC. g Total number|Total number of Average Year. Milºer Total earnings, of passengers passengers ear- rate per - tº * carried. ried one mile. mile. - Cents. 1874. -------------------------- 5,278. 36 || $12, 537,230 74 10, 207, 416 420, Ö77,000 2. 60 1875 --------------------------- 5, 311. 77 | 11, 590,894 00 10, 716, 227 421, 272,314 2.49 1876 ---------. . . . . ------------- 5, 387. 25 | 11, 263, 942 94 || 10, J38, 718 473,007, 640 2.38 1877 --------------------------- 5, 436. 28 10, 255, 365 36 9,944, 848 404, 868, 0.76 2. 54 - 1878 --------------------------- 6,039, 53 || 10,447, 268 38 || 10,615, 504 414, 668, 252 2. 52 1879.------------ -------------. 6, 166.71 10,972, 289 24 11,055, 617 447, 402, 532 2.45 1880 --------------------------- 6, 427.34 || 13, 336,478 25 | 13, 597,200 561, 982, 824 2, 69 1881 --------------------------- 11, 528.79 18, 473, 153 71 18, 914, 933 824, 103, 330 , 2.89. 1882.--------------------------- 12, 513. 23 22, 761, 294 24 24, 158,093 967, 401, 776 : 2. 72 1888--------------------------- 14,043.01 || 24, 179,325 30 25, 312, 275 | 1,025,680, 909 2. 72 FREIGHT TRAFFIC. & r Rate per Miles oper- * r * Total tons | Total tons car- Year. .* |Totalearnings. || “...ie.” |...o. tºr - Cents. 1874--------------------------. 5,278. 36 $31,071, 591 01 14, 260,052 1, 963, 506, 467 1. 37 1875 --------------------------. 5, 311, 77 27, 353,727 33 14,651, 137 1,954,003,452 1. 20 1876 --------------------------- 5,387. 25 | 26, 945,752 20 | 16,474. 721 2, 323,961, 690 . 982 1877 --------------------------- 5,436. 28 27, 226, 230 30 | 16,489,211 2,292, 655, 424 1. 032 1878 --------------------------. 6,039.53 30, 121, 618 70 19, 980, 642 2, 858, 931, 229 J. 053 1879 --------------------------- 6, 166. '11 || 33,080,934 95 24, 248, 809 3, 598,676, 485 920 1880 -------------------------. 6, 427.34 41,234,027 64 || 26, 830, 550 || 4,789, 420, 773 . 864 1881 --------------------------. 11, 528.79 53,239, 707 02 37, 779, 555 5, 753,029,737 1, 13 1882. -------------------------- 12, 513.25 | 56, 198,612 14 39, 400, 806 5,781, 580, 167 . 973 1883 - - - - - - - - - - - - - - - - - - - - - - - - - - -] 14.043.01 || 62,044, 908 27 37, 104, 324 6, 235,081,222 . 999 THE REGULATION OF WATER ROUTEs. Referring to your suggestion as to whether any law of Congress for the regulation of inter-State traffic by rail should apply to the water routes as well, we have no hesitancy in saying that it should not. In the fact that for at least six months of each year the rates by water will give to the entire Northwest and the Mississippi Valley the cheap. est and for freight in bulk the best transportation, We must recognize the most effective factor in the determination of the whole traffic ques- tion in the territory adjacent to our inland waters. g t TEIE GRAND TRUNK RAILWAY. - Restriction by law upon the absolute freedom of commerce upon those waters would prove -hardly less disastrous to the great business interests of this country than would similar obstructions enforced (were it possible) upon the high seas to the maritime trade of the World. With regard to the Grand Trunk Railway of Canada, which, as you observe, begins and ends in the United States but is mainly in the Dominion, from considerable familiarity with the conditions attending the operation of that road we do not think that there are any elements of advantage in its situation that demand adverse legislation in the interest of American lines. While it is true that the portion of the Grand Trunk located outside our national jurisdiction is beyond the reach of laws that we may enact for the regulation of inter-State com merce, we see no reason for believing that such fact would be relied upon (even if available) by the foreign corporation as a disturbing ele 38 INTERSTATE COMMERCE. •” …” ment in the fair adjustment of the through rates. It must not be for- gotten that the Grand Trunk has been constructed and equipped at a larger cost per mile than almost any other road of single track in the country. The money for the work bas been furnished by actual share- holders, whose only chance of securing a return upon the vast capital invested is by maintaining rates and not depressing them. Indeed, we are unable to discover that the Grand Trunk management, if less dem- onstrative, have not in fact been more conservative in its action with regard to traffic polity than some of its neighbors within the States who frequently are not slow in charging the Canadians as the authors of all the eruptions in a traffic way that the railroad world is heir to. The physical disadvantages attending the operation of the Grand Trunk are apparent. The region which its line traverses is character- ized by long, cold winters, and a store track upon the lower end of the road, containing, it is said, about a mile of snow-plows, speaks more forcibly than words of the cost and difficulty of keeping the road open for winter traffic. To this last disadvantage add the fact that the largest per cent. of its through business must be derived from a people disposed from habit and tradition to patronize their own institutions rather than those of foreign neighbors, and we Inust conclude that the Grand Trunk, if left upon an equal footing with our own roads, will not prove an Ob- stacle in the way of desirable rates for our inter-State commerce. DISCRIMINATION AND EXT ORTION. Referring to the subjects of inquiry suggested in the circular from your committee under date of April 6, ultimo, this Commission, without expecting to add much to the weight of opinion already elicited from the prominent representatives of railroad and other commercial inter- ests, who have responded to your call for information, will briefly allude to some of the more important questions presented. > . First. The best method of preventing the practice of extortion and unjust dis- criminations by corporations engaged in inter-State commerce. - From a somewhat critical examination of the reports of the traffic operations of railroad companies that reach this office from other States, as well as from observation in our own, we confess that we see but little evidence to establish the fact that such practices prevail to an appreci- able extent. It is probably true that large amounts of freight are moved for much less than the service is justly worth or can be afforded. It is also true perhaps that much other freight of similar character has under- different conditions been charged a higher rate over the same roads, but we are impressed with the conviction that for several years past the instances of excessive or unjust rates realized by railroad compa: nies are exceedingly rare. Indeed, general complaint seems to be not so much of discrimination between shippers as between localities dif. ferently situated as regards the presence of competitive roads. Unques- tionably there is some ground for complaint in the latter particular, but not so much as is generally supposed. In most parts of the country. parallel roads run so closely to each other through contiguous territory that stations upon each are competitive with the other, and traffic rates are affected by such circumstances almost as sensibly as though such points were situate at the intersections of competing lines. ' To a farmer with a load of produce on his Wagon the difference of a few miles in- creased haul does not weigh much as against a few cents better price, and he will make his way to the market most favorably situated in that INTERSTATE COMMERCE. 39 * regard. Such fact is well understood, and gives competing points at stations oftentimes ten to twenty miles apart on parallel lines. Impressed with the correctness of such conclusion, this Department last year selected upon the line of eight of our principal roads four stations, each more nearly non-competitive from location than any others upon the respective lines. From such companies we required, without previous notice, statements of total traffic of freight forwarded for the months of . January and June from the stations selected. The subjoined recapitu- lation of results, cut from our report for 1884, conclusively shows that as a rule the freight rate is much more evenly adjusted between stations than is generally believed. Occasionally a point with small tonnage and short haul pays a higher average rate than its neighbors with heavier traffic, but it is the result of well established principles of traffic that no legislation can change. - - - - RECAPITULATION showing total traffic of freight forwarded from four non-competitive sta- lions on each of the railroads below named in the State of Michigan during the months of January and June, 1884. - - - Tons car- a Average Name of road. Tons. ried one Alºe JEarnings. Tate per ton *. mile. CU - i.e. per mile. | - Miles Cents. Chicago and Grand Trunk --- - - - - - - - - - - - 2, 569 189,094 73.60 || $4,215 82 - 2. 23 Ch:cago and West Michigan . . . . . . . ----. 35,955 3,719, 389 103.33 42, 680 11 . 15 Detroit, Grand Haven and Milwaukee . . 5,735 448, 305 78. 17 9, 385 82 2. 09. Detroit, Lansing and Northern . . . . . . . . . 6, 497 489,861 75. 39 10,966 19 2. 24 I'lint and Pere Marquêtte. . . . . . . . . . . . . . . 9, 434 946, 591 100. 34 16, 081 34 1. 69 Grand Rapids and Indiana - - - - - . . . . . . . . 11,902 | 1,985, 641 166.83 20, 849 66 1. 50 Take Shore and Michigan Southern. - - - - 9, 232 | 1, 873, 354 202.90 | 16, 616 68 (). 887 Michigan Central ----------------------. 4, 643 519, 802 111.95 8, 963 03 1. 72 Totals ---------------------------. 86,007 || 10, 172,037 118. 27 | 138,767 65 J. 36 From the foregoing statement it will be seen that the average rate per ton per mile for the stations included by the figures was 1.36 cents, or thirty-seven hundredths only in excess of the average freight rate for all the stations in the State. Certainly not a very great difference, when it is considered that the traffic from the stations named was largely local. . - • * The views here presented with reference to the first question sug- gested in the circular apply to the second, and we see no reason for be- lieving that the rates generally charged by the railroads of the country for local as well as through traffic are unreasonable, and as a rule un- favorable to the shippers rather than to the corporations. PUBLICITY OF RATES SHOULD BE REQUIRED. We are of the opinion that publicity of rates should be required by law, and that in all cases of increase, at any rate, and generally in those of reduction, changes should not be made without reasonable notice to the public. In case of reduction it will sometimes happen that a road forming part of a through competing line will be obliged, in order to meet a cut rate by its competitor, to accept a smaller proportion of the through rate and to modify its own tariff accordingly. As such exi- gencies are frequently of sudden and unforeseen occurrence, an iron- clad rule that required previous notice of all reductions would work a hardship, and an exception to the requirement should probably be con- eded under such circumstances, but immediate notice to the public of 40 a' INTERSTATE COMMERCE. * z such reduction to be insisted upon, immediately it is made. But all changes of tariff rates to be made at a day certain in the future should be given to the public a reasonable time before the same take effect. Otherwise it is easy to perceive that some shippers and Operators upon the market in the confidence of traffic managers might have greatly the advantage of others who were not. No better method of securing uniformity and stability of rates can be devised than to have all ship- pers thoroughly informed as to current established classification and rates, and in position to understand if the same are dispensed without favor or partiality to all. IMAXIMUM AND MINIMIUIM RATES, As to the advisability of establishing maximum and mimimum rates for the transportation of inter-State commerce so far, experience in the States indicates that it is impracticable to do it, at least upon a basis that works no injustice or hardship upon certain of the roads to be affected by the determination of the rate. So many elements must necessarily eliter into the consideration of the justness of a maximum rate that might be fixed for a particular road that it makes it almost requisite that each must stand on its Own bottom in that particular. Scarcely any two are alike situated in the matter of fixed charges, in plant, in location, alignment, gradients, and cost of maintaining and operating, and, most important of all, in the volume of traffic passing over their tracks—all important factors in determining the question of rates. Nor must it be forgotten that the cost of maintenance and operating Will vary from year to year according to the character of the seasons and the increasing age of the road and its equipment, so that the margin necessary for extraordinary expenditures must all the time he remembered and provided for. It is easy to see that these compli- cations and inequalities would be largely increased in cases of long through lines traversing diversified regions of country, making it still more difficult to so graduate rates that each section of the line would realize that Warranted by its own peculiar situation. It is probable that to some extent the difficulty could be surmounted by grouping roads of similar cost and capacity and volume of traffic in an arrangement for rates; but in view of the obstacles above cited it is very questionable whether legislation for the purpose of enforcing maximum or minimum rates of transportation would prove of practical utility. THE PROPER BASIS OF RATEs. In fixing tariffs on railroad traffic the elements of cost to be considered are properly classified as follows: 1. The cost of movement of trains, which, of course, covers simply the service and Supplies requisite therefor. 2. The maintenance of the property. 3. General expenses and fixed charges. - As a matter of correct theory each class of traffic should contribute a proportion to the total cost for movement, maintenance and general expenses, and fixed charges. Otherwise some classes will bear an un- due share of such cost, or a deficiency in revenue to expenditures fol- lows. While the rule should ordinarily prevail that no business should be done for the mere cost of movement, it would hardly do to say that sound policy Would not sometimes warrant a departure from its require- ments. A heavy Surplus product and low market prices at the com- inercial Centers making it impossible to move such surplus at a rate f INTERSTATE COMMERCE. 4l much beyond the mere cost of movement without a serious loss to the producers would seem to justify a very low special rate to meet the emergency, rather than to invite the stagnation in other business Chall- nels that would follow inactivity in railroad transportation. While in such case it is true that shippers in other classes of traffic than that favored with the special rate would pay higher tolls in order to keep earnings up to the sum necessary to cover expenditures, still such in- crease would be added to the price of the commodities in which they dealt, and the burden of it be divided among consumers, among whom would doubtless be a considerable portion of the number to whom had been accorded the low rate in the original instance. And in that way the traffic rate would be equalized among all. & REBATES DEMORALIZING AND UNFAIR. The system of rebates and drawbacks now generally practiced on our American roads has nothing to commend it to favor, and should be abrogated as promptly as possible. It is the medium through which discrimination exists and regular rates are discarded. Demoralizing in its tendencies and unfair in its purpose, the laws of many of the States prohibit by heavy penalties the practice of giving rebates to favored shippers; but unfortunately such laws have not been as rigidly enforced as they ought to have been, and impairment of fair tariff rates has re- sulted. Not only is the system a ruinous one in itself, but is also main- tained at vast expense by the railroad companies that further it. A person not familiar with the adjustment of rebate and drawback vouchers between the companies charged with proportions has little idea of the cost attendant upon the process. - - All freights should be billed straight at the figures at which they are actually to be carried from point of shipment to place of destination, and if to pass over more than one road such billing should be upon coupon bills so devised as to show the exact amount that each company is to collect for its proportion of the transportation. All rebates as a concession from tariff rates should be absolutely prohibited, and no drawbacks, except in case of actual error in billing or classification, should be allowed. | - POOLING CONTRACTS. With regard to the efficiency of pooling contracts between railroads organized, as it is claimed, “for the purpose of establishing proper tariffs and strickly maintaining them,” there is a great difference of opinion. If the purpose of pooling contracts is certainly in the inter- ests of the roads, and the observance of their terms can only result to their benefit, why should there be need of legislative interference for the enforcement of good faith between companies in such compacts with each other ? While it is true that the courts, in the absence of special legislation, would hesitate before enforcing contracts of that character between the corporations as being against public policy, inas- much as they tend to create monopoly, nevertheless, why the necessity of invoking the interference of the courts at all for the enforcement of agreements resulting only, it is insisted, in the best interest of the par- ties concerned 2 If it really is for their best interest, why should recal- citrant companies oblige the necessity of judicial proceedings to restrain them from doing hurt to themselves 3 And what assurance is there, even with the legislative sanction of railroad pools, that the situation would be far different from what it is 42 INTERSTATE COMMERCE. without such sanction, or any great advantage to be secured to the public that it does not already enjoy " If a mere observance of tariff rates is all there is requisite to secure to each of the railroad corpora- tions doing business in the country its fair proportion of traffic, it would appear that nothing plore is left to be desired. - The laws of nearly all the States leave them free to make their own classifications, and to establish their own rates thereon, and each to take the trade that comes to it from its own territory, leaving to other lines that which naturally comes to them. But, as we know, our railroad companies as a rule adopt no such policy. They cut and Sear and in- vade each other's fields, aud by all the arts known to the shrewd scalpers in their employ build up large tonnage at the expense of income. For several years past most of the trunk lines of the country have belonged to associations organized for pooling purposes. The outcome of them has been far from a success, and as a rule discordance and dissensions have characterized their history. It would be, perhaps, too much to say that they had achieved no good at all, but no permanent good to the public, at least, has resulted. But the fact is that nearly if not all the members of these associations have in turn, when their interests seemed to require it, suspended their relations to the pool and cut the rates at their discretion, to return again when concessions made influ- enced them to that course. . - These facts lead to the suspicion that it is possible the difficulty sought to be corrected is not within the control of pools, or even of leg- islation, but will only be remedied by time and a better appreciation of the necessity on the part of the railroad companies of keeping faith with each other, and a strict adherence to those principles of trade that must apply to railroad traffic, as well as to other departments of busi- ness, before success can be assured. ^ With the close of the financial and business depression commencing in 1873 the building of railroads in the United States received an im- petus unparalleled in the history of any other country. Lines were projected and completed without reference to the consideration of the Question of whether they were warranted by location or the traffic needs of the country through which constructed. The ease with which municipal aid could be secured to such enterprises, and the facility with which the bonds issued for the purchase of steel and rolling stock could be negotiated, greatly stimulated railroad schemes. In other cases important roads with remunerative traffic were paralleled, with the sole intent of compelling their owners to purchase at heavy cost the road last built, rather than permit it by ruinous competition to imperil the capital already invested. The Outcome of this has been that railroad construction is far in ad- vance of the actual needs of the public, and the total traffic of the country is insufficient to afford remunerative returns upon the capital. invested. In other Words, the demand for freights is far in excess of the Supply, and it is not easy to perceive how Congressional or other legislation is to remedy the deficiency. In railroad traffic, as in other departments of business, the relative supply to the demand must regu- late the price of transportation, the same as it does that of the com- modity carried. Add to this the further circumstance that many of the roads have been capitalized per mile far beyond their capacity under the most favorable circumstances of yielding a fair or any return to their owners, and the reason of the fierce and disastrous railroad wars, Which it is sought to terminate, becomes apparent, and the remedy proposed by those who favor the enforced compliance with pooling con- INTERSTATE COMMERCE. * - 43. $ tracts strikes, as it seems to us, at the results of such wars, rather than at the causes from which they originate. It is an “irrepressible con- flict” maintained by certain of the companies with the purpose in view of securing advantages to themselves at the expense of the others, and by the latter in the endeavor of recouping losses sustained in the un- equal contest which they are forced to maintain. - - Through the medium of expensive systems of agencies, planted either by the corporations themselves, or, more frequently, by the fast freight Jines (parasites that are consuming the substance of the freight busi- mess of numbers of our roads), most of the traffic is reached where it originates; is diverted in many instances from the natural parallel on which it should move to the centers, where competition is the most act- ive, finally to reach destination over the line willing, however little able, to accept the lowest proportion of the through rate. - - That such methods are ruinous to the railroads, and the manner in which the slender earnings derived from them are proportioned among the corporations that practice them, are not so much matters of interest to the people as their right to have equable rates and reasonable ones, is evident—such rates as will result from a competition sufficient to stimulate traffic, but not ruin the companies engaged in it. - Legislation that would impair such right would be more disastrous to commerce than are the evils incident to the present complications. And right here, in our judgment, is the point where the danger of legalizing pools is to be apprehended. It is easy, by stately, array of figures and plausi- ble distribution of proportions, to indicate how the compelling of rail- road corporations to observe pooling contracts would redound to their benefit, but what the real effect of such a policy would be upon tariff rates and the real interests of the people must not be lost sight of in the mysticism of a merely technical consideration of the subject. For some years the tendency has been in the direction of the absorp- tion of the less important roads by the greater, and the reorganization of the principal systems leading eastwardly from the Mississippi Valley and the lakes, with reference to their connections with the great thorough- fares to the Pacific now competing for the transcontinental trade, While it has been the settled policy in most of the States for some years past to inhibit the consolidation of parallel or competing lines of rail- road, experience has demonstrated that laws having that object in view practically amount to but little. Notwithstanding there may be duality of corporate organization, through ownership of stock or lease of prop- erty, there may be, and frequently is, unity of interest in everything appertaining to the management of nominally Competing lines. In the opinion of many thoughtful men the day is not far distant when our prin- cipal railroad properties will be under the control of not to exceed half a dozen competing companies, with their systems extending from the Atlantic to the Pacific. In such an event, would not the authority of the law compelling inter State roads to abide by their traffic contracts. with each other be the cover under which the great consolidated com- panies would practically have the traffic rates of the entire country at their controſ ? It is easy to insist that additional legislation would at any time correct any evils that might spring from the legalization of pools, but does not all experience prove that corporate power, fortified in its position by those influences that it so well knows how to exert, is not easily deprived of franchises oncé granted, however oppressive to the public their exercise may prove 2 Were Congress in a position to incorporate the inter. State roads and limit their franchises by proper restrictions through their entire length, the situation would be far dif. 44 INTERSTATE COMMERCE. * - ferent. Or if, in the case of Corporations whose properties traverse dif. ferent States, by virtue of consolidations, made pursuant to the laws of such States, Congress has the power to regulate the tariff of charges to be made by such consolidated companies, by reason of their being in- ter. State roads, doubtless it would sometimes be in the interest of the people that such power should be exercised, so far as necessary, to pre- vent discriminations in favor of points without a State, as against a point Within, and both equidistant from the same shipping point on the same . line of road. • , - - But of necessity the railroad corporations are largely the creatures of the States where they exist. Their local traffic must be regulated by the laws of such States, and the regulations for inter-State rates should be in harmony therewith, and it is very questionable whether any effort upon the part of Congress to interfere with the subject at all will riot add to the difficulties already surrounding the solution of the problem. If left to work itself out consistently with those fundamental principles of Supply and demand that no legislation has ever been able to affect; with laws to prevent the building of additional roads, not required by the public need ; with traffic left to move on its own natural parallels without diversion by prenicious methods; with fewer proprietorships, better roads, less expenses for general management, less or no free trans- portation, and each road with the traffic that fairly belongs, to it, and finally, as the resultant of all these conditions, with honesty and good faith between the corporations themselves, there would seem to be but little reason for the legislation urged by the friends of the pooling sys- tem, as a prominent feature in the policy to be adopted for the regula- tion of Our inter-State traffic. - * . . THE DIVERSION OF FREIGHT. The right of the shipper to name at the original point of shipment the route which his property should take to place of destination would seem to be undeniable. But if a shipper should elect to divert his con- signments from some point short of destination to the road of a com- peting line, he certainly should not expect to carry his freight to such point of diversion at the proportionate part of the through rate agreed upon at the place of shipment. Where two or more roads compose a through line, the proportion of the through rate which each will receive will depend largely upon the volume of the traffic it can deliver to the others for through transportation. Therefore, to deliver line traffic to a competing road for transportation at a less proportion than would have been carned by its associate road in the through line, would be a breach of faith that no law ought to tolerate, much less to legalize. If several roads were associated with a trunk line as part of a through route, at the same rate to the same point of destination, it would seem , that under such circumstances the shipper should have the right to elect, if for any reason he has a preference of the routes embraced by the pool, which route his property should take. The dispatch with which freights are to reach market is often a matter of great importance to a shipper, and to send shipments over the less direct route, in order that the tonnage may be equalized between the members of a pool, would hardly seem to be justified by the principles of fair dealing. . In our opinion, as before stated, uniform systems of rates for the trans- portation of passengers and freight can be best Secured by first adopting I'easonable classification and tariffs, then giving them publicity, and afterwards maintaining them without rebate or drawback, and without INTERSTATE COMMERCE. 45 * t change, until after reasonable notice to the public ; the violation of such requirements to subject offending officers to heavy penalties of fine or imprisonment and their companies to the payment of all damages recovered in a suit at law by parties aggrieved. - - It seems to be now pretty generally conceded that the long haul is entitled to the advantage of the short one in the matter of rates, other things being equal, and the necessity of legislation with regard to that Subject is not apparent. - - CONCESSIONS TO LARGE SEIIIPPERS, Why a different rule should obtain in transportation from that which prevails in other departments of business, giving more favorable fig- ures to the larger purchaser, we are unable to understand. But for the protection of shippers the unit of quantity should be defined so as to avoid misunderstandings, and shipments to be made under the oper- ation of the rule should be limited to equal periods of time—a day or week or month, as may be agreed. In our judgment a train-load of, say, twenty cars is entitled to a better rate than a single car-load of any commodity, and a contract for an exceptionally large shipment at one place, within a specified time, would be entitied to a special rate, with- out doing injustice to smaller shippers. Of course it will be claimed, and not without reason, that such concession would have a tendency to drive the smaller operators from the market. That is true, but the latter could unite their shipments for a similar quantity at the same rate, or purchase jobbing lots from heavy shippers, realizing in the price paid a part of the reduction enjoyed by such shippers from the tariff rates. For the protection of the public concessions made under the operation of the rule last suggested should be bulletined for the in- formation of other shippers. * UNIFORM ACCOUNTs. Uniform accounts, so far as earnings and expenses are concerned, are not only practicable, but should be insisted upon, for the purposes of comparison and information in the adjustment of tariff rates and the division of earnings between companies forming through lines. The Saratoga distribution of expenses, so called, is now in use by all the companies reporting to this and several other commissions, requiring conformity there with, and the advantage of the uniformity and sim- plicity thereby secured is indispensable to a proper comparison of the results of operation. s - As the companies in the States where railroad commissioners have been created are required by law to make annual reports of their con- dition and business to such commissions, which reports will always be within the reach of Congress and its committees, the necessity for fur-. ther reports to other authorities is not obvious. - So far as water-routes are concerned, their maintenance and develop- ment, as it appears to us, should rest entirely upon their own merits as part of our transportation system and the advantages they offer for facilitating the movement of freight. If incidentally the effect of their construction or improvement would be to cheapen traffic rates by rail, such circumstance would be a factor in their favor. But for the Government to undertake works of doubtful utility for the purpose of regulating railroad rates Would probably prove an unprofitable ex- periment. - . 46 & INTERSTATE COMMERCE. -A COMMISSION NECESSA.R.Y. Should legislation be perfected by Congress for the purpose of regu- lating interstate commerce, its provisions will unquestionably have to be carried into effect by a commission to be organized for the purpose. Thé creation of such commission and defining its powers would not be the least difficult problem to the solving of which the offices of Con- gress would have to be addressed. Such a commission would neces- sarily be clothed with quasi judicial powers; and therefore to familiar- ity with details of railroad operation and the conditions surrounding the railroad properties in the different States should be added such knowledge of the rules of law governing the determination of the vexed questions that will be continually presented to the attention of the Commission as will entitle its conclusions to the respect of, and ready compliance with, by the parties affected thereby. It has been sug- gested in another quarter that such commission, if selected from among the members comprising the commissions of the several States by rea- son of their thorough familiarity with the situation in their respective localities and the relation which their State system of railroads sus- tain to lines engaged in interstäte traffic, would be in the surest posi- tion to carry out the intent of the laws successfully. That such sugges- tion is entitled to consideration as being of force we think is evident. But it is more than possible that Congress can agree upon some plan for a more effective tribune for the disposal of the important question to be referred to it for its decisions. - & - We regret that we have been unable to respond more promptly to the call of your committee for our views upon the several topics em- braced in the questions suggested by your circular and your letter of more recent date. But if such as we are able to send you at this late moment shall be of any service in helping you to reach conclusions upon the subject of the important inquiry with which your committee is charged, we shall be glad that in some measure we have contributed to a result so full of moment to the people of Our Country. HORATIO SEYMOUR'S STATEMENT. The following letter was received from the Hon. Horatio Seymour, of New York: . UTICA, May 4, 1885. DEAR SIR : I have been confined to my house during the past winter and I am still too weak to prepare a paper with regard to our water-routes. I do not think they are properly valued. Their usefulness does not depend so much upon the amount of tonnage carried upon them as it does upon their influence upon the cost of transpor- tation. As they are open to all, the moment undue charges are made upon other modes of transportation boats which are cheaply built are placed upon them. Pool- ing arrangements cannot be made with boatmen, as they would only serve to multiply boats and boatmen. I value as highly as any one can our railroads. But they are forced into pooling arrangements, which are hurtful to the interests of commerce. We have strong proof of this in the history of the canals of New York. Up to a late date the State imposed heavy tolls upon them and the railroads kept up high charges. The balance of trade was against our country. We could not send our products as freely as we should to Europe. Our State then began to reduce the tolls, and in 1880 the canal was made free of charges. The result was that the balance of trade was in ſavor of our country in its dealings with Europe and We enjoyed unusual prosperity. The tonnage of the canal has not been much increased by the policy of low tolls or no tolls, but the cost of carrying grain from Chicago to Now York is cut down to about one-third of the former charges. - INTERSTATE COMMERCE. 47 re. * I send you a paper I prepared on this subject. I wish to call your attention to a table which it gives, taken from the official reports of the General Government. . I can make no argument in favor of water-routes so clear and strong as this official table. - - -- * It is strange that many regard with complacency plans for ship canals which will enable vessels to sail around our country from New York to California, only touching at a few points, while they denounce improvements across our Country giving pros- perity to all points on their lines in our own country, while the ship canals across the isthmus are for the benefit of other lands as well as our own. - , Canals as regulators of transportation will soon be appreciated. Water-routes are the only reliable protections against undue charges for carrying. The people will Soon learn that fact. I fear you will find it hard to read this letter. I am so weak I write with difficulty. Respectfully, yours, . HORATIO SEYMOUR. Hon. S. M. CULLOM. . - THE ADJUSTMENT OF RAILROAD RATES. Paper submitted by George C. Pratt, chairman of the Missouri railroad commission, and approved by his colleagues on the commission. The railroad provides a mode of overland transportation by means of which the business is conducted with less frictional resistance, and con- sequently with less expense for motive power, than in the Ordinary way; or, in other words, it furnishes cheap transportation. The following quotation elucidates this point: As to the question of economy in railroad transportation, it has been demonstrated that freight can be carried by rail for one-twentieth part or 5 per cent. of what it, costs by dirt road, which is a saving of 95 per cent. on the cost of transportation; and that at 4 cents a mile passenger rate it is cheaper for a man who can earn a dollar a day at home to do his traveling by railroad than on foot. To have secured for our- selves and for our fellow-citizens the benefits of this mode of conveyance means, therefore, that we have secured that cheap transportation which railroads alone can furnish ; and if we examine critically all the particulars wherein is manifested its superiority over other modes of transportation overland, we shall find them all to have an economic value. Cheap transportation is, therefore, the Summum bonum in railroad construction, the one Supreme benefit resulting thorefrom which alone justifies the liberality of our laws respecting it, and furnishes the excuse for exercising the right of eminent domain in its favor. The limit to this economic result to the public on the one side is the boundary of reasonable profits on the other side, and this line of demarkation between the two interests is the neutral ground on which alone a ſºir schedule of rates can be adjusted. ... It is not surprising, therefore, that popular opinion seizes upon the matter of rates as the one great and important subject connected with railroads demanding attention, supervision, and control. This senti- ment found expression in the old railroad charters in the limitation of rates. All maximum rates established forty years ago were high, it is true, as compared with present rates; but no one then knew the actual cost of transportation by rail, much less what would be its cost in 1885. During the first fifty years of the life of the railroad the ingenuity of its friends and devotees was expended unainly on increasing the sta. bility and endurance of the track, the speed and power of the locomo. tive, the capacity and convenience of the various kinds of cars, and on . . . the general improvement of all kinds of machinery and appurtenances used, with only incidental attention to economy in operation. The financial crisis which culminated in 1873, and which knocked off 25 and 50, and - in some extreme-cases 75 per cent. from the market value of Our most important exports, caused the Wail of distress which arose from among the producers to be mingled with loud demands for a re- 48 INTERSTATE COMMERCE. duction in railroad rates. There being also a perceptible diminution in the ratio of the hitherto rapid increase in volume of business, the result was a more careful attention to economy in transportation. In 1875 the minimum rate at which freight, could be carried at a profit by rail was supposed to be 1 cent per ton per mile; now (in 1885) it is put at one-half a cent. There are no two companies, however, that can carry freight at exactly the same figures, and scarcely any two experts that will arrive at the same conclusions as to an average rate after a survey of the whole field. Consequently there is very little uniformity of opin- ion as to what is a fair rate in a given case, and still less as to any gen- eral rate for determining what is a reasonable rate in all cases, or what are the constituent elements of an equitable rate in any case. Railroad officials persistently deny the possibility of making any rules that will be generally applicable, as well as the propriety of any attempt at the regulation of this matter on the part of Government. Having demon- strated to the world, however, that after sixty years' experience they themselves cannot make and maintain an equitable system of rates, and having proclaimed the necessity for the same by calling upon Gov- ernment to legalize and enforce agreements among themselves for that purpose, they are estopped from making any objection if Government now undertakes to make and enforce equitable rules and regulations on this subject. & Custom has decreed that all adult passengers shall be charged alike for same quality of accommodations, i. e. at So much a passenger, alld that they shall be charged according to distance carried, i. e. at so much a mile. It has also decreed that freight shall be charged according to weight, i. e. at so much per 100 pounds, or per ton, or per car-load, or its equivalent in space; but in regard to distance there are in this :ase no such clearly defined rules as in the other case. Perhaps the only well-settled point respecting distance is that rates should be more per mile on short hauls than on long ones. This would seem to de- stroy the analogy between passenger and freight traffic and to demand that their rates be adjusted on entirely different principles. No defi- nite ratio for the differences between long and short hauls is given, how- ever, and the whole matter of freight rates is left in confusion. But if we inquire into the reason for this last-mentioned rule, we will find that it results from an effort to provide a compensation for the actual dif. ference between passengers and freight. The passenger loads and un- loads himself and is charged only for the haul, while freight must be handled by the carrier; and the Čost of handling is a fixed or constant one regardless of distance hauled. If, therefore, we make a separate and constant charge for handling freight, which may be called a termi- nal charge, then the charge for hauling or the transportation charge may be a regular one per ton or per hundred pounds per unile, and the analogy between passenger and freight traffic is preserved. The rule established by custom for passenger charges is a just one. The cost of carrying any burden varies as the distance carried. Freight charges should therefore be composed of two elements, the terminal charge and the transportation charge, the former being the same for all distances, and the latter a regular rate per hundred pounds per ton or per car for the distance hauled. With a terminal charge of $1 per ton and a transportation charge, or lauling rate, of 1 cent per ton per mile, the total charge for a 10-mile haul would be $1.10; for a 20-mile haul, $1.20; for a 50-mile baul, $1.50; for a 100-mile haul, $2.00, and for a 1,000-mile haul, $11 a ton. As distance and the total charge increases the ratio of the terminal to the total charge decreases, and in long hauls INTERSTATE COMMERCE. 49 becomes almost imperceptible. If rates adjusted on this basis were en- forced on all traffic, State and interstate, the question of long and short hauls would be solved, discriminations in favor of competing points and railroad wars would cease. That an exceptional case de- manding a deviation from this rule would never occur, we do not affirm ; but every such case would be an exception to the rule of equitable ad- justment, and not the rule itself. Another important factor in the adjustment of carrier's rates is the insurance, the carrier being an underwriter; and this introduces the Subject of classification of freights, a matter of no pecuniary value to any one, but a great convenience to the rate-maker. The amount in- sured on any article of freight is the value of that article, and the charges on different articles on account of insurance should vary as their value per weight; and in the case of articles of same value per weight, between which there is a manifest difference as to risk of break- age, &c., there is also another variation corresponding to difference in rate of insurance, or difference in premiums paid on policies of equal amount. This last variation, however, although assumed by many to be the only one due to insurance, is in reality so small as to be impercep- tible in the total charge, except in a very few cases. Pig-iron is very rarely lost or even injured in a railroad accident; but such articles are few. The importance of taking into account the value of the article carried. is made very clear by comparing a car-load of bituminous coal, worth $30, with a car-load of dry goods, worth $30,000. No one can afford to take these two risks for the same money, and at the same time to do so would conduce to a public injury. At 1 cent per ton per mile for hauling, that coal caunot be mined, loaded, hauled, and delivered at a point over 100 miles distant from the mine Without consuming the value of the article and leaving nothing for the producer; while, on the other hand, the dry goods could be carried at the same rate 1,000 miles and the cost of transportation not be taken into account in the selling price of the articles. In fact, many kinds of goods of that class could be charged 10 cents per ton per mile for that distance before this cilarge would be perceptible in the retail price. It is clear, therefore, that justice to producers, carriers, and consumers demands that freight rates should vary directly as the values of the articles carried Vary per ton or per bundred pounds, as the case may be. There being ino other factor in the problem of classification of freights so important, so regular in its variations, and so convenient as this, it may safely be assumed as the most suitable basis for such classification, allowing at the same time the rate-maker to exercise a proper discretion in the con- sideration of rate of insurance, risk of breakage, injury to other articles, bulk, &c. Bulk becomes especially important when so great as to pre- vent the loading of a car to its full weight-bearing capacity. From ten to fifteen classes will probably be found sufficient for all traffic in this coultry, and they may be so arranged that the lowest class shall em- brace articles worth less than $5 a ton and the highest class those Worth over $5,000 a ton, or some less amount. Si.ecials will sometimes be necessary, and subclasses will be found convenient. The latter should be multiples of, such as one-half, one and a half, or two times a given class, but in their use the hauling rate only, and not the terminal charge should be modified. To raise or to lower the terminal charge is to raise or to lower the total charges on short hauls as compared with long ones. Fifty cents a ton is suggested as a suitable terminal charge for all classes based on a valuation of less than $50 a ton, and $1 a ton for all higher classes. The hauling ràte may increase regularly from 4 mills .16232 AP—4 50 INTERSTATE COMMERCE. On the lowest class to 6 or perhaps 10 cents per ton per mile on the highest class, the hundred-pound unit being uniformly one-twentieth of the ton. * *... Many people suppose that all freight should be carried at the same rate. This might be true but for the matter of insurance; and if we were to relieve the carrier of his responsibility as underwriter other parties would assume it, resulting finally in a more expensive system, and in many and various injurious effects on all parties interested. It is better to hold the carrier strictly accountable as insurer. He can carry the risk cheaper than any one else can possibly carry it, and it furluishes a stimulus to his diligence, his watchfulness, and his integrity. A recognition of this duplex function of the carrier is absolutely es- sential to a correct adjustment of that equitable system of rates whereby his total receipts from both sources will secure to him a reasonable profit. On his business, and that all else may inure to the benefit of the public in the shape of cheap transportation. - - W. L. BRAGG’s STATEMENT. Statement of W. L. Bragg, Montgomery, Ala., late president of the Ala- bama railroad commission. - I think it proper to state that I have never been engaged in the busi- ness of operating railroads, but am a lawyer by profession and have practiced my profession for more than twenty years. Such knowledge and information as I have in regard to the practical Operation of rail- roads and railroad legislation, and my views upon these subjects, have been formed by virtue of the fact that from March 1, 1881, to March 1, 1885, I was president of the railroad commission of Alabama, and during that time devoted myself closely to the subject of supervising the rates and operation of railroads in the State of Alabama under the laws of this State. And as the commissioners were required by the statute to make recommendations in their annual reports to the gen- eral assembly for additional legislation, I also devoted considerable time to that subject, examinning as carefully as I could the railroad commission laws of England and the different States of the American Union, and the statutory enactments generally bearing upon the subject. A NATIONAL COMMISSION. (1) The best method of preventing the practice of extortion and un- just discrimination by Corporations engaged in interstate commerce, in my opinion, is to establish a national railroad commission, composed of several commissioners with a president, and giving the board large dis- |cretionary powers on the subject of revising the rates of the railroad companies, and with authority to correct extortion and unjust discrimi- nation, and to reduce the rates of railroad companies,to a fair and just compensation ; all freight and passenger tariffs of railroad, companies engaged in interstate commerce to be submitted to the commission for revision ; the commission to have power to revise them from time to time as often as occasion may be necessary, either by increasing or re- ducing any of the rates charged, and by graduating them as experience may show to be necessary; extortion to be criminal and punished by INTERSTATE COMMERCE. 51 penalty in the courts; unjust discrimination to be criminal also, and punished in the courts of the United States; the rates made by the SNational Railroad Commission to be conclusive evidence in all Courts and before every officer or tribunal that the same are just and reasona- ble ; upon approving any tariff the commissioners to give a certificate of approval to be attached to the tariff, and to furnish each company with one copy of the tariff, and to retain one copy as a record of their office and for public inspection. A great many other details I could name, but it would take up unnecessary space; for they are surgh as would most naturally occur to the committee in connection with the views I have here expressed, (2) Rates charged by corporations for through traffic are generally reasonable enough, though there are many glaring inequalities between them. For instance, much higher freight is charged by railroads from New York to Montgomery, Ala., than from New York to Mobile, al- though the freight passes by Montgomery on its way from New York to Mobile. The reason alleged for this is competition, but we all know that there is no competition whatever at Mobile by Water lines that has anything to do with making these prices. As to the local rates of rail- roads, they are whatever the traffic will bear, and are usually in the highest degree extortionate. - (3) My opinion is that publicity of rates should be required by law, and that changes of rates without public notice should be prohibited. The best method of securing uniformity and stability of rates, in my opinion, would be through the action of a national railroad commission, so far as interstate commerce is concerned. - MAXIMUM AND MINIMUM RATES. (4) As to the advisability of establishing a system of maximum and minimum rates, my opinion is that all these rates should be maximum rates, the commission making them being sure that such maximum rates allow a fair and reasonable compensation for the services rendered, taking into consideration all the elements that enter into it, and erring, as every such body naturally would do, if at all, in favor of the con- servative rights of property. I can readily see how a system of maxi- mum and minimum rates would involve a great deal of confusion and complications, and be impossible by practical enforcement as a method of governmental Supervision. (5) As elements to be considered in revising the rates of railroad companies, the cost of transportation, the conditions of business, and occasional competition, wherever it exists, are each factors that should be considered. Each of these is very important. Among railroads there is really but little competition, but the elements of cost and the conditions of business are in the highest degree important, and for that reason rates should be maximum rates, so as to be flexible, and the Commission should be required to remain in almost perpetual session. REBATES AND POOLS. (6) My experience is against the wisdom of any system of rel)ates and drawbacks. I believe that rebates and drawbacks ought to be made penal by statute. I believe they should be entirely prohibited. My experience has shown that they are a potent means by which unjust discrimination is most usually perpetrated, and that they are the most thorough of all cloaks for fraud. 52 INTERSTATE COMMERCIE. (7) Although pooling contracts and agreements are frequently sus- ceptible of great abuses, yet I am not prepared to say that they ought to be prohibited by law. I am certain, however, that they ought to be regulated by law, and that the terms of such agreements should be made public and subject to official approval. (8) I believe that a provision should be made by law for securing to shippers the right to select the lines or parts of lines over which their shipments shall be transported. - - (9) I have already answered the ninth interrogatory substantially in my answer to the first interrogatory. º (10) My opinion is that corporations engaged in interstate commerce ought to be permitted to charge a lower proportionate rate for a long . than for a short haul. And upon this particular point I do not know that any legislation is needed. (11) My opinion is that no concession in rates should be allowed to large shippers, except such as represent the actual difference in the ex- penses of handling large shipments over small shipments, and that such concessions should be made kilown to the public by advertised rates. UNIFORM ACCOUNTS AND REPORTs. (12) It would be next to impossible for a national railroad commis- sion to justly, safely, and intelligently revise the rates of railroads en- gaged in interstate commerce, unless a uniform system of accounts was required to be kept by these companies. Unless such uniform system of accounts was kept, it would be impossible for the commissioners or their clerk to know what the actual net earnings of the company were. Unless a uniform system of accounts was required to be kept the com- panies would be stuffing their earnings or their losses, as the case might be, under heads that would baffle all efforts to arrive at their actual condition within a reasonable space of time. - - (13) If a national railroad commission were to be established, it would be absolutely necessary that railroad corporations engaged in interstate commerce should be required to make annual reports to the commission in order to enable the commission to see the actual condi- tion and what rates would be fair and reasonable for them as returns upon their property invested. Such reports should embrace a full and detailed statement of their earnings and expenses from freight service, passenger service, express service, mail service, and from all sources. . . (14) In making provisions to secure cheap transportation it is of the utmost importance in arriving at this great end that the Government should develop as much as can be done consistently with true economy the water routes of the United States. Especially in heavy freights do these Water routes Compete With railroads to a considerable extent and thereby reduce the rates of transportation. - (15) I have already answered this in my answer to the first interro- gatory, A. - RESULTS OF RAILROAD LEGISLATION. I will state that so far as my reading and observation have extended the experience of great nations and states has been substantially alike on this subject. They first commence by attempting legislation filled With penalties as a means of regulating the business of railroads and preventing extortion and unjust discrimination. All such legislation by itself dependent alone upon the courts has signally failed. Then the next step has been With them the creation of a railroad commission for INTERSTATE COMMERCE. 53 $ the purpose of administering the statutes, backed up by the courts of the country, and this last method of railroad supervision has in Eng- land and among all of the States of the American Union been a suc- cess, and has conferred great and lasting benefits upon the people with out doing injustice or injury to the railroad companies. . I will state that up to the time I was railroad commissioner myself I knew but little about legislation of this character, and entertained a very great prejudice against it. But my experience has shown me that such legislation is absolutely necessary to prevent unjust discrimination and extortion, and to protect shippers against these great evils. I am Convinced that such a commission is as necessary for interstate Com- merce as it is in the different States for local or State commerce, and even more so. Inequalities of pooled rates are very glaring in many instances, and grossly unjust. . I have answered as briefly as I can the questions propounded by your honorable committee. The subject involved is a vast one, and if I had the time I could now, as I have done in the last few years, write several volumes upon the subject, but I forbear perpetrating such an infliction, and it would be far beyond the time I could possibly take for it. THE RAILROAD COMMISSIONERS OF MAINE. Statement by Messrs. A. W. Wildes, John F. Anderson, and D. N. Mort- land, the railroad commissioners of the State of Maine. While the Maine railroad commissioners keenly appreciate the grave import of the queries proposed in your circular, our inability to offer a satisfactory solution of them is quite apparent to ourselves. We doubt whether it is practicable to reach a true middle ground of common and general benefit in any attempt, by legislation, to correct the alleged ex- tortions and the admitted discriminations by which the managers of the immense property in railroads are struggling to procure some return upon the capital invested therein. If the time has arrived when action must be taken by the General Government, we think that a national com- mission might possibly be so constituted as to fairly represent the true business interests of all sections and all properties, and be clothed with authority for advisory adjudication upon vexed questions of interstate commerce that may be referred to it by local State boards or by United States citizens associated for the purpose, which, thowing the light of open, impartial, and reasonable consideration thereon, might conserve a genuine healthy public sentiment in favor of its decisions. The Maine railroad commissioners also proffer the individual views of the general ticket agent and clerk of the Portland and Ogdensburg Rail- road Company, Charles H. Foye, of Portland, whose thoughtful paper we believe merits your consideration. * - OELARLES Eſſ. FOYE'S STATEMENT. (1). Whether, if ever true, the charge of extortion has not now become obsolete, through the eager competition of rival lines, many of which were created as a remedy and defense against alleged extortion; whether the losses of individuals under any such extortion have not been aunply t * * 54 INTER3TATE COMMERCE. repaid in benefits to the country at large by the increase of rival lines and consequent counpetition ; whether, in view of the nature of the service rendered by transportation lines being created by law for cer- tain public uses, with specific duties imposed upon them, and restricted in the privilege of private contract, they are not in a position analogous to that of public servants whose discrimination, favoring any individual or class, is an injustice to the interests discriminated against. Extortion is in many cases counteracted by competition, but discrimination cannot be prevented so long as the right of private contract is conceded. (2) The reasonableness of any charges for transportation can only be determined by the cost of service. The elements of cost are many and vary so widely that it would be unfair and unjust to fix any stand- ard by which to measure the one or the other in individual cases. (3) The question of publicity of rates can only be answered after the right of discrimination is admitted or denied. If denied, then the pub- lic should be allowed every possible safeguard that publicity, uniformity, and stability of rates can provide. - (4) Maximum and minimum rates established by law are, in the present undetermined state of the transportation problem, of little use in solving the difficulty; the charge of extortion and injustice may be bandied about by the one party or the other as the higher rates are charged or the lower insisted upon. - . (5) In computing cost of interstate traffic the same elements that enter into local traffic Inust be fairly considered. (6) Any system of rebates or drawbacks is but another method of discrimination, and must be prohibited if uniformity and impartiality of rates are to be established. (7) Pooling contracts and agreements are but temporary in their nat- ure, and can Only continue during the pleasure or consent of the con- tracting parties; disturbing elements are inevitable among so many, so varied, and often adverse interests, and the history of such combi- nations in this country furnishes conclusive evidence that they cannot prevent unfair competition and unjust discrimination. - * (8) The free choice of route is as essential to the shipper as any ques- tion of rates, and any restriction of such choice is discrimination. (9) It would appear, from long experience, that no method can secure uniformity in transportation rates where the adoption and use of such rates is dependent upon the individual choice and action of corpora- tions. But, if it be not against public policy, a method might be devised whereby interstate commerce, being removed from the control of corporations, should be governed by uniform regulations and rates, made and established by an impartial representative body, empowered and charged with such duties by the General Government, or by the Government directly through a department resembling, perhaps, the Post-Office Department in its organization and operation, except that it should be forever removed from the sphere of partisah politics. Such body or department, operating as a “clearing-house,” should be able to establish rates for transportation of passengers and freight between the States fair to all private iliterests, and to adjust the division of such rates satisfactorily aujong the corporations interested upon a basis of their respective share or service rendered and the cost of such service. The removal of interstate commerce from the jurisdiction of corpora- tions into the control of one common authority should eliminate from this problem of transportation at least one disturbing element, viz, the serious interferent e of long, indirect routes with business that, under fair rates, would prefer and select direct short routes; while the longer INTERSTATE COMMERCE. 35 routes could hardly be debarred from engaging iu such business, it is unjust to other corporations and demoralizes trade to permit such diver. Sion of business from its legitimate channel. It is an entire subversion of the principles of trade to say we must perform more labor and under- take greater expense to accomplish What our competitors do; therefore we will charge less for our work than they. Private individuals may be allowed to act upon such false reasoning; their downfallis inevitable and the error corrects itself by their ruin. But railroads cannot be eliminated; they are permanent investments, highways that must be maintained, and their mismanagement and mischievous rivalship are far-reaching in their operations and results. If it is proper for the General Government to interfere with or correct corporate rights, the just control of transportation certainly promises good to all commercial . interests, to producer, trader, carrier, and consumer, in that it would make certain a factor in commercial transactions which is now too much a matter of conjecture. Questions of interstate transportation being thus disposed of, corporations, relieved of their most perplexing and harassing questions and duties, would be free to develop local interests, upon which, it is conceded, their highest prosperity depends. THE OHIO COMMISSIONER. Statement by Henry Apthorp, commissioner of railroads and telegraphs, - * State of Ohio. I have been too busy to give this matter as early attention as you desired, or as full consideration as its importance demands. The rail- way carrying trade of this continent has so suddenly grown to gigantic proportions, and it is reciprocally related to such a multitude of interests both of public and of private concern, and so little of this subject is known to me, that I hesitate to give specific answers to the questions of your circular. - While the power of Congress to regulate commerce among the States no doubt includes the power to regulate that element of commerce knewn as interstate railway traffic, the limit within which this power to regulate may be legally and properly exercised has not yet, it seems to me, been clearly defined. If, however, the common law does not afford a speedy and efficient remedy, or if State legislatures cannot furnish adequate relief for extortiolt and unjust discrimination—this I understand is the core of the complaint—then Congress should provide such remedies, under its power to regulate commerce, as will secure justice. Your committee is in a better position than any one else to know to what extent extortion and unjust discrimination prevail and the degrees to which they are practiced in interstate railway traffic, but for a long time no, complaints of extortion have been made by shippers in this State to this office. - . - It has become quite general and popular to refer to railway trans- portation rates as a tax upon the product carried. Using this simile in the subject before us, and carrying it one step farther, I think the facts will show that governmental valuation and taxation of property allows quite as wide a range of discrimination as railway rates. I do not mention this to invite an apology for the latter, nor to suggest 56 INTERSTATE COMMERCE. blame for the former, but as an illustration of the difficulty in applying a theory of equity to practice in multiplied affairs that will be satisfac. tory to every person concerned. - se Notwithstanding these difficulties, improvement is demanded—as an advance to a better condition of things is always desirable; but even with this to urge it, I seriously doubt the wisdom of resorting to an in. flexible law of Congress to govern the many special transactious (that are themselves subject to inflexible conditions) embraced in the matter referred to in the fifteen questions of your circular. I fear the remedy would be worse than the disease. - - - For the present let the action of Congress go no farther than to es- tablish a national railway commission, authorized and directed to gather statistics touching this new industry. After this commission has become acquainted with the facts, let them advise Congress what to do and what not to do. . TEIE CONNECTIOUT RAILROAD OOMMISSION. Letter from George M. Woodruff, of Litchfield, chairman of the railroad commission of Connecticut. I made no response to your previous letter and circular, thinking that mány wiser men would weigh you down with opinions, and this is still my feeling. Briefly, however, I would say that “extortion and unjust discrimination by corporations engaged in interstate commerce” cannot survive publicity, and publicity can best be obtained by having a tri- bunal which will, without cost to complainants, hear, make public, and pass judgment upon the complainant. - - Bates now charged are generally as low as shippers and consumers can reasonably ask. There are, of course, some exceptions. Publicity of rates, not to be changed except by authority of a commission, would in a degree secure stability; and stability would be a protection to in- vestors and traders alike. I do not favor fixing rates by statute. Rebates and drawbacks are usually the result of partiality rather than of business principles, but if subject to official inspection and ap- proval would be without serious objection. - Pooling, regulated by law through a commission with power to Čon- trol and enforce, would, I believe, be desirable. - Shippers should have the right to select the lines over, which their shipments shall be transported, but if sent by a route other than the one commonly used by the receiving road the same dispatch should not be required. - - Public interest does not require any legislation which would prevent, under all circumstances, charging less for a long haul than for a short haul. w Large shippers are entitled to concessions in rates only on the basis of the difference in expense of hauling their shipments. - The greater my experience the mºre desirable does it seem to secure “a uniform system of accounts,” a ſºd also the more difficult to obtain absolute uniformity. A general uniformity is all that can be expected. Annual reports are desirable and should at least give : Gross earn- ings from operation (in detail); operating expenses (in detail); receipts from all sources; expenditures for all purposes; balance-sheet of the corporation; statement of stock and debt. INTERSTATE COMMERCE. X- 57 I do not think it necessary for Government to develop and maintain a system of water routes in order to secure cheap transportation. I believe that legislation for the regulation of interstate commerce can be best enforced through a commission, and that such a commis- sion would need but very little arbitrary power. *º-º-º-º-º-º-º-º: *-º-º------ CHARLES RANDOLPH'S STATEMENT. Statement of Charles Randolph, South Evanston, Ill., late secretary Chi cago board of trade. I assume it to be conceded that the States are powerless to exercise an efficient control over the rates and policy of transportation lines ex- tending beyond their own territory, while at the same time, practically, all the interstate lines of traffic are organized under State charters, and are, in at least some degree, subject to State authority. I also as- sume that as State organizations they are not subject to any supervisory control by the National Government, in so far as their operations are strictly confined within the State granting their several charters; but that Congress has undoubted authority over traffic between the States, or that passing from one State into another, by whatever means it may so pass, I suppose may be taken as practically settled. If, however, it is sound policy to require that transportation lines shall not be per- mitted to charge more per ton per mile for a short than for a longer. haul, and that equity to the lines and to the people will be reached by establishing and maintaining uniform rates on that basis, then it would seem that the whole question might safely and properly be relegated to State control; inasmuch as under that view of equity the people of other States would bave no right to expect or require different rates on their shipments through, or partly through, a given State than are ac- corded to the people of that State. I do not consider such a theory either sound as public policy or just to the people of the country gener- ally, or to the transportation lines. As illustrating the operation of such an established principle of controlling freight rates, I will take a promi- ment shipping point—not Chicago, lest I seem to be arguing from a Chicago standpoint only, but Minneapolis, where in some degree the prevailing policy operates against the interests of Chicago. There are three or four railway lines operating between Minneapolis and Chicago and one or more between Minneapolis and Duluth at the head of water navigation on Lake Superior. There is an immense movement of flour from Minneapolis to the sea-board; Water rates from Duluth to Eastern points are substantially the same as from Chicago to the same points; the rail line from Minneapolis to Duluth is about 160 miles; to Chicago the average of the lines is about 450 miles. Now, if the rail lines to Chicago were obliged to adjust their tariffs on the basis of uniform rates per ton per mile, or even approximately so, over their whole lines, it is manifest that they could not make a rate from Minneapolis to Chicago that would command a barrel of flour to be shipped beyond Chicago without cutting down all their traffic to a ruinously low figure. Whereas if they are allowed to make a rate to meet the rate from Minneapolis to Duluth, they are really Serving the miller, and through him the wheat grower and the consumer as well, at lower rates than either would get if they Were entirely out of the competition. If they can make a rate for 58 - INTERSTATE COMMERCE. the flour that will command the bulk of the business, as they do, and that rate yields them even a small profit, that profit enables them to grant lower rates than they could otherwise do to their other patrons, and so they in turn are more or less benefited. If, on the other hand, the Minneapolis rate is below the actual cost of doing the business, all things considered, they will be likely to recoup themselves for that loss from their other patrons—a practical “robbing of Peter to pay Paul,” a policy which I think Government should effectually prohibit. Sub- stantially the same condition of things exists at many other places in the country as I have alluded to above, and should not be ignored in any intelligent policy dealing with this great question. In the above view of the case, and for other reasons bearing in the same direction, I feel confident that it would be a public calamity to prohibit any railway line, whether engaged in interstate or only in State transportation, from charging a greater rate per mile or even a greater rate irrespective of mileage for a short than for a longer haul; but in no case should a rate for a short distance or any rate whatever be permitted which is based on an attempt to recover losses made by some other and lower relative rate. • Now, as to what methods are practical for the fair and equitable ad. justment of the problem of interstate transportation. In discussing this I shall go somewhat beyond suggesting remedies to prevent extortion and unjust discriminations, as those terms are generally understood; because I think the time has conne when a broader range of remedies for existing evils should be considered than simply preventing by a statute law embracing methods of proceedings to give it effect, princi- ples already well established by the common law of the civilized world. In most cases where complaint is made of excessive rates for transpor. tation it would probably be difficult to prove to the satisfaction of a court or jūry that they were extortionate. There being such a wide range of circumstances in the conditions affecting different lines, and at different times of the same line, what under some circumstances would really be but a fair and reasonable rate would under differing conditions be quite extortionate. Scarcely any two intelligent men would fix the same point as the line between reasonable and extortion- ate rates. And so, too, in respect to unjust discriminations; the very term implies that some discrimination is permissible, but concerning the justice or injustice of a given case men would differ. Hence, legis- lation aimed simply at preventing extortion and unjust discrimination, without defining what extortion is or what discriminations, are unjust, would be as barren of practical results as the principles of the common aw now are in providing an efficient remedy for actual existing evils in this respect. f . - - A. MAXIMUM R.A.T.E. It seems to me that any attempt by Congress to fix a point in the form of a maximum rate.which shall be taken by the courts as the line between a proper and an extortionate rate must be attended with great difficulty, if indeed it is not wholly impracticable, especially should such a rate be established by law in connection With a provision for uniformity in the rate per ton per mile, or something approaching that idea. In determining such a question by statute law, equity to both the carrier and the public should be considered; al.d. in adjusting the equities of the case the cost of doing the business, Which involves a full understanding of the cost and expenses of the line, the volume and character of the business it is doing, and very many other factors, must INTERSTATE COMMERCE. g 59 have their due weight, not only as regards a combined line as a whole, but in respect to every separate link in it, which may consist of many independent lines, as, for instance, ‘between Galveston, Tex., and Bos- ton, Mass. The impossibility of this being done, so as to embrace in any law a just maximum rate for all business coming within its pro- visions, must be manifest on a very casual consideration of the subject. I suppose under such a law it would be held that a railway company would be liable for damages if it were to refuse business tendered at a rate the law prescribes as a fair and equitable one, and also that it would be bound to bill consignments to destination outside of its own State; thus practically forcing any short line to accept interstate trans- portation and its pro rata of a through rate established by law, which to any one would be recognized as ruinous to it. For instance, say the maximum rate for 1,000 miles west of New York was fixed at 50 cents per 100 pounds on grain, a very high rate. A shipment of grain is offered 1,000 miles from New York, but 10 miles from the trunk line on a short but independent railroad. All it could claim for its 10 miles of haul would be one-half of 1 cent for 100 pounds, or not to exceed $2 per car. This, every one would say, was absurd, but to my mind that is where the principle would inevitably lead. - s WEIAT CONGRESS. CAN DO. In view of all the complications of the subject, and having due re- gard to all the interests involved, my own idea of what Congress can and ought to do is about as follows, and in stating my views in this way Several of your questions will be incidentally answered : Enact a law prescribing adequate and easily enforced penalties for its violation, infraction, or evasion, and suitable damages to persons in- jured thereby. Provide for the appointment of a commission of six per- sons at an annual salary of not less than $7,000 each, to be paid by the United States; two of the commissioners to be selected from the States - east of the Alleghany Mountains and north of Washington; one from \ the States north of the Ohio River and east of the Mississippi; one from the States south of the Ohio River and Washington, and east of the Mis- sissippi; one from the States between the Mississippi River and the Rocky Mountains; and one from the Pacific States. Give the commis- Sioners power to employ a competent secretary and other necessary as: sistants as they may deem proper, and to fix their compensation; such compensation to be subject to the approval of the Secretary of the In- terior, and to be paid by the United States. The commissioners to be assigned to and required to maintain a suitable office in the city of Washington, in which their regular meetings shall be held, and where all official communications shall be addressed; the office to be kept open to the public the same as all other Government offices in Washington. The commissioners to hold office for six years, provided that of the first appointments two shall be designated to hold their appointments for two years, two for four years, and two for six years. Make it the duty of the proper officers of every transportation line or company engaged in interstate traffic to make to the commission prompt, full, and detailed reports in respect to such business transacted by it as the commission may from time to time deem necessary for its information in the dis- charge of official duty, and which it shall in a proper manner make due request for. And as they may deem it necessary give the commission power to require the production before them of any books, contracts or. other paperS relating to interstate commerce in the possession or con- 60 - INTERSTATE COMMERCE. trol of any company, person, or persons in the United States. Give them also power to issue citations for the attendance before them of any per- son, in the same manner and with the same effect as if issued by a United States district court. g Provide that all railway tariffs for interstate transportation, either for freight or passengers, and all changes in the same, shall, before tak- ing effect, be approved by the commission, and that after it goes into effect, until changed by approval of the commission, no deviation from the rates so established shall be permitted in any way, either by charg- ing more or less than such approved rates, directly nor indirectly. All tariffs or changes of tariffs, so approved by the commission, for the transportation of passengers or freight, to be conspicuously printed and posted up for the information of the public in all the passenger and freight stations of every railway company or line to which it applies, at least one day before it shall go into effect, and be kept so posted during the time it is in force. Permit any railway or other transportation com- pany or line engaged in interstate transportation to establish and allow drawbacks or rebates from its published tariff of rates, but only on con- difion that such rebates shall be approved by the commission and shall apply to any and all shipments under substantially the same conditions, which conditions, and the amount of rebate to be allowed, shall be spe- cifically and fully stated on the printed tariff posted in their several sta- tions as herein required. - - - Make it the duty of the commission to hear any evidence which may be submitted to it by the officers of any railway or other transportation company or line, or any other person interested, touching the reason- a bleness of any proposed tariff or changes of tariff of rates for interstate transportation which may be submitted for its approval; their approval or disapproval of the same to be based on the apparent justice or injus- tice of the rates proposed from the evidence so presented, or from other facts obtained by them from other sources. The approval or disapproval of proposed rebates from tariff rates as herein provided to be based on like evidence as that relating to the tariff of rates to be charged. All persons giving evidence before the commission to be required to do so under Oath and Subject to such proper cross-examination as the repre- ... sentatizes of opposing interests may see fit to make in the presence of the commission. Give the commission power to issue authority and di- rection for the taking of depositions of persons whose evidence on the question is deemed by them of sufficient importance to justify such pro- ceesings in the same manner as judges of the United States district COUlrtS. - - - - In case any tariff or changes of tariff or scale of rebates submitted to the commission for its approval shall not be approved by it, the Commission shall indicate in particular what changes it deems proper to be made in the same, and it shall be the duty of the company or com- panies, line or lines submitting the tariff so disapproved, to adopt the modifications so indicated by the commission. All such decisions should, however, be subject to appeal, either by any transportation line interested or by any citizen of the United States interested, to the court in the city of Washington, and thence to the Supreme Court of the United States if the appellant or the commission so elects. But pending such final appeal and reversal of the decision of the commission in re- spect to the rates in question, the decision of the commission shall stand and be respected by the parties in interest the same as if fully concurred in by the parties originally appealing therefrom. Some such provisions embodied in a law would, in my Judgment, if INTERSTATE COMMERCE. - 61 faithfully carried out, meet all the requirements of regulation now neces- sary to be imposed on the traffic, and I have little doubt but that in the main they would meet the approval not only of the people but of the railway interests as well. The machinery suggested is not intricate. The end plainly sought is to do even-handed justice to both the railway interests and their patrons. Both have rights which are entitled to respect and consideration. Many of the companies' charters, perhaps most of them, give the right to the companies to fix their own tariff rates, which it is now pretty well settled means reasonable and just rates, and this suggestion leaves them perfectly free to do that, under a legal supervision applying only to the justice and equity of the rates they may propose to charge. - -- *, Undoubtedly other provisions will suggest themselves as proper to be embraced in any recommendation your committee imay be inclined to make to Congress, even though in the main this should meet their approval. One now suggests itself to me, which I had overlooked; that is, that the commission should make annual reports to Congress of the general scope of their proceedings, and recommend from time to time such further legislation as it may deem to be necessary. As to the reasonableness of rates now existing, I can only say in a general way that the through rates to the seaboard are probably as low as can be reasonably asked. Local rates are in many cases unreasonable, in fact extortionately high under the developments of economies in rail- way operating in the past few years; in some cases these apply to inter. state traffic, i. e., rates from points in one State to another though com- paratively a short haul. - Under such a law as I have suggested there would be little object in pooling interstate traffic. This is only made supposably necessary by the fear of cutting any agreed rates; but for that no railway line would probably care to go into a pool. Without some such law I do not see any way to prevent SGme form of pooling. I do not think pooling is ever resorted to in order to extort unreasonable rates, but rather to pro- tect the lines against each other at competitive points. I cannot see any other way than something like what I have outlined to control the subject, and doubt if publicity of pooling terms would accomplish any good end. Every shipper should be accorded the right to prescribe the entire route over which he desires his shipment to go, and should be fully protected by law in that. Concessions should be made to large shippers only in the Way of drawbacks, under published conditions, similar to what I have sug- gested. These should apply to all shippers coming within the pub- lished Conditions alike. Nothing in any way leaning to favoritism should be tolerated. One of the real abuses of the present railway sys- tem is its unfair favoritism shown to certain persons and firms, which enables them to undersell or overbid others, and in that way grinding out small dealers, making the strong stronger and utterly destroying the Weaker. - - I do not see any good reason for requiring any particular form or uniformity in keeping transportation books or accounts. If the lines are required by law to Supply such information as the commission may call for, with proper penalties for neglect or refusal to do so, they will be able to do it from their own chosen methods of book-keeping. There is no valuable information needed by the commission that every line Cailliot 1:0 W supply if it chooses to do so. - The range of information needed by the Government or its commis- sioners can hardly be indicated with precision in the absence of knowl- 62 INTERSTATE COMMERCE. edge as to what the law may be, but will become apparent as the opera- tion of the law progresses. I do not think it would be wise to particu. larize in the law just what information will be required. I hardly need enter on a discussion of the importance of the Govern- ment’s aiding in developing the fullest capacity of Waterways wherever practicable. These more than anything else tend to cheapen freight rates, and their influence is felt at points far removed from their course. Mr. Albert Fink some time since very truly remarked : . The water routes not only control the tariffs of their immediate railroad competi- tors at points where they can render like service to the same people, but their influ- ence reaches directly and indirectly to the remotest parts of the country. ÖHARLES RIDGELY'S STATEMENT. Stat ment o Oharles Ridgely, of Springfield, Ill., president of the Spring- * - field Iron Company. - º I have the honor to acknowledge the receipt of your circular of April 10, propounding certain inquiries in regard to the matter which it has been given to your committee to investigate, and in reply I have to say that as a Western man I believe that I appreciate the importance to the West that your deliberations in regard to the control of interstate com- merce should lead you to proper conclusions. The underlying question, on which the development of the great grain growing States of the West has altogether depended, has been as to the possibility of sending our surplus products to European markets—a question of long-distance transportation—of commerce, not only between the States, but across the ocean and with foreign nations. To solve this question our reliance was primarily upon nature's Waterways, then also upon the canals, and afterwards upon the railroads, acting in conjunction with the other two. When the railroads were built these States were purely agricultural, and the only need for the roads was to aid in furnishing to that interest its necessary supplies and to carry its products to market. At first all of the supplies in the way of manufactured articles, as well as many articles of food, and large quantities of fuel, were brought from long distances, and mainly either from the Eastern States or from Europe. The population having been purely agricultural the development was wholly of that interest, with the exception of the small number of per- sons and such a limited amount of Căpital as was necessary to serve its needs in the way of transportation and commercial facilities. How well this transportation problem has been Worked out the present condition of the West can tell. - * That it has not borne heavily on the agriculturists the increase in the value of their lands bears witness. It is also notorious that it has not been the good fortune of those who invested their money in railroads to have enriched themselves thereby. All of the States have framed laws to encourage the building of railroads. This encouragement was all of the same kind. It all held out the prospect of large profits to be real- ized. And it is notorious that no money could have been found with which to execute such projects, had it been understood that if they suc- ceeded the promoters of them were to be limited to the legal rate of in- terest on their investments, while if they failed they were to stand their OWI) losses. As it was it was Only Occasionally that a Contractor or a lucky speculator made money. As a rule the roads have been built in INTERSTATE COMMERCE. 63 advance of the needs of the country, and the people who furnished the money with which to build them have lost by it. The roads were not, at first, able to meet their obligations, and they were generally sold under foreclosures of their mortgages, and reorganized before they be- came able to maintain themselves. The later development of the West has proceeded from the movement on the part of its inhabitants to man- ufacture on the spot such articles as are needed to meet the wants of the different communities, and to supply themselves with the various finan- cial facilities which are needed in the transaction of the daily business of the country. The land now being mainly occupied, and in cultiva- tion, the increase of the agricultural population is proceeding at a slower ratio, and it is not surprising that the returns of the last census showed that the urban population of the United States, which in 1790 consti- tuted but 3.3 per cent. of the whole, has increased proportionately with every decade, and that it reached 20.9 per cent. in 1870, and 22% per cent. in 1880. This has occurred in accordance with a natural princi- ple, and a continuance of this same effect, following from the same cause, may be looked for for all time to come. The tendency of the cities to grow may be expected to continue, while the population in the country will increase at a comparatively slow rate. Returns also show that the number of persons returned as actually engaged in the following named occupations in 1870 and 1880 were as follows: Occupation. 1870. 1880. Increaso. Peº' cent. Agriculture.----------------------------------------------------- 5, 922, 471 || 7, 670, 473 29. 51 Professional and personal service. . . . . = * * * * * * * * * * * * * * * * * * * * * * * * * * 2,684, 793 || 4,074, 238 .51. 75 Trade and transportation ---------------...------------------. . . . . 1, 191, 238 | 1,810, 256 51.97 Manufacturing, mechanical, and mining. ------------------...--. 2,707, 421 || 3, 837, 112 41. 72 Total.------.. --------------------------------------------- 12, 505,923 || 17, 392,099 39. 07 Also that in the State of Illinois the number of persons reported as engaged in agriculture is 436,371, against. 563,409 engaged in the other occupations referred to above. Unfortunately the data are liot furnished for a comparison with 1870, in this State. The value of farm products in Illinois for the census year was $203,980,137, while the value of the articles manufactured in the city of Chicago alone for the same year 'as $249,022,948. This result was accomplished by 3,519 concerns, who are credited with a capital of $68,836,835, and employing 79,414 hands. The mileage of all the railroads of the United States at the close of the year 1883 had reached 121,592, and now exceeds 125,000. The roads built up. to 1883 had cost $7,500,000,000, a sum which is equal to one-fifth of the accumulated capital of the whole country; and this takes no account of the amount invested in all of the Various manu- facturing and other concerns that depend for their living on furnish- ing supplies for the operation of the railroads. Six hundred and fifty thousand people are directly engaged in operating the railroads. It can only be conjectured as to how many there are who join in the proprie- torship of the immense sum which represents the cost of the roads, and are to a greater or lesser extent dependent upon the income to be de- rived from the investment year by year. None of the persons repre- Sented by these enormous figures are engaged in agriculture. On the contrary, they are the consumers who require the nine-tenths of the prod. ucts of our agriculture which is consumed at home. The other tenth. goes to fill our quota of the foreign demand. These are the persons who 64 - "NTERSTATE COMMERCE. give that diversity to our industries which, more than anything else, adds to the value of farm products, to the income of the farmer, and to the value of his lands. It is evident that if this be true it is of the utmost importance to the farmer that his large class of consumers should be kept up to the highest condition of consuming capacity, and that if anything happens to distress them in their circumstances the evil effect will be felt by the agricultural community in their inability to take and pay for the produce which they ordinarily consume. All of the differ- eit classes are so bound together in their interests that the prosperity of any one is shared by all of the others, and any calamity or distress to one affects the whole, affects them certainly, and with a rapidity that increases as our relations grow more intimate and Our means of Com- munication improve. • ‘ TEIE RAILROADS AND THE FARMERS. Holding these views, I do not think that there has been in the past, nor is there now, any very great cause of complaint as to the methods of operation of transportation companies in this section of country in so far as the transportation of grain or farm products is concerned. The failroads were mostly built to accommodate this traffic. Their sole re- liance for income has been upon its development, and the result to those investing their money in the roads, as compared with that realized from an investment in lands, shows that the rates have not been unfavorable to the farmers. The railroads first made farming possible in a large portion of this State. They brought the lands into market, brought in the materials for the houses and the fences, as well as the fuel to pro- tect the new settlers from the cold winter winds that sweep across the prairies. They also found a market for the products, and at such a charge that the lands have increased in value near fifty-fold. Now, that the lands are all occupied and the farms established, they are continu- ing their beneficial work by transporting the consumers of this produce from their European homes to our very midst, where their incomes will be doubled and trebled, and where they will not only be that much bet- ter customers for our products, but where they must be customers of ours and not of other nations, our competitors. It has been, and is, a question as to whether we can retain our supremacy in the grain markets of the world, and it must give every thinking personſ satisfaction to see that, no matter how that may turn out, the country is filling up with a population so greatly diversified in its interests and pursuits that we are becoming more and more independent of foreign markets year by year. * I As already said, the interests of all the different classes are bound up together. It is therefore to the interest of the farmer, as well as to that of persons engaged in any of the other occupations, that the railroads should have fairly remlinerative rates for the traffic which they do. This will protect the operatives, as well as the great number of investors who own the capital which is invested in the roads, and all of that large class of business men who furnish supplies to the railroads, from the losses and other bad effects to which they are now subjected from the constantly- recurring railroad wars. It is obvious that these classes do suffer se- verely from this cause. But I am of the opinion that the losses occa- sioned to the general business of the country are no less serious or important. We are just passiug through a period of dullness and de- pression in business which extends to every part of our country and which affects every interest of every kind. There is no doubt but that INTERSTATE COMMERCE. 65 this trouble has been both prolonged and intensified by the struggle between what are called the trunk lines, which probably had its origin in the disturbance caused by the building of the West Shore and Buf. falo Railroad. And this brings me to say that the necessity seems to be urgent that the indiscriminate building of railroads should stop. The country is now for the most part fairly well supplied with railroad facilities. The building of unnecessary roads absorbs capital that can be more usefully employed in other directions. It is inevitably followed by a railroad war; it creates an undue competition, and cripples roads already existing by a division of the traffic, so that the public are not well served by either the old roads or the new ones. It does much to bring on what we have come to call financial panics, and it adds to the general distrust and retards our return to prosperity in times of commercial depression by the disasters which it brings to one or both of the companies involved. Let us by all means have the advantages of competition, but let us be careful, lesſ by having too much of it we so exhaust the competitors that they Wil. be compelled to combine in order that either may live. This is a Ques- tion which belongs more properly, perhaps, to the State legislature than to Congress. But the evil complained of is a crying one and Works more mischief to the people of the West than they know of. I also think that the danger of unjust discrimination just now is much greater in regard to merchandise and manufactured articles coming West than on any other products going east. East-bound products go for the most part to the great market places, and bear a well-known value. The rates of freight are primarily controlled by the water rates, and are very carefully adjusted as between the principal shipping points, so that each shall surely enjoy the trade naturally belonging to it. But with-West bound merchandise or manufactured articles the influences are more insidious, and freight rates can be, and constantly are made, as between different roads, or as between different points on the same road, which control not only the fortunes of individual mer- chants or manufactures but also the location, growth, and prosperity of cities and towns. In this direction I think that there is discrimina- tion that needs correction. - - WEIAT A COMMISSION MIGEIT IOO. As to the best method of preventing extortion or discrimination, I speak with much hesitation, never having been directly engaged in the Operation of any railroad, nor having had in any public capacity to study the Working of laws designed for that purpose. It seems to me, however, that in a matter of so much importance, and which up to this time has been studied by so few persons, and which is consequently so little understood, the United States Government should proceed slowly and with great caution. Less damage to business is likely to occur from doing too little in the way of regulation of interstate commerce than from doing too much. There are doubtless evils to be corrected and rates of transportation have doubtless been made that are based, on false principles; but large investments may have been made, and important undertakings in business assumed, depending upon a con- tinuance of these rates and practices, and it is due to the parties interested that nothing shall be done hastily nor without the fullest investigation nor until the parties interested can be heard, and proper consideration given to the preservation of their interests. 16232 AP—-5 ($6 INTERSTATE COMMERCE. I should think, however, that it would be highly proper for Congress to form a commission to take the whole subject into consideration. This commission might at first require that all railroad companies should report to them all of their tariffs, and all the changes made in them. They could then suggest such changes as seemed to them to be desirable. With the large field which they would constantly have in view, it might be expected that their experience would accumulate rapidly and their suggestions would soon become valuable; and it might be hoped that the railroad companies would appreciate them and in a great measure adopt them. This result has followed under similar circumstances in some of the States. They could also make all tariffs public, require reports from the railroads of any character needed to enable Congress and the people to judge of their condition and their manner of doing business, and report all to Congress, with such recom. mendations as to legislation as their constantly accruing experienge might show to be safe and proper. They might also hear complaints, . as is the case in this State, and, when necessary, bring such matters as may require such treatment to the attention of the United States courts, giving the complainants such assistance, in the way of legal services and in the payment of expenses, as may be found necessary to enable . them to prosecute to final judgment such cases as involve principles of importance to the public. It might be hoped that a commission formed upon these principles, and composed of carefully selected, competent men, might take up this subject and gradually get it under such con- trol as to meet the reasonable requirements of the public, including all the various interests involved; and the railroads themselves, from hav. ing been a little restive at first under the control exercised over them, might be expected to come to appreciate the advantages that would accrue to them from the protection against sudden and violent fluctua- tions in rates, and to co-operate with the commission in perfecting the system. I would not think it advisable to give this commission the right to make the tariffs immediately upon its organization, for fear that no body of men could at once be found sufficiently versed in the ques- tion of interstate commerce to enable them to intelligently deal with so complicated a subject, and to whom a power so great, and touching so many important interests, could at once be intrusted. My own ex- perience, which coincides with that of many other large shippers, was that the first effect of the tariff made by the board of railroad and ware- house commissions in this State was injurious to the interests which I represented, and I have not only had occasion myself to try, but I have also joined others in earnest efforts, more than once, to have the new tariff set aside and the old order of things restored. In reply to your second question, Illave to say that I have no means of accurately judging as to the reasonableness of the rates now charged on local and through traffic; but, so far as I know, there is more com- plaint on inequality of West-bound than on east-bound rates. It seems to me that it should be required by law that publicity should be given to all rates, and that the fewest possible number of changes should be made, so that the utmost stability should be given to the rates. This item of stability is one of the first importance: We may , hope to secure it under the operation of a commission at no very dis- tant day; but, for the present, I would fear to forbid changes without notice, not knowing but that the exigencies of the railroad service, as now conducted, sometimes requires very prompt action. All such changes, however, should be made public as soon as made. - INTERSTATE COMMERCE. 67 THE BASIS OF RATES. The question raised in your fifth interrogatory seems to me to be very difficult to answer, unless we may assume that the rates have in the main already been arranged by the railroad companies in accordance with the practical experience of themselves and their customers, having due regard to all of the elements of cost and other conditions that should have a bearing on the rates to be charged on every kind of traffic. Some classes of freight will stand a higher rate than others, and it Seems as if a larger percentage of the various expenses that go to make up the cost of conducting the business of a railroad company must, almost of necessity, be charged upon certain classes of traffic than upon others. Passengers are charged more in proportion to the cost of trans- porting them than is freight. Light, valuable, bulky articles pay better profit to the carriers than do coal or stone or coarse freights of any kind. The rates on grain may not be more than fairly remunerative when the grain markets are active and the movement is full and strong; yet when the markets are depressed the rates must be lowered or the grain Will not move. The rate on a car bound east may be inordinately low, and yet it may be a matter of necessity, and at the same time good policy, to make a rate only half as great in order to induce the shipment of a car-load of coal or salt or lumber in the empty car on the return trip. I know that there is a flavor of extortion about the prop- osition that even very low rates may be advanced for no other reason than that under changed conditions the traffic will bear it. But dis- guise it how we will, men in all classes of business, and professional men as well, are guided to a certain extent in making their charges by a consideration of what the customer can afford to pay. In some aspects of the case the principle is not correct, but there are exceptions, similar to those which I have noted, in which the parties who pay the highest rates have no cause of complaint, because the money earned from the other parties helps to pay expenses aud makes it possible to give them a rate which would not be possible if the carrier were confined to such a traffic as their own would be. This whole question, however, may be more properly one for the decision of an expert railroad accountant than for me. . - es - - - It would appear to be proper to abolish all rebates and drawbacks, except such as may be necessary to correct errors or something of that kind. The rates should be uniform, open, and public, and should be paid in full once for all, and no drawbacks allowed. As previously stated, I believe that the best interests of all will be promoted by fair and reasonably remunerative, and at the same time stable, rates. If the danger of extortion can be guarded against by the commission, backed up lºy the United States courts, either with or with: out further legislation, I think that the pools should be legalized, as an aid to the railroads to secure their maintenance, and that the railroads should then be given an opportunity to arrange the rates with their customers. If they fail, after a fair trial, it will then be time for the Government to interfere. Business men generally prefer to manage their affairs in their own way, and without governmental aid or interfer- ence; and I would much prefer to see them have a fair chance to settle this question among themselves than to attempt to control it by law. In my judgment it should be the duty of Congress, as well as of the State legislatures, to pass laws for the prevention of fraud and imposi- tion, and not to hamper the people unnecessarily in the transaction of their daily business. It may be assumed that the persons engaged in 68 * INTERSTATE commHRCE. business approach the questions involved in their daily experiences with more or less preparation of a kind to fit them to deal with them; and it may also be assumed that they will understand the interests which they have under constant consideration better than can any set of legis- lators who hold for the most part biennial sessions, and who have not generally had the kind of experience calculated to enable them to fully comprehend the questions involved. In business matters I am decid- edly of the opinion that the best government is that which governs least. Shippers, in my judgment, should have the right to select the routes in full over which their consignments shall go. In answer to your ninth question, it is hard to say by what system a uniform system of rates can be best secured. But it might be hoped that such a system would gradually grow out of the Workings of the commission heretofore referred to. • - I also think that the matter of charging proportionally more for a short than for a long haul might, for the present at least, be left to the railroads, subject to such influences as the commissioners might be ex- pected to bring to bear upon them. The interests of this section of country are on the long-haul side. The railroads have during the past year been engaged in an effort to carry a very large crop of cereals from this country to a foreign market, which has been lower than for a century past. To do this would naturally require very low rates. It can be conceived that it would not be possible to give to a miller at Rochester, Or Albany, or Poughkeepsie, for instance, the same rates per ton per mile on flour as to one at Minneapolis; and yet that the rates to each could be made more favorable because of the business of the other. The rates to the local millers may be no more than reasonable, and yet the Inecessities of the case may require that the through flour shall be car- ried at a proportionately less rate, or not at all. The through freight swells the volume of business, consequently it lessens the cost at which it can be done; and it makes a lower rate possible on the local busi- ness than could otherwise be made. If this matter is arranged in this Way it should also be borne in mind that the commission can always be depended on for a remedy for extortion if that be attempted. It does not seem as if any concessions should be made to large shippers over smaller ones, except such as legitimately ensue from the less cost of handling, &c. These concessions should be made public and alike to all. * Neither does it seem important that all corporations engaged in in- terstate commerce should keep an uniform system of accounts. They should be required to make an uniform set of reports to the Commission and to keep their books as their several interests may require. TEIE INFLUENCE OF THIE WATER, RO UTES. I do not think that too much emphasis can be given to the impor- tance of developing and maintaining a system of water routes for the transportation of freight in the West. All of the freight rates in this section of country have always been controlled primarily by the rates on the Great Lakes and the Mississippi ttiver. The influence of these great Waterways in fixing rates has been as beneficial as it has been can- stant. A similar influence has been exerted by the Canals, and this can be extended and increased by the opening of new canals in such directions as will bring large and important scopes of territory under their influence. The cost of such improvements would come back to the people many times over, in the reduced rates of freight which they would secure, even if all of the freight went, as now, by rail, and the Canals Were unused. - - INTERSTATE COMMERCE. 69 THE TOLEDO PRODUCE EXCELANGE. Statement submitted by the Toledo Produce Eachange, Toledo, Ohio, by 4 - Denison B. Smith, secretary. . RECKLESS RAILWAY BUILDING. Methods of easy and economical transport of the products of the soil and of manufactures are the basis and bulwark of the prosperity and growth of any nation. That maxim can be applied to Our country with singular justice. The necessities of our widely extended domain have stimulated the enterprise of our people in the line of railroad building, not only greatly beyond historical precedents, but beyond the just bounds of the requirements of the country, of prudence, safety, and profit. We have continued to build roads until this interest has over. loaded itself. The manufacturing of railways for sale, at large profits, has beretofore presented captivating allurements, and this industry, like other manufacturing interests, has undoubtedly been pushed more rap- idly than the growth of the traffic that supports them. Projects involv- ing immense sums, and in sections of the country already provided with adequate facilities, have attracted capital and have been completed. Lines of railways, fully capable of moving the business to be done, have been paralleled with new roads, until to-day this great and valuable investment has become top-heavy, unwieldy, and untmanageable by those who are appointed to that trust, and thus the expected result of excess- ive enterprise in railway building is before the country. While we fully recognize that the managers of railways are among our brightest and most capable business men, We believe this interest has assumed such proportions as to place it beyond their control, and therefore beyond the possibility of such just and equitable administration of its affairs as doubtless animates the minds of these managers. Pools are now no protection to stockholders or shippers. Under each pooling agreement of the past year or more, effected by a desire on the part of leading managers to preserve the property from loss, and the public from un- certainty and unfairness, it has been found that too many lines are under the control of men whose agents cannot be restrained from break- ing faith, by cutting the rates, and of course disrupting the agreement. If managers disapprove of these irregularities it is not often illustrated by dismissal of the agents. Under any system of penalties that we have heard of, the temptation to reduce a rate of freight that has been agreed upon is frequently too great for the restraining power of any agent, from the chief to the subordinate. * FAST FREIGHT LINES. However much the managers of railways and the public may desire to maintain fair and uniform rates of freight, there is another feature in, the present System of railways which seems to us to load down and cripple their attempts in that line. We refer to the great number of So-called express lines, and their multiplied agencies, engaged at all leading points in a contest for the Saume freight to go over the same trunk line of road. Independent of this adverse influence on freight rates is the economic consideration. Each of these organizations is equipped with its full list of officers, from manager to the subordinate agent, Scattered over the West. Of course this great additional expense 70 - INTERSTATE COMMERCE. *. must be charged upon the freight transported. There is no good and valid reason why more than one agent is required in Toledo, or any other leading shipping point, for engaging freight for the New York Central, the Erie, or other trunk lines. Of course, the effect of increased competition is to enhance the chances of a broken compact, and the probability of ascertaining how the break was accomplished diminishes in the ratio of the number engaged in it. - . -- LOW RATES ON I.ONG HAULS. But the most conspicuous and oppressive injustice in the management of railways is signalized by the flexible and frequently ruinous rates at which the products of the country are transported on what is called the long haul or through business, from points like Saint Louis, Kansas City, and west, while from points on their line of road is maintained a rate -three or four times as great. We will content ourselves with one or two examples. Large quantities of freight have been transported this winter and spring from Saint Louis to New York at 15 cents per 100 pounds, or about one-fourth of 1 cent per mile, while the local rates on one of the lines engaged in this reckless traffic, say from Illinois to Toledo, average 20 cents per 100 pounds. It is well known that every road engaged in the movement of the products of the country at such a price makes an actual loss, and every manager who permits it is guilty of a flagrant violation of his obligation to the stock or bond holders of his road. Whence comes the right to the exer- cise of this high-handed arbitrary power % What right has any railway management so to discriminate against his own stations, and the value of their products, and the trading towns that have grown up on their line, and deflect trade from its natural channels? Most of these traders desire a near-by market and quicker results for small transactions, and any management that interposes obstacles to that freedom of choice, in the way we have here suggested, is a usurper of power never delegated or contemplated in the chartered franchises of his road. LOCAL DISCRIMINATIONS. The Lake Shore Railway Company have a local tariff from Michigan and Northern Indiana stations to Toledo and Detroit, while, from the same points, on commodities going east of Toledo and Detroit the rate charged is much less per 100 pounds. In illustration, we state that from a large number of stations on their roads, where the local rate on grain to Toledo and Detroit is 10 gents per 100 pounds, it is 4 cents per 100 pounds to those cities on grain going east of them. Such instances are simply indications of the drift of railway management in the West. These unfair and aggressive discriminations are the true index to the cause of the natural appeal of the country to the State and Congress for measures of relief, and which ought not to be disregarded. SOME OF THE RESULTS OF POOLING. In the foregoing observations we have apparently deprecated reduc- tions in rates. The great business interests of this country are conserved and prospered by an approximation to uniformity in the cost of its inter- nal and national commerce, based upon fair rates and fairly adjusted. Frequent and violent fluctuation in the cost of transportation, which enters so largely into the cost of all commodities, is in the last degree INTERSTATE COMMERCE: - 71 unequal in its results, unsettling in its relation to values, and exasper- alting to those who are caught by a sudden change. The management of the railways of the country, by pooling on a fair basis of rates, is doubtless greatly to be preferred to ruinous and destructive manage- ment without it. The interests of other branches of trade and com- merce are not to be promoted by destroying or rendering profitless the railway investments of the country, and the prosperity of thousands who are not railway managers would be touched by such a result; but the past has demonstrated that no such agreement is sufficient to re- strain the great diversity of interests now concerned from violations of pledged faith, even if such contracts had the sanction of law. Under frequent agreements for pooling in the past year and one-fourth, let us look at some of the results to the roads. The Railway Age says: “In the year 1884 thirty-seven roads, operating 11,000 miles of line, were bankrupted and placed in receivers’ hands, with an aggregate of bonds and stock of $715,000,000. In the first quarter of the present year twenty corporations have been given over by the courts to re- ceivers, with aggregate bonds and stock of $275,289,000. The aggre- gate is about $1,000,000,000 in fifteen months. These are not the re- sults of decreased tonnage. The tonnage carried by the railways from Chicago during the first quarter of this year exceeded any similar period in railroad history. The loss then was occasioned by a contest and rivalry amongst the multiplicity of agents, as unnecessary as it was destructive.” - - : - The Railroad Gazette says: “The enormous tonnage transported in March, 366,517 tons, from Chicago eastward, shows a capacity for trans- porting at a rate of 4,400,000 tons yearly, while the largest shipments ever yet made in any entire year have been about 3,150,000 tons. Hence it appears that the capacity of the roads is at all events ful'sſ 1,250,000 tons in excess of the business done in any year thus far. Nor is it at all probable that the roads transported to their full capacity even in March last. It will require years of growth and of very rapid development in the business of the country in all its branches to supply a sufficient traffic to make all lines profitable which are now in opera- tion.” * TEIE DUTY OF CONGRESS. Without the aid of pooling contracts the tendency is so to depress rates of freight and travel as to endanger the wrecking of the whole system of railways, and in our judgment the time has arrived when Congress should assume its undoubted right and duty to the whole country, to supervise the Whole system of transportation in this coun- try. There is no other one interest directly involving such enormous sums of money. There is no other interest of such consequent results, by good or maladministration, upon the business and prosperity of the country, whether considered in relation to its stock or bonds, or to the general Welfare of the whole business of the country. This plain duty of Congress has been deferred too long already, and should be assumed without delay. - We beg to state to your committee that the foregoing observations are free from animosity to the great railway interest of the country. The interests of this exchange are closely interlocked with transporta- tion facilities, but we sincerely believe that an equitable, fair, and steady management of freight rates, which all interests require and demand, cannot be expected without the interposition of Congress in the method We shall refer to in our reply to your inquiries. - 72 INTERSTATE COMMERCE. " In replying, categorically, to your several inquiries, we have to say: (1) We know of no other method of preventing extortion and unjust discrimination except the one we have pointed out, viz, Congressional Control. - - Af ºw (2) The rates now charged on all through business from the West to the East are very low, while the local rates are unchanged. These local rates, from all points in Ohio, Michigan, Indiana, Illinois, &c., are ad- justed on a basis too high, when compared with any pool rate on through business established within the past year. t PUBLICITY OF RATES, - (3) We believe publicity of rates should be required by law and a change prohibited without public notice, and contracts for the future absolutely prohibited under any circumstances. Large contracts are frequently claimed to exist between railways and shippers, when rates are advanced, under which shipments continue to be made at rates far below what is charged to others. A significant point, well worthy of notice, is that such contracts are unknown on a reduction of rates. (4) A system of rates for winter should form the basis of a maximum, and from April 15 to November 15 a minumum, with modifications as in lmext inquiry. * (5) The element of value of agricultural products should, in our judg- ment, have a bearing on rates of transportation. There is a degree of fairness in the principle that higher values justify a more generous rate of freight, and it is sanctioned by the principle of participation in gen- eral prosperity; and, on the other hand, depressed values dictate a pol- icy of sharing the depression with the producer. R.E.BATES AND POOLING CONTRACTS. (6) We can imagine no conditions or circumstances in transporting the products of the country that would justify a railway Company to pay a rebate from a uniform price of freight agreed upon. If it is practiced On a lot of one thousand cars, another could justly claim it on one hun. dred cars, and the result would be irregularity and unfairness to the greatest number, who are smaller shippers. - (7) We should not oppose pooling agreements, the result of which wa steady, uniform, and fairly-adjusted rates, maintained without sudden breaks, and without rebates, as an alternative to uncertainty, irregu- larity, and ruinous rates without pooling. We sincerely deprecate the loss to this great interest which the present competitive contest is sure to result in. Under no circumstances can a pool contract be justified that does not so reach and touch the local rates on the different lines of road as to make an approximate correspondence between them and the rate through. But our impression is that the time has passed for expecting any further permanent agreement by pooling on a stable and fair basis, and which recognizes the principles we advocate in this paper; and any agreement that ignores them is but a continuation of oppressive discrimination. In our reply to interrogatory No. 15 we indicate a fuller reply to this question. - (8) We suppose the laws of our country give to every shipper the right to designate the route of his consignment. If any law is required to re- strain railways from otherwise diverting such consignments it should be passed. z' - (9) Iły a commission appointed for that purpose by the Congress of the United States. INTERSTATE COMMERCE. 73 THE EFFECT OF LOW RATES FOR LONG HAULs. (10) Undoubtedly railways can afford to transport for long distances at a less rate than for short hauls. But what is a long distance in this connection is a question to be decided by an intelligent commission. Taking Kansas City or Minneapolis as a base there is no reason for a lower rate per mile to the sea-board than to the lake ports, and any sys- tem that proceeds on a different theory cannot be defended. A power that can be used to destroy the business interests of one city to enrich and build up another is simply a detestable oligarchy, which every American citizen desires to, but as no power to, resist. To transport the flour of Minneapolis to New York at a less rate than from Chicago, or points nearer the sea-board, is to use the combined power of corpora- tions to oppress the people who have given them their franchises, and to build up one city and destroy another. These great transportation routes were not created for such purposes, and should be restrained from exercising such power. ; WATER ROUTES AS REGULATORS OF RATEs. (14) The great water routes of this country, which are being improved yearly by the General Government, and on which transportation is thereby cheapened, are nature’s highway for the great agricultural country West and Northwest. It has been heretofore, and must con- tinue to be, the great regulator of rates of transport of the heavy com- modities passing east and West. Without this potential and con- servative element rates of freight would at once be enhanced and Western values depreciated. By a free water navigation of 1,000 miles grain is transported at 6 cents per bushel, and against that no railway can compete. And yet there is no antagonism between the railways and the water. The grain products of the country, lumber, timber, staves, and coal, seek the Water in the season of navigation, while flour, provisions, live stock, and the great and growing variety of other prod- ucts seek the rail, and under fair rates of freight the railways have prospered during that period as highly as in any other. The necessity of this water transportation is more directly realized in the very active competition that now exists between the agriculturists of this country and those of India, Australia, Russia, &c. In supplying the wants, of the importing states of the Old World and in this contest every one- fourth of a cent per bushel Counts. - - A COMMISSION ADVOCATED. (15) We believe the only good and reliable method of regulating inter- state commerce in this country is by the establishment of a transporta- tion or railway bureau, with a commission of a suitable number of competent and experienced gentlemen, with power to regulate and establish systems of railway rates and travel throughout the country. Before this commission complaints should be made, or to its individual members, and these commissioners should have the power to compel the railways to deal fairly by shippers. No individual shipper can con- test a case with a railroad company without being confronted with a final decision in the United States court at Washington, and any city or trading point would, of course, expect the same delay and result. A commission to hear complaints and employ the power of the Govern- ment to prosecute such as are reasonable is the salient feature to be embodied in any bill for the protection of the rights of shippers. The 74 - INTERSTATE COMMERCE. labor of adopting a just system of rates, as before referred to, may be less difficult than it seems. The various pools that have been formed have made that work more easy of accomplishment, and from their own voluntary agreements a suitable, fair, and doubtless acceptable basis can be ascertained. Without such control, and Without such a basis, regulated by the power of the General Goverement, we may justly anticipate the bankruptcy and demoralization of the great railway in- terests of this country. - SIDNEY D. MAXWELL’s STATEMENT. Statement of Sidney D. Maawell, superintendent of the Cincinnati Cham- - - ber of Commerce. The questions fouching transportation which the committee have designated for answer are so broad, involve so many interests, and rep- resent so much difference of opinion among men equally well informed, that I am not disposed to answer them, in any sense, for the Cincinnati Chamber of Commerce. Whatever reply I may make will be the ex- pression of a personal opinion and nothing more. . - As to the propriety of corporations engaged in interstate commerce being permitted to charge a lower proportionate rate for a long than for a short baul, it seems to me there is room for little difference of opinion. The charge for the performanée of any work should, in general, be predicated on the cost of the service performed, and inasmuch as the cost to the railroad company for a long haul is proportionately less than for a short one, the conclusion appears inevitable that the railroad company should, at least within certain limits, be permitted to charge a less proportionate rate for the former. Touching the importance of the Government maintaining a system of water routes for the purpose of securing cheap transportation, I believe it to be the duty of the Government to foster, to the fullest ex- tent, a system of water routes. Without entering into a discussion of the particular manner in which it is to be secured, I may add that there is no outlay that the Government may make on the Ohio and Missis- sippi Rivers and their navigable tributaries, which may be necessary to maintain their present usefulness for navigation, or to improve the same, that will not be money economically expended. While by combi- nations the competitive influence of water routes may at times be neu- tralized, they can never be permanently destroyed, and must always serve as a Wholesome protection against railway extortion. Relative to the manner in which legislation for the regulation of in- terstate commerce can be best enforced, it occurs to me that it will be useless to legislate unless some agency be specially established to see that the laws are enforced and that the rights of corporations and in- dividuals are alike protected. wº As to the matter of rebates and drawbacks, pooling contracts and agreements between railroads, &c., this opens such a wide door for consideration that I hesitate in a brief reply like this to enter upon their discussion. I may remark, however, in general terms, that there are two or three things which have more and more impressed them. selves on my mind in connection with these matters touching trans- portation. One is that, in the midst of the operation of all these processes to which you allude, we have witnessed, if not a steady, a INTERSTATE COMMERCE. . 75 general reduction in the cost of the transportation of the commodities of the country where the observation is made through a period of con- . siderable duration. This is so much the case that it seems impossible to imagine what could be done with the surplus products of the coun- try at present if we were compelled to rely upon the rates which were charged in the earlier years of railroading. Again, in the period em- braced by these various methods devised by railroad management, the country has developed with surprising rapidity and its wealth has been immensely increased. Furthermore, on general principles, the inter- ference by legislation with the perfect freedom of movement among the various agencies employed in conducting the commercial affairs of the country, alike with individuals, is subject to the constant danger of in- flicting larger injuries than it relieves; of making it more expensive to transact the business of the country by complicating the agencies em- ployed for its performance, and by opening the door for excesses under the cover of the law which would find no defense in the absence of gov- ernmental interference. I do not lay down these general propositions as reflecting necessarily my opinion in regard to the specific inquiries re- lating to drawbacks, pooling, &c., named in your circular, but as indi- cating, in a measure, the breadth of the questions involved and the necessity which is imposed on the legislators of the country to proceed with caution in a matter where interests of such gravity are involved. 2 PITTSBURGH CHAMBER OF COMMERCE. Following is the response to the circular of the committee prepared by the Committee on Transportation and Railroads of the Chamber of Commerce of Pittsburgh, Pa., and adopted as expressing the views of the chamber : - (1) The best method of preventing the practice of extortion and unjust discrimina- tion by corporations engaged in interstate commerce. The best method of preventing Such practice would be in legislation on the subject, to provide means for the discovery and proof of extor- tion and unjust discrimination, and to provide adequate penalties. (2) The reasonableness of the rates now charged by such corporations for local and through traffic. - - No rates of freight can be considered as fixed, but rather are con- stantly changing. The so-called “through rates” are determined largely by competition between the different carrying corporations, and may be allowed to be so determined, but there should be provision in the legislation whereby the so-called local charges should be propor- tionately adjusted to the through rates. (3) Whether publicity of rates should be required by law; whether changes of rates without public notice should be prohibited, and the best method of securing uniformity and stability of rates. Publication of rates is not absolutely necessary, and would involve expensive and Cumbrous preparation to make them public, but rates should be always accessible to interested shippers. (4) The advisability of establishing a system of maximum and minimum rates for the transportation of interstate commerce. It is not necessary to establish by legislation any rates for transpor. tation. (See answer to No. 2.) - 76 * INTERSTATE COMMERCE . (5) The elements of cost, the conditions of business, and the other factors that should be considered in fixing the tariffs on interstate traffic. In view of the second and fourth questions and answers, above Con- siderations are unnecessary. -- - * (6) Should any system of rebates and drawbacks be allowed ? If so, should such transactions be regulated by law, and be subject to official inspection or approval? Or should they be entirely prohibited ? --- The system of rebates and drawbacks is notoriously associated with unjust discrimination, and should not be allowed or countenanced b legislation, and should be positively prohibited. - (7) Should pooling contracts and agreements between railroads doing an interstate business be permitted, or should they be entirely prohibited by law # If they should be regulated by law, would it be sufficient to require the terms of such agreements to be made public and subject to official approval? - Such contracts and agreements should be positively prohibited. (8) Should provision be made by law for securing to shippers the right to select the lines and parts of lines over which their shipments shall be transported ? Most assuredly shippers should have the right to select any one of Several common Carriers. - - (9) By what method can a uniform system of rates for the transportation of passen- gers and freights by all the corporations engaged in interstate commerce be best se cured ? - - - The same principle applies here as stated in second answer, viz, the Securing of fair relations between charges for shorter and longer dis- tan CeS. . - (10) Should corporations engaged in interstate commerce be permitted to charge a lower proportionate rate for a long than for a short haul ? Does the public interest require any legislation on that subject 3 - This question opens up the general subject of long and short hauls and the charges therefor, and the discussion might prove too extensive for an ordinary report; but as a general principle, subject to certain limitations, charges should be proportionate to distance and the public interest would be subserved by appropriate legislation. (11) Should any concession in rates be allowed to large shippers except such as represent the actual difference in the expense of handling large shipments over small Shipments, and should such concessions be made known to the public 3 In view of the danger to the public consequent upon any system of concessions which may be liable to abuse, it would be better possibly to refuse all concessions, but the one suggested seems reasonable and might be permitted, if strictly guarded, and the basis of such concession should be made known to the public. (12) Should corporations engaged in interstate commerce be required to adopt a uniform system of accounts? - The Government should adopt a uniform system, including similar reports from all transportation companies, rather than require the adoption of any system of accounts. (13) Is it desirable that such corporations should be required to make annual re- ports to the Government? If so, what information as to their earnings, expenses, and operations should such reports contain } - 3. Yes, or oftener than annually, as the experience of the Government. may suggest—the reports bearing upon such points as affect the gen- eral public—but not necessarily the details of earnings, expenses, &c., which affect their stockholders only. INTERSTATE COMMERCE. 77 (14) In Imaking provision for Securing cleap transportation, is it or is it not impor- tant that the Government should develope and maintain a system of water routes ? It is decidedly important that the Government should. (15) In what manner can legislation for the regulation of interstate commerce be best enforced? Should a commission or other special tribunal be established to carry out the provisions of any law Congress may enact 3 . - There should be established a special interstate-commerce bureau in connection with one of the present Departments of the Government. FRANK S. BOND'S STATEMENT. Statement of Frank S. Bond, of Cincinnati, Ohio, president of the Cincin- nati, New Orleans and Texas Pacific Railway Company, with the pro- wisions of a bill proposed by him. In response to interrogatories of the committee, communicated by circular dated April 10, 1885, I beg to submit the following: ANSWERS TO THE COMMITTEE'S INTERROGATORIES. (1) The best method of preventing the practice of extortion and un- just discrimination by corporations engaged in interstate commerce, is by bringing all such corporations under the common-carrier laws of the TJnited States and enforcing those laws through the Federal courts; such enforcement to be had by suit in name of the United States, on complaint of any person injured, to be brought by a United States dis- trict attorney, whenever an injury is done and the law is violated by any interstate railway Company. - (2) The rates now charged by such corporations for local and through traffic are subject to frequent fluctuations; at times they are unreason- ably high, and then again as unreasonably low—below actual cost of the service. Fluctuations of this character are injurious to the public, as they unsettle Values, and have all the evil effects of discrimination against localities and individual shippers. Legislation that will secure reasonable and uniform rates is What is needed. . (3) I think publicity of rates should be required by law, but the carry- ing companies should not be prohibited from changing such rates when necessary to meet competition via Water routes, or from any other proper cause, without other public notice than posting such changes in a public place in their station buildings. I believe the best method of securing uniformity and stability of rates will be by Congressional legislation that will make the common-carrier laws, and their enforcement through the Federal courts, applicable to interstate traffic, supplemented by cor- responding State legislation (which will naturally follow), applicable to domestic or State traffic; and in this way only is it possible to secure uniformity of legislation for all the States. (4) I do not think it advisable to establish a system of maximum and minimum rates on interstate commerce, as maximum rates are hardly ever charged, and minimum rates should as rarely be reached under a prudent and conservative management. Competition, and the value or Worth of the transportation to shippers, will sufficiently regulate rates if violent fluctuations can be avoided. . - (5) In fixing tariff rates for interstate traffic, the value or worth of 78 INTERSTATE COMMERCE. the transportation to the shipper and the conditions of business, are the principal factors that should be considered. The cost, or assumed cost, of such transportation to the railroad company should not be considered, for it must necessarily vary materially at different seasons of the year, and can never be definitely determined, liable as it is to fluctuations from changes in the volume and character of the business done, from unusual expenses caused by accident to trains, and by losses from flood, fire, or other action of the elements. *. (6) Rebates and drawbacks are not necessarily improper in them- selves, and they should not be restricted other than by the common-law rule, that all shippers situated alike must be treated alike. To prohibit them by law would be a restriction upon commerce that, in my opinion, would result in injury to the trade and commerce of the country. (7) Pooling contracts and agreements are simply a federation of roads, or systems of roads, for the purpose of măintaining reasonable and uniform rates, and avoiding sudden fluctuations from unreasonable competition. They answer the same purpose that boards of trade and chambers of Commerce do among merchants, by regulating the manner in which business for the public shall be done, and in defining and maintaining the rights of the different companies in respect to competi- tive traffic. There is no necessity for regulating snch organizations by special laws, for the reason that it is impossible to keep any action they may take from being publicly known. By bringing the companies under the common-carrier laws of the country, any improper use or abuse of their powers under such a federation of the roads will be effect- ually controlled, as the enforcement of such laws through the Federal courts on complaint of parties injured, by suits brought by local district attorneys in name of the United States, will amply protect the public from injury. • * (8) I do not think any special law necessary for securing to shippers the right to select the lines and parts of lines over which their ship- ments shall be transported. If a route other than that designated is: taken, and any injury results to the shipper, he is amply protected under the common-carrier laws. He has a right to demand that his shipments shall be safely and promptly transported to destination, and he has his redress under the bill of lading in all cases of injury from violations of his contract. . * ... • (9) I believe the best and only practical method for securing a uni- form system of rates for transportation of passengers and freight is by making all corporations engaged in interstate transportation, subject to the common-carrier laws of the United States, and by providing for the prompt enforcement of such laws through the Federal courts, on complaint of any person injured. It should be the duty of the United States district attorney to investigate every such complaint, and if, in his opinion, injustice has been done and the law violated, on refusal of the company to correct the evil he should at once commence a suit in the name of the United States against such offending corporation for violation of the law, and for damages to the party injured—such suits to have precedence in the courts. • (10) Corporations engaged in interstate commerce should, in my opinion, be permiſted to charge a lower proportionate rate for a long haul than for a short one. Were this prevented by law it would be impossible to move the agricultural products of the Western and West Mississippi States over our long lines of railway transportation to the Gulf and to the seaboard. If the rate for the short haul is not un- reasonable in itself, and if there is no unjust discrimination against a INTERSTATE COMMERCE. 79 tect the public. locality or an individual, no injustice is done by such a difference in the rates. In cases of injustice, or where injustice is claimed, an en- forcement of the common-carrier laws through the Federal courts will amply protect both shippers and localities. I do not believe that any special legislation is required in this respect, as the effect of such legis- lation must inevitably act as a restriction upon commerce. • (11) A concession in rates to large shippers does not necessarily work injustice to shippers of Smaller lots. A rigid and unvarying rule would work injury both to shippers, to localities, and to transportation companies. A simple enforcement of the common-law rule, that all who are situated alike must be treated alike, is all that is necessary to pro- (12) I think railway corporations engaged in interstate commerce should be required to adopt a uniform system of accounts. (13) I believe it is desirable that such railway corporations should be required to make both quarterly and annual reports to the Government, showing in detail (on blanks of uniform character to be furnished by the Government) the cost of the road and current charges against cap. ital, the earnings, expenses, and current operations of each separate Corporate property; these reports to be so prepared that comparisons can be made. This would be of great value to the Government, to the public, and to all owners in such properties; and it would furnish the best practical test of the manner in which the different properties are handled by their managers. - - -- - (14) I do not think it necessary that the Government should develop and maintain any special system of water routes for securing cheap transportation, The water routes now in existence, reaching as they do every important distributing center, are ample to protect the public from excessive charges by the railroad companies. - - (15) In reply to your interrogatory as to the manner in which legis- lation for regulating interstate commerce can be best enforced—whether a commission or other special tribunal shall be established to carry out the provisions of any law that Congress may enact—I have only to say that I do not think a commission desirable or necessary, as I do not think it would be possible for any commission to satisfactorily accom- plish such a purpose in connection with the 120,552 miles of railway that would necessarily be subject to such a law. A PLAN OF REGULATION SUGGESTED. I believe the best and only practical way of regulating interstate commerce is by bringing all interstate railways under the very compre- hensive common-carrier laws of the country, that are the result of the wisdom and experience of centuries, and providing for the enforcement of such laws on complaint of parties injured, by suit in name of the United States, to be brought by the local district attorneys in the Fed- eral courts; and, in order that prompt redress shall be had, such suits to have precedence on the calendar. As all railway corporations are Creatures of State or Congressional legislation, I think it a duty of the Government to protect the public from all abuse of their powers, free of cost to the parties injured. For the purpose of more fully explaining to the committee the char- acter of legislation required under such a plan as I have suggested, the following paper on “interstate commerce and its regulation by Con- gress” is submitted, in which is outlined the substance of a bill that, when put into proper shape to be passed by Congress, will, I believe, 80 * - INTERSTATE COMMERCE. furnish a basis upon which to construct a Comprehensive system of in- telligent legislation in respect to the railways of the country in the interest of interstate commerce—a system that will secure uniformity of legislation in all the States, that will fully protect the rights of the Government, and that will secure prompt redress in all cases of injury or injustice to individuals or localities arising from abuse of corporate powers, by simply availing of existing iaws and existing tribunals that, if only enforced and made use of, are ample for the purpose. - INTERSTATE COMMERCE AND ITS REGULATION BY CONGRESS. Beyond all question the transportation of freight, 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 Consti- tution, when to Congress was committed the power to regulate commerce among the several States. (Supreme Court, P. & R. R. R., vs. Pennsylvania, December term, 1872. 15 Wallace, 232.) ſº There is an almost universal feeling throughout the country that rail- way corporations and transportation lines need regulating; that the public is so dependent upon them for its transportation that any mis- management or abuse of their corporate powers becomes a public evil; that, as all such properties and the corporations controlling them have been created by and derive their powers from the Government, it is a duty of the Government to protect the public from extortionate charges, unjust discriminations, and unreasonable exactions of every kind on the part of such companies. The owners and managers of railways, the merchants, manufacturers, and others who use them, and the law-makers who are responsible for their existence, while admitting that something should be done, are neither able to agree among themselves nor with each other as to the character of legislation required. Some favor a commission to act as a kind of advisory board; others would invest a commission with plenary powers to investigate and determine all mat- ters of difference between the public and the corporations; others, like Mr. Reagan, of Texas, would enact a rigid and stringent law as to the rates and changes in rates to be charged for the different classes of traffic, and for otherwise controlling by an inflexible law the trade and commerce of the country and the manner in which the business and operation of railways shall be carried on ; others do not think any leg- islation is required, but, that competition will in time correct all evils, and that in the mean time matters should be left to adjust themselves. Any legislation in the direction indicated should be well considered, as it must affect nearly $7,500,000,000 of capital represented by 120,552 miles of railroad that produce a yearly revenue of nearly $824,000,000. As this enormous interest has an individual ownership and pays its full proportion of State, county, and municipal taxes, it is entitled to like protection from the Government as other property owned by citizens in the several States. All attempts at legislation by Congress seem to have been in the direction of controlling the railways, instead of regu- lating them as authorized by the Constitution. It is possible to regu- late the waters of the Mississippi River by a proper system of jetties, levees, dikes, and revetment works, and a vast amount of good can be done by keeping its waters in natural channels; but an attempt in any other way to control the force of the current or the volume of water seeking the Gulf must result in signal failure, It is equally impracti-" ble for Congress to control the trade and commerce of the country by rigid and arbitrary laws designed to obstruct or limit the free and un- INTERSTATE COMMERCE. 81. restricted use of one of the most important constituents of commerce, the 120,552 miles of transportation lines that cover our broad extent of territory, reaching from the Atlantic Ocean to the Pacific, and from Canada to the Gulf of Mexico. * s - - The existing laws relating to common carriers embody the wisdom and experience of many generations. They have been but little changed in many years, only to such extent as has been found neces- sary to adapt them to our later civilization, and they are based upon , a recognized principle of justice, applicable alike to localities and to individual shippers, that all who are situated alike must be treated alike. The simple enforcement of these laws through the Federal courts will, it is believed, amply protect every citizen and every locality from unjust discriminations and unreasonable exactions of every kind on the part of railway companies and transportation lines, and but little legisla- tion is needed to bring all such corporations subject to these laws to the fullest extent. - - - * PROVISIONS OF TEIE PROPOSED L.A.W. It is only necessary for Congress to pass “an act regulating com- merce with foreign nations, among the several States, and with the In- dian tribes.” The essential provisions of such a law would be to enact and declare— --- . . . (1) That “interstate commerce " is the commerce, trade, or traffic, that originating in one State or Territory is carried therefrom into, or through, one or more other States or Territories. That “State commerce’’ is the domestic trade, or traffic, that originating in any one State or Territory is confined within the territorial limits of the same State or Territory. - (2) That all lines of railway, including boats, bridges, and ferries, operated in connection there with, that are open to interstate business, or over which interstate traffic shall pass, are interstate railway lines; that they shall be open highways, military and post-roads, and common carrier lines; and that they shall, together with all corporations, associations, and individuals owning, controlling, or operating the same, be subject to the provisions of this act, and of all acts relating to high- ways, post-roads, and common carriers. - - -- . (3) That all interstate traffic shall be shipped and forwarded to destination without unreasonable delay, and as nearly as practicable in the order of its delivery to the proper agent of the transportation company. That the president, directors, and other officers of every corporation or other organization owning, controlling, or operating an interstate railway line, and all managers, superintendents, agents, enginemen, trainmen, and other employés on such lines, shall, so far as their duty and power lies, be responsible personally and officially for the prompt shipment of traffic offered, that the rates charged are just and equitable, for the prompt movement of trains carrying interstate traffic, or the United States mails, and for the protection and safe delivery at destination of all such trains and property in their charge or keeping ; and any person or persons who shall willfully obstruct or delay the movements of such trains, or if an officer, agent, trainman, or other employé in charge be shall desert such train en route, or refuse to take it through to its destination, he or they shall be guilty of a misdemeanor, and, on conviction, shall be subject to the penalties therefor, and in addition shall be liable for both actual and exemplary damages. (4) That fair and reasonable rates shall be established for the transportation of interstate passengers and freight over such lines, and through tickets and bills of lading may be issued to cover such business; and joint through tariffs shall be pub- lished for the information of shippers and other parties interested; but such through rates shall not exceed the sum of the local rates charged by the several companies for a like haul of State or domestic traffic on their several lines. That extortionate charges, and unjust and unreasonable discriminations, by rebate or otherwise, against localities or individuals, are absolutely prohibited; and what shall constitute an extortionate charge, or unjust or unreasonable discrimination; shall be determined after hearing by any United States district or circuit court having jurisdiction, as hereinafter provided. - (5) That if any such interstate railway corporation or organization shall make extortionate charges for the transportation of interstate traffic, or if it shall make unreasonable or unjust discriminations against individuals or localities, the party or 16232 AP 6 82 - INTERSTATE COMMERCE. de parties aggrieved may file a statement of such grievance with a United States district attorney, who shall investigate the case; and if, in his opinion, there is reasonable ground for complaint that injustice bas been done, and that the law has been vio- lated ; and if the company shall cu his request or demand refuse to make proper reparation, it shall be his duty to bring a suit in name of the United States against such offending company, such suit to be brought in the district or circuit court of the United States having jurisdiction, for violation of the provisions of this act, and for damages to the party or parties injured, and such suits shall have precedence on the calendar. a (6) That in case the managers of any two or Inore interstate railway lines shall fail to agree as to a connection of their roads for interchange of business, or on proper traffic rates to or from competitive points or competitive territory; or if from any cause a cut or unreasonable reduction of rates shall be made so much below the gen. eral average of traffic charges on similar lines as to be manifestly below cost or service, on complaint filed with the district attorney, accompanied by a sworn statement of facts made by the president or vice-president or by any two directors of a corporation unfavorably affected by such disagreement or reduction, or on like. complaint with like statement of facts made by shareholders holding five thousand or more shares in any such company or companies, or on like complaint by any party claiming to be injured by such unreasonable reduction in rates, suit shall at once be brought in the Jname of the United States against such company or companies; and on application of the prosecuting officer the judge of any United States district or circuit court hav- ing jurisdiction, or any justice of the Supreme Court of the United States, shall ap- point three disinterested persons to act as a special board of commissioners, one of whom shall be a civil engineer familiar with Tailway construction, one with experi- ence in the operative management of railways, and one with a knowledge of traffic management and rates. Such special board of commissioners may hold meetings when and where they please; they shall keep a record of their proceedings, and shall be vested with power to send for persons and papers, and to examine under oath all persons hav- ing knowledge of the matters to be investigated. After a full investigation and hearing of all interested parties desiring to be heard, the board shall prepare a report in writing, setting forth the facts in the case, with suggestions and recommendations as to what should be done in the interest of the public and of the parties interested, to adjust the differences. This report, with the record of evidence taken, shall then be pre- sented to the court, notice being first given to the proper officers of the disagreeing lines to be present by counsel or otherwise. The report will then be read, and such arguments and statements as parties in interest shall desire to make shall then be leard, after which an order or decree of the court shall be made in respect to the matters in dispute, that shall be final and binding on the several railways and trans- portation lines, and other parties interested. wº - (7) That there shall be established in the Interior Department an “interstate transportation bureau,” to be in charge of a “chief commissioner,” who shall be ap- pointed by the Secretary of the Interior, and responsible directly to him, with such clerical and other assistants as may be required; and all original records and returlus relating to interstate commerce and transportation shall be in charge of such bureau; and it shall be the duty of the chief commissioner, under instructions of the Secretary of the Interior, to see that the provisions and requirements of this act, and of all acts amendatory of and supplementary hereto, are strictly complied with, and carried into practical effect. And the said chief commissioner, or any other person desig- nated by the Secretary of the Interior, shall have authority at any time to examine the books, records, and vouchers of any interstate railroad corporation or transpor- tation line, and to take extracts and copies therefrom ; and may examine under oath the officers, agents, servants, and employés of such corporation, or any other person or persons, in respect to any of the rights, powers, and duties of such corporation, or as to any other matters necessary or proper to be known for the due regulation of interstate commerce; and it shall be the duty of the Secretary of the Interior to recommend, from time to time, such additional legislation as may be necessary to establish and perfect a just and practical system of national legislation regulating interstate commerce and transportation. All necessary and proper expenditures of the Interior Department in organizing and maintaining such bureau, including salary of chief commissioner, clerks, and assistants, and all other properly authorized expenditures under the pro- visions of this act, shall be kept separate and distinct from other expenditures of the Interior Department, and the aggregate amount when ascertained for each calendar year shall be assessed upon and collected from the interstate railway lines pro rata, according to the actual mileage of each company open to interstate traffic. (8) That every corporation or other organization created by or organized under a general or special law of Congress, or of any State or Territory of the United States, 1 hat shall own, control, or operate any such interstate railway line, or lines of trans- portation, or any part or division of such a line, shall within three months from the passage of this act file with the Secretary of the Interior of the United States copies of INTERSTATE COMMERCE. 83 all its charter papers and papers relating to its organization and powers; such copies to be verified by the president and secretary of the company, under seal, and if copies of a State or Territorial act, or of articles of association or consolidation filed thereunder, to be also certified by the proper State or Territorial officer under his official Seal. They shall also file verified copies of all leases, contracts, or agreements by which the property and rights of any other corporation or association have been acquired, or are controlled or operated. They shall also file copies of all yearly re- ports heretofore and hereafter made by the president, directors, and officers of the company, together with a statement verified by the president and secretary (on blanks to be furnished by the Secretary of the Interior) showing the capital stock of the company, the amount and character of its indebtedness and liabilities, with copies of its mortgage and guaranty obligations, the receipts of the company from interstate business and from other sources, and its expenditures of all kinds during the calendar year, together with such other reports and information as shall be called for from time to time by the Secretary of the Interior ; and similar yearly statements shall be made currently as required by the Secretary of the Interior, showing the condi- tion and operations of the company for each calendar year thereafter. - (9) That every such interstate railway corporation, or other organization, shall file with the Secretary of the Interior (on blanks to be furnished by him) current quar- terly statements, verified by the president and secretary of the company, showing its ... interstates and other tonnage transported, its gross receipts from interstate traffic of every kind, and from other sources, its working expenses, its fixed charges for in- terest, rentals, &c., and its current expenditures charged to construction, reconstruc- tion, betterment, and improvement accounts; such statements to be made up to March 31, June 30, September 30, and December 31 of each year, and to be filed within five weeks from the end of each quarter respectively. - (10) That if any such interstate railway corporation or organization shall refuse or neglect to make the returns required by the Secretary of the Interior, or shall in any other way fail to comply with the provisions of this act, or of any decree or order of court issued hereunder, the Secretary of the Interior may suspend or revoke the per- mission and rights granted by this act, and under the act of June 15, 1866, for such com- pany to carry interstate traffic on its lines, and to receive compensation therefor, in- cluding the right to have such business covered by through tickets and bills of lad- ing ; and he may also revoke the permission herein and heretofore granted for such company to connect its road with roads in other States for the purpose of forming continuous lines of transportation; and such company shall also be subject to a penalty of $1,000 fine, and $100 per day, additional, as a fine for each day’s refusal or Ineglect of such requirements, to be recovered in an action at law, instituted in the name of the United States, in any court of competent jurisdiction. In case any com- pany shall remain in such default for more than twenty days after notice from the Secretary of the Interior, it shall be the duty of the Attorney-General to take legal proceedings to enforce a compliance with the provisions of and penalties incurred under this act, by mandamus, injunction, or otherwise, and any judge of a United States district or circuit court, having jurisdiction, or any justice of the Supreme Court of the United States shall give precedence to such suits and applications. TEIE TEIBORY OF THE BILL. It will be noticed that the theory of the bill is to clearly define what is interstate commerce and what railways and transportation lines are brought under the provisions of the act; to provide for the prompt shipment of such traffic, and for its protection through to destination; to secure fair and reasonable rates for transportation and to prevent extortionate charges and unjust discrimination; to provide prompt re- dress through the United States courts to parties injured from viola- tions of the law, without cost to the parties so injured. It also provides a practical and expeditious method of settling the differences between railroad corporations, whenever such differences affect public or private interests. The act further provides for the establishment of an “interstate transportation bureau,” where verified copies of all charter papers, in- cluding leases, contracts, and agreements, shall be filed for information of the Government and of the public; and it will also secure to the Government full reports and statements as to the volume and character of interstate business, and incidentally, to shareholders and others in- terested in railroad corporations, uniform quarterly and yearly reports 84 INTERSTATE COMMERCE. showing the financial conditioni and current operations of such com- panies, so that comparisons can be made. - - The act is based on the theory that while railway companies are private corporations, their special powers and privileges are derived from State and Congressional legislation; consequently any misuse or abuse of their powers is a public offense or misdemeanor against which it is the duty of the Government to protect the public without cost to the individual injured. The bill, therefore, provides that complaints against such carrying companies may be lodged with a United States district attorney, and it is made his duty to investigate them, and when in his opinion injustice has been done and the law violated suit must be brought at once in name of the United States against such offending companies, such suits to have precedence in the Courts. In suits of such a character, involving as they necessarily must the private rights of individuals claiming actual and exemplary damages, no company with an intelligent management will ever stand a trial that can be avoided by reasonable concessions, without great confidence in the jus- tice of its defense. It is believed that the effect of such legislation will be to make all parties more anxious to settle their differences out of court; and the provision for a special board of commissioners to exam- ine and report facts and suggestions to the court in cases of disagree- ment among corporations that injuriously affect the public interests will, it is believed; force railway managers to settle their company dif. ferences without indulging in a “war of rates” that is certain to inflict great injury upon the corporate properties in their charge, and by un- settling values is equally certain to injuriously affect the trade and traf. fic of the country tributary to their own and all connecting railway lines. . The plan of using local district attorneys as agents to adjust through the Federal courts local complaints against carrying companies will, it is believed, secure a more prompt adjustment of such differences than can be obtained in any other way ; and the record of such cases in the various offices of the United States district attorneys throughout the country, transcripts of which should be filed currently in the Interior Department, or can be called for by the Attorney-General at any time, will enable the Government to obtain, whenever desired, the most full and complete information from all sections of the country in respect to complaints and differences between the public and the carrying compa- nies, from which to formulate such supplemental legislation as experi- ence shall determine to be necessary, to complete and perfect a national system of supervision over interstate railways, in the interests of inter- state commerce, and of commercial intercourse between the several States and Territories, and with foreign nations. - . - ...” GEORGE B. WRIGEIT'S STATEMENT. Statement by General George B. Wright, of Indianapolis, Indiana, former Railroad Commissioner of Ohio. In looking over your inquiries, I find them so numerous and compre hensive I feel some hesitancy in attempting a reply, but feeling a deep interest in the subject, and believing that you are anxious to obtain information from all sources to aid your committee in determining as INTERSTATE COMMERCE. 85 far as possible what could and what could not be done by Congress in solving the most difficult problem of the age— How shall the transportation of inter-State commerce be so controlled and regu, lated as to best subserve the interests of the companies engaged in it and the people dependent upon it without injury or injustice to either? - So understanding the purpose and aim of your committee, I bawe taken up your inquiries in the order presented, and will make my com- ments upon them with a sincere desire to throw what light I can upon the subject, but with full consciousness of my utter inability to offer a safe and sure cure for all the evils and difficulties attending the subject. I begin with your first question. # - (1) The best method of preventing the practice of exportation and unjust discrimi- nation by corporations engaged in inter-State commerce. While each of your questions involves abundant range for comment, I will endeavor to confine myself as briefly as possible to the points raised by each inquiry. While they are varied in phraseology, there are several so nearly alike I fear I may beled into some repetition, which I hope you will excuse. In regard to this first inquiry, I will be very brief, and, as far as possible, will endeavor to be so in reply to the whole fifteen. “Extortion and unjust discriminátion” will seldom be found in rates where abundant competition exists, either by water or rail. They may exist where a short line is dependent upon some great through line for its outlet or inlet of through traffic, when arbitrary rates are forced upon them by the stronger line. You may find a few instances of this kind in your investigations; but I think they will be rare, and that you will find the contrary to be the general rule—that a large pro- portion of the transportation companies are carrying both through and łocal traffic too low to enable them to maintain their property and de- rive a reasonable revenue for its cost. If cases of “extortion and unjust discrimination” are found, I think they might be prevented by a com- - pact or agreement between all the lines interested in or affected by the through traffic, and the compact or agreement legalized and enforced by some official authority. . . - - (2) The reasonableness of the rates now charged by such corporations for local and through traffic. . Maximum rates for local traffic are almost always fixed by the States granting the charters to the companies, and cannot be controlled by Congress. The maximum rates allowed are rarely ever charged; on the contrary, they are almost always far below the maximum allowed, especially were competition exists. The country is now so abundantly supplied with rail and Water transportation that competition will gen. erally prevent extortion in rates, and where this is not the case as to local rates the States alone have power to deal with them. As to through traffic, the rates cannot be called unreasonable. For most of the coun- try they are the lowest of any country in the world, and lower than most of the companies can afford with their present fixed charges. There are numerous instances where the through rates are below the actual cost of transportation, and I know of no through rates that are exorbitant compared with the length of haul and other expenses of Service. This traffic is also regulated and controlled against extortion in almost every locality by competition and the laws of trade and sup- ply and demand. 3. -- 86 INTERSTATE commRRCE, (3) Whether publicity of rates should be required by law; whether changes of rates without public notice should be prohibited, and the best method of securing uniformity and stability of rates. - g THE PUBLICATION OF RATEs. Nearly all companies publish a general tariff of rates. Such publi . cations are sometimes on small cards; in other cases on large cards or in volumes of many pages. These schedules are mostly for their own convenience and guidance and for the use of their own agents. They are hardly ever consulted by the public. The shipper consults the agent at the station, and the agent, if not familiar with the rates, con. sults the schedule. There should be published a general schedule of rates, fixed upon a just and fair basis, considering, as far as possible, all the elements involved in cost of service, length of haul, competition, value of article shipped, supply and demand, and the many other con- tingencies influencing rates. These rates, both for passengers and freight, should be published, or printed and kept, subject to inspection, by any and all shippers and passengers, or proper authorities, When galled for. But to publish and post up at every railroad or water sta- tion in the country passenger and freight rates on every article of transportation to and from every railroad, canal, and navigable water station, and to every terminal point of through traffic, would be a great. expense; and to publish every change in them would be a large ad- ditional expense, and, in my judgment, of little value to the general public. . As to the best method of securing “uniformity and stability of rates,” no uniform rule can, in my judgment, be adopted. The many compli- cations and difficulties involved in regulating rates applies equally to the method of securing “uniformity and stability.” It cannot be done for any great length of time. They are, and must be, as variable as the seasons, and, in some instances, as the winds and waves. If the Gov. ernment could, through an officer or commission duly authorized, co- operate with a commission or delegation created by the transportation. companies, with power to enforce their agreements and rules, rates might be made more uniform and stable than they now are. But so long as competition and the laws of trade and of Supply and demand exist, and no power exists to control the action of the companies, great difficulties must be experienced in making rates uniform and stable. I believe it will be impossible to do it. - } t (4) The advisability of establishing a system of maximum and minimum rates for the transportation of inter-State commerce. . MAXIMUM AND MINIMUM RATES. It would, no doubt, be a great blessing to many railroad companies if maximum and minimum rates could be established and maintained; but i do not believe it is possible. What would be a high maximum. rate for one line would be entirely too low for another. Many of our railroad companies own or control and operate lines of Ocean, lake, and, river steamers, and thus enjoy advantages which companies deprived. of and unable to command cannot compete with. The stronger com- panies can transport at rates that would bankrupt the Weaker lines. The weaker lines must, submit to the stronger or be forced out of the traffic of inter-State commerce. - A minimum rate that would fairly compensate one line Would leave. INTERSTATE COMMERCE. * • 37 the traffic on another line unmoved, or bankrupt the company at the same low rates. It is very evident that many of the railroad companies of this country, as now organized, are transporting at rates too low to enable them to pay interest on their debts, without any dividends on their capital stock. If this state of things continues with them, bank- ruptcy must be the inevitable result. If the fixed charges of these companies could be reduced to a point where they could be met with reasonable certainty, this calamity might be averted, but until this is done nothing but a large increase of traffic can avert the calamity. Whether it is better to let bankruptcy come, and sales, reorganizations, and consolidations follow on a reduced basis of stock and debt, is an important inquiry. Where this has been done in the past, in many cases, and the weak lines have fallen into the hands of stronger Ones on a large reduction of fixed charges, the public has generally been the gainer in reduced rates and better accommodations. But latterly sales, Consolidations, and reorganizations have been made on terms tending to bankrupt entire systems. If all the railroads of the country could be consolidated into a few important lines on a fair basis of cash value, and brought into harmonious action, and subject to judicious Govern- ment supervision, maximum and minimum rates for the through traffic might possibly be adopted. But even then the water lines of transpor- tation would have to be brought into harmony with the railroad lines. (5) The elements of costs, the conditions of business, and the other factors that should be considered in fixing the tariffs on inter-State traffic. TEIE GOST OF TRANSPORTATION. There are so many elements entering into the cost of transportation that it is difficult to state them all. They are frequently classified by companies in their records into numerous heads or divisions, such as movement expenses, maintenance of road, general expenses, and interest, besides numerous other details. But in addition to these, of which no record is kept, are the elements as to value of articles transported, supply and demand, Competition by Ocean and other Water routes, as well as rail- road competition. These elements are so varied that it would be almost impossible to arrange a tariff on inter-State commerce embodying all of them. Inter-State traffic by rail is generally a mere incident to local traffic, and can always be done at very low rates. If every railroad company between the Atlantic and Pacific Oceans engaged in trans- porting the inter-State commerce were required to establish and adhere to a specifie rate for any fixed period, the law could hardly be enforced, and, if enforced, the traffic would cease. - Again, the traffic could not be done by rail on a fixed, unvarying standard of rates. The actual cost of doing the work, including all the elements above specified, has very little to do with the rates obtained. If every company over whose line the traffic must pass were confined to a rate one-half or even one-fourth what would be deemed a reason- able local rate the traffic would not be moved. A company owning one of the great trunk line railroads of this country, in its report for the last year, says that the average earnings per ton per mile ou its main line and branches “was 4% of one cent.” Another important company, whose main line is partly in this State and partly in Ohio, reports even a less rate per ton per mile. Certainly such rates cannot give cause to the shipper for complaint. This inquiry seems to imply that rates for inter-State traffic can be permanently fixed and enforced. I do not believe 88 -- INTERSTATE COMMERCE. it can be done even by a union or confederation of all the companies engaged in the traffic. In any event, there must be frequent changes of rates. - ." { (6) Should any system of rebates or drawbacks be allowed ? If so, should such transactions be regulated by law and be subject to official inspection or approval 3- Or should they be entirely prohibited ? THE PROHIBITION OF REBATES. “ Rebates and drawbacks” should be prohibited by law. Notwith- standing the proof of their use is very difficult, and may be almost impos- sible, of discovery by their postponement and the various forms in which they may be used and concealed, a prohibitory law might have some re- straining influence, though the policy of passing laws that cannot be enforced, or are easily evaded, is a very questionable one. - - “Rebates and drawbacks” are the offspring of wars of rates between competing lines, and are of no lasting benefit to transportation compa- nies or shippers. They tend to demoralize the management, excite jeal- ousies and dissatisfaction among shippers, and are a fruitful source of the popular prejudice against this class of corporations. The railroad system of the country is so extensive and complicated, so many coun- panies are involved in the through traffic, that if rates are agreed upon and established for a time by a number of companies, the failure of any one of the connecting lines, however small, to adhere to the rates, de- stroys the harmony and affects all lines. No power now exists to pre- vent the cutting of rates. All the efforts of the trunk lines’ manage- ment for several years past has failed to fully accomplish the desired object, and it would seem that the companies need quite as much help to sustain their organizations and restrain the unruly Imembers as the public against the faults and injuries suffered from them. If railroad compacts, entered into in good faith ańd on a just basis for the mainte- mance of rates, could be sanctioned and enforced by law, and all com- panies would unite, the temptation and motive to resort to “rebates and drawbacks” would be taken away, and they would cease. An agreement between all the transportation companies in this coun- try and adjoining foreign countries, participating in the through traffic, legalized and its violation punished, would effectually abolish “rebates and drawbacks.” Of course, I refer to rebates and drawbacks given se- cretly, to the advantage of one shipper over another, resulting in the practical reduction of rates. Many instances might be given, if large shippers or railroad companies would expose them, where thousands of dollars have been annually paid back to an important firm or shipper as drawbacks. But where “rebates or drawbacks” are made to adjust errors in weights or overcharges, or to correct mistakes, they are just and right, but ought to be called by some other name. (7) Should pooling contracts and agreements between railroads doing an inter- State business be permitted, or should they be entirely prohibited by law # If they should be regulated by law, would it be sufficient to require the terms of such agree- ments to be made public and subject to official approval 2 - The practice called “pooling” is resorted to by railroad companies for the purpose of maintaining rates agreed upon to all shippers at competing points, and to prevent the cutting of rates at such points. This method has been in use for many years in this and other countries, and wherever established on a just basis and continued has proved beneficial to railroad companies and no injustice to shippers and the public generally. The evils resulting from the practice of cutting rates. INTERSTATE COMMERCE. . 89 are very great both to railroad companies and the public. It leads to dangerous speculations and demoralizes the business of the country. Properly regulated and subject to official recognition and approval, “pools” would be largely beneficial and their publicity unobjection- able. - (8) Should provision be made by law for securing to shippers the right to select the lines and parts of lines over which their shipments shall be transported? - Ordinarily every shipper has the right to select the route he will travel or his shipment shall go, but this right must be subject and sub- ordinate to the rights of the transportation companies. Circumstances may render it inconvenient, more expensive, or impossible for the rail- road company receiving the traffic to send it by the route chosen by the shipper. The company may have connections and alliances with other lines than the one chosen. There can, however, hardly ever arise. any serious conflict between the shipper and the transportation com- panies on this subject. Every company is anxious to secure traffic and at the same time retain the good Will and patronage of shippers. It is the study and effort of every company to popularize its own line, and the choice of a shipper will always be accepted, when not at serious inconvenience, loss, or expense to the company. I think it would be in- judicious to take the control of this matter out of the hands of the trans- portation companies and give it by law to the shipper. (9) By what method can a uniform system of rates for the transportation of passen- gers and freights by all the corporations engaged in inter-State commerce be best secured? - e - This is one of the most difficult questions in the entire series to an- swer satisfactorily, and furnishes opportunity for the presentation and discussion of all, the evils and difficulties involved in the subject of transportation. But, without going into the discussion here, I will only say that, in my opinion, no positive or fixed “method” can be adopted at present. A perfect union and confederation between all the lines in the entire system of inter:State transportation, with a commission or court of arbitration recognized and authorized by law to enforce obedi. ence and compliance with the terms or awards, would go far towards establishing a uniform system, and might in time become reasonably successful in correcting many of the evils and difficulties now existing, But it must be a matter of growth from time and experience, Rates must always be more or less changeable, and any method must be made flexible in order to meet changes and contingencies that may arise. (10) Should corporations engaged in inter-State commerce be permitted to charge a lower proportionate rate for a long than for a short haul? Does the public interest require any legislation on that subject 3 . - - Undoubtedly there are cases where “corporations engaged in inter. State commerce” do and should be allowed to charge more in proportion for a short than for a long haul. Were this right prohibited by law, it would prevent the movement by rail of a large amount of the commerce of the Country and nullify much of the competition in transportation busi- ness, Which is of great value to the people in many localities where ocean and other Water transportation exists in competition with railroad trans- portation. THE DIFFERENCE BETWEEN THROUGH AND LOCAL RATEs. One cause of the present complaints is that the through and local rates are not properly adjusted. The local or short line shipper cannot 90 - INTERSTATE COMMERCE. understand why the through rates should be less than 1 cent a ton per mile, while he is compelled to pay two or three cents. I know an instance in my own experience where a miller complained that Wheat brought to his mill from another State for conversion into flour was charged so much more than a miller 100 miles beyond him, shipping from the same point, could convert his wheat into flour and ship it back the hundred miles and undersell the other miller in his own town. This seemed an unjust discrimination, and when the railroad company was called on for explanation and the reason for the difference in the rate, gave among other reasons, that the longer haul was to the terminus of its line, to which point all its trains were compelled to run, whether with loaded or empty cars; that if it did not carry to the terminal point at the low rate its cars would go empty; that from the point of ship- ment to the terminus of its line, three other lines were in direct com- petition with it, one of which was a water route, and all the companies carried at the same rate between the two points; that it was compelled to accept the low rate for the long haul or abandon the traffic, on which a small profit was obtained in connection with the local business on the line. The local rate was shown to be reasonable and below the rates allowed by its charter and the laws of the States through which its line ran. And that it was not responsible for the injury to the miller at the end of the short haul. That was the misfortune of his location. If it were to carry all its traffic at the low through rate it would soon become bankrupt. The adjustment of rates on every line is a difficult matter, requiring experience and a scientific knowledge of the subject to deal at the same time fairly with the shipper, whose patronage and confi- dence is desired, and to yield a just and fair revenue to the company Sufficient for its support and maintenance. The right to adjust tariffs must be left with the transportation Com- panies, subject only to restrictions against extortion in rates. The only legislation that is needed on this subject, it seems to me, is to legalize and enforce the contracts which transportation companies will voluntarily make, and punish their violation as the violation of other contracts are punished. I believe the railroad companies would gladly accept Such a law. - - (11) Should any concession in rates be allowed to large shippers except such as repre- sent the actual difference in the expense of handling large shipments over Small shipments and should such concessions be made known to the public 3 Undoubtedly some “concessions” should be made to a shipper Who has invested large capital, given employment to many laborers, and arranged for the shipment of hundreds of car-loads continuously, Over the shipper who only furnishes a few car-loads, at long or short intervals. It is the advantage conceded to wholesale over retail, which prevails and is recognized in every other class of business and trade. A reason- able concession in rates for large and continuous shipments tends to develop and enlarge the resources and increase the commerce of the Country. New and important business, in many localities, has been de- veloped, and large shipments and new industries created by these con- cessions, which would not otherwise have existed. Nor can these concessions be measured or determined by the difference in the expense of hauling large shipments over small. What the con- cessions shall be, must be left for the most part to the discretion of the managers of the companies and the parties directly interested, under the Various circumstances surrounding each case. If a commission were created, similar to the “Board of Trade" (so called) in England, which could act as arbitrator between the companies and Shippers, there Would INTERSTATE COMMERCE. 91 .* be no objection to making the concessions known to the public. It might stimulate and encourage new and important enterprises. Secret rates should always be avoided; they tend to excitesuspicions, jealousies, and prejudice against the management of the transportation business. (12) Should corporations engaged in inter-State commerce be required to adopt a uni- form system of accounts? . - So far as the information desired and advantageous to the public, intended for publication by a commission or bureau of the Government, it might be desirable to have all accounts of a uniform character. But it would be very difficult, if not impossible, for all transportation com- panies to adopt a uniform system of accounts. Many things incident to the accounts of one company do not appear or belong in those of another. Scarcely any two companies keep the same classification or division of items in their records. It would not be difficult to formulate a series of questions adapted to any and every “corporation engaged in inter-State commerce,” the replies to which could be easily made from any system of accounts or records that would furnish all the informa- tion necessary for a clear and full understanding of the operations of the various companies. They could be tabulated and presented to the public in printed reports. Many of the States have commissioners who collect very full and explicit information from railroad and telegraph companies, which are printed and distributed among the people. I do not think a uniform system of ageounts could be adopted by all corpora- tions engaged in inter-State commerce, nor do I regard it as important they should. - * (13) Is it desirable that such corporations should be required to make annual re- ports to the Government? If so, what information as to their earnings, expenses, and operations should such reports contain } lf the Government were to establish a commission or create a bureau for the purpose of collecting and disseminating information on the sub- ject of inter-State commerce and its transportation, it would be desira- able and necessary to have full reports as to the location of the differ- ent lines, their length, cost of building and equipment, in proper detail; how much of their cost is represented by bonds or other indebtedness and stock; a full report of earnings and expenses; the different sources of earnings, and the various items or channels of expenses; rates (maximum and minimum) of passengers and freight; accidents result- ling in injury or loss of life and the causes thereof, and any other mat- ters desirable for the commission to know in order to a clear and full understanding of the condition and Operations of the companies. The reports made to State Commissioners are in many cases full and ex- plicit enough. The annual reports of officers of many of the corpora- tions to the stockholders contain nearly all the facts and information for the year sufficient for the purpose. There are and will be in any full re- port matters that the general public will have little or no interest in, and it should properly be left with the Commission or Bureau to present to Congress and the public so much as might be deemed valuable for the public good. The benefit of these full reports would be to enable the Commission to understand the true condition and wants of the cor- porations and their obligations to the public, and would enable them to suggest such legislation and Supervision as was found judicious and practicable. - (14) In making provision for securing cheap transportation, is it or is it not impor. tant that the Government should develop and maintain a system of water routes? The Government has already spent many millions of dollars for the & *...* ga 92. INTERSTATE commRRCE. - “development and maintenance of water routes,” and is every year add- ing to these expenditures. No improvements except the building of rail- roads have done so much for the improvement and development of the Country as the opening of water routes. Ocean, coast, river, and canal facilities and improvements were at one time the only means for the transportation of the people and the commerce of the country. Great liberality has been exhibited by the Government in this direction. It is undoubtedly for the interest of the country and the people that the water routes should be maintained and further developed as the neces- sities of the country may require. They are very powerful in their con- Serative influence upon the rates of fare and freights of railroad com- panies. As the country improves and increases in population these lines of communication will become in many localities more and more important. It is the cheapest means of transportation that can be had in many parts of the country, and in many places the people are wholly or in part dependent upon them. While they are rivals or com- petitors in many cases of the railroad companies, that fact need not be a serious injury to the general railroad interests. They are often used in connection with railroads in forming lines of through traffic, and can S be used to great advantage in transporting many articles of commerce that will not always bear transportation by all rail. - • THE EIARMONIOUS DEVELOPMENT OF TRANSPORTATION FACILITIES. I do not wish to be understood as advocating rates so low that the railroad interests of the country shall be injured. There is no necessity for any such result, nor would the country or people be benefited by Such a result. I believe the Water and rail routes can be so harmonized and united that both can prosper. Improvements and inventions are rapidly demonstrating that transportation by rail can be done in many cases as cheaply as by water. Improvements and inventions are steadily going forward and are of great value in reducing expenses and econo- mizing the movement of the commerce of the country. While railroad companies complain of the ruinously iow rates of fare and freight, it is not so much the fault of the rates as the large fixed charges and lack of traffic on many roads. Some of the most prosperous and paying roads of the country do not complain of low rates and still pay interest on their debts and dividends on their stock, proving, I think, that proper economies in management and in Operating lines built at actual cash cost will enable them in many cases to make rates still lower and at the same time maintain their property on a fair paying basis. Un. doubtedly more railroads are built than the present wants of the coun- try require. But this is in great measure the fault of the earlier roads built, whose stock has been increased or watered and debt enlarged for the purpose of buying rival lines built for speculation and not at pres- ent needed. Eſad proper economy been exercised in building and man- aging many of the earlier lines, the fixed charges would have been so far reduced by this time that parallel and competing lines could not have been built to compete against the rates that could have been adopted by the earlier lines. Instead of reducing fixed charges and expenses, many parallel and competing lines have been bought up at a large profit to the proprietors and builders, and thereby the purchas- ing companies have so far increased their stock and debt that their revenues are insufficient to yield interest and dividends at the present reduced traffic and low rates. Speculations have been rife and interest INTERSTATE COMMERCE. +. 93. and dividends overlooked. Hence, when traffic is light, the railroad interests of the country must suffer and nearly all other business of the country sympathizes with it. - (15) In what manner can legislation for the regulation of inter-State commerce be best enforced ? Should a commission or other especial tribunal be established to carry out the provisions of any law Congress may enact 3 The experience of the past five years proves that it will be very diffi- cult to secure any judicious legislation for the regulation of inter-State commerce. Members of Congress are not all well informed on the sub- ject, and, where such immense interests are involved, hesitate to vote for any measure for fear of doing more harm than good. Great lack of knowledge on the subject exists among the masses of the people, and a great deal of prejudice and misapprehension exists among them in re- gard to transportation companies. They are regarded by many as great monopolies, endeavoring to rob the people, make themselves richer and the poor poorer. The railroad managers who are making honest and earnest efforts to adjust their affairs On a sound and healthy basis are not agreed among themselves as to the wisest and best methods to be adopted, and are unable or unwilling to suggest Such legislation as might aid them, fearing that there might be coupled with it some ob- jectionable provisions. Others think that transportation companies can work out their own salvation and need no help from Congress. . This, however, does not accord with their own reports of failure or of indifferent success in the last four or five years. TEIE SOLUTION OF TEIE PROBLEM A WORK OF TIME. It is claimed that the railroad interests of the country have never been in so depressed a condition as at the present time. Many of the Companies are, like drowning men, catching at Straws. Eager for busi- ness, they resort to rate cutting, paying rebates, drawbacks, or commis- sions, which absorb all profits and demoralize the entire management of the whole system and bring discredit upon it. There is not traffic enough to employ all the equipment and facilities of many of the roads. In many places not half the traffic is obtainable that could be carried With little or no additional expense. Eſence every means is resorted to to get business. Compacts, agreements, and pools entered into, appar- ently in good faith, are easily broken, and no power exists to prevent it. We bear almost daily of the violation by some line of its agreement with other lines. If some legislation by Congress could reach these evils and remove them millions of dollars could be saved annually to the railroad interests of the country without injury to the shippers or public, but positive good. -- -- - “EIow can this be done,” your committee inquire. - - No One yet has been able to point out a sure and safe method. In so important a matter ās this, involving such vast interests, it is better to go slow, than by haste fall into errors and mistakes. I believe the managers of the trunk lines between the Mississippi River and Atlan- tic Seaboard and north of the Ohio River are making an earnest and honest effort to correct the evils surrounding them, and no doubt have made Some progress, which is not apparent to the public. But they ac- knowledge their inability to carry out their own plans and purposes. Doubtless there is a lack of integrity and good faith among certain railroad Officials. The ambition and eagerness to acquire wealth rapidly lead to speculations among officials, who sometimes resort to improper methods, and there is no power or law to reach them, in 94 INTERSTATE COMMERCE. THE PROVINCE OF A COMMISSION. As I have suggested in my replies to several of your inquiries, a commission created by the Government, with ample powers of inquiry and authorized to co-operate with and aid the managers of transporta- tion companies in carrying out and enforcing their own just contracts; a commission competent and expert in the transportation business, in- dustrious and vigilant in searching for and exposing the evils to be over- come could, in my judgment, with the Support and co-operation of the companies themselves, work out a system that would ultimately cure most of the evils now existing. But it would be a work of time, pa- tience, and experiment. No great judicial power should be given to the commission, but the fullest power for inquiry, research, and examina- tion, and perhaps authority to enforce rules and regulations agreed upon by transportation companies and prosecute offenders and violations of proper rules and agreements in the courts of the country, at the expense of the Government, to be reimbursed by violators when proven guilty. The millions that could be saved to the railroad interests of the country by the adoption of a practical system would justify a liberal expendi- ture by the Government in making the experiment and employing the best talent in the land for a length of time sufficient to acquire the necessary information and make the proper test. Such a commission would inspire confidence among the people and the transportation com- panies. The very creation and organization of Such a commission would les- sen many of the real as well as imaginary evils which now exist. The people would look to such a commission with hope and confidence that all was being done or would be done, that Gould, to abate evils and wrongs and would patiently wait a fair trial. I believe such a commis- sion, with powers of inquiry and perhaps of arbitration, would prove of value in preventing violent outbreaks by employés and their sympa- thizers, which have occurred and are liable to occur again, to result in bloodshed and great losses and damage both to the corporations and people. - I have already made this communication much longer than I intended. Allow me to close with the expression of my earnest hope that the labors of your committee in this important matter may, ere long, be crowned with success in the passage by Congress of such laws on this subject as shall, when executed, give to our transportation manage- ment a high character and credit both at home and abroad. TEHE BURLINGTON BOARD OF TRAIDE. Statement by Ezra A. Brenizer, secretary Board of Trade, Burlington, - Iowa. - - f In behalf of the Burlington Board of Trade I beg to submit the fol- lowing responses to your interrogatories as reflecting in some degree the views of Our Citizens upon the transportation Question : (1) We would leave the field open to private enterprise and general competition, subject to the Supervision of a national commission. (2) We have had in the Western States a marked decrease in freight rates during the past ten years, and at the same time quite a number INTERSTATE COMMERCE. i 95 Af of railways have gone into bankruptcy. This indicates to our minds that in the effort to still further cheapen transportation €harges great care and discrimination will need to be exercised in order to avert in- justice to invested capital and disaster to the community. - - (3 and 4) Some general basis of rates ought to be reached and made public, but there ought to be leeway for such fluctuations within a moderate limit as the exigencies of business may demand. In other words, there ought not to be any arbitrary restrictions upon the law of Supply and demand. t . (5) The cost of a road bed and rolling stock is not the only expendi- ture made by a railway company in building and equipping its line and permaneutly establishing its business. There ought to be, therefore, such reasonable scope in any limitations that may be imposed as will give inducement to capital to seek investment in railway properties as readily as any other enterprise. It is for the general interest of the country to have transportation facilities developed equal to the require- ments of trade and commerce, and if the State does not build such lines' private capital must have sufficient inducement to do it; otherwise, un- der a hostile policy, the lines will not be built and the progress of the Country Will be retarded. & - (6) Rebates and drawbacks are only roundabout methods of reducing rates. The simplification of work is desirable in any line of business, and in some degree is an element of the cost of transacting the business. Under a national system of transportation there will inevitably be a tendency to complications in the effort to adapt the system to the varied local necessities and demands. (7) Pool contracts are desirable to prevent railway companies ruin- ing each other and demoralizing business. If inhibited by the Govern- ment care should be taken to substitute regulations that will prevent alike ruinous competition and excessive charges. But any such inhi- bition will necessarily bring us perplexing problems which only time and long experience can enable the commission to finally adjust on a permanently satisfactory basis. And it is difficult to foresee how any such adjustment can be reached as long as the jurisdiction of the na- tional commission is limited to roads traversing more than one State. . (8) Shippers ought not to have the arbitrary right to select the line of transit except when the refusal of that right works an injury or a loss to the shipper. Such a right might involve a loss to the transporta- tion company Without any corresponding gain to the shipper. This is a feature that ought to be left to the discretion of the national Com- mission rather than to be regulated in fixed terms by law. (9) The possibility of securing uniformity of rates can only be de- veloped by long investigation and experiment. The first step might be profitably taken by the adoption of a uniform classification of freights aud, possibly, by a reduction of classes. * (10) Unquestionably a less proportionate rate ought to be charged for a long than a short haul. A uniform proportionate rate for long and short hauls Would be ruinous alike to farmers, merchants, and man- ufacturers of the interior States of the Republic. No legislation is needed except to sanction the principle involved as a basis for the authoritative guidance of the national commission. . (11) Concessions should be made to quantity and not to individuals, leaving the way open to any individual or association to take advantage of large shipments with the same facility enjoyed by the individual or association in buying land or merchandise in large quantities. This will permit of private or co-operative efforts in business enterprises on an 96 INTERSTATE COMMERCE. equal footing with individual or corporate capital, and these special rates should be given equal publicity with the common rates. - (12) A matter of minor detail of greater interest to the transportation companies than to the general public. "For if there are advantages to be reaped, by uniform accounts those advantages will inure to the com- panies, the general public caring little for a question of book-keeping that does not necessarily involve any economic question concerning shippers. But in the nature of things the transportation lines and the national commission will gradually develop more uniformity of accounts as the new policy of national supervision grows into a permanent system. (14) If the Government is to take the supervision of the interstate commerce of the United States and to be the arbiter between the people and the corporations, it would not be good public policy for it to engage in the transportation business itself, either directly or indirectly, and thus become a party at interest in the very business upon which it is called to arbitrate. Whatever may be the policy of the General Gov. ernment relative to improving natural waterways or building artificial ones, it is uot legitimately within the province of a national commission to administer upon our sea-coast, lake, and river navigation. That is an element of the transportation problem that ought not to be con- sidered in this connection, or at least not until the more immediate necessities of overland transportation have been successfully provided for. By attempting too much at first there is danger of disastrous mis- takes that will seriously retard the growth of the country and give permanency to evils now sought to be remedied. (15) We venture to suggest the utility of a national commission com- posed of one member from each State, which shall as a body have certain limited powers of enacting rules and regulations. Out of its member- ship there shall be appointed an executive committee of five who shall be charged with the execution of the rules and regulations of the national commission and who shall devote their entire time to the routine duties of the work of supervision, their doings to be reported at stated inter- vals to the iull board of the national commission and subject to its ap- proval. i SAN FRANCISCO CHAMBER OF COMMERCE. Statement by L. L. Baker and Alfred P. Elfelt, of the committee on inter- mal trade, on behalf of the Chamber of Commerce of San Francisco, Cal. : The questions involved are of importance to the whole people, and are paramount to the interest of any one individual or corporation. The industries of the country have been for a number of years in- debted largely to railroad construction, and to the settlement of immi- gration upon the lines of new railroads, building up new homes, towns, and cities upon lands made available for settlement by the construction of railroads. Any legislation which tends to cripple the continuance of the industries thus promoted would be felt by the nation in a dimin- ished circulation of money among the people, the investment of capital in bonds foreign or domestic, or any other thing that would offer secu- rity, instead of active industries that benefit the whole people by pro- moting constant circulation of money in business throughout the COuntry. * - (1) Few complaints, if any, are now heard of extortion or unjust dis- Crimination in interstate commerce. It might be well to have a special , sº-w INTERSTATE COMMERCE. 97 commission appointed whose duties should be to hear complaints, to inquire into rates and unjust discrimination or extortion, but these men should be of the highest character and have a thorough knowledge of railroad matters. Their term of office should be for life. They should hear complaints and call upon the railroad companies to adjust claims Without delay, without the form of court or the service of attorneys. (2) The present tariff of rates for overland traffic is considered rea- Sonable for consumers, but just discrimination should be made in favor of large shippers, who carry large magazines of supplies for the Com- munities of consumers who are dependent upon them for their constant needs. The reasonableness of this rests in the fact, that customers of wholesale houses look to large dealers to procure their supplies at rates to compete with articles purchased in other markets; handling or storage expenses must be added to first cost and cost of transportation. If Pittsburgh is the central point for iron, a wholesale merchant must try, by purchasing in large quantity, to obtain his iron there at large-quantity prices, and his transportation at prices in proportion to the quantity to be shipped, so that the man who is obliged to buy of him for his imme- diate needs may not be forced to pay much more than his rich neighbor, who can have his supplies from foreign markets, although no greater Consumer. . (3) Maximum rates should be made public, and should not be ad- vanced unless for good cause and on due publication. The rest of the Question is too important to answer fully here. If the Government owned all the railroads, they could be kept from competing with each other, even if one road was worn out by use, while the other could not earn its expenses, because the better facilities of transportation of its Competitor could not be overcome by reducing rates. (4) Answered in the above. - (5) To this question should be added the circumstances which would enable traffic to turn to competing routes. As far as this city is con- cerned, the overland roads must compete with ships via Cape Horn and steamers via Panama. - - - * (6) This should regulate itself by competition, as too rigid laws might tend to too great centralization of trade, unless the Government through Some system of compensation could arrange rates upon a system for the benefit of the whole people without regard to profit, as the Post-Office system is now managed. Then it would undoubtedly be deemed wise to make some provision for common points, or bases of supply, and Gov- ernment would consider the facts of second transportation to consumers or small purchasers, as from San Francisco to interior points. (7) If a commission, appointed as suggested in the answer to your first question, thought pooling contracts or agreements not for the best interests of both raiſroads and people, they should have power to pro- hibit them. - - (8) Shippers should be protected by the commission in the exercise of this right, because overland shipments directed over northern routes, if perishable, might deteriorate or be ruined if forwarded by a southern route. While many other reasons suggest themselves, this is deemed Sufficient reason for such protection. - - (9) By the Government compensating and controlling the roads. (10) It seems fair that there should be a lower proportionate rate for a long haul than for a short haul. If divers interests demand Some modification of this principle it should be referred to the commission before alluded to. This is a question of grave importance, involving the interests of large commercial centers as well as the interests of 16232 AP—7 * 98 INTERSTATE COMMERCE. sparsely settled sections at a great distance from markets, whose in. dustries languish because of this distance from commercial centers. (11) Concessions should be made to large shippers who keep ware- houses, pay taxes, &c., at points of delivery. There is no objection to the public knowing that concessions are made, because the wholesale and retail system is well understood by the people at large. (12) If from experience there can be eliminated a system of accounts which can be made applicable to the varied interests, then it would be highly important to make it uniform. - - (13) Business information is desirable. All corporations whose stock and bonds are offered to the public should be obliged to make annual statements, as well as banks or insurance companies. (14) Subsidies should be granted to water routes by the Government, if the trade was not sufficiently renumerative without such assistance, but such subsidy should be regulated by the stated or fixed expenses and the annual profits. - (15) Legislation can be best enforced by a commission as before stated, yet the benefit of any legislation would depend almost entirely upon the reliability and ability of the commission appointed to carry out its provisions. IFor want of time, it cannot be claimed that the above answers or suggestions have had full and mature consideration, yet such as they are, they are most respectfully submitted. - RICHMOND GRAIN AND COTTON EXCHANGE. Statement by Messrs. John Addison, W. G. Clemons, and R. A. Dunlop, committee on behalf of the Grain and Cottom Eachange of Richmond, Va. : - In replying to your communication requesting the views of this ex- change as to the advisability of placing the control of the railroads in the United States in the hands of the General Government, with a view of correcting the evil of discriminating rates for freight and passenger traffic, now so generally the subject of complaint, we have to say that we are met with the difficulty that many believe that the Constitution does not confer the power upon Congress to do this thing. They be- lieve that the power to regulate the commerce between the States which the Constitution does give refers to altogether a different matter; that the railroads are creatures of the several States through whose terri- tory they pass, and were chartered by the States, who alone have the power to exercise control over them. We believe that a large propor- tion of our people, who have looked into the subject, take this view of the case. It is perhaps unfortunate that this is so, for there is no more impor- tant question—and we desire to emphasize the statement—now before the people of this country than the railroad question. Complaints, except from the favored few, are universal of the outrageous discriminations by these monopolies, and it is easy to show that there are sections of our country that have been so injured by discriminations against them that instead of a blessing the railroads have proved a Curse, and it would have been better for the people who gave the right of way if a railroad had never been permitted to enter those States. INTERSTATE COMMERCE. - 99 .e-- THE EXPERIENCE OF GEORGIA. If the constitutional difficulties can be got out of the way, and it made clear that Congress has the right to control the railroads under the “interstate commerce” provision of the Constitution, we believe there would be no serious difficulty in the way of Congress adopting a plan which would meet the wants of the country, and at the same time be just to the railroad companies. As an illustration of what can be accomplished in this direction, when the power exists to enforce the law, We call the attention of your committee to the experience of the State of Georgia in dealing with the railroad question in that State. So much had the people of Georgia suffered from the discriminating rates against . them by roads entering the State from the north and the west, and their inability to secure relief through their legislatures (they being wholly under the influence of the railroad companies), that in 1877, when an election was held to elect delegates for a constitutional convention to form a new constitution for the State, the railroad question entered largely into the canvass; and so thoroughly was the matter discussed and the damaging effects upon the people of the railroad discrimina- tions against them exposed by the candidates, that a majority in favor of making a constitutional provision regulating the railroad traffic were elected, And when the convention met and framed a new constitution an article was made to carry out this demand of the people. This arti- cle of the new constitution made it the duty of the legislature to pass such laws regulating the railroad traffic as should be just and equitable to the people and to the railroads. In 1879 the legislature carried this provision into effect by passing a law creating a railroad commission, giving the commissioners full power to regulate the freight and passen- ger traffic on all roads entering the State. The law required the com- mission to be appointed by the governor and to consist of three men, one skilled in the law, one skilled in railroad management, and one familiar with general business affairs. The commissioners were duly appointed and entered upon their work. The railroad officials at once antagonized the efforts of the commissioners to bring about the needed reform, and the courts were appealed to by the railroad companies to prevent the commissioners from exercising the power conferred on them by the legislature. The commission was sustained by the courts, and for the past three years the Operations of the commissioners had not been interfered with, and the workings of the system adopted by them have been so satisfactory that other States are considering the policy of passing similar laws. The commissioners’ reports, which are pub- lished semi-annually, show that the citizens of Georgia have saved many thousands of dollars, that the railroad companies have declared better dividends, and railroad stocks appreciated in value, as a result of the commissioners' management. Two interests only are dissatisfied, viz, high railroad officials and the large operators. These latter oper- ate chiefly from points far distant from each other, say from the cities of the West and the North, and the practical effect of the present sys- tem is to make the whole country between these points, from which very low rates are secured, tributary to these large operators by having to pay high local freights. * INSTANCES OF DISCRIMINATIONS. It is charged, and the charges have not been disproved, that for a consideration the railroad officials give to the large shippers of the West , 100 INTERSTATE COMMERCE. - rates to Eastern markets every ton of which nets a loss to the railroad over which it is transported. This loss is, as far as possible, made up by imposing high rates on local traffic. - i . To illustrate : Within the last six months the rate on flour from Chi- cago to Richmond, a distance of some 1,100 miles, was 28 cents per barrel, while from a point within the State 175 miles distant from Rich- mond the rate was 57 cents. The same discrimination is made on all farm products and manufactured goods. - Another evil growing out of this system is that it enables large cap- italists to crush out the man of moderate means, and virtually gives them the control of the markets. We think the practice of these meth- ods by transportation companies affords substantial grounds of Com- plaint, and should be corrected by the States or by the General Gov- ernment, if it has the power, as soon as suitable legislation can be had. - RECOMMENDATIONS. In answer to your inquiries We say: - (1) Our opinion is that the best and only way to prevent extortion and unjust discrimination by corporations is to create a commission to control them, with full power to execute the laws. Power, and a good deal of that, is the only thing worth a cent in dealing with railroads. (3) We think rates should be published and not be allowed to change without notice. - (5) The elements of cost and competition of business, we think, should be considered in fixing rates. - - (6) Rebates and drawbacks should not be allowed. They defeat the very thing we are trying to establish—uniform rates. (7) Pooling contracts should not be allowed. (8) Shippers should always have the right to select the lines over s which they desire to ship. (9) A uniform system of rates can best be secured through a com. I]]1SSIOll. - .. - - (10) If short hauls cost the railroads more per mile than long hauls, equity would seem to entitle them to charge more. This we consider a very important question, which can, in our opinion, only be properly adjusted by a competent commission. The increased, if such be the case, is the only ground upon which concessions should be made. (11) No concessions should be allowed large shippers except such as represent the actual difference in the cost of handling shipments, and Such concessions should be made public. (12) It is not necessary that railroads should be required to adopt a uniform system of accounts. We don’t think the public are interested in the mode of keeping their accounts, so they are correct. (13) Annual reports are not necessary. - (14) In making provision for securing cheap transportation it is im- portant that water routes should be developed by all means. We be-, lieve all navigable streams should be developed by the Federal Gov- ernment. ...? • (15) A commission with ample power we believe the only means by Which to Carry out legislation, unless a new Department of the Govern- ment is formed, viz, a Cabinet office, to be called the Railroad Depart- ment, to be filled by the President the same as other Cabinet offices. We are not sure but this would be the best thing to do, for certain it is there would be no more important office in the Government, nor one INTERSTATE COMMERCE. - 101 that would require greater acquirements in solid statesmanship to fill. We are much inclined to favor this plan, for the railroad influence has become so great that legislation is largely controlled by it, both in Con- gress and in the State legislatures, and unless taken in hand by the Government at an early day will soon be beyond control. It has almost “e reached that point now. THE TRADERS AND TRAVELERS UNION. Statement of the Traders and Travelers' Union, No. 287 Broadway, New York, by Daniel C. Robbins, president. (1) The best method of preventing extortion and unjust discrimina- tion is by co-operation on the part of the public, and the withdrawal of business from any corporation practicing extortion. - (2) Trunk line rates, at present, appear to be reasonable, but could be more justly graded by proper reclassification of goods. (3) We favor publicity of rates, and think that all changes should be made public. Publicity of rates will assure practical uniformity by the recognized laws of political economy. We favor equality of rates, con- ditioned upon equality of service rendered. (4) We deem the establishment of maximum and minimum rates im- practicable. t (5) Among the factors which should be considered in fixing rates of interstate traffic are value of goods, bulk, and weight. . This can only be practically met by a more equitable classification of goods than at present exists. & (6) We think the system of drawbacks should be entirely prohibited, if such probibition can be effectually enforced. -- (7) Pools between railroad companies should be entirely prohibited by law. -- . (8) Stringent provision should be made for securing to shippers the right to select the lines over which their shipments shall be trans- ported. - *x : (9) Qur experience has suggested no method by which uniform rates can be secured. y g (10) We think it reasonable that corporations engaged in interstate commerce should be permitted to charge a lower rate in proportion for a long than for a short haul. We do not think the public interest re- quires any legislation on that subject. (11) We believe that no concessions in rates should be allowed for large shipments over small shipments. All shipments should be at uniform rates. . . . (12) A uniform system of accounts is desirable, so far as the same may be practicable. (13) We think that annual reports should be made to the Govern- ment, showing in detail earnings, expenses, operations, and condition of - each road. (14) We consider it important that the Government should develop and maintain a system of Water routes in making provision for Securing Cheap transportation. (15) Legislation for the regulation of interstate commerce can best be enforced by a national commission. - 4.-- 102 INTERSTATE - COMMER.C.E. NEW YORK STOCK AND PETROLEUM EXCHANGE. Statement by T. L. Watson and John F. Zebley, designated to represent the Consolidated Stock aud. Petroleum. Eacchange of New York. (1) It is our opinion that the best means to prevent the practice of extortion and unjust discrimination by corporations engaged in inter- state commerce is to establish a United States railroad commission With full powers, or to establish a court of appeals similar to the present Court of Claims. - (2) We regard the present rates as being fair as far as through traffic is concerned, but think that the local rates are too high. (3) The public are entitled to know what the rates are, and all ar- ticles for transportation should be classified, and shippers should be furnished with rates from which there should be no deviation. (4) We regard it advisable that there should be a system of maximum and minimum rates. (5) The elements of cost should not be considered in establishing rates, for the reason that a common carrier should regulate their affairs the same as other businesses do by the laws of supply and demand. (6) Rebates and drawbacks should be prohibited by law. (7) The system of pooling contracts and agreements is not in accord with strict business principles and should be prohibited by law. - (8) Shippers should by all means be entitled to say by what line their goods should be forwarded, and should be protected in this right. (9) Uniformity of rates can best be secured by proper legislation. (10) Corporations should be allowed to charge a lower rate for long hauls than for short ones. This is a matter that Will, in our judgment, regulate itself. * * - (11) Concessions to large shippers should be permitted, but should not be made public. - - (12) Corporations should be required by law to adopt a uniform sys- tem of accounts. . - (13) It is desirable that corporations should be required by law to make semi-annual reports to the Government, which report should be sworn to by the president and at least three directors. They should state the gross earnings and expenses, and they should not be allowed to charge expenditures for renewals and repairs as being construction. These items should be charged off as a portion of the expense of oper- ating the road. - - ~. (14) It is important and desirable that the Government should de- velop and maintain the water-ways, as there is a great deal of what is known as “slow freight” that can be forwarded much cheaper by water than by rail. (15) A commission should be established of not less than five, two of whom should be practical railroad men, two to represent shippers, and one selected as the legal representative of the Commission. The Com- mission should have full power to compel the attendauce of all persons, and an appeal from their final decision should be subject to review by the Supreme Court of the United States. INTERSTATE COMMERCE. 103 R. W. BAKER'S STATEMENT. - Statement of R. W. Baker, secretary Board of Trade, Duluth, Mönn. The object aimed at in the committee's investigation is of paramount interest to the great majority of business, men of this country, but, like many other matters of vital importance to all, individuals will not give their time to bring about results, while they are loud in condemning public servants for not adopting legal measures which they will not even sacrifice their time to assist in framing, and then complain of ex- tortion and monopolies. r - I think rebates should be allowed, to the end that the same principle involved between the wholesale and retail dealer should be recognized, unless a sliding scale of rates can be adopted and maintained, giving certain rates for 10, 25, 50, 100, 500 cars, &c. I think they should not be regulated by law, as it is a private business matter between the shipper and the transporter. They should not be prohibited. Pooling should be allowed under certain restrictions for the protection of the railroads, but not in such a manner as to give them arbitrary cou- trol of the shipper's property, utterly disregarding his directions as to route, time, &c. If regulated by law, it would be sufficient to require the terms to be made public and subject to approval. I am most decidedly of the opinion that provision should be made by law for securing to shippers the right to select the lines over which their shipments shall be carried. * Railroads should be permitted to charge less proportionate rates for long than short hauls, as it costs less. I do not think the public inter- est requires any legislation on this subject. , I believe it to be a matter of great national importance that the Gov- ernment should develop and maintain a system of water routes; that it means hundreds of millions of dollars increased wealth to the agri- Culturists of the West. - A commission is essential to the carrying out of laws regulating inter- state commerce. - -- - - THE PEORIA BOARD OF TRADE. Statement by the transportation committee of the Board of Trade of Peoria, Ill., J. B. Greenhut, J. M. Quinn, and E. S. Easton, adopted by the board. (1) The best method of preventing extortion and discrimination is by means of Stringent laws passed by Congress. * (2) As a rule through rates are too low and local rates too high. (3) Publicity of rates should be required by law. Changes of rates Without public notice should most certainly be prohibited. The best method of Securing uniformity and stability of rates is through a com- petent commission Sustained by adequate laws of Congress. (4) We think it advisable to enact a law fixing a maximum rate. (5) In fixing the tariffs the actual cost of building and operating of road for a term of years, with interest and a fair remuneration for risk Of the business, should be considered. (6) Rebates and drawbacks should be subject to official inspection. 104. INTERSTATE COMMERCE. (7) Railroads should not be allowed to pool against the interests of shippers. - - • ‘ (8) The shipper should be allowed within reason to select the line where two or more lines make the same delivery. (9) Uniformity of rates can be best secured by good and sufficient laws passed by Congress, with honest and efficient officers to enforce them who will not be dependent on the railroads for pay or position. (10) Railroads should be allowed to charge lower rates for long than for short hauls. Legislation on this subject is badly needed, but should be carefully guarded not to destroy what we would protect. (11) There should be no difference in the rates allowed to shippers when the same amount of freight is handled and the conditions are the S3LDO €. - 3. (12) The railroads should be required to adopt a uniform system of accounts. **, - - (13) They should be required to make reports to the Government as full and complete as possible. * zº - (14) In making provision for securing cheap transportation the Gov. ernment should develop and maintain the water routes. (15) There should be a commission appointed for the purpose of en- forcing any laws Congress may enact for the regulation of interstate COLONDO €I'C62. . - - TEIE MANUEACTURING JEWELERS. Statement submitted by Aaron Carter, George R. Howe, Henry Hayes, David O. Dodge, jr., and David F. Conover, of New York, a committee representing the interests of manufacturing jewelers and wholesale dealers in watches and jewelry. - gº In some of the States (more particularly the Southern) there are local licenses issued to peddlers selling goods to consumers in the respective States. We doubt whether the laws providing for these licenses ever intended that they should be applied to wholesale merchants as at present applied, and usually on information of irresponsible parties who manage to obtain part of a precarious living by causing the arrest of our agents, in order to procure a portion of the fine involved. Our traveling agents carry With them a complete stock of goods from which they deliver to the store-keeper such as he may select, with invoice for the same ; not selling by Samples as is done in most other businesses. As We do not sell to the consumer, we of course do not interfere with the business of local merchants, but on the contrary, we enable these merchants to obtain the full benefit of ample competition, which we think is decidedly advantageous to the whole population of the States. These benefits they cannot obtain if we are hampered in the facilities of traveling from State to State. We believe that there will be but slight difficulty, if any, in having these laws amended so that they will apply to us precisely as they would apply to their own wholesale merchants; placing us on a par with Such merchants. - Another feature of interference with free interstate commerce affect- ing us, is the refusal of certain railroads to carry our trunks as baggage on the passenger trains which also carry the custodians of these trunks. We appreciate the claim of the railroads that they decline as a matter of security to carry merchandise as baggage, but we merely ask that .* INTERSTATE COMMERCE. ~ : 105. the same protection should be given to our baggage as is given to ordi- nary baggage, and that unjust discrimination should not be made against us; for we are perfectly willing to guarantee (with good Secur- -ity) the railroads against any loss that may occur which would involve an amount greater than would be sustained by the loss of an Ordinary wardrobe. This not only hampers our business, but prevents the un- fettered competition in our goods which would be beneficial to all the people of the States, as indicated in a prior Section of this paper. THE ANTIMONOPOLY LEAGUE. Statement by Walter H. Sharpe, John W. Greene, Wilson McDonald, John W. Keough, and William L. Snyder, committee of the anti-monopoly league of New York. - Attested as follows: At a regular meeting of the anti-monopoly league, held on July 2, 1885, the fol- lowing statement, prepared by a committee heretofore appointed so to do, was unanimously adopted and approved as the view of this body upon the subject of interstate commerce, and upon motion it was - Resolved, That a copy of the same be placed before the United States Senate Com- mittee on Interstate Commerce for its consideration. - t JAMES J. CONDON, - - * Secretary. 46 East Twenty-sixth Street, New Yorh. INTERSTATE COMMER.C.E. The interstate commerce of the country is carried on by means of its interstate postal, telegraph, waterway, express, and railroad systems, all subject to legal control in the public interest. THE POSTAL SYSTEMI. The postal system is created and controlled by enactment of Con- gress, and is managed as one would manage it if he owned the whole country, and all the people therein were his tenants whose immediate happiness and whose greatest good he honestly desired to secure. It is managed with a view to find out how much service can be yielded to the public for $1 without loss. - I There are over fifty thousand post-offices in the country and each now delivers matter at a uniform rate. A company made up of five thou- sand selected from these post-offices would make an unreasonable profit out of the business done by them at present rates, while a company representing the remaining forty-five thousand offices would become bankrupt at the same rates of charge. The good of the whole is best secured by equating the deficiency of the feeble with the surplus of the strong. This is only possible under one ownership, and experience has proved that that ownership can only be safely vested in the Gov- ernment, because it aims at highest service without profit. THE TELEGRAPH SYSTEM. In its office the telegraph system is similar to, while in its nature it is different from, the postal system. Its management should be upon the same principle, i. e., with a view to determine how great a service 106 : - INTERSTATE COMMERCE. can be rendered for $1, not, as it is now managed, with a view to de termine how little service the public will accept for $1, or how much a sender will pay rather than not use the facility. One policy determines how much the traffic will bear, the other how little it is necessary to bear the traffic. - * Under Government control on this principle a rate of one cent a Word for ten or more words for any distance could easily be furnished, and the benefaction of this great facility brought down to the reach and use of thousands, which is now limited to hundreds. wATERWAYS. It is found that those of its waterways which are sustained at public. expense and open to common use free, yield the most satisfactory re- sults, and the steady gravitation in this and all countries is to such free use. - - -- The waterways furnish the cheapest rate, and affect and regulate railway rates most favorably in the interest of the shipper, and being open on common terms to all who choose to use them need no other legislation than will make them free and secure access to them to all users alike; it is necessary that sufficient landings should be accessible to all upon the same and reasonable practicable conditions. - A syndicate representing private interests owning and controllin the landings on the Hudson River would virtually own and commerci- ally control that artery of trade. This should be prevented; no exclu-. sive landing privileges should be allowed at ally shipping point. * . Where public landings accessible to all comers on equal footing and private landings inaccessible to the public at large cannot co-exist, the private interest should give way to the public need, and that need be amply provided for and fully protected. A monopoly in whole or in part of any natural highway is unjust. RAILWAYS. There are in the United States 125,000 miles of railways, of which but 30,000 miles pay dividends to stockholders. The traffic which produces the revenues of the railway is of several classes: 1st, Passenger; 2d, postal freight; 3d, express freight; 4th, dispatch freight; 5th, common freght. * .* PASSENGERS. The through lines between New York and Chicago charge as a rule at the rate of $320 per ton for passengers in an ordinary car and $400 per ton in a sleeping car, while common freight is carried by the same roads at $5 to $8 per ton. This difference is unjust to passenger traffic and represses it. At 1 cent a mile the same train would in the end earn more dollars than at 2 cents. POSTAL FREIGEIT. The rate paid for postal freight carried on the same train and car- ried in the same car as express freight pays much higher rates per ton than is collected upon express freight per ton. EXPRESS AND DISPATCH FREIGEIT. As a rule these two classes of freight pay too little per ton to the car- rying railway and extort too much from the public, while the difference INTERSTATE COMMERCE. 107 is appropriated by intervening corporations, which by Contract with the carrying companies monopolize it and enforce unjust rates arbitrarily. f TEIE PROFITS. If the profits absorbed by the intervening corporations which prey upon the railway and traveling and shipping public alike were added to the railway receipts the 30,000 miles which now pay dividends would yield returns beyond reason, while 70,000 miles more would pay reason- ably, and all would pay something. - PHYSICAL GEOGRAPEIY. The physical geography of the country gives to the route used by the New York Central to Chicago so great advantages over all other roads in grades and natural development of local traffic that it can earn and pay a dividend upon a charge for passenger and freight traffic that will impoverish any rival charging the same rates. Ełow then can passenger and freight rates be fixed and made common to all roads under various ownership, except they be crushing to the major part of the railroads or be extortionate to the public and uncon- Scionably profitable to such situated as the New York Central Com- pany ? - What legislation can cure this evil, which no commercial device or pool can eradicate? . COMPETITION AND CONSOLIDATION. Competition and consolidation can do and have done much to facili- tate transit and reduce charges, but in the last analysis of the question of rates it is found that grades and natural costless advantages are fac- tors that nothing can overcome except the application of the principle adopted in the conduct of the postal system under one ownership aim- ing at the greatest public good without profits. There can be no other remedy. - Let the whole system of interstate commerce by postal, telegraph, express, Water, and railways be organized and conducted as a system of uational public works. Make waterways free, and conduct all the rest upon the same principle as under the authority of Congress the postal service is now conducted. - Let the Government assert its right of eminent domain, condemn and convert to public use every mile of interstate railroad and telegraph line in the country, pay for the property at its ascertained actual value, and in the use thereof for the public good practice every possible economy, aim at the most complete service, seeking no profits while reasonably guarding against loss in transporting common and express freight, rendering transit with facility, safety, and comfort, and in the transmission of information. g This done, it will become practicable to do the interstate postal, tele- graph, passenger, express, and freight business of the country with the greatest dispatch and economy, and to reach and establish general average rates for all such Service as shall be uniform, permanent, and just, and furnish the greatest attainable facility, stability, and utility in the management of these great engines of education and civilization in their adaptation to the Wants and comforts of man. The inevitable is that a monster corporation will succeed the present 108 INTERSTATE commeRCE. chaotic and commerce disturbing and repressing condition, or that Government control must occur. . . . . - The former would be inimical to public interest and dangerous to our free institutions. - - The latter will best conserve every desirable social condition, and its consummation is the earnest hope of the patroit, philanthropist, and Statesman. - - J. J. WOODMAN'S STATEMENT. Statement of J. J. Woodman, Paw Paw, Mich., master of the National Grange of the Patrons of Husbandry. - **. IReferring to your circular of April 10, now before me, I will briefly state not only what I understand to be for the interest of agriculture but what I believe to be for the public good. - * (1) The best and only practical method of “preventing extortion and unjust discrimination by corporations engaged in interstate commerce,” in my judgment, is to enact a national law, clearly defined, and protect- ing alike the interests of the people and of the railroads. - (2) The law should aim, as far as practicable (with the aid of State legislation), to establish reasonable rates, both for “local and through traffic,” and thereby prevent the unequal and unjust discrimination now practiced of charging for local traffic “whatever the article will bear,” and for through traffic whatever the avariciousness of railroad managers through the pooling system demands; also to prevent unjust discrimi- nation between individuals and localities in shipping. (3) “Publicity of rates” should be required by law, and no changes - should be made from the published rates until after at least thirty days' notice of the same. - . (4) Reasonable “maximum” rates for the transportation of both.local and through freights should be established, leaving competition to take place under such rates; and if no unjust discrimination is allowed be- tween persons and localities justice will be secured and extortion abol- - ished. - . (5) In fixing maximum rates, the actual cost of construction, or bona fide capital invested, together with amount and “condition of business,” should be well considered. Arbitrarily taxing the people to pay divi- dends upon fictitious or watered stock is a system of extortion and robbery too palpable to be concealed or palliated, too contradictory to the principles of our Government to be permitted, and too oppressive and humiliating to an enlightened people to be endured. (6) The present system of “rebates and drawbacks” should be abolished. It is a system of favoritism which enriches one company or individual at the expense of another. The transaction between the Pennsylvania Railroad and the Standard Oil Company, by which the latter received rebates amounting to $10,000,000 in eighteen months, breaking up seventy-nine other houses engaged in the same business, is sufficient proof of the above. This system enables speculators in farm products who have influence With the companies to obtain lower rates than are given to farmers. By this advantage in shipping they are enabled to buy and manipulate most of the surplus farm products. This is seri- ously detrimental to the farmer. It not only reduces his profits, but deprives him of the satisfaction and valuable business experience which Shipping and marketing his own products would give him. As agricult- INTERSTATE COMMERCE. -- 109 ure is the basis of all prosperity, and from which the nation draws its Very life-blood of existence, the farmer should have access to a free and untrammeled market, without being compelled to pay tribute to specu- lators and gamblers in the products of his labors. - (7) The system of “pooling contracts and agreements between rail- roads doing an interstate business” destroys all healthy competition in transporting freight, compels unwilling partnership, and enables the contracting parties to ruin weaker and outside lines whenever it may Serve their interest to do so. The system should be abolished and - prohibited. (8) Provision should be made by law for securing to shippers not Only “the right to select the lines and parts of lines over which their shipments shall be transported,” but to insure to them good and suit- able cars for the same. -> wº (9) As passengers get on and off the cars without expense to the Company, and as ticket agents and conductors must be employed, it Seems reasonable to infer that “companies engaged in interstate com- merce’ should carry passengers at one uniform rate per mile. I am Somewhat inclined to the opinion that if the rates upon all railroads in . the country were limited by law to 3 cents per mile for “first class,” 2 cents for “second class,” and 1 cent for “third class,” and the com- panies were compelled to carry at these rates, it would not only stim- ulate travel, but result in benefit to the people and the companies. This is the European system, and enables the poorer classes to travel with- Out Serious embarrassment. - . ... • (10) “Corporations engaged in interstate commerce” should be per- mitted to charge an excess for a short over a long haul equal to the ad- ditional cost of loading and unloading cars, stopping trains, and switch- ing; but they should not be permitted to charge more for a short than for a long haul. To illustrate, the rates from a station between Chi- cago and New York to New York should not be more than from Chi- cago. This practice by the companies is a just and fruitful cause of COmplaint. º (11) No concession should be allowed to large shippers, “except Such as represent the actual difference in the expense of handling large ship- ments over small shipments,” and this should be confined to freight which passes through private warehouses, elevators, and stock-yards, and the difference should be made known to the public. (12) A uniform system of accounts should be kept by all Companies engaged in interstate Commerce. •" (13) They should also be required to report annually to the Govern- ment: (1) Number of miles of road operated; (2) actual cost of the same; (3) value of rolling-stock; (4) indebtedness, bonded and otherwise; (5) amount paid for repairs during the year; (6) amount paid for rolling- stock during the year; (7) cost of operating; (8) net profit or loss, as the result may show; (9) number and amount of dividends declared, during the year; (10) amount paid as dividends or otherwise on ficti- tious capital stock, if any. - - tº . (14) Water routes are nature's great thoroughfares, and it should be a fixed policy of the Government to keep the channels of these great ar- teries open, that the life-blood of commerce may flow freely. Water routes are indispensable in maintaining cheap transportation. (15) The people want no board of railroad commissioners. They want just and wholesome laws, with well-defined provisions for enforcing them. Several of the States have created “commissions,” but With unsatisfactory results. The people prefer to trust the Courts rather than a commission, -- - - 110 INTERSTATE COMMERCE. zº CYRUS G. LUCE's STATEMENT. Statement of Cyrus G. Luce, of Gilead, master of the Michigan State - Grange. * - I frankly confess that the subject is too vast and complicated for me to master. But for the general good of the people, and the railroads, too, it seems to me essential that the Government should in Some way exercise Control Over them. -- (1) I can hardly imagine a case where it would be right or proper for a railroad to charge more for a shorter than for a longer distance for freight like in kind and quantity and over the same road or roads. The public believe this to be wrong, and will not be content while the prac- tice exists. This the law should prohibit. The car-load should be the basis for charges, and all discriminations between places or individuals should be prohibited. Of course I do not claim that the rate should be the same on all roads, nor the same per mile for a Short as for a long haul. (2) The through rates are very low, or local very high. This is es- pecially true at non-competing points. But my answer to the first ques- tion will afford a remedy for a part of this wrong. (3) Publicity of rates is essential and should be required of all roads. Imaginary wrongs are often hard to be borne, and I doubt not some of the complaints are founded upon imagination. Publicity of rates would remove some of this. . (4) The advisability of establishing a system of maximum and mini- mum rates is the hardest question of all, and the deponent saith not. (5) The elements of cost of roads, as well as the facilities for earning money on the part of the roads, should be taken into consideration and should all have their influence if rates are fixed by law. But the real cost (and not watered stock) should be estimated. (6) Rebates and drawbacks should never be allowed. Here is where some of the greatest abuses exist. One place is built up, another torn down; one man is made rich, another poor, through this system of rebates. It ought to be probibited now, henceforth, and forever. (7) Pooling may safely be permitted if the Government will exercise official control over it so as to insure justice and equality. (8) It seems to me that shippers should enjoy the right to select the lines over which their shipments shall be transported, yet I cannot re- gard this as essential if they are justly and promptly served. (9) The question of securing uniformity of rates, like the fourth ques- tion, is a little too weighty for me. The cost and business of roads differ so much that an iron rate or rule cannot be adopted that will do justice to all. If a commission of constituted authority can be found wise enough, broad enough, just enough, and bold enough to do justice to all, it might be placed in its hands to decide and enforce. But the if forms an important part of this consideration. But observation weak- ens confidence in a commission to settle the vexed questions. Maximum rates may be adopted that would in some cases prevent extortionate rateS. * (10) Corporations engaged in interstate commerce should certainly be permitted to charge a lower proportionate rate for a long than for a short haul, but never more for a shorter than for a longer haul. (11) “Should any concessions in rates be allowed to large shippers,” &c. ? No, no, no! - INTERSTATE COMMERCE. 111 (13) Corporations engaged in interstate commerce should be required to make a statement to the Government of the actual cost of their roads, gross and net income, and the Sources from which it is derived, and of the various items of expenses. Such official reports are a source of great satisfaction to the public. They often correct the imagination. (14) The Government should at least encourage by liberal appropria- tions the maintenance of water courses to the sea-board. This is of prime importance. With these a competition will exist that will do much toward regulating the charges. - (15) My own opinion is that a regulating law should be passed re- stricting and fixing rates so far as possible consistent with justice, and that then a tribunal or commission should be established to enforce the law; and in addition to this it should be clothed with discretionary power to enforce necessary rules to insure the desired results. And now permit me to say that the assertion of the right to legislate upon the very important question of interstate commerce by the Con- gress of the United States will be hailed with delight by the great mass of the American people. This right can in no way be declared so effect- ively as by the passage of a bill that shall regulate, restrict, or control. The passage of an act that merely provides for the appointment of a commission to gather and publish facts and reports will be of no avail. To afford any satisfaction, this commission must have authority to act and enforce. ** This demand does not come from the hoodlums or communists, but from the conservative, candid citizens. It is quite possible that this demand comes not so much from what has been done as What may be done while a few men are in position to exercise such unlimited power. In the approaching conflict between wealth and corporations on the One side and poverty, vice, ignorance, prejudice, and communism on the other, the Government will be wise to pursue such a course as will com- mend itself to the conservative average citizen. W. EI. NELSON'S STATEMENT. Statement of W. H. Nelson, of White Haven, master of the Tennessee State & Grange. - That there is pressing necessity for legislation by Congress on the subject of interstate commerce seems evident from the clashing of in- terests which occurs almost daily in the courts, as a result of attempted State supervision of transportation lines which extend beyond State lines or merely pass through to terminal points beyond. Perhaps the worst result which is growing out of these conflicts is the ill-feeling and mistrust engendered by What seems to be—and is becoming generally believed to be—a determination on the part of these corporations to resist unitedly all attempts at Supervision and to defy the powers of the State. As farmers, we hope that this is more apparent than real, since agriculture and transportation have become and must ever remain so dependent on each other. Another very grave evil which is growing Out of delay and the injustice of permitting corporations to tax at will “what the traffic will bear” is the increasing disposition among the more intelligent and independent farmers to seek other employment and to leave the ignorant and stupid to cultivate for absent owners. This * 112 - INTERSTATE COMMERCE. tendency is operating slowly, but surely, at the present time, and only needs the breaking of a few more strands in the cable of public con- fidence to precipitate a general rush from the farms. The best method of preventing the practice of extortion and unjust discrimination by corporations engaged in interstate commerce will perhaps be most profitably found by first determining What interests stand most in need of any method of supervisory legislation. I should say without hesitation the corporation interest stands foremost in point of need in this respect. A large proportion of them are confessedly on the verge of bankruptcy, while others are growing so strong that their unruly greed, like the blind desperation of Samson, is threatening to pull down the temple of State upon themselves and the rest of us. The poverty of the one class is to be found in the wealth of the other. A system of fraud, discrimination, and robbery is continually practiced among them, and the morals of the whole nation are lowered by toler- ating such examples in high places. As one evidence that this is not too strongly stated witness the fierce wars, which are only suspended by truce at cost of the public until some contracting party breaks faith, when hostilities are again renewed. It seems to me that a remedy can be found only in a rigid code of laws, enacted by Congress and clearly defining their relations to each other and to Government or people, and prohibiting every known prac- tice of dishonesty and unfairness in their dealings with each other, with heavy penalties for violations, including forfeiture of charters in case of repetitions. The materials for such a code could perhaps best be obtained from the records of the courts and from their own ample stores of experience. But one clause would we suggest from the outside, viz, a total prohibition of all secrecy and privacy of transactions. The interests and future prosperity of these corporations require that this much should be done for them, and they are of too much importance to the rest of us, and especially are they too closely allied to the agricult- ural interests, to be allowed to wreck the grand system of transporta- tion which, by reason of its magnitude, has become the wonder of the world. We have dwelt upon this part of the subject because we be- lieve that we have hit the root of the matter and proposed a condition precedent without which other legislation will give but little promise. With this enacted, however, we believe that the problem of preventing extortion and unjust discrimination against other interests will be more than half solved. - In considering rates now charged for local and through traffic as an . aggregate of receipts, we have no accessible statistics upon which to base a conclusion as to whether they are reasonable or unreasonable, and it would seem that in order to prevent such a conclusion being reached these corporations have very generally adopted the culpable practice known as “stock watering” and secrecy. We are satisfied, however, from what we do know that through rates in many cases are too low, and that local traffic is unjustly taxed to make up the deficit. This would probably be remedied to some extent by establishing a sys- tem of maximum and minimum rates. And while We do not think that the public interest requires the prohibition of charging a lower propor- tionate rate for a long haul than for a short haul, yet we believe that a higher actual charge for a short haul than for a longer haul should be prohibited. This feat is accomplished in this section, on freight con- signed to a way station, by carrying it on past the Way station to the end of the road at through rates, when it is returned to destination With local charges for the lap-back. J. " INTERSTATE COMMERCE. . ... • 113 We think that rebates and concessions in rates, except such as repre- sent the actual difference in expense of handling large shipments over . small shipments, should undoubtedly be probibited by law. We also believe that a wise public policy demands the prohibition of pooling contracts, at least for the present, as they are dangerous and in danger- ous hands so long as that unruly and defiant spirit is so clearly mani- fested. While we are firm in the belief that the cost of the service, with a liberal addition for profits and contingencies, constitutes the true basis for determining the rates which should be charged for the trans- portation of freights and passengers, yet we have but little hope of ob- taining satisfactory results until complete publicity of all transactions. is required by law and obtained. Full annual reports should also be required to be made and sworn to, and they should contain : Names of officers and directors, with residences; assets and liabili. ties; capital stock; cost of construction and equipment; earnings and expenses; description of property; number of employés; tonnage car- ried; passengers carried; accidents and stock killed; free passes issued, and to whom ; by whom operated ; in what States operated. Of course under each general head subdivisions should be arranged so as to bring out like information from each company. Perhaps other general heads might be added with advantage, and the requiring all companies to adopt a uniform system of accounts would add Very much to the accuracy and value of such reports. The railway system is con- tinually enlarging, and many, if not all, of these propositions appear as absolutely necessary when viewed with reference to the future; but even if we look to the past we can see that these corporations and the whole country would now be in better condition if such laws had been enacted years ago. The country is likewise growing in population, with Vast resources undeveloped, and certainly all the water routes which can be opened to commerce will be needed and will exert a wholesome influ- ence so long as competition can be maintained. For this purpose We believe that Congress should enact laws prohibiting combinations be- tween boats lines and railways, and should also prohibit the ownership of boat lines by railroad corporations. Did time permit, we might en- large upon the absolute necessity of competition not only as a protec- tion to the public interests but for the continued prosperity of the cor- porations. We are not unmindful that reductions in rates have been going on for years as an incident of the times. This is evident from the fact that freight in excess of the local demand must reach the sea- board at prices which will meet the foreign demand or exportation Will cease. So that during short crop years and weak foreign demand trans- portation companies must share with other interests a financial depres- sion; but with recurring abundance and advancing prices abroad, Tates are advanced to “all the traffic will bear,” thus reimbursing for the past and fortifying for the future. In this way they grasp at will the fruits of the sunshine and favoring showers and stimulated låbor, and make all seasons alike unpropitious to the farmer. And through the farmer - they depress every other interest in the land, including their own. But these attempts to “kill the goose to get the golden egg,” it would seem, should not be tolerated much longer by the American goose. Much has been said against commissions, but most of these arguments might be turned with equal propriety against any public trust or office. We are decidedly in favor of a commission, but without any grant of ar- bitrary powers to militate against the rights or interests of Corporations. We think that the commission should have power, and be instructed, to co-operate with State commissions, and should be required to enforce 16232 AP 8 114 - INTERSTATE COMMERCE. the laws by advisory consultation, if possible, but through the courts if necessary. They should be required to make annual reports, giving all official correspondence and full details of all business transacted. Es- pecially should the commission be charged with the duty of ferreting out and prosecuting all secret transactions. Let us have no secrecy and all real causes for complaint will soon be removed, and complaint with- out reason will soon vanish when exposed to open daylight. We regret, but are not responsible for, the very general belief among railroad men that the order of Patrons of Busbandry is intent on injur- ing their interests. Railroad men are too much occupied with a new and complicated business to mingle with farmers and learn better, and hence they fall an easy prey to hungry attorneys, who see a good living in exciting their fears and magnifying mole-hills into mountains. * *. - R. P. BOISE'S STATEMENT. - Statement by R. P. Boise, of Salem, master of the State Grange of Oregon. This matter of the best methods to be adopted by Congress to regu- late interstate commerce on railroads has for Some years attracted the attention of farmers in this State, and caused considerable discussion among them. They believe abuses prejudicial to their interests exist in railroad management, and they have been anxiously looking to Con- gress and the State legislature for relief. This subject was before our State legislature at its last session, and a law was passed by that body regulating transportation on railroads in this State, which received the approval and influence of our farmers in its support. This law is in effect the Reagan bill, which was considered and passed by the House of Representatives of the last Congress. The enactment of this law by- our legislature by a very decided majority expresses more emphatically than 1 can the earnest desires of the people of this State, for I believe three-fourths of the people favored its enactment. The passage of the Reagan bill through the House in Congress was formally approved by our legislature, and a resolution passed both houses unanimously, in- structing our Senators in Congress to support the Reagan bill. I men- tion these facts to show to your committee that the people of this State favor such regulations of interstate commerce as Will suppress manifest abuses by forbidding their continuance by positive laws which name the abuses and provide for their suppression. PlUBLICITY OF RATES. - In your third interrogatory you speak of publicity of rates. This is very desirable here, for now with rates unknown shippers can make no certain calculations as to the Value or price to be paid for articles they buy or sell which are subject to railroad transit. Secret rates also ex- pose shippers to impositions by dishonest railroad agents, who some- times Wish to extort for private gain. So also where a railroad company ‘pretends to carry goods by weight, the goods should be weighed and the true Weight ascertained, and not left to be guessed at by station agents, for they always guess against the shipper. I know a case in point where a man shipped a buggy by rail which weighed not over 300 pounds. The station agent guessed its weight at 800 pounds, and collected & * * INTERSTATE COMMERCE. 115 freight at that rate. I know of other similar instances of this kind of extortion. - - - No rebates should be allowed, for by this system of discrimination the favorites of railroad managers are assisted in business at the ex- pense of their neighbors, and free competition in business destroyed. While this system prevails no one can safely enter a business requiring large shipments, unless he first secures the friendship and aid of rail- road managers. All persons should be equal so far as the law can make them. - * Railroad corporations should make annual reports to the Govern- ment, that we may know the cost of construction, their earnings, their liabilities; whether they have borrowed money to pay dividends to in- flate their stocks, so that persons wishing tô buy or sell stocks may act intelligently ; that we may know how much tax they ought to pay, and that we may have that information relative to their business which will enable the authorities of the nation and States to act intelligently in making laws to regulate commerce on them. This kind of knowledge your committee seems to be seeking through this circular. "THE RAILROADS DESTROYING COMMERCE By SEA. Again, it is the duty of Congress, so far as it can be done with reason. able expense, to encourage and secure cheap transportation by Water routes, and not allow the railroads to so discriminate as to break down or dominate the business on these waterways. With a view to crip- pling if not destroying the carrying trade by ship from the Atlantic to the Pacific coasts, the transcontinental lines have put down through freights from Eastern cities to San Francisco, and Portland, Oreg., and deliver them at very low rates by special contracts to shippers who agree and bind themselves not to ship any goods by sea. One way to prevent the destruction of this cheap waterway is to forbid the charg. ing more for shorter than longer hauls, which is being done. Take for example coal oil. It has been brought from Eastern cities by the North- ern Pacific and the Oregon Railway and Navigation Company to Port. land for $1 per 100 pounds, while more than double that amount was being charged to Spokane Falls, a place on the Northern Pacific more than 300 miles east of Portland. These discriminations are intended to, and do tend to, embarrass, and if continued may destroy our com- merce by sea with the Atlantic coast. They also unjustly tax Eastern Oregon and Washington without any recompense to the people of that Section. - - TFIE IMPIROVEMENT OF THE COLUMBIA. R.I.V.E.R. I would also call the attention of your committee to the importance of the Canal and locks now being constructed at the Cascades of the Co- lumbia River. Were they completed (and they should have been before this time), then a cheap waterway would be open to the people east of the Cascade Mountains, a country of great extent and vast resources. The Oregon Railway and Navigation Company now controls this great river and taxes the growing commerce of its great interior basin at will. Mr. Henry Villard, who founded this corporation, and at one time through a combination with it and other corporations monopolized the entire carrying trade of this Northwest, said to his stockholders that the “control of this river was the backbone of their enterprise.” They will mot Willingly surrender their power, and will, if they can, delay the comple- tion of these locks so they may continue their monopoly and gather more 116 INTERSTATE COMMERCE. millions from the people. So completely is the business of the Upper Columbia region in the control of this monopoly that the wool clip pro- duced there last year, though then baled, pressed, and ready for ship- ment to Boston and other Eastern markets by Way of the Northern Pa- cific, was compelled to go to Portland before the owners could get a bill of lading to take it again over the same road past the Warehouses where it had been gathered and baled on its way east. - - -- These Wrongs are so apparent to us that we think no commission or other investigating tribunal is now needed to further point them out. A commission invested with powers ever so comprehensive should not be intrusted to right these wrongs. If we have a commission (and one may be necessary to investigate complaints of abuses less manifest) let its jurisdiction extend to other natters which may be equitably adjosted, such as the rates to be charged on the different lines where elasuicity in charges may be just. But positive law is best to suppress palpable wrong. The action of the lower house of Congress in passing the Rea- gan bill meets the approval of the people here. It seems to us that the United States Senate should not be slower in meeting the demands of the people, as expressed through their representatives freshly chosen by their votes, than the House of Lords in yielding to the demands of the Commons in England. - S. T. COULTER'S STATEMENT. Statement of S. T. Cowlter, of Santa Rosa, master of the State grange and one of the directors of the State board of agriculture of California. I cannot allow my silence to impress the minds of your committee with the conviction that either I or the members of the organization of which I have the honor to be, for the present time, the head and representative take no interest in the subject your committee has under consideration. The abuses, the extortions, and discriminations of which we have been made the victims by the transcontinental railroad Com-, panies have made us so keenly alive to the importance of the subject that when Judge Reagan’s interstate-commerce bill was first under con- sideration in Congress petitions were circulated in all the granges of the State, and signed by almost every voting member, praying for its immediate passage. They were also circulated throughout the farming portion of the State and signed indiscriminately by persons of all pur- suits. There is no subject, except perhaps that of restricting Chinese immigration, on which our people are so unanimous in sentiment as that of the regulation of interstate commerce by Congress. I say by Congress. First, because the Constitution has delegated that authority and duty to the Congress of the United States. By the authority “to regulate commerce with foreign nations, and among the Several States and with the Indian tribes,” we understand that the Congress of the United States is clothed with power to pass laws for the regulation of such commerce, not to appoint some person or persons and confer on him or them the power and duty to establish and enforce rules for the regulation of such commerce. Second, because our exper- ience with railroad commissioners, and our observation of the manner in Whieh they have performed the trust committed to them elsewhere, lead us to doubt whether it would be possible to get a commission that would give the needed relief. t INTERSTATE COMMERCE. 117 4. We have more confidence in a law enacted by Congress fixing the rates of freights and fares, prohibiting pooling and discriminations, and providing punishment for its violation. We are not insensible of the vast importance and utility of railroads. We recognize them as indispensable to modern civilization, and have no desire to impair their ability to perform their proper function of transporting speedily and safely from place to place both persons and commodities for a fair and just compensation, to be paid alike by all in proportion to the service rendered. - ... • Dut we are unwilling that they shall continue to enjoy and exercise one of the great powers of the Government (that of eminent domain), to enable them to monopolize a new and valuable discovery in the art of transportation (the great benefit of which ought to inure to the peo- ple), and use them as an engine of oppression. - While we recognize the fact that the construction and operation of railroads require the exercise of great abilities and the expenditure of large sums of money—abilities that are entitled to liberal compensa- tion, and moneys that ought to receive a fair return for their use—we cannot forget that corporations are creatures of Government; that they, being artificial persons, have and can have no natural rights; and that it is the duty of the Government that permits their existence to protect the people from their tyranny and oppression. } MILTON GEORGE'S STATEMENT. Statement of Milton George, of Chicago, secretary of the National Far- mers' Alliance and editor of the Western Rural. (1) The best method of preventing extortion and discrimination is to make a maximum rate and provide heavy penalties for discrimination, which practically secures a minimum rate. (2) As a rule the through rates are reasonable enough, especially from competing points. Local rates are generally too high. (3) Publicity of rates should be required by law, and changes of rates should be prohibited without public notice. (4) A maximum rate should be established, and, by compelling the managers of the roads to treat all shippers alike, a minimum rate will practically be made. - (5) The tariffs should be adjusted as far as possible to suit the con- ditions of trade, So that the roads may earn reasonable dividends on the actual and not the fictitious value of their investment. (6) Rebates should be entirely prohibited by law. (7) Pooling can do no harm if the tariff is kept within the limit of the maximum rate fixed by law, but should be made public and sub- ject to official approval. - (8) Provision should be made to secure to shippers the right to select the line or parts of line over which their goods shall go. (9) Uniform rates can best be secured by a commission, we believe, though there may be a better system. (10) A corporation should be allowed to charge a lower proportionate rate for a long than for a short haul. There is too much difference now, and the subject needs legislation. } (11) No concessions to large shippers over small should be allowed, 118 - INTERSTATE COMMERCE. except such as represent the actual difference in the expense of hand- ling large shipments over small. Car-lots should be made uniform, whether One or more. - - - (12) Corporations engaged in interstate commerce should be required to adopt a uniform system of accounts. --- (13) Such corporations should be required to make annual reports to the Government of earnings, expenses, &c. (14) It is not important that the Government should develop and maintain a system of water routes to secure cheap-transportation. (15) A commission or other tribunal should be established to enforce legislation for the regulation of interstate commerce. * ALEXANDER A. ARNOLD's STATEMENT. Statement of Alexander A. Arnold, of Galesville, president of the State - Board of Agriculture of Wisconsin. I am glad to know that Congress has seen fit to appoint a committee for the purpose of investigating and reporting relative to interstate commerce. The subject is so broad that one can give but little-infor- mation from a local standpoint. It is a subject that has interested me and upon which I have been considerably exercised in the past. Public sentiment has, however, had a controlling influence on these corpora- tions and they have not of late been as indiscreet in their management as they once were. This with competition in many instances has cor- rected many of the past errors. However, I have no doubt that the Government has the right and should exercise it by in some way con- trolling their management, so that the people shall not be plundered and that railroad property shall be allowed reasonable profits on the amount of labor, skill, and capital employed, unless such a number of lines have been built as would require extortion from the people to make- each pay. A correct public sentiment has a benign influence in correct- ing abuses in semi-public enterprises, but it is ofttimes slow in correcting existing evils, and whenever not under surveillance the natural greed of man takes advantage of any laxity. - (1) The best method of preventing extortion and discrimination is by a just law to be enforced by a commission. (2) In this section at this date the rates are generally fairly reason- able, except where there is no competition. - (3) Rates should be published and no change made without public notice. (4) Maximum rates should be established on all lines. (5) No doubt the elements of cost of management must be considered in fixing tariffs, otherwise property invested in railroad enterprises would be more insecure than at present. (6) I believe the system of rebates is pernicious. - -- (7). No pool has yet been made that the law will sustain, and none should be allowed. - - - (8) Shippers should probably have the right to select the lines over which their shipments shall be transported by paying proportionate rates. - (9), The best method of securing uniformity of rates is by a commission, but that is Where the Work comes in and it will take experts to devise a proper law. - INTERSTATE COMMERCE. 1.19 (10) There is no doubt that the roads should have more for short than long hauls, but the proportion should be made by men (or law) not in- terested; otherwise the railroad corporation is above the law in this regard, and what they lose on one line can be made up on another, or . What is lost on competing points can be made up at non-competing points. . (11) No concessions should be allowed to large shippers. If so, there is no uniformity and other monopolies are thus encouraged. * * (12) A uniform system of accounts should be required. This is one of the best things to be introduced first, and thereby find out some things that will be a basis for future legislation. - (13) If the roads are to be controlled by law, they should certainly be required to make reports, and thus have a way of showing any injustice in case of defects in the law. (14) The development of water routes depends upon the expensiveness of the enterprise, so that wherever it can be done and not make it in the end more expensive to the people than by other transportation it is advisable, as it is on all navigable streams. - (15) The regulation of interstate commerce can best be enforced by law and a commission, subject to the final decision of the courts as other final adjustments. Should your committee be able to find a railroad expert broad enough to comprehend the situation and understand that in the near future their safety and best security lies in the direction of Government cor . trol to a limited extent, he would be of great use to you. What the people have been asking for they will yet ask for themselves. A. J. ROSE'S STATEMENT. Statement of A. J. Rose, of Salado, Bell County, master of the State Grange - … of Teacas. - - The prevailing opinion among the class I represent is that legislation is badly needed. This belief is rapidly growing in Texas. I will re- ply in brief to the questions seriatim. * - - (1) Maximum rates should be fixed by law and the penalty so great and redress so speedy as to prevent frequent Violations of it. (2) The present local and through freights in our State are unjust in this : there is too much difference. The present maximum local rates are too high and through rates too low, perhaps. This, if possible, should be remedied. (3) The publishing of rates should be required by law; also changes in rates as made. - (4) I would say, fix a maximum rate, reasonable, but not a minimum. (5) Freights should be paid according to the class. That is, Value and liability to damage for which the carrier is responsible. (6) Drawbacks and rebates should be prohibited by law. (7) If maximum rates are made reasonable let them pool. (8) Provision should be made by law for securing to shippers the right to select the lines over which their shipments shall be transported. (9) Uniformity of rates can be best secured by national legislation and the agents of railroads. (10) I would say that railroads should be allowed to charge lower 120 • INTERSTATE COMMERCE. proportionate rates for long than for short hauls. Maximum rates should be fixed to prevent discriminations against persons and places. No legislation on the subject is required other than to make charges equal to all dealers and producers. (11) No differences should be permitted in the charges per car for one or twenty. All charges should be made public. (12) The railroads should be required to adopt a uniform system of aCCOuntS. - º (13) I think they should be required to make reports to an extent suf. ficient to enable the Government to know that the laws had not been violated and their net income per cent. on the investment. (14) All water routes should be developed until their full value has been reached. (15) Legislation can be best enforced by making the penalties very heavy against our county and State officers for not doing their duty in the enforcement of our National and State laws. With laws properly defining the duties of our State and county officers, with penalties suffi- ciently heavy, I don’t think that we would need any commissioners or Other additional tribunal. - - . We hope that the committee may be able to agree upon such recom- mendations as will be just to the roads and just to the people. Our people demand nothing more nor nothing less. We think it wrong for a speculator set up at a station to secure such advantages in the reduc- tion of freight per car as will force the producer to sell to him. We think that the producer with one car of grain, stock, or other freight should not have to pay more for that car than the speculator who ships twenty cars. We think that the railroads should give producers an equal chance. The farmers need the roads and the roads need the farmers. We contend that it is wrong for the roads to make these dis- criminations. The roads have no better friends than the farmers, none Who would stand by them closer if they would stop this discrimination. The mere fact of one man shipping 20 cars of grain and twenty men shipping 20 cars does not change the number of cars, but it does in- crease, and largely, too, in our State, a surplus of middle-men at the ex- pense of the producer and consumer. Yes; let the roads come to the producer and consumer and they will come to them. The farmers are ready to meet them on middle ground. They only want justice. E. A. GILLER'S STATEMENT. Statement of E. A. Giller, of White Hall, master of the State Grange of Illinois. (1) Government will have to take control of or build one or more lines of road from the Eastern sea-board to the Western settlements, and fur- Inish to the people transportation at cost. Data will thus be furnished to base future action on. (2) I call your attention to the fact that when the waterways are closed, up go freight rates. I cannot say much about through rates, but think local rates are too high, and will give my reasons. Before there was so much complaint about unjust discrimination, it was cus- tomary for both the Chicago, Burlington and Quincy and the Chicago and Alton railroads to allow the shippers on those roads a rebate of $5 per car. Of course they did most of the shipping, and if the rate was INTERSTATE COMMERCE. - 121 $32.50 to Chicago from this point it only cost them $27.50. Therefore I conclude that they were charging us poor devils of outsider $5 a car too much. i - (3) Publicity of rates should certainly be required by law. Any honest business will bear publicity, and nothing to my mind hurts busi- ness more than uncertainty. - (4) I do not see how to get at the advisability of establishing a sys- tem of maximum and minimum rates without carrying out my views as given in answer to the first question. I do not like these cast-iron rules that have no elasticity. . - (5) If the tariff is fixed, it should be based on the actual (not fictitious) cost of road, allowing a fair rate of interest, which, in my opinion, ought not to exceed the rate paid on Government bonds with taxes thereon. (6) Bebates and drawbacks ought to be entirely prohibited. (7) The question as to pooling is a difficult one to answer. We want to foster and protect the railroads, and if any plan can be devised to keep them from cutting their own throats I should say prohibit pool- ing. But if allowed to pool, make it public by all means. (8) It seems reasonable that shippers should have the right to select the lines over which their shipments shall be transported, all other things being equal. - - (9) I know of no better way of securing a uniform system of rates than that indicated in my first answer. . (10). As to the question of legislating upon the long and the short haul, I think it better to let this alone for the present. - (11) There ought to be no concessions allowed to large shippers ex- Cept such as represent the actual difference in the expense of handling large shipments over Small shipments. - (12) If a uniform system of accounts could be adopted it would sim- plify matters very much, and the general public would understand mat- ters more readily. (13) Annual reports to the Government are desirable, and the state. ments ought to be comprehensive and full. - (14). In making provision for Securing cheap transportation, the Government should, by all means, develop a system of water routes. (15) In order to enforce legislation there ought to be authority of Some kind, so that those having grievances could make the same known and have the matter attended to without expense to the complainant. I have answered the questions to the best of my ability. The answers . I know are crude, but they will give an idea of the way farmers look at these matters. One important question you did not ask, and that is the free-pass question, which I look upon as a monstrous evil. If you Succeed in putting an end to that you will have conferred an inestim- able benefit upon the people. J. L. NEAL'S STATEMENT. Statement of J. L. Neal, of Harrodsburg, master of the Kentucky State Grange. • - Thail with much pleasure any move that will directly or indirectly relieve the agricultural interests of the country from the great wrongs they suffer from the unjust discriminations of railroads. The best method of preventing extortion and unjust discrimination 122 INTERSTATE COMMERCE. is by national legislation, fixing heavy penalties and forfeiture of Charter. - * - The rates now charged are unreasonably high, particularly on way freights. & - - Publicity of rates should be required by law, and changes without public notice should be prohibited. The best method of securing uni- form and stable rates is by legal enactment with heavy penalty. A system of maximum and minimum rates should be established. Rebates and drawbacks should be entirely prohibited. * Pooling should be entirely prohibited. The law should secure to shippers the right to select the lines over which their shipments shall go. - --- A uniform system of rates can be secured by classifying the roads and freights. -- - Corporations engaged in interstate commerce should not be permitted sto charge a lower proportionate rate for a long than for a short haul. The public interest requires legislation on this subject. " No concessions in rates should be allowed to large shippers. - The railroads should be required to adopt a uniform system of ac- counts, and to make full and honest reports to the Government. It is important that the Government should develop and maintain a system of water routes. - - Legislation for the regulation of interstate commerce can best be en- forced by a commission composed of one good man from all the leading interests except agriculture, and as that is the greatest of all interests We should have two on the commission. - MILES NORTON'S STATEMENT. Statement of Miles Norton, of Deanville, Wis., secretary of the State IFarmers’ Alliance. - (1) The best method of preventing extortion and unjust discrimina- tion by corporations engaged in interstate commerce is to first remove the desire from such corporations to extract from the producers money they do not earn by law of Congress, giving them 7 per cent. on money actually invested by said corporations over and above actual expenses, the balance, if any, to be paid into the Treasury of the Government as an income tax. - (2) Rates are not reasonable, some riding on free passes, others pay- ing 4 cents per mile; some getting rebates, others paying full freight. (3) Rates should be made public. The only method of securing uni- formity is by law of Congress. (4) Rates should be established by law of Congress or by commis- sioners appointed by Congress. A majority of said commission should be Democrats under a Democratic administration. • (5) The cost of the road should be considered in fixing the tariffs. (6) No rebates should be allowed. (7) Pooling should not be permitted. - - (8) Shippers do the paying and should have the right to select the lines over which their shipments shall be carried. - (9) Uniform rates can only be secured by law of Congress. (10) The public interest require legislation upon the subject of the rates charged for long and short hauls. INTERSTATE COMMERCE. 123 (11) No concessions should be made to large shippers, except such as represent the actual difference in the expense of handling large ship- ments over small shipments, and such concessions should be made known to the public. e (12) A uniform system of accounts should be required. - (13) Reports should be made to the Government or the commissioners of their earnings and expenses. - •. (14) Water routes should be maintained. * (15) The regulation of interstate commerce can best be enforced by law of Congress through commissioners. A majority of one of said commissioners should be of the same political party as the President. Congress should make it a penal offense for any person to accept or use a free pass over any road in the United States, punishable by fine and imprisonment. --- …” J. D. LYMAN'S STATEMENT. Statement of J. D. Lyman, of Ea'eter, lecturer of the State Grange of New Hampshire (made by request of the master, Colonel Stinson). (1) The best method of preventing extortion and unjust discrimination is by the best laws that can be devised and wise and just commissioners with large powers. - , . - (2) I cut timber, valuable without railroads, because of nearness to market, and which cost considerable before railroads were built, and paid $20 per car freight from near the middle to the end of the road, while other parties, taking timber nearly worthless before the road was built, transported their lumber the entire length of the road, as I was informed and believe, for $18 per car. I was paying a public agent for transportation, for labor performed, and this agent had no right to charge me above a fair price or to perform the labor for others at less than a fair price. Neither had this public agent a right to improperly supply my market and thereby depreciate the value of my lumber where it stood, and unduly increase the value of lumber in the wild regions. Worse still, when I wanted to send my ship timber 6 miles over the same road to another road they charged $10 per car. Their plea in the first instance was the competition of other routes, and in the second instance their desire to transport my timber over more miles of their road; that is, to send ship timber inland. They ought to have charged me about $5 per car for the 6 miles, and from $15 to $20 for the longer distance, and not depressed my market by so cheap through transportation. My remedy for evils of this nature is judicious and just laws and a wise commission with ample power. - ‘(3) Rates per car-load at least should be public, and public notice of º should be given a certain length of time before the change is Iſla,Cl62. 'y - - • \ e (4) Some roads should charge more per mile per car than others be- cause of greater cost, less business, and worse grades, &c. Actual cost plus Fair Profit should equal Freight Bill as a general proposition. A car-load of the same goods over the same road from A to B should be at the same charge, for the question of ownership has nothing to do with the cost of transportation, and favoritism is closely allied to fraud. (5) In fixing tariffs the cost of road, grades, running expenses, amount of business, &c., should be considered. . (6) I think rebates and drawbacks should be entirely prohibited. 124 - INTERSTATE - COMMERCE. (7) Pooling should perhaps be permitted in some cases; certainly so if good reasons can be given for pooling, and certainly not without good reasons. If pooling is permitted it should be public and by sanction of the railroad commissioners. Railroads have large duties to perform, are great public benefactors, and should have the fostering care of the Government, and not be hampered by needless legal restrictions, but ought never to be permitted to act unjustly with the public, with the humblest citizen: - (9) In the matter of securing uniform rates, justice and impartiality are what we want. One road may be able to transport cheaper than another. Any road should charge a fixed rate per car per mile for local freights, with suitable and just charges for extra time, labor, and cost for short distances. . - - * (10) Railroads should be allowed to charge a lower proportionate rate for a long than a short haul, but not less in proportion to cost. The public interest probably requires legislation on the subject. (11) As to concessions to large shippers, I think there should be equal and exact justice to all, whether great or small, and publicity of freight charges. - - (12) Uniform methods of accounts are very desirable and should be required in all cases, unless there be cases where the trouble and ex- pense to the road would outweigh the benefit to all interested. (13) The report to the Government and stockholders might be the same. It would take some time and study to prepare the schedule or blank for a proper report. (14) It is not important that the Government should develop water routes as competitors in the transportation business. I believe in “in- ternal improvements” in certain cases for the development of the country. Never admit that the Government cannot control the railroads and secure fair freights and justice to the people except by establishing competing routes. The people have been woefully cheated in expend- ing so much to sustain this Government if it is as weak and contempt- ible as this would indicate. (15) Without professing to have mastered the subject, my impressions favor commissioners with large and judicial powers. The Watering of stock, favoritism, unjust local freights, bribery, and free passes for improper purposes are perhaps the five great sins and consequent errors in our railroad management, so far as the public is concerned. MILTON TRUSLER'S STATEMENT. Statement of Milton Trusler, of Bentley, master of the Indiana State - Grange. (1) The best method of preventing extortion and discrimination is by a law limiting the rates of charges. (3) Publicity of rates should be required by law, and changes with- out public notice should be prohibited. The best method of securing uniformity of rates is by a heavy penalty for violation. (4) Maximum rates should be established. (6) Tebates and drawbacks should be prohibited. (7) Pooling should be entirely prohibited by law. - (8) Provision should be made by law for securing to shippers the right to select the lines over which their shipments shall be carried. INTERSTATE COMMERCE. 125 (10) The railroads should not be permitted to charge lower rates for long than for short hauls. There should be a heavy penalty for viola- tion. º - - (11) No concession in rates should be made to large shippers. (12) The railroads should be required to adopt a uniform system of accounts. ^s . (13) They should be required to make reports to the Government showing their total receipts, expenditures, and profits. (14) It is important that the Government should develop and main- tain a system of Water routes. (15) Legislation for the regulation of interstate commerce can be best enforced by heavy penalties for violation of the laws enacted. - S. C. CARR'S STATEMENT. Statement of S. C. Carr, of Milton Junction, master of the State Grange of - Wisconsin. (1) The best method of preventing extortion and discrimination is for Congress to pass an interstate-commerce act. # (2) The rates now charged are too high by one-half. Look at the Watered stock. (3) Publicity of rates should be required by law. Changes of rates without public notice should be prohibited. The best method of securing uniformity of rates is through action by Congress. (4) Maximum and minimum rates should be established. (5) In fixing the tariffs all the elements of cost and conditions of busi- ness should be considered, and “live and let live” the motto. (6) Tebates and drawbacks should be prohibited. (7) Pooling should be prohibited by law. - (8) Provision should be made by law for securing to shippers the right to select the lines over which their shipments shall be transported. - (9) The present rates should be reduced one-half. - - - (10) Railroads should be permitted to charge lower rates for long than for short hauls, but the public interest requires legislation on the subject. : (11) No concessions whatever should be allowed to anybody, rich or p00r. * º - (12) A uniform system of accounts should be required. (13) Annual reports to the Government should be required, and should contain all the information possible about the corporations. (14) The Government should by all means develop and maintain a system of water routes. (15) Legislation can best be enforced by good officers, and a commis- sion should be established to carry out the provisions of any law Con- greSS may enact. - t T). GILLIS'S STATEMENT. Satement of D. Gillis, of Jamestown, master of the Georgia State Grange. I have no doubt in my mind but that corporations do charge too much in some cases for freight and passengers, but just how Congress can remove these grounds of complaint I am not now able to say. They 126 h - - INTERSTATE COMMERCE. should not be allowed to give any free passes, or to allow any rebate or drawback to large shippers except such as represent the actual differ- ence in the expense of handling, and they should only be allowed such rates as would pay a reasonable per cent. On actual cost of road, not on Watered stock. WILLIAM H. WILSON'S STATEMENT. Statement of William H. Wilson, of Lake City, master of the State Grange of Florida. - - The discrimination of freights in favor of one place over another is a great hindrance to the prosperity of the country; also the discrimina- tion in freights in favor of the larger shipper over the smaller, and the larger dealer over the smaller dealer, all tends to paralyze the energies of the person of small means and throws the profits into the hands of the few, whose efforts are just in proportion to the amount of money they have under their control. Hence I advocate no discrimination in Such cases as I have alluded to. H. S. HAINES'S STATEMENT. Statement” by H. S. Haines, of Savannah, Ga., general manager of the Savannah, Florida and Western and the Charleston and Savannah Rail- way Companies. - TJNJUST IDISCRIMINATION AND EXTORTION. It is common to couple the charge of extortion with unjust discrim- ination when exception is taken to railroad tariffs, but what is meant by extortion in this connection has not been clearly stated. Webster defines extortion as “the act or practice of wresting anything from a person by force, duress, menaces, authority, or by any undue exercise of power; illegal exaction ; illegal compulsion to pay money or to do some other act.” This definition seems to refer to the tyrannical con- duct of a government official, in defiance of law, and its application to railroad tariffs seems inappropriate. The charge of unjust discrimina- tion is capable of definite application to railroad rates. The expression “unjust discrimination” recognizes that discrimination may be just, and leads us to consider, first, as to what discrimination in railroad tariffs means, and then as to what constitutes unjust discrimination. Discrimination is primarily a departure from uniformity. Uniformity in its simplest form would be the transportation of every kind of freight for any distance, over one or more roads, at the same rate. But lumber and feathers have not a uniform weight as compared with their bulk, nor a uniform value, and if a uniform rate were to be applied to both, the lumber shipper would claim that the rate must be so fixed that he Gould ship lumber with a margin of profit, and the shipper of feathers would be Well satisfied With the same rates. Therefore the public is not interested in having a classified freight tariff so long as the * Mr. Haines stated that his replies were directed principally to the interstate com- merce of South Carolina, Georgia, Florida, and Alabama, with which he is familiar INTERSTATE COMMERCE. º 127 uniform rate applied to all articles will permit the profitable shipment of the heaviest, bulkiest, and least valuable of them. Why, then, are freights classified at all, since the public could be equally well served by a uniform rate 2 The answer is that unclassified rates would not be “just and reasonable" to the carriers—that goods should be classed with a view to their weight, value, and convenience for handling, in order that the carrier may get a larger profit out of transporting silks. and other light and costly articles, and thereby be enabled to charge a lesser profit on coal, lumber, and other articles of little value in propor- tion to their weight. Here is a plain case of discrimination against that class of citizens which manufactures, deals in, or purchases Silks, spices, feathers, willow ware, &c., ostensibly to benefit the carrier, but practi. cally for the benefit of that other class of citizens which produces, manufactures, deals in, or purchases lumber, coal, iron, &c. This fun- damental departure from a strictly uniform tariff may be seen in its simplest form in the charter of the Georgia Railroad Company, which recognizes but two classes of freight : “heavy articles,” to be carried by weight, and “light articles,” to be carried by cubic measure. After many years of differing views among railroad managers and of complaints and protests from shippers, each road or group of roads ar- rived at a classification which served its purpose and caused no com- plaint from local shippers; but when a shipment was to be made over several roads or groups of roads the varying classification caused in- convenience to the roads and annoyance to the shippers. The estab- lishment of the Southern Railroad and Steamship Association was fol- lowed by the appointment of a committee from among its members which, after long deliberation, prepared a classification based upon the trunk-line classification in the Northern and Western States. Every road in the association adopted it, making special rates for certain arti. cles, such as lumber on the Sea-coast roads, coal and iron on the mount- ain roads, and oranges and early vegetables on the lines leading from Elorida. When the Georgia railroad commission came into being it found a uniform classification already in existence, and very wisely re- frained from any extensive meddling With it. Besides charging different rates for different classes of goods, another departure from uniformity was made by charging different rates for transporting the same class of goods different distances, and looking from the shipper's side it is difficult to see the justice of this discrimi- nation. Why should a farmer who lives 200 miles from Savannah pay more for having his cotton Carried there than one who lives only 100 miles distant & The one gets no more for his cotton than the other, and yet he is discriminated against because he is so unfortunate as to live farther away from market. There is more justice in such a position than will at first be admitted, and it has been recognized for many years in the transportation of fertilizers in the Southern States, evidently to the advantage of manufacturers and of planters. This shows that if rates had originally been charged without regard to distance, as is still the case with river steamboat transportation, shippers would have had no cause to complain, so long as the uniform rate was low enough for profitable sale or use of the goods after reaching their destination. But there was more profit to the carrier in making two trips per day with the same engine and cars than in a single daily trip, or perhaps only one trip in two days; and here again, as with classifying goods, the original motive for discrimination was to favor the carrier; i. e. it was unjust and unreasonable to expect him to get no more profit out of a car loaded for a point two days distant than if it could be returned the next day, 128 INTERSTATE COMMERCE. or perhaps the same day. This was probably the cause of discrimina- tion for distance allowed in the Georgia Railroad Company's charter, which allowed an additional charge for every hundred miles. But after awhile the reason for this discrimination was forgotten, and the man shipping goods 50 miles thought it a hardship to pay as much as the man that shipped 100 miles. The man that shipped 10 miles Would not pay more than if he shipped by wagon, and so the principle that rates should be somehow proportioned to distance got so well established that it became customary to place several Stations lying COInsecutively together in one group for the purpose of making freight rates, although the same group would sometimes include stations lying 30 or 40 miles apart. This saved the railroad companies a multiplicity of rates, and the dealers at adjacent stations generally paid the same rates, so that it Worked out satisfactorily to both parties. -- }. Georgia railroad commission has ignored this custom of group- ing stations in making the standard tariff. Their rate on first class for 10 miles is 16 cents per 100 pounds; for 20 miles, 20 cents; for 30 miles, 24 cents; so the man living 20 miles from Savannah pays 10 cents more per 100 pounds than he who lives 10 miles nearer, and 10 cents less than if he lived 10 miles farther. But if he lived 250 miles from Savan- nah he will pay only 1 cent. per 100 pounds more than his neighbor 10 miles distant on one side, and 1 cent. per 100 pounds less than the neighbor 10 miles distant on the other side. . The principle upon Which this tariff is based cannot be ascertained from an examination of it ; the ratio of increment of rates with each increase of distance is varia- ble with each class of rates and for every distance. The rate on coal for 10 miles is 50 cents per ton, and for iron 80 cents per ton, so for 10 miles iron pays 30 cents (or 60 per cent.) more than coal does; but fol- low the distance in each class out to 250 miles and the rate is the same for both articles, while for 350 miles the rate is 80 cents perton more on coal than on iron. For some reason the ratio is so variable that the class of goods which for 10 miles paid 30 cents per ton more than the other, paid 80 cents less per ton if both were carried 350 miles. I think that this class of discriminations originated with the Georgia railroad commission. - - - The next class of discrimination in rates is in permitting two corpo. rations, each operating a road 100 miles in length, to charge, each of them, the 100-mile rate for freight passing over the entire length of both lines; whereas if the same 200 miles of road had belonged to the same corporation the 200-mile rate would have been charged. For in- stance, referring again to the standard tariff of the Georgia railroad commission, goods in first class for 100 miles are charged at 45 cents per 100 pounds; therefore, on a shipment over the Western and Atlan- tic road, from a point 100 miles West of Atlanta to a point on the Georgia Railroad 100 miles east of Atlanta, each road would get 45 cents per 100 pounds and the consignee would pay 90 cents; but if both roads had belonged to the same corporation he would have paid 70 cents per 100 pounds. Why should the shipper in one instance be so much more favored than in the other? There can be but one an- swer, viz, that the discrimination is in favor of the two corporations, and is rendered necessary because the tariff is based upon a scale of rates for distances varying unequally as the distances increase. For in- stance, under the tariff of the Georgia railroad commission goods in first class, shipped over 300 miles under one corporation, pay 80 cents per 100 pounds, but if the same goods were shipped the same distance for the same price over two roads, one of which was 200 miles long and INTERSTATE COMMERCE. 129 the other 100 miles long, how is the amount to be divided? Is the road over 200 miles long to claim the rate of 70 cents allowed for that distance and leave the other road only 10 cents out of the total 80 cents for its 100 miles; or is the 100-mile road to claim the 45 cents allowed for that distance and leave the 200-mile road only 35 cents for double the distance? This inconsistency can only be avoided by allowing each road to charge its local rates; and here again, to favor these two corporations, shippers are discriminated against in a way that they Would not be if shipping the same distance over a single road; or to State the same thing in another way, the commission considered it un- just and unreasonable to the railroads to require equal rates for equal distances under such circumstances. The next class of discrimination is where equal amounts of goods of the same class are shipped equal distances over different roads. It Would seem that in such cases the railroad commission should put a citizen living at Savannah upon an equality with a citizen living at Atlanta; but if the latter ships second-class goods 100 miles out of At- lanta to a station on the Georgia Railroad he pays 40 cents per 100 pounds, but if the Savannah citizen ships the same goods the same dis- tauge on the Central Railroad lie must pay 48 cents, or 20 per cent. more. The ou!y reason that can be given for this discrimination is, that since the tonnage of the Central Railroad is less than that of the Georgia Railroad it would be unjust and unreasonable to require the former road to charge no more than the latter for performing the same Service. There is another class of discrimination which affects different quali- ties of the same class of goods shipped the same distance, known as car-load rates. In these cases, the shipper of a car-load of the same articles to the same consignee is allowed a rate of 20 to 30 per cent. less than is charged to the shipper of a lesser quantity, for the reason that a full load for the car is thereby insured, with the cost of only one entry on a way-bill, considerations which seem to warrant the State Commission in requiring the railroad company to do the same amount of work for less money for the one citizen than for the other. I have been particular in citing the rates made by the Georgia railroad com- mission as instances of that kind of discrimination which was not in the interest of the railroad company, since they were made by an Offi. cial body appointed in the interest of the shippers, from whose decision there is no appeal, and who have officially reported that by reduction in rates they have saved the people in one year an amount equal to the entire State taxes. It may therefore be fairly presumed that the dis. criminations embodied in their official freight tariffs cannot be consid- ered as unjust ‘toward shippers. What are the discriminations & (1) That goods offered for shipment are classified; that is, that dif- ferent rates are charged for different classes. . (2) That different rates are charged for transporting different goods for different distances. .* * - (3) That the rate of increase in rates for distance is variable with each class of rates and for every distance. (4) That the scale of rates for distance only applies to shipments over the line of one corporation, and is applied afresh to the same shipment When it passes on to the line of another Corporation. (5) That the scale of rates for distance may vary for different roads, as between a road with a light and with a heavy tonnage. (6) That the scale of rates for distances may vary for different ship- pers, Where one has a car-load to ship and the other has not. . These principles have been applied by the Georgia railroad Commis- 16232 AP—9 e * 130 - INTERSTATE COMMERCE. sion only to what is known as local business, or that for.which there is no competition. They would be as applicable, under such conditions, to interstate commerce as to that which is contained within the borders of One State. . But the State commission before mentioned had to meet the require- ments of competitive traffic. For instance, between Augusta and Savannah there were rival routes, one altogether within the State and the jurisdiction of the commission, and others which were not. The Georgia Central was permitted to charge 34 cents per 100 pounds, or about $1.56 per bale on cotton from Augusta to Savannah, but the com- petition by a rival route through South Carolina prevented that com- pany from getting any cotton at that price. They could not get more, perhaps, than $1 per bale. But, under the rules of the commission, if they adopted less freight rates from one station, they were required to make a reduction of the same per cent. at all stations along the line of the road, “so as not to make an unjust discrimination against any per- son or locality.” So this company could not lower its rates on cotton from Augusta one-third without reducing its cotton rates one-third from every other station on its line. Whereupon the railroad commis. sion issued an additional order, as follows: “Competing lines not all within the jurisdiction of the Commission. When, however, from any point in this State there are competing lines, one or more not subject to the jurisdiction of the commission, then the line or lines which are so subject, and are working at the lowest rate under the rules, may, at such competing point, make rates below the standard tariff to meet such competition without making a correspond- ing reduction along the line of road.” . Under this amendment, what becomes of the “unjust discrimination against a locality?” Why should Augusta shippers be given a lower rate than is allowed to a station 10 miles nearer Savannah & Is this not a discrimination against a locality ? It evidently is, and can only be a “just and reasonable” discrimination because it is to the benefit of the railroad corporation. And because it is to the benefit of the railroad corporation it is to the benefit of the public at large and indirectly to the benefit of the shipper from a station where there is no competition and where there is a greater charge for a less distance, as I will proceed to show. Railroads are built to accommodate Communities dependent for transportation upon water-courses, turnpikes, or public roads. They furnish cheaper and more convenient facilities than such communities before possessed, but still it costs Something to maintain and operate them. If no charge was made for using them, this cost would have to be met by taxation. But whether met by taxation or by charging freight and passenger rates, it is a tax at least upon the communities which have no other road to market. If it costs $600,000 per annum to keep up a road, then the money must come out of the freight and passengers that are obliged to pass over it. Whether the amount of business be small or large, the money to keep up the road must be forthcoming, or it will go to decay. If 100,000 bales of cotton were the only freight that passed over a road which carried no passengers, that cotton would have to pay a freight of $6 per bale if it cost $600,000 per annum to maintain the road, and no legislation could make it otherwise. But if the quantity of cotton to be transported could be increased to 200,000 bales, then the cost of transportation could be fixed at $3 per bale, to the great joy and relief of the shippers of the first 100,000 bales; and yet the $600,000 required to operate the road would be forthcoming. Now, suppose that the INTERSTATE COMMERCE. 131 community which raised this second 100,000 bales had a water route to market and said to the railroad company, “It only costs a dollar per bale to ship our cotton by water, but we prefer to ship it by rail at the same price,” who whould be benefited if the company took the cotton at a dollar per bale % Who but the local shippers themselves, for with- out this addition to the business of the road they would have to pay $600,000 per year, or $6 per bale, to keep up the road, while with the $100,000 obtained from the other 100,000 bales of competitive or through cotton they would have to pay but $500,000 or $5 per bale on their own cotton. Should they turn around upon the managers of the rail- road and say that it was unjust to the local shippers to charge only a dollar per bale on the through cotton ? No, it is not only just, but to the benefit of the local shippers, that the railroad which they are obliged to use should get all the business it can from those who are not obliged to use it, and at any rate the latter choose to pay, provided, and it is a . very important provision, that such competitive business adds something to the net revenue of the road; or, in other words, if it be carried, at anything above the actual cost of transportation. Once this fact is established, that a road is carrying competitive freight at any rate above the cost of transportation, it follows that such rate is not only just and reasonable to the shipper and to the corporation, but it is of benefit to the local shipper also, since it.relieves his own burden to the extent of the net profit derived from the through business. I have already defined the discriminations in local freight tariffs which may be, considered as just and reasonable, and have shown that it is not an unjust discrimination against local shippers for competitive. freights to be transported at less rates for the same or greater distance. It remains to state what are unjust discriminations. (1) It is unjust to discriminate between persons; that is, to charge one person less than another for the same service. - (2) It is unjust to discriminate between shippers of different quanti- ties of the same article, except under conditions which enable the rail. road company to perform the service more economically, as, for instance, between a car-load and a quantity less than a car-load, and perhaps when a full train load is offered as a single shipment. . . . . (3) It is an unjust discrimination to transport competitive freight at less than would be charged for local freight under the same conditions of quantity and distance if the competitive rate will yield no profit above the cost of transportation. Taking a practical view of the subject, it would seem that the charge of unjust discrimination is generally made with a reference to com- petitive rates. Communities at non-competitive points complain that their rates to and from market are higher than for a longer haul at competitive points. This cannot be prevented unless competition is prohibited, or the offending company is forbidden to compete. As above stated, it is not unjust that the rate between competitive points should be less than for a shorter haul on non-competitive business, unless such rate is below the cost of transportation. How can com. petitive rates be maintained above the cost of transportation ? The answer is, by combination among the competitors. Whenever public Opinion and the respect paid by lawyers to precedents will permit con. tracts for this purpose to be legally enforced, instead of being stig matized as unlawful, rates at competitive points will be maintained at figures sufficiently above the cost of the service to add to the net reve. nue of the competing companies and leave a margin for relief to local Shippers. As matters now stand, the local shippers on the trunk lines 132 INTERSTATE COMMER.C.E. are contributing to the maintenance of a wicked War of rates between Western markets and the seaboard. Conservative railroad managers have sought to prevent this by framing agreements to maintain these rates, only to see their companies defrauded by unscrupulous rivals who entered into these agreements because they knew they could be violated with impunity. When legislators and judges require men who enter knowingly into such contracts to keep them as inviolate as they are required to keep their other agreements, competitive rates will be main- tained upon a profitable basis and competitive business will contribute its proper quota to the net revenue of railroad companies. Nor need ship. pers who are interested in competitive business fear that if such contracts are legally enforced the rates will be injuriously high. The competition between different cities engaged in shipping the same products will be sufficient to prevent this. The railroad managers specially interested at Cincinnati, or Chicago, or Saint Louis will see to it that what they consider their own legitimate trade is not diverted by a disparity of rates. They are quite as keen observers of the course of business as are their patrons, and will be as swift to mark its fluctuations. Combination for an exorbitant advance of rates at all competitive points is impracticable. The two great interior water routes, the one by the Mississippi to New Orleans, and the other by the Great Lakes from Chicago, Milwaukee, &c., will always regulate this matter, in con- nection with the coastwise steamships on the Atlantic, the Gulf of Mexico, and the Pacific. The legalization of contracts intended to maintain competitive rates will also prevent the most unjust kind of discrimination that can exist—that between man and man. e There can be no form of discrimination more reprehensible than that by which one shipper from the same point is secretly favored at the expense of another in the same line of business. The favored one can be made rich by the same process that makes his competitor bankrupt; and that is just what is done through that unrestricted competition which railroad managers condemn. The much-abused pooling system is an attempt to obtain rates upon competitive business that are above the cost of transportation, and until some better device is offered to obtain the same end, those who are interested in legislation to prevent unjust discrimination should not permit themselves to be argued into opposition to pools. To those interested in maintaining unrestricted competition no argument in favor of pools need be addressed, for upon them it would have no effect. What they want are rates lower than any one else can get, even though they be below the cost of the service rendered; what they desire is not in accord with the interest either of the railroads or of the public in general, and yet the “pooling system’’ has its advantages for them also, for it does away with the pernicious “rebate system,” a system which takes the making of rates away from railroad managers and puts the power, not in the hands of the legislators, but of speculators—men who make their profits, not from buying and selling in open market, but out, of rebates secretly paid by railroad managers, and virtually at the expense of those who pay the published rates. - - This system went on from bad to worse, centering the business of competitive points in fewer hands, drawing the business of neighboring stations to competitive points, and rendering it impracticable for a man with a small capital to establish himself in business under such disad. vantages. No Wonder that the railroad managers themselves revolted against this condition of things. They no longer controlled their own INTERSTATE COMMERCE • 133 - business. Under the threat of losing freights they were forced to make concessions which they knew were wrong. They were annoyed by ap- plications which it was impolitic to reſuse, and met with suspicion and charges of treachery from the very men who were being made rich by rebates, yet feared that some one else might be getting better rates. When competition got too fierce one of the contending parties would call a truce, and peace would be re-established upon a basis of higher rates, which no one expected to use for any other purpose than as a standard by which to measure rebates. No wonder that railroad man- agers accused each other of fraud and deception. Men who in all the other relations of life were blameless winked at falsehoods and dallied with deception, not because they were morally debased, but actually because they knew not the way out of the toils. Specious methods of maintaining agreements, and yet breaking them, were devised to meet the occasion. Secret-service funds were placed at the disposal of trusted agents, not to be accounted for; through-passage tickets were sold to favored shippers, never to be paid for; and one tissue of fraud and de- ception was woven after another until the web became so fine as to be worthy of the father of lies himself. It is this rebate system, with its corrupting influences, that Congress is expected to call back to life by threatening pains and penalties upon the railroad corporations that have replaced it by the pooling system—a system which, so far from being placed under the ban of the law, should be legalized. The public calls for legislation against rebates as loudly as for legislation against extor- tion and unjust discrimination; but until human nature can be changed by law rebates will be paid in one way or another where unrestricted competition exists. Congress should seek to prevent unrestricted com- petition as well as unjust discrimination, and the railroad companies have themselves pointed out the way. If the pooling system be legal- ized—that is, if a party to a contract to maintain rates can be sued for damages for violating such an agreement—then the local shippers at competitive points, paying only just and reasonable rates, freed from all fear of discriminating rebates, will find that their business will not suffer from the greed of corporations, but will prosper under rates alike . for all. ! * - sº SECOND ANSWER. The Committee's second question is as to the reasonableness of the rates now charged upon local and through traffic by corporations en- gaged in interstate commerce. - The answer to this question depends upon the meaning of the word “resonableness.” Webster defines it as “that state or quality of a thing which reason supports or justifies.” It may, therefore, be asked whether reason supports or justifies the rates charged on local and through traffic. As to through or competitive traffic, it may be said that reason Will not support or justify competitive rates which are not equal to the cost of the service rendered, nor secret rebates to a large Shipper, while small shippers are made to pay the published rates, Whether it be reasonable to charge local shippers higher rates than are charged upon competitive business transported longer distances depends upon the considerations contained in my reply to the first question. The reasonableness of local rates depends upon considera- tions of a different character. As stated in the reply to question No. 1, . the local traffic must yield sufficient revenue to maintain a railroad, ex- cept So far as revenue for this purpose may be contributed by competi- tive traffic. But while the local traffic in mass must support a road, a 134 & INTERSTATE COMMERCE. certain reasonable relation should of course be preserved in making rates upon the various articles offered for shipment. That this ideal state of reasonableness has been obtained is not to be asserted. Indeed, the process of reasoning by which rates for carriage were originally established and subsequently developed canliot be accurately traced. Many essential facts have been allowed to lapse unmoticed into oblivion. The common carrier by land was originally a carter, and when his occu- pation was shared by railroad corporations their rates were naturally based upon carters' rates. And as railroads came to compete With car- riers by Water their rates were still further modified. - It must be borne in mind that what is called local, or non-competitive business, though not subject to competition by other railroads, is still Open to competition by wagons or by water carriage. Special competi. tion may exist, as in the transportation of coal by canals, which would not affect the transportation by rail of other commodities; but as a gen: eral thing the reasonableness of local rates in the early days of railroads seems to have been attained by a division of articles, as wet and dry barrels, boxes, and bales, or shipments in bulk. The advance from such a state of things to the modern freight classification, substantially uni- form throughout the United States, is unquestionably an effort to adjust the rates upon articles varying in Value, bulk, fragility, &c., in such a way as to distribute the contribution of each shipment to the sum total of local revenue equitably among them all. And this is “a quality which reason Supports or justifies,” for the charge upon a shipment is made up of two elements—the class in which the article is placed and the rate upon that class. It is much easier to fix the relations of articles by classes than the relation of the rates which should be charged upon the several classes. It is the latter consideration which enters chiefly into the es- tablishment of the amount which each class of goods must contribute to the maintenance of the railroad. There are no accurately defined rules for determining this matter. Railroad logic and mathematics have not reached this summit of perfection. We have inherited the rates which our predecessors have fixed under conditions above noted. We have moſ]ified them here and there as circumstances seemed to require, and such will continue to be the process. Our methods will improve as our knowledge increases, The method of classification now in use may un- doubtedly be considered a reasonable one. As to the fixing of local rates, there is but little method about it, Railroad managers are much divided as to what would be a rational basis. Of Course such a basis should recognize what is termed “the cost of transportation.” But what is meant by “the cost of transportation?” Ask half a dozen railroad managers, and you will probably receive as many different replies. I will repeat that the local traffic must pay for maintaining the rail- road, assisted as far as may be by competitive traffic. But what con- stitutes “maintaining a railroad?” It includes the cost of maintaining the property and paying the men. Somewhere among those expendi- tures lie concealed the items which go to make up that desideratum, “the cost of transportation.” One eminent authority arbitrarily divides the total expenditure ratably between passenger mileage and freight mileage, and says that the “cost of transportation” is so much per pas- Senger mile and so much per freight mile. If this assertion could pass undisputed our task would be indeed an easy one. We could fix a rea- sonable rate of profit upon the stockholders' investment, divide that out per passenger and freight mile, and any school-boy could solve the problem of “just and reasonsonable rates.” But the problem cannot be Solved in that Way. All the difficulties which have led to fixing different INTERSTATE COMMERCE. 135 rates for different distances and for different articles forbid such a solu- tion. Another eminent authority suggests that about one-half of the cost of maintaining and operating a road is virtually unaffected by the amount of business done; another part is chargeable solely to passenger or freight traffic ; certain expenses are greater or less, varying with the train or car mileage, or with the amount of freight loaded or unloaded. This is in the right way to a correct analysis of the items which enter into “the cost of transportation,” and Some very ingenious and greatly involved algebraical formulae have been constructed to aid in arriving at a solution. I think that the mathematicians who framed them have never had sufficient confidence in their own Work to apply it practically to their own business. The men who are experienced in such matters, who are alike removed from fine spun theories and from blind adherence to antiquated methods, who, in short, represent what may be called the common sense of railroad management, will probably agree that the reasonableness of local freight rates should be based : . - (1) Upon their providing a net revenue sufficient to maintain the property in good condition and leave a fair profit to stockholders. The passenger traffic must, of course, contribute its share of revenue, and competitive business should not be conducted at the expense of local shippers. - & (2) As between the different classes of local business, due regard must be paid to keeping certain rates at or below the point where a suitable margin of profit is left for the shipper. *. For instance, on each road there are certain staple articles, products of the field, the forest, the mine, &c., or manufactured goods, that form the basis upon which the prosperity or the very life of the people is based. The rates upon such articles must not be more than they can bear. It would be killing the goose that lays the golden egg. It is from the margin of profit remaining to the producer that he is to pay freight on the supplies which he purchases and for his own fare when he travels. As specially applied to such articles, “the cost of trans- portation,” that is, the rate below which the railroad company cannot transport them without positive and immediate loss, can be approxi- mately ascertained. It is for the railroad management to observe this closely, and whenever circumstances render it practicable the rates on such staples should be varied Within certain limits with the margin of profit to the consumer. The minimum limit should be the specific cost of transportation, that is, What the Corporation Would save by not trans- porting that particular article ; the maximum should be the full local rates ordinarily charged upon it. Theoretically, the reasonable rates to be charged upon the staple products of a country would be a fixed per- centage of the margin of profit returned by the merchant to the pro- ducer; the charges of the merchant not to include the local freight charges, and the railroad compalſy to be entitled, in any event, to the specific cost of transportation. Practically, it is somewhat in this way that rates are now determined where they are not established by law, for the carrier knows that if such rates are higher than the business will bear that the business Will languish or die out. There are also cer- tain articles which, under certain conditions, it might be reasonable to transport at the cost of transportation in order to stimulate production. The Massachusetts railroad Commission advised the railroads of that State to transport coal for manufacturers at the bare cost of transporta- tion. They feared that the cost of fuel for steam-power would divert manufacturers to other States where coal was cheaper. Was it reason- able to expect this of the railroad Companies 3 Did reason support or 13 INTERSTATE COMMERCIE. justify this discrimination between coal for manufacturers and coal for domestic purposes? The answers to these questions cannot be definitely given in our present state of knowledge as to the items which enter into the cost of transportation. - The differences in opinion between shipper and carrier grew out of the want of information on this very subject. The attention of experts has for some time past been attracted to it, and, as the facts accumulate, we seem to be nearing the solution of the problem. For the present the reasonableness of local freight rates can neither be asserted nor denied except under unusual circumstances; certainly not with sufficient con- fidence for the conditions which should determine it to be defined by act of Congress. | TEIIRID ANSWER. Should publicity of rates be required by law 3 Should changes of rates without public notice be prohibited ? What is the best method of securing uniformity and stability of rates? These are the three Queries embodied in the third question of the committee. Publicity of rates would be a reasonable requirement. It is customary with railroad companies not only to furnish such information freely, upon application, but also to print and distribute gratuitously their local tariff sheets and what are known as “open " competitive rates. But they do not give equal publicity concerning rebates to favored customers. A penalty for secret rebating—a legal enforcement of Con- tracts to maintain competitive rates—would probably insure all the publicity that could be desired. The changing of rates without previous notice is injurious to shippers in general. Those who had been secretly advised of an intended change of rates upon any important article would have an unjust advantage over their less favored rivals, either as shippers or as stockholders. Uniformity and stability of rates are greatly to be desired. The meth- ods for securing them have been considered in my answers to the first and second questions. + FOURTEL ANSWER. The fourth question is as to the advisability of establishing a system of maximum and minimum rates. Maximum rates were incorporated into some of our earliest railroad charters. Competition has reduced all railroad rates far below the maximum then established. At no time (lo they seem to have served any useful purpose. If maximum rates were re-established, with our present experience, they would be just as un- serviceable. If a maximum rate of 1 cent per ton per mile Were fixed for the interstate commerce of the trunk lines, competition with water routes would prevent them from demanding it; yet if such a rate were fixed for the commerce between the Southern States it would perhaps bankrupt the corporations affected by it. Minimum rates might be of some effect in preventing a reduction be- low the cost of transportation, if punishment could surely and swiftly follow an infraction of the law; but the difficulty of conviction would bring the law into Contempt, and those who conscientiously observed it would be the principal sufferers. We must remember, too, that the ingenuity and experience of man has been constantly reducing the cost of transportation, and what would have been considered a very low rate Some years ago Would leave a very fair profit under the improved methods uow in use. Although the rates have been reduced much faster than the expense of Operating railroads, and the margin between INTERSTATE COMMERCE. 137 .* them is now proportionately smaller than ever before, still no one can truly assert that the utmost economy practicable in railroad manage- ment has been attained. The legal enforcement of contracts to main- tain rates will be of far more protection to investors and shippers than the establishment of maximum and minimum rates. FIFTH ANSWER. The elements of cost, the conditions of business, and the other factors that should be considered in fixing interstate tariffs, have been incident- ally referred to in the replies to the previous questions. - - The conditions which distinguish competitive or through traffic from that which is local or not competitive have also been noted. The local traffic, freight and passenger, of any railroad must furnish the means to maintain and operate it. If there be any other traffic, which may be diverted by competition, then such competitive traffic will also con- tribute to the support of the road to the extent that the receipts from such service exceed the cost of performing it. The expenses ordinarily incurred in operating and maintaining a road bear varying relations to the work performed in transporting freight and passengers. They may be accordingly divided into several classes, as— Class A : Expenses not affected by the amount of business done. Class B : Fxpenses affected indirectly by the amount of business done; for instance, by a considerable increase or decrease of traffic. t Class C : Tºxpt-lases directly affected by the amount of train service. Class D : Expenses directly affected by the amount of car service. . Class E : Expenses incurred in loading and unloading freight. - Class Al, or fixed expenditures.—In this class may be included salaries and office ex- peuses of general officers, legal expenses, rents, taxes, insurance, maintenance of earthwork and fences, repairs to bridges and buildings, repairs of machinery, tools, and implements, furniture and fixtures, pay of bridge watchmen, and telegraph ex- penses. This class of expenses virtually remains the same whether the business done be much or little. r Class B : Earpenditures remoſely affected by amount of business done.—Stationery, print- ing and advertising, repairs of wood aud water stations, renewal of cross-ties, supply- ing water for locomotives, labor on track, wages of agents, clerks, watchmen, and switchmen at stations, loss and damage claims. This class is remotely affected by the amount of business done, i. e., if the business be largely increased or diminished. t Class C ; Dapenditures affected by train mileage.—Renewals of rails and fastenings, frogs, and switches, repairs of locomotives, supplies for locomotives, pay of conduct- ors, engineers, baggagemen, firemen, and brakemen, stock killed by trains, accidents to trains. Class D : Expenditures affected by car mileage.—Maintenance of cars; oil, tallow, and waste for lubricating car axles ; hire of cars. Class E : L'a penditures affected by tonnage.—Labor loading and unloading freight. The classification here given is in sufficient detail to show that the expense of Operating a railroad does not vary directly with the amount of traffic ; that one class of expenses bears no relation to it; other classes depend upon the amount of service performed by the engines or cars, whether they are earning much or little, and that but a small class bears a direct relation to the tonnage. It should also be noted that much of this expense has to be incurred in preparation for business that may prove less than expected, and that expenses cannot be diminished in the same proportion that business decreases. It must next be stated that the business of a railroad is twofold in its character; it transports passengers as well as freight, and to ascer. tain the Cost of performing each class of service, the operating expenses should be apportioned to the services for which they were incurred. This cannot be done accurately with all classes of expense, and the ap- 138 INTERSTATE COMMERCE. portionment must, to some extent, be based upon the relative volume of the two kinds of business. . - The expenses specially incurred for passenger business are: The Sălaries and office expenses of officials employed solely in this service; also of conductors, engineers, and others employed only on passenger trains; the maintenance of passenger stations, and of passenger train locomotives and cars; fuel for locomotives; advertising and other printing and stationery required solely for this purpose. The expenses specially incurred for freight business are: The sala- ries and office expenses of officials so employed ; pay of men employed on freight trains and at freight stations; maintenance of freight sta- tions; maintenance of locomotives and cars in freight service ; fuel for freight train locomotives; advertising and other printing and station- ery required solely for this service. All other expenses, not specially incurred in one service or the other, should be divided between them upon some recognized basis, and that of the respective car mileage in each service will answer the purpose. - According to this classification the operating expenses of the Savan- nab, Florida and Western Railway, for the year 1884, have been classi- fied as follows: - Per cent. For fixed expenditures, Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 For expenses indirectly affected by amount of business done, Class B . . . . . . . . . . . . 32 For expenses affected by train mileage, Class C - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 22 For expenses affected by car mileage, Class D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 For expenses directly affected by amount of freight handled, Class E . . . . . . . . . . . . 4 For renewals of rails --------------------------------------------------------- 4 Total ----- --------------------------------------------------------. --- 100 . Therefore, any increase or decrease in the number of tons of freight transported affects only 4 per cent. of the total cost of operations, unless a greater or less number of cars be required to run a greater or less distance. ** Any increase or decrease in car mileage affects 21 per cent. of the total operating expenses. - If the increase of business requires more trains to be run, then 22 per cent. Of the expense may be-proportionately increased. But there re- mains 53 per cent. of the total cost of operating the road that practi. cally cannot be decreased with a diminishing business without impair- jing the efficiency of the service, and that need not be increased when additional business is offered. It is usual to state the average cost for hauling one ton of freight one mile, but it does not follow that the transportation of each ton has cost that annount. Here it is that the facts are obtained in fixing the spe- cific cost of transportation of competitive traffic. If freight is offered at a competing point that can be carried in a car which would otherwise run empty, the only cost incurred is for loa'iing and unloading the freight; all obtained over that cost would be profit. If the car has to be sent for the freight, then an additional cost will be incurred for the distance that the car runs to perform the service. If the freight offered amounts to enough to load the train, then there is the cost for the train Service beyond the cost which attaches to running each car in the train. As a practical illustration of the use that can be made of this infor- mation in fixing minimum rates on competitive business, let us suppose cotton to be offered to the Savannah, Florida and Western Railway for transportation from Bainbridge to Savannah, a distance of 237 miles. INTERSTATE COMMERCE. - 139 If there be an empty car at Bainbridge to be returned to Savannah, the cost will be for loading and unloading 30 bales of uncompressed cotton, say 7% tons, at 12.6 cents per toll , -- - - - - - - - - - - - ... ........................... $0.94% If a car had to be sent for the freight, add the distance both ways, 474 miles, at 1.73 cents per mile-------------------------------. ------ * * * * * * * * * * * * * * 8 20 Total cost per car-load . . . . . . . . . ------------------------ --~~~~ , 9 14% But if a train of say 25 cars be required, then the cost for 25 cars, at $9.14% per car, would be .----------------------------- - - - - - - - - - - - - - - - - - - - - - - - - - 228 624 And for train mileage (474 miles), at 24.6 cents per mile - - - - - - - - - - - - - ** * * * se s = 116 60% - Total cost per train of 25 cars ------------------------. * * - - - - - - - * * * 345 23 Total cost per car------------------------------------------------- 13 80 Total cost per ton.----------------------------. --------------------- 1 84 Or, for a bale of cotton, say. - - - - - - - -* = - * * * * * * * * * - - - - - - - - s = * * * * * * * * * * * * 46 \ The example here given illustrates the fact that business obtained by competition, even at low rates, assists to lighten the burden of those who must pay local rates; also how it may be profitable for a railroad company to offer reduced rates for shipments with which cars may be returned loaded to destination, which would otherwise go back empty. I have been careful to state that this illustration applies Only to the specific cost of transportation of competitive freight; that is, the point below which such freight cannot be taken except at the expense of local Shippers. • With local business the conditions are different. The local freight and passenger business must between them maintain a road which has no other resources. Each class of business should bear its own ex- penses and its proportionate share of expenses, which cannot be spe- cifically divided. If the revenue of a road be obtained 70 per cent. from freight and 30 per cent. from passenger business, then these joint expenses might be charged proportionately to each class of business. In this way it might be determined whether the net revenue of a road was obtained disproportionately from either source of revenue, and the rates be readjusted accordingly, forbearing to unduly advance rates on staple products. - - I have endeavored to indicate in a general way the elements of cost and the conditions of business that should be considered in fixing inter- State tariffs, according as the traffic is or is not competitive. I assume that Congress Would not attempt to evolve a general interstate tariff out of its own consciousness. - * My Whole argument has tended to show : (1) That uniformity of classification is desirable; how it has been attained and may be modified as required without legislation. e (2) That uniformity of rates is not desirable. (3) That just and reasonable rates on competitive business can best be determined by contract between shipper and carrier, not to be fixed below the specific cost of transportation. - (4) That the legal enforcement of contracts between railroad com- panies to maintain rates is the best method to regulate such rates in the interest of all shippers, competitive and local, of all stockholders and Creditors of railroad corporations and of the public. (5) That the rights of local shippers do not call for any further inter- vention of law as to rates on competitive business than is stated in the above propositions. - (6) That the local business of a railroad must maintain it with such assistance as may be obtained from the profits derived from competitive 140 INTERSTATE GOMMERCE, traffic, and that the rates on local business must be fixed with this cal- culation in view. . . - sº (7) 'l'hat rates on local staple products should be so fixed as not to depress such industries, and should fluctuate within certain limits with the variation of profits derived from them. (8) That certain classes of discrimination on local rates are just and reasonable. - - (9) That intentional discriminations between individuals should be made criminal Offenses. - I wish that it were practicable to give specific rules for making a local freight tariff out and out, but this cannot be done. We can only take the several tariffs as they exist and modify them here and there as the intelligent application of facts may justify. This is a work which cannot be done either by act of Congress or by a commission; the field is too large and the variety of conditions too great. The modification of local tariffs had best be left to the shipper and the carrier, to the in- fluence of the press and to public opinion, enlightened continually, as it will be, by the elevation of these railroad questions to prominence among the issues of the day and the discussions that will thereby be occasioned. Prom local business the principal net revenue of most roads must Come, and the main issue between local shippers and the railroad man- agement will be the equitable adjustment of rates among the local ship- pers themselves. - The principal points to be observed in a tariff for competitive busi- ness are to insure a uniform rate to all shippers similarly situated, which shall be above the specific cost of transportation. Under this head of specific cost should be included the maintenance of all struct- ures and appliances rendered necessary by this very competition, such as grain elevators, terminal docks and yards, the third and fourth track of a trunk line, and perhaps one track of a double-track road. * I have not included the expenditures for betterments among the items entering into the cost of transportation. They should properly be a charge to capital account, and be represented by bonds or stock. Ad- ditions to property which do not result in reduced expenses or increased business are poor investments, and the money so spent had better been divided among the stockholders if taken from net revenue, or if ob- tained as a loan, then the increase in the fixed charges must diminish dividends or prove an additional burden to local traffic. SIXTEL ANSWER. “Should any system of rebates and drawbacks be allowed ? If so, should such transactions be regulated by law and be subject to official inspection or approval, or should they be entirely prohibited ?” - The replies to former Questions present my views upon secret rebates, but cases may occur where rebates could properly be allowed under suitable provisions for publicity and for uniform application. The sug- gestion that coal for manufacturing purposes should be transported at or about the cost of performing the service, as made by the Massachu- Setts railroad commission, is a case in point. If this suggestion were to be put in practice it would be difficult to determine at the time the coal was transported which shipment was for manufacturing purposes and which was not ; but provisions could be made for a rebate upon the amount that a manufacturer could show had really been consumed by him in that Way. The system of custom-house rebates is apparently based upon similar considerations. It is questionable whether Con- INTERSTATE COMMERCE. - 141 A gress should interfere in regulating such reasonable rebates or in sub. jecting such transactions to official inspection and approval. Suitable publicity would, in the case above noted, put every manufacturer on notice as to the extent of the rebate and the conditions under which it would be given, and if any one consumer of coal, was unduly favored it would be virtually a fraud upon his rivals, of which the courts could take cognizance through a civil suit for damages against the offending railroad company. - ‘SEVENTEI ANSWER. The Seventh question as to the advisability of legal recognition and regulation of pooling contracts and agreements has been substantially answered in my replies to the questions preceding it. I have no doubt as to the propriety of giving legal sanction to these agreements to such an extent as will enable one of the parties to sue the other party for damages growing out of its alleged violation. In such a suit the terms of the agreement, the circumstances under which it was made, and the purpose it was intended to serve would all be exhibited in the evidence and the arguments, and I venture to say that two or three such suits carried to a conclusion would serve as powerful correctives of the evils resulting from unrestricted competition, of which the people justly com- plain. The evidence of experts which would be given in such suits, the arguments of counsel, and the opinions of the court, analyzed and commented upon by the press, as they would be, would aid largely in bringing the public to an intelligent comprehension of the issues be- tween the shipper and carrier; issues which have been obscured by parties interested, partly from design and partly from ignorance. Be- yond such legal sanction it would, in my opinion, be inadvisable to go in the direction of legislative regulation and approval of agreements to maintain rates. At all events it would do no barm to stop just there until some experience had been obtained as to the effects of the experi- ment. - - - - EIGHTEL ANSWER. The right to shippers to select the lines and parts of lines over which their shipments should be transported is indefeasible, and should not be restricted by legislation. The argument made by the trunk lines favor. ing its restriction is invalid. It is a confession of their lack of confidence in their own good faith toward each other in the maintenance of agree- ments to maintain rates, and furnishes additional evidence of the value of a legal recognition of such agreements. If the trunk lines then choose to embody in their contracts among themselves a condition that shipments should be diverted at their pleasure, the courts could deter- mine the rights of an objecting shipper. Until a competent court de- cides to the contrary it would seem that these rights already subsist in the shipper without further legislation. If the shipper be willing to forego them for a valuable consideration, e.g., a reduced rate, that is a matter for a contract between him and the carrier. NINTH ANSWER. A uniform system of rates for interstate transportation of freight and passengeſs is not to be desired, and the need for such uniformity is not obvious. Uniformity is an obstacle in the pathway of progress, and in a Country of varied topographical features and industrial resources the attempt to regulate every man's business with the same unit of meas- 142 • . INTERSTATE COMMERCE. . \ urement would be a bar to its accelerated prosperity. It would be as well to require both corn and oil to be measured by the gallon. The principles upon which a system of rates should be based is an- other matter. Such principles should be as capable of application to the interstate commerce of the Pacific slope as of New England, and, yet the manner of application might be different. As I have previously stated, there are two elements in a freight tariff: the classification, and the charge for each class. The classification might well be uniform in the main, though specially varied to suit local conditions, as for coal and ore in a mining country, or for lumber in a forest region. But this uniform classification should not be petrified by law, for then it would Soon become a fossil indeed. - The experience of the Southern Railroad and Steamship Association shows that its uniform classification has frequently to be revised, and in the public interest. The rate committee of that association holds frequent meetings, at which the applications of shippers for the modi- fication of the existing classification are considered and acted upon. The modifications determined upon are specially published and duly in- corporated into the official tariff. A revised edition of this tariff is then issued by the general commissioner and distributed among the members of the association. How could legislation better secure a uniform sys- tem of rates for interstate commerce 3 A copy of the latest edition is hereto attached (Exhibits A and B). Attention is asked to the shades of difference which are recognized in the classification of different arti- cles. For instance, the different kinds and parts of plows are classed in nine ways, ale in seven, and furniture in thirty-six. This minuteness of detail grows out of the efforts of the association to conform to the requirements of trade, and yet this association, so far from having legal sanction, is seriously threatened with penalties as an unlawful combº- nation conspiring against the public Welfare. While I am clearly of the opinion that a virtually uniform classifica- tion is practicable, and have pointed out the Way to secure it, I am as clearly of the opinion that uniform rates are not only undesirable, but also impracticable, for the reason that the rates essential to the existence of a railroad in one part of the United States would be oppressive to shippers elsewhere. The extent to which uniformity in the charges upon each class is practicable, and to which discrimination is just and reasonable, I have already discussed at length. * The reference in the seventh question to uniformity of passenger rates is apparently incidental, and I have not attempted to consider it. TENTH ANSWER. Should a proportionately lower rate be permitted for a long haul than for a short baul ? Only in competitive traffic, for the reasons and under the considerations I have already given. - The public interest requires no legislation beyond the experiment of legalizing contracts to maintain rates upon competitive traffic. ELEVENTH ANSWER. Concessions in rates to largeshippers commend themselves to minds ac- customed to advantages claimed by Wholesale dealers in their commer- cial transactions, but the conditions surrounding transportation contracts differ in some respects from those of bargain and sale. The rights of third parties are different in the two cases. As between buyer and INTERSTATE COMMERCE. 143 seller, the larger the transaction the less is the proportionate expense attendant upon effecting the sale, and the more eager is the seller even at a small margin of profit. He would rather make 5 per cent. On one transaction of $10,000 than 6 per cent. upon each of ten transactions involving $1,000, or 7 per cent. upon one hundred transactions involv- ing $100 a piece; and this, too, even though the attendant expenses in each case were the same. This is no infringement upon the rights of others, even though the larger buyer has consequent advantage over the retail dealer. But railroad transportation is another matter. The expression “selling transportation” is sometimes used, as if it were the same as to sell coal or corn, but this is a mistake. Railroad corpora- tions do not sell transportation. They have been granted a franchise to collect tolls. A privilege has become vested in them ; they do not possess a natural right. A railroad company occupies a position to- ward the public different from that of a turnpike company. It owns both the route and the vehicle, and carriage over the route is not an occupation free to all. It is monopolized by the owner of the route. If he have the power to fix the price, the person desiring the service performed over that route must pay it or not obtain the service. This is true if the service must necessarily be performed over that route, but if there be another route between the same points then the person desiring the carriage may exercise his option. *. Here, as elsewhere, we are met by the distinction between that traffic which is competitive and that which is not. If there be alternate routes then the relation between shipper and carrier as to rates of carriage is largely a matter of contract; but when there is not an alternate route this relation is, if I may use the expression, more a matter of status; and the shipper is therefore more entitled to invoke the aid of the law in de- fining that relation. But he stands in the relation of a third party to contracts between carriers and shippers of gompetitive freight, and the State ought not to interfere in such contracts for his benefit, except so far as his rights may therein be affected. It is not right to add anything to the charges upon his shipments to offset losses upon transporting competitive freight, and his rights are affected by any competitive rates which are below the specific cost of transporting the articles offered for shipment to rival roads. As between shipments of competitive freights offered in different quantities, there seems no necessity for legal enact. ments beyond requiring suitable publicity of the conditions under which such shipruents are made. A civil suit for damages would probably protect any shipper suffering by a secret departure from those conditions in favor of a rival. All else might well be left to agreement between the shipper and carrier. It may be asserted that this would be discrim- inating greatly to the advantage of the dealer or manufacturer at com- petitive points, and against the dealer or manufacturer at points where there is no competition, and such an assertion might be correct. But how does this discrimination arise? It arises from difference in geo- graphical position as affecting facility of transportation. Cities with Safe harbors, convenient of access by Sea and at the mouths of naviga- ble rivers, or adjacent to practicable mountain passes, became centers of trade in prehistoric times, and the same conditions for the facility of transportation continue to concentrate commerce at such places. With the invention of the locomotive and the iron rail they began to supplant the turnpike and the Wagon ; they were first used where they were most Wanted, where the greatest traffic already existed—as, for instance, be- tween Liverpool and Manchester, and between New York and Philadel- phia. The gradual extension of the railway systems resulted in railroads 144 INTERSTATE COMMERCE. meeting or crossing each other, and competitive traffic was established at such junction points which occasionally, as at Atlanta, became large cities. Railroad corporations have not originated the discrimination in favor of competitive traffic and against local traffic. It existed before they did, and the economic law of supply and demand compelled them to recognize it. *. g --- - But as between local shippers the case is different. The railroad company ought not to discriminate between them except when such discrimination can be shown to be just and reasonable. As I have al- ready shown, it is just and reasonable to discriminate between ship- aments in different quantities of the same article where by reason of the increased quantity the specific cost of the transportation is proportion. ately lessened. It is generally accepted that this is true of Čar-load shipments; it is probably as true of train-load shipments, and especially when business for a train is insured for a considerable period of time. There are most likely other causes in which such discrimination might justly be made. It may be laid down as a general rule that, as between local shippers, no distinction in rates for quantity should be made un- less the specific cost of transportation be proportionately lessened. TWELETEI ANSWER. A uniform system of accounts for railroad corporations would be, to my mind, as undesirable as a uniform system of rates, and for the same reasons: First, that a perfect system of railroad accounts has not yet been devised; and, next, that “circumstances alter cases,” and the elaborate system which is required for setting the multifarious affairs of the Pennylvania Railroad Company properly before its stockholders, if ap- plied to the affairs of a minor corporation, would be like a giant's armor upon a dwarf. The accounts of a railroad company are intended pri- marily for the protection and information of its stockholders, and should be as free from the interference of any one else as the accounts of any other corporation or of a private individual. If the rights of a third party are affected by the manner in which they are kept there are ample precedents for having them produced in court and suitably explained. It is difficult to understand how the interests of persons engaged in in- terstate commerce could be affected by the manner in which the ac- Counts of Corporations are kept which are engaged in such commerce, and it does not seem necessary for their protection that Congress should require such corporations to adopt a uniform system of accounts. THIRTEENTH ANSWER. Corporations engaged in interstate commerce might well be required to make annual reports to the Government. It is the right of the pub- lic, stockholders, creditors, and shippers to be informed as to their operations, and the publication of such information would serve to cor- rect erroneous impressions concerning them. - These reports should only contain such information as the public might rightfully demand as stockholders, creditors, and shippers. Nothing should be conceded to idle curiosity or to thirst for scientific statistics. The one deserves rebuke, and the other does not warrant an unwelcome intrusion into the affairs of a railroad corporation any more than into the affairs of a private citizen. But such information as the public may rightfully require of a railroad corporation, that informa- tion an annual report to the Government should contain, within certain INTERSTATE (;OMMERCE. - 145 limits. The limit as to information for stockholders would seem to be fixed by the right of minority of stockholders to obtain such informa- tion. A majority interest could obtain any information at an annual meeting, but not so with the minority. The latter would seem to be entitled to know the financial condition of the company without resort- ing to a court of equity, and therefore such information as to the amount respectively of the various issues of bonds and stocks, and of the float- ing debt, the income account, and the assets and liabilities, could prop- erly be called for in a prescribed form so simple as to admit of no mis- construction. The creditors of the company would find in such a state. ment all the information which they could rightfully require. The rights of shippers pertain rather to statistical information, especially as to tonnage, properly classified and divided as competitive or other- wise, to similar information as to passenger business, and to such clas- sified statements of expenditures as would throw a light upon the cost of transportation. None of the forms required by the State commis- sions give this information in proper form for such use, so far as I ain aware. Some of them go into a good deal of irrelevant detail, and some stop short of the right point. - FourTEENTH ANSWER. The development and maintenance of a system of water routes by the Government as a security for cheap transportation is a subject of grave importance. The United States has been for many years com- mitted to the policy of maintaining and improving natural waterways. It has been looked upon as a matter of general public interest in which private Capital could not be profitably invested, since no tolls could be collected from the traffic over such routes. But in the question as stated in the committee's circular, tige development of a system of water routes to Secure cheap transportation seems to look to the construc- tion of canals intended specially for competition with the railroad sys- tems of the country—systems controlled by private enterprise which have reduced the charges upon interstate commerce to such an extent that the Erie Canal could not hold its own in the contest. That great water route, constructed at the expense of the tax-payers of New York, is now also maintained at their expense. Would it be right for Con- gress to follow this example, to throw the financial strength of the - United States into the scales against the capital of individuals, of es- tates of widows and orphans invested in railroad property & The con- test for competitive traffic between the subsidized canal and the unpro- tected railroad to which it is parallel will be fierce for awhile, but the issue will not be doubtful. Shipments by the canal will not have to pay any part of the interest on the original investment in its construc- tion, nor for maintaining it. They will only bave to contribute to oper- ating and maintaining the canal-boats. Whatever the rate may be by canal that will be the rate by the competing railroad, unless shippers be willing to pay a little higher rate for greater dispatch. Whatever that rate may be it is not supposable that there will be any considera- ble margin above the specific cost of transportation—that is, that it will contribute anything towards the general maintenance of the rail- road or towards the interest upon the investment. It is much more probable that the rate by the highly-favored canal will be reduced be- low the actual cost incurred by the railroad for transporting such com- petitive freight, and that the resulting loss will be made good from the 16232 AP—10 146 INTERSTATE COMMERCE. net revenue from local business; and residents along the road inter- ested in local business will not only pay bigher local rates in order to maintain this competition, but will make a further contribution for the benefit of their fellow-citizens to the extent that they are indirectly taxed to build and maintain these canals. The alternative is for the railroad companies to withdraw from the competition and leave the car- riers by canal to fix their own rates for such service. It is possible that competition might be carried-on to such an extent as to bankrupt the railroad corporations, and we should then have the spectacle presented to us of the wealth and power of the people of the United States being employed to bankrupt one class of citizens for the benefit of another, which would be class legislation indeed. When we consider the great. reduction in the rates upon competitive traffic which has been brought about by the railroad corporations of this country, it would seem that such treatment of them would accord with the proverbial ingratitude of republics. - - . . I have already shown that it is not necessary for Congress to come down into the arena of competitive traffic as a combatant for the pur- pose of protecting such traffic against unwarrantable railroad combi. nations. The geographical features of our great country render this unnecessary. - On the one band, the great chain of lakes which feed the Saint Law - rence River, and which are connected by the Erie Canal with the com- mercial metropolis of the United States; on the other, the Father of Waters, reaching out his arms—the Red River, the Arkansas, the Mis- souri, the Upper Mississippi, the Ohio, the Tennessee, the Cumberland River. These two great natural Water routes not only led the way to our commercial prosperity while railroads were yet unborn, but they still exist to protect it against the combined attacks of greedy railroad stockholders. There are other natural waterways, which in a lesser degree serve for such protection for interstate commerce. The Con- necticut, the Hudson, the Delaware, the Potomac, the Savannah, the Apalachicola, the Alabama, on the Atlantic slope, and the Columbia . on the Pacific slope, are instances in point; and “pour’d round all, old ocean's gray and melancholy waste” unites them in one grand combi. nation, against which the puny Opposition of railroad pools shall not prevail. • * - - FIETEENTEI ANSWER. The thread of argument which has run through my replies to the pre- vious questions indicates my views as to the extent to which interstate commerce should be regulated by legislation. The fifteenth and last question asks how such legislation could best be enforced. I have asserted that the great evil is the reduction of the charge upon corn- petitive traffic below the cost of performing the sery.ice; that this is an evil not only to the competitive shippers, by reason of secret rebates, but also to the local shippers, who have to make good whatever is lost to the railroad companies through unrestricted competition ; that it should be lawful for railroad companies to restrict competition by agree. ment, and that such contracts should be enforced as other lawful coa- tracts are enforced. Where interstate commerce is not competitive, unjust discrimination should be defined in a simple way, and such legis- lation as may be necessary for this purpose should include provisions for its enforcement in the Courts. Legislation within the limits here suggested would not require the INTERSTATE COMMERCE. 147 establishment of a commission or other special tribunal to execute it. This would seem to be a merit rather than a fault ili law-making of a confessedly experimental or tentative character. If, after sufficient trial, it should not accomplish all that was expected of it, there would be no false step to retrace, no irretrievable damage to investments through blundering, but the experience thus acquired at Small expense would serve to indicate the right direction and extent for additional legisla- tion. + ** - W. G. RAOUL'S STATEMENT. Statement of W. G. Raoul, of Savannah, president of the Central Railroa and Banking Company, of Georgia. sº Before beginning to answer the questions in their order, I will say, in a general way, that my study of the subject of railway transportation, and the extent to which the State can properly and economically exert an influence upon it, impresses me with grave doubts of the existence in the present status of railway affairs of any middle ground between free- dom of action on the part of the owners of the roads in conducting their business and State ownership, or a guarantee of profits by the State, which would practically be ownersbjp, and possibly more objectionable in its character than outright ownership. By freedom of action I mean, of course, only such freedom as may be given under the general and common laws of the country to do business in a proper and legitimate . manner, not license, but absolute freedom from specific interference with rates of transportation and legitimate methods of business pertaining to transportation. < Railroads, being as they are such vast improvements over all plans and systems of highways of the past, would appear to be established as the permanent means upon which we are to rely for the inland carrying business of the country, and an absolute necessity to modern civiliza- tion. Being a necessity, we must have them, and to have them we must pay for them and their use as other things We have and use are paid for. Admitting this, it next becomes a question of the best and surest means for 'securing the construction of the roads necessary for the conduct of the business of the country, and the easiest and most equitable plan of distributing the burden of their maintenance among the people to meet whose necessities they Were built. We decided from the beginning, and have since continued to pursue the policy of relying upon private capital to build the roads as fast as needed by the country, the inducement for such investments being the hope of profit. We have up to this time endeavored to distribute the burden of cost and maintenance among the people who use the roads by what might be called a direct tax upon every one who uses them in pro- portion to the extent of that use. The object of change can only be the reduction of cost, and the adoption of some better method of distributing the burdens their cost and maintenance impose. The burdens never can be reduced below cost and maintenance; distribute them as we may, they must be borne. If, and, as I apprehend, it is true, the income of the railways of the country does not exceed the interest on the money neces- sary for their construction and cost of maintenance, then the question is only one of distribution of burdens. 148 INTERSTATE COMMERCE. THE DISTRIBUTION OF BURDENs. It will be answered that discrimination is also a question. Discrim-. ination is only a feature in the one question. If to avoid discrimination by making a more uniform system of charges it reduces the income of the roads, we must weigh in the balance one against the other, deter- mine which is the easiest to be borne, tariff for revenue, which will Sup- port the roads, or tariffs for the avoidance of discrimination, which will not support them, and decide upon one or the other, and upon whom. the burdens imposed by a change of policy shall fall, for either must be a burden. Left as it is, the public who use the roads must bear such discrimination as results from a departure from the system of uniform tariffs. Adopt a uniform tariff system, lessening income as it will, and the burden will fall upon the comparatively small class of the com- munity who own the roads. - * It will scarcely be urged that the necessity of the general public for a uniform tariff system can become so great as to warrant its being adopted, if it must be done at the expense only of that portion of the public whose money is invested in railroads. If it must be done, and not at the expense alone of those who use the roads, but from broader considerations be distributed over the whole State, those owning the roads bearing as other citizens only their pro rata part, then it comes to ownership or guarantee of profits by the State. Owned by the Gov- ernment, a uniform system of freight charges and reduced number of classifications would follow as a logical result, and put the maintenance of the roads on the same footing as that by which the postal service is maintained. Those persons living in thickly populated sections pay to the Government an enormous profit upon the mail matter over the cost of carriage and handling. Those living in thinly-settled sectious pay far less than it costs the Government to deliver it—in many instances a mere tithe of the cost. Thus would result a uniform tariff for railroads. Those living in thickly settled and prosperous commercial communities would be heavily taxed to support cheap transportation for those living in sparsely populated sections, and in many cases struggling in a com- mercial rivalry with those who are being taxed beyond the cost of trans- portation in order to support a system of transportation for their rivals below its cost. - g . - UNRESTIRICTED COMPETITION. Had the feature of governmental regulation of railroad tariffs been introduced and taken into consideration at the time of the granting of the first charter, I can conceive how the State might then have so in- fluenced location and encouraged or restricted building, or have laid down conditions both for itself and the builders, as to have enabled them to have assumed some intelligent supervision of rates. Without hardship to the owners of the roads, and with good results to the pub- lic to be served by them. I can see how useless lines could have been avoided, how useful ones might have been forced, how competition with all the evils that follow in its track could have been avoided, and by an intelligent mapping out of the country, responsibilities laid upon the companies assuming to construct and operate those highways that would have alike protected their owners and the users of them. However, with such a system adopted at the beginning, no one can doubt that more than a century would have elapsed before the country would have been as well supplied with railroads as it has now become under the plan we have pursued, but we should have had them better and INTERSTATE COMMERCE. 149 cheaper, have avoided much useless drain upon the resources of the country through the building of unnecessary roads, have had more perfect systems of transportation, which would have been satisfactory each in themselves, and not, as is now the case, a standing menace to commercial communities from the changes which the building of every new line now threatens, often resulting in the transfer of the trade and business relations of large sections from old markets to new, breaking down values in the old to build them up in the new, which yet again may be in turn broken down. This is an evil of unrestricted railroad build- ing—a fundamental evil, which results in unrestricted competition, which in turn results in discrimination, of whicle the public complain. We desired railways to do the carrying business of the country. We desired them through the expenditure of private capital, without put- ting the burden of debt for their construction upon the State. We de- sired them in competition with each other as a protection against extortion, and we have secured them in the way and under the condi- tions we thought best. We may now speculate as to whether We have paid too little or too much for such advantages as we do recognize to have flowed from the rapid but uncontrolled development of our rail- way system. At all events, whatever mistakes may have been made, they are no more the mistakes of the promotors and builders than mistakes of those who permitted and encouraged the plan upon which they have worked. Therefore, if we have made mistakes that now call for correction, if that correction involves waste and loss, we cannot, from a moral point of view, put it alone upon those who now own railroad property; but as all are alike responsible, all should alike share the cost of remedy. Few will doubt that of all the remedies heretofore tried or suggested, most, if not all, of them must necessarily work a restriction upon the earnings of the roads, and disastrously so to many. It is these considerations that bring me to the doubt I have expressed as to the feasibility of any interference in rates except under a guarantee of rea- sonable returns to those whose money has produced the property. DISCRIMINATIONS TEIE RESULT OF COMPETITION. - (1) The best method of preventing the practice of extortion and unjust discrimina- tion by corporations engaged in interstate commerce. - - - As a fact, the practice of extortion does not exist as a rule, among railroads. I think they are freer from this charge than almost any other business of the country. There may be isolated cases where it is practiced to some extent, but they are very limited, and I cannot say that anything of the kind has fallen under my personal observation. The fact that the total railroad capital of the country has not earned a fair interest on the investment, and the fact that the rates of railroad transportation for the past twenty years have constantly and continu- ously declined, and are still declining, is sufficient to prove this. With the exception of certain periods when railroad rates were in an abnor- mal condition through the effect of reactions following controversies be-, tween different lines, the decline has been continuous. On interstate rates this has been notoriously so. The discriminations complained of by the public are the results of competition, and, it might with safety be said, of competition alone—competition, between the roads mostly in their own interest and on their own motion, but often acting from a pressure from large and influential communities seeking advantages over a commercial rival. We have taught ourselves to rely on compe- 150 INTERSTATE COMMERCE. tition for relief from monopoly and extortion, but we were seeking re- lief When We in reality needed none, and the means adopted for the re- lief has brought us face to face with an evil of immense magnitude and out of all proportion to the imaginary one of monopoly and extortion. In the nature of things extortion would have cured itself or have been easily dealt with by legislation. The complaint of discrimination is very much less in regard to interstate business than to State business. It usually arises from a disproportion in rates for the carriage of goods for long distances as against higher rates per mile for carrying goods from one point to another in the same State. -- * - The latter part of this inquiry is the most difficult one to answer of any in your list. It, in fact, embraces the problem you are dealing with. Its satisfactory solution involves, in my opinion, the entire elimination of the principles of competition in the sense that we now understand Colmpetition, i. e., a competition in rates. Just to the extent we can modify competition, to that extent can we decrease discrimination. Therefore, in my judgment, the first step in the case is the study of the Questions of competition and the devising of some plan for its modifi- Cation. - * (2.) The reasonableness of the rates now charged by such corporations for local and through traffic. The railroad managers have recognized the necessity of working their roads in the interest of the public as far as practicable. Selfish inter- est would prompt this if no higher motive existed, as it secures patron- age from their friends and avoids complaints that often culminate in experimental legislation, always resulting harmfully to revenues, or in embarrassment and confusion in the conduct of business. The fruitful source of complaint is the difference between what is called through or competitive and local rates; naturally so, as this is a fruitful (I may say the only) source of discrimination. Obviously it is desirable to modify if we cannot entirely remove the cause, and to this end the effort of railroad managers has been to bring these as nearly together as possi- ble; hence, as a result, the cardinal principle for making rates is to secure for through or competitive traffic as high a rate as the competi- tion will permit, and reduce the local rates to the lowest point Compati- ble with the proper maintenance of the property. It may be asked why they should not be placed on an equal footing, and the same rates per mile, in other words, the uniform tariff system, adopted. I have already said competitive rates were made as high as the nature of the Competi- tion would permit; to increase them would result in a decrease of that business by diversion from the line advancing either to the shorter rival lines reaching the same markets or to other markets served by other lines, rail or water, inviting resistance from the communities from which the trade is diverted, charges of discrimination against the line losing the traffic, and, if the aggrieved community is strong enough, the build- ing of still other competitors, and would leave the revenue from local business inadequate for the maintenance of the road. To place local rates on a parity with the through would result in the same Way, i. 6., yield less than a sufficient revenue to support the property. The Vol- ume of through business secured over a line enables it to charge a low scale of local rates. The allegation that the roads are charging extor- tionate rates on local business in order to make up losses On through cannot be sustained, except, perhaps, in isolated cases. Some absurd exceptions to usual rules may always be looked for, but such as these ' – . | INTERSTATE COMMERCE. : 151 are short lived and corrected through a self-operating principle. The intelligence of railroad management has progressed beyond that point as a rule. On well managed roads (and most of the roads in the United States are now reasonably well managed) the rates are not excessive on either through or local traffic. The immense development of through business by the interchange of products between distant parts of the Country, largely brought about by cheap and rapid transportation, has been a potent factor in Working a reduction in the local rates, and has made a scale of charges possible now that would otherwise have been impossible for many years to come, the cheapness of transportation be. ing so thoroughly dependent on volume of business. (3) Whether publicity of rates should be required by law, whether changes of rates without public notice should be probibited, and the best method of securing uni- formity and stability of rates. - - PUBLICITY IS ESSENTIAL. Assuming that there are to be some specific laws bearing upon the railroad transportation rates, I should say that publicity is essential. Without any laws to fix them, rates should be public, because there is no sound business reason why they should not be, and every reason why they should. I'or obvious reasons it is important that the public should be equally informed in regard to rates. I do not think there should be any restriction upon change of rates without public notice. Assuming or assuring that the rates will be made public when changed, there would be no necessity to trammel the roads by requiring a given notice before they were allowed to change. The necessity for changes sometimes comes very suddenly, and prompt action is necessary to ac- complish the desired, result to be effected by the change. The best method of securing uniformity and stability of rates is further combina- tion among railroads, that is, enlargement of the systems, a more specific division of territory for the express purpose of modifying competition, placing larger areas of country under the control of responsible com- panies, and fixing more firmly the responsibility for efficient and proper Service upon each company, and in pooling (as a division of business is now commonly called) among the lines that are under separate con- trol. The public are perhaps more jealous of the enlargement of the railroad systems of the country, the amassing of long lines and many branches under single control, and of pooling than of any other features in railroad development and management, yet I am forced to the con- clusion that these of all others will work more rapidly to the accounſplish- ment of the desired result, that is, to the purpose of uniformity and stability of rates. I know of no instance where the combination of various lines into larger systems has resulted otherwise than in a reduction of transportation charges and in the increased facilities and improved methods of business. They are managed with more economy, more con- servatively, feeling as they must a higher responsibility to the public, and it is practicable to secure a higher order of ability in their manage- ment than on small and divided lines, and modifying competition goes far to lessen discrimination which is inseparable from competition. (4) The advisability of establishing a system of maximum and minimum rates for transportation of interstate commerce. $ If maximum and minimum rates were established by law, it would be found, when they come to be made, that, in order to be just and fair to 152 ** INTERSTATE COMMERCE. all the transportation companies involved, that they would have to be made between such wide limits that it would practically leave the ques- tion as it is now. The Government would scarcely venture to establish the maximum at a lower rate than the higher rate now charged on in- terstate business, which, as a rule, is too low, nor would it likely fix the minimum higher than the lowest voluntarily charged. The most prolific source of trouble and dissatisfaction is the abnormally low rates result- ing from Wars between competing lines. It increases discriminations, disturbs values, invites preferences for individuals to specially favor- able yet secret terms, creates uncertainty in trade, and diverts trade. from natural channels. To counteract this, reductions on other lines in no way concerned in the contest are enforced, and this in turn creates other discriminations, besides causing loss to the roads on which the reduction is forced, and to the public against whom the reduction causes discrimination, both innocent and powerless against the cause. I feel somewhat confident that it is possible to devise some system of classi- fying the lines and fixing a minimum that would have the effect of at least placing a limit upon reckless competition that would bear good fruits. To enforce such a system penalties would be necessary. (5) The elements of cost, the conditions of business, and the other factors that should be considered in fixing the tariffs on interstate traffic. To establish rates intelligently, and with a view to a fair return upon the cost of the property, it would be necessary to possess a knowledge of all the conditions that in any way influence the results; for instance, cost of Construction, cost of operating, local tonnage, through tonnage, character of tonnage, direction and period of its movement, extent to Which tonnage is subject to fluctuations, liability for accidents from natural causes, subjecting traffic to interruption, and reliability or un- reliability of the products upon which the road depends for its traffic, and, above all, some familiarity with the surroundings and characteris- tics, to enable the rate-making power to estimate the effect given rates would have in increasing or diminishing traffic through their effect upon business enterprises, or diverting traffic from or to other sections, and the effect upon the cost of carriage—the increasing or diminishing of tonnage resulting from the effect of the rates—would exert. (6) Should any system of rebates and drawbacks be allowed ? If so, should such transactions be regulated by law and be subject to official inspection or approval; or should they be entirely prohibited ? - - I think that any law regulating the conduct of the business of the roads should prohibit drawbacks or any system of rebates. Except in rare cases, they are only subterfuges to cover the real rate in the interest of one or more individuals as against the others. Occasionally a spe- cially low rate is made in consideration of a large amount of traffic, under specific condition. To insure the railroad against having to ac- cept the low rate on a lesser amount, or on different conditions than those agreed upon, a certain refunding is agreed upon to be paid at the end of the shipments. This would seem to be legitimate enough, but only for such reasons as this do I think it warrantable, and this is as: Suming that it is proper to make a difference in rates between large and Small shippers, the advisability of which I am inclined to doubt. If a law was made permitting drawbacks, it should be subject to official approval or inspection. My judgment is decidedly to prohibit it. It is unbusinesslike, unsound in principle, and in most cases is prompted by unfair motives. - INTERSTATE COMMERCE. 153 THE POOLING SYSTEMI. (7) Should pooling contracts and agreements between railroads doing an interstätte business be permitted, or should they be entirely probibited by law # If they should be regulated by law would it be sufficient to require the terms of such agreements to be made public and subject to official approval 7 < I think when the combination of various roads into large systems has reached its limit that pooling is the only possible means left for adding to the uniformity and stability of rates. Pooling is quite as much in the interest of the commerce of the country as in the interest of the roads. The public has become prejudiced against it, and look upon it as the means by which the rates are to be raised and extortion practiced. In the face of a long experience with lasting and permanent pools, the rates have continued to decline. So far from being prohibitory, if they were legalized and subject to approval of the proper authority, and re- cognized in the courts as all other contracts are, it would go far to re- move, I may say, the only real grievance of the public, that of discrimi- nation. Pooling is simply an understanding or agreement among the * roads that each shall take a certain proportion of the business of the territory they compete for, and in the event of their not being able to divide the business physically, they equalize the disadvantages by di- viding profits. . I cannot see that such a contract should of necessity be subject to official approval, yet can see no harm in such a provision. There is a world of virtue in publicity. (8) Should provision be made by law for securing to shippers the light to select lines and parts of lines over which their shipments shall be transported THE DIVERSION OF FREIGHT. Each shipper, of course, has the right as an original proposition, to select the line by which he will ship, but I do not think it practicable to give him the right of selecting parts of lines. The business arrange- ments for the handling of freights over long distances, where several transportation companies are involved, is a matter of no small conse- quence. The necessity for excellent methods, honesty of purpose, and energy in carrying out the plans is important to the successful and proper handling of goods. This can only be secured by negotiating with the lines, the principal line having the right to select their con- nections and treat for the proper handling of the business they ex- change with them, the assurance of larger volume of business being the inducement for expending the money usually required to prepare for it. The right of the shipper to divert this from parts of one line to parts of another would throw goods very frequently out of the regular chan- nel and over transportation lines perhaps badly managed and unpre- pared for it, which must result in confusion, delays, and dissatisfaction. It wery frequently happens that there are short links competing with links in long lines of transportation, and these getting no business, uot being included in the established line, would establish agencies at the principal points and pay rebates or drawbacks to shippers as induce- ments to divert their business, which Would only result in confusion and prevent the possibility of effecting a perfect System of transportation. Then, again, in many States the law makes any road in a line liable for the loss, damage, or delay of freight, treating the lines over which the bill of lading is issued as partners, and holding that the public are not interested in the details of agreement between the partners, but that any of them must respond to the damage the shipper has sustained. 154 INTERSTATE COMMERCE. Under these circumstances the shipper would have the right to select “ parties who were to be held as partners in the responsibility, and yet thoroughly irresponsible. The two methods would be incompatible. , If the shipper may select or rather determine the make-up of his line, the laws must relieve the Various links for the conduct of each other and free each road as it frees itself by receipt from its connections. (9) By what method can a uniform system of rates for the transportation of pas- sengers and freights by all the corporations engaged in interstate commerce be best Secured ? --- - Absolute uniformity of rates among all the transportation companies for freights will be, in my opinion, impossible to establish. It can measurably be accomplished through more extended control and the system of pooling. There would even be some difficulty and unfairness in forcing uniformity in charges for passengers, because a uniform rate per mile would place the short lines at an advantage over those that were only a slight distance longer, and divert the business from the long lines, and deprive them of considerable revenue, and at the same "time deprive the public of the choice of lines at equal rates which they now enjoy. But there are limitations to these advantages and disad- vantages beyond which harm comes, first to the roads and then to the public, and the establishment of a minimum rate would be of great value to both. - (10) Should corporations engaged in interstate commerce be permitted to charge a lower proportionate rate for a long than for a short haul ? Does the public interest require any legislation on that subject 3 g It will never work with satisfaction to the roads or the public to en- force a law prohibiting the charging of lower proportionate rates for long hauls than for short. It would be equally damaging to the roads and the public. There is no feature in railroad management more firmly settled in the conviction of that portion of the public who have not studied the subject with some care, than that the rates should be uniform, and that there should not be proportionately lower rates charged for long hauls than for short ones. It is an extensive subject, and more far reaching than is generally supposed. It involves not only the profitableness of many important roads, but to an enormous extent the values of property far removed from the sea-board. It is the oper- ation of this principle in railroad transportation that has done more to build up the West than anything else, and a reversal of it now would change values beyond what we can possibly conceive. The operation of this principle makes it possible to utilize lands in the far West for the production of food for foreign countries, which without it would be of little value except to feed the population existing upon them ; but it at the same time puts distant parts of the country in competition with the home industries, decreasing profits to these various industries and trades, yet decreasing prices to the consumers. This in itself brings its complaints from various sources, often responded to by legislatures, yet seldom analyzed closely enough to make clear the principle, the operation of which is causing the trouble. (11) Should any concessions in rates be allowed to large shippers except such as represent the actual difference in the expense of handling large shipments over small shipments, and should such concessions be made known to the public # I do not think concessions in rates made to larger shippers is a cor- - rect principle. There is a difference in the expense of handling freight by car load lots and in less than car-load lots, but this difference is very much less than is usually supposed; but to that extent, whatever it may i INTERSTATE COMMERCE. 155 be, between a car-load and less than a car-load, it is reasonable and proper that difference should be made, but I can see no reason why there should be a difference in rates charged per car for one car, or for one hundred cars. Such differences only throw great advantages in ‘avor of the large dealers as against the small dealers, and have the tendency to put trade in fewer hands, which I do not believe serves the public interest best. Whatever concessions of this kind are made should be as much a matter of public information as the rates them- Selves. - - . . (12) Should corporations engaged in interstate commerce be required to adopt a uniform system of accounts 3 - * - I do not think it is desirable to force the railroads to accept one uni- form system of accounts, but if they are to be managed and controlled in their rates and methods of business by one central power, this will become to some extent a necessity, for it will be impossible to control intelligently the business and rates of a road without a full knowledge of its condition and financial affairs. This could not be gained by one central power if it had to study the various systems of accounts as con- ducted by the various roads. From one point of view, a uniform system would serve many advantages under all circumstances, but upon gen- eral principles I am so much opposed to limiting the scope and actions of individuals that I think we could forego many obvious advantages for the indirect benefit that results from every citizen being allowed to use his intellect in his own way and compete with all others for better results. It encourages originality and developsingenuity. A uniform system of statistics and classification of expenses, defining With precis- ion what items could enter under the various heads of expense ac- counts, could be adopted to give possibly all the information on the subject needed, without any change being made in the general accounts. Quite as essential as uniformity in accounts would be, it occurs to me, the fixing of one day for the termination of the fiscal year of all Com- panies. This, however, is an inquiry requiring for intelligent discussion far more thought than I have given it. - (13) Is it desirable that such corporations should be required to make annual re- ports to the Government # If so, what information as to their earnings, expenses, and operations should such reports contain 3 . If the Government is to control the rates and business of the railroads it must of necessity not only have annual reports, but have reports more frequently. To make suggestions as to the character and scope of such reports would be the work of very serious and careful consideration, and scarcely any one would be willing to outline it in the off-hand and hasty manner in which I am answering these inquiries. In such an un- dertaking an effort should be made to secure uniformity between the sys- tem of accounts adopted by the Government and those adopted or to be adopted by the various States, for the passage of some of the larger systems through several States would (in fact does now) involve a con- fusion and expense almost unbearable. Uniformity in reports to the States and General Government would indeed be a Welcome feature in governmental requirements. - - (14) In making provision for securing cheap transportation is it or is it not import- ant that the Government should develop and maintain a system of water routes? I can see no more reason why the Government should develop and maintain a system of Water routes for the purpose of securing cheap trans- portation than that it should build parallel railroads. The idea of main- * S. * 156. - INTERSTATE COMMERCE. taining the water routes, not needed in themselves, is based upon the principle of competition, the reduction their competition would enforce upon the rail routes. If that principle is sound, and opening and main- taining water routes is justifiable, the building of railroads would be more so, because the water route would be of little value except to force rates down by rail between distant points, and the public would use the rail in preference to water routes; therefore, if there is a neces. sity for such a policy, it would be better that the money be spent in building this competing line in a way that would serve the public best. We cannot doubt that railroads would do this, for we see railroads built parallel to some of the finest water routes in the country and taking the traffic. There are instances in this State of water routes that were practically forced out of use twenty-five years ago by competition with ailroads in their them imperfect state. Rivers that were filled With steamboats and other craft, and transporting the bulk of the produce, are now without any transportation facilities upon them. It will never, in my opinion, be wise to expend money for the purpose of creating competition in transportation. It is a misapprehension of the cause of the trouble to suppose such a remedy will reach the real evil. (15.) In what manner can legislation for the regulation of interstate commerce be best enforced ? Should a commission or other special tribunal be established to carry out the provisions of a y law Congress may enact 3 If the laws proposed to regulate the transportation business of the Country are conservative, based upon business principles, do justice to the railroad companies, and permit them to pursue their business with reasonable hope of profit and reasonable freedom from embarrassment, there would be no difficulty in enforcing them. The roads will co-oper- ate thoroughly aud cheerfully to the end of their successful operation. I do not think it practicable to regulate rates under arbitrary laws, and if any method can succeed it must be through a commission with some elasticity in its methods. The chief difficulty of dealing intelligently and justly with the rail. road question is from the fact that neither the General Government nor the States possess jurisdiction over all character of business of all the railroads; but for this, some comprehensive plan might be devised for the modification of discrimination through the modification of competi- tion; and to guard the public against a decrease of facilities and unfair increase of rates, which might follow were the pressure of competition and the fears of adverse State legislation removed, it might be possible to fix a maximum percentage upon investment beyond which the rev. enues of the companies would revert to the State. Such a limitation could have no such effect as to deprive private capital of a just return. . It would not (leaden the energies of railway managers by absorbing all the fruits of their labor from those in whose interest they are employed. It would not offer a temptation to withhold expenditures upon the property in order to make large dividends upon inflated stock, but 1'ather to encourage a rivalry among the various companies for superi- ority of facilities and arrangement, a competition in methods of busi- ness and facilities to the public, which would be legitimate and healthy in its tendency. Capital invested in transportation is entitled to fair returns; it is entitled to a liberal consideration for the risks assumed, sufficiently liberal to properly encourage enterprise in building roads where they are needed, but it is entitled to no more; and in view of the dependence of the commercial prosperity of the country upon the proper railway facilities at fair prices, it would seem to behoove the Govern- ſº INTERSTATE COMMERCE. 157 ments to adjust the scales of justice fairly, to protect the capital against communism, that capital might always be ready to provide the facilities needed by the public, and to protect the business of the country against unfair rates, that it might prosper. , In answering the sixth inquiry of your circular, referring to draw- backs and rebates, I intended to suggest that any law dealing with rebates and drawbacks should also deal with commissions to ticket- sellers. An investigation of that branch of the subject will develop it to be a great evil, not so much as a discrimination directly hurtful to the public but as an enormously wasteful method of business, making a serious drain upon the revenues of the companies, the saving of which would make lower charges to the public possible. - - - THOMAS STURGIS’s STATEMENT. Statement of Thomas Sturgis, of Cheyenne, secretary of the Wyoming Stock- & growers’ Association. My time will not permit a prolonged discussion of the great questions involved, and I shall confine myself to a few points which have been forcibly impressed on me as important in the matter of transportation of freight by rail. Some of these points are suggestions as to the wisest and best policy for both the public and the railroads; some to the effect that the rights and duties of the shipper and of the railroad company be more clearly defined than is the case under the existing law; some indicate much needed reforms. I wish to be clearly understood as speaking only, in a general way and without reference or application to any individual railroad or system of railroads except when the allusion is directly by name. Stability of rates is of the first importance. Sudden or frequent fluc. tuations are bad. Business calculations extend over a series of months. Freight rates are an important factor, and the temporary advantage gained by a “cut” or break in rates is more than counterbalanced by the general disturbance and unsettled values. Pooling by railroads is not objectionable in itself. It conduces to stability of rates, but it should be supervised that it may not be made, in certain localities, a means of extortion. Rates are generally lower and more reasonable at pooled points than at points of same length of haul not pooled, and rates certainly fluctuate less under the pooling system than without it. The railroads, however, find great difficulty in maintaining pools. The tºxtension of new roads to pooled points constantly necessitates the ad- mission of new members to the pool, and the change in the relative traffic. of old roads consequent on the struggle for new business, and the building of branch roads, also necessitates constant revision of the agreement for the division of earnings. Publicity of rates is good and necessary, but it amounts to little un- less the rates are established by law and supervised. Many roads make a public tariff, but do much of their business inside of it and at lower rates, using the published tariff to appeal to in case of misunderstand- ling between them and the shipper; or in case the shipper loads freight Without an express agreement applicable to that instance. In some cases where the published tariff is much higher than the actual rate regularly in use, and where the said actual rate is recognized by the rail- 158 INTERSTATE COMMERCE. road as being a full and satisfactory payment to them for the service performed, the shipper can only obtain said regular rate by signing a printed “release,” which frees the railroad from much of its usual re- sponsibility and leaves it only liable for accidents due to displacement of rails or road-bed and breaking of car trucks, the guarntee of proper care and treatment of property being relinquished by Shipper. TEIE BASIS OF RATES. Rates of freight should be based on a calculation in which mileage and the expense of doing the business at each point should be consid- ered together, recognizing the fact that a railroad can unquestionably make a long haul cheaper per mile than a short one, and is therefore justified in charging less on a per-mile estimate in the former case than in the latter. But rates should in no case be higher at a point where there is no competition than at a point where, assuming the mileage and general conditions to be the same, competition does exist. In other words, the rate forced by competition should govern, and the railroad should not be permitted to make up at the non-competitive point..the amount yielded at the competitive one. Rates should not differ mate- rially, whether bound east or west, assuming the mileage and other Conditions to be substantially the same. At present the rates for small lots of highly-bred animals are in some cases prohibitory and in many cases extravagantly high. This is made possible by the fact that their destination in the West limits their choice of transportation to one line, of which advantage is taken by the railroad. • Evening freights. In answer to question eight of the circular, I should say, emphatically, yes. The right of the shipper to indicate the lines and parts of lines over which his freight shall be transported should be clearly affirmed, and the right of a railroad to act as an evener of freight by dividing it arbitrarily between two or more railroads, without refer. ence to the line indicated by bill of lading, or to divert freight, for pur- poses of its own, from the railroad over which it is billed to some other railroad, should be definitely denied and prohibited. Rebates or drawbacks are right in many cases, and must be allowed. At the same time they cannot be made public. Circumstances con- stantly arise by which certain freight can be carried for less than the usual rate. It unites favorably with other business, or cars are otherwise necessarily going out or returning empty, &c. But to make such re- duced rates public Would unsettle rates and create a demand for a gen- eral reduction, which could not be conceded because the especial con- dition would not exist. - * * CONCESSIONS TO LARGE SEIIPPERS. Concessions to large shippers are justifiable in special cases, as, for " instance, where they constitute an inducement to draw capital to the line of the railroad and into the business of the country it traverses, and also where it induces the shipper to enlarge his operations and bring to the railroad additional or new business, which could not be Commanded, except for the Concession in rate, on account of the expense attending the advances of funds or the distant location of the business sought. This reasoning would apply, among other products, to the ores of mines in mountain localities distant from railroads and to coal. The concession by Opening all otherwise impossible market accomplishes three benefits: It engages labor at the place of production; it in- INTERSTATE COMMERCE. 159 creases the tangible wealth of the community by converting into money a thing otherwise dead, and it gives to the market to which it is taken a larger supply of the material produced, and generally at a lower price. wº. r * -- - Arbitrary discrimination by one railroad against another for the pur- pose of suppressing competition in a different locality, should be pro- hibited by law. For instance, the Union Pacific Railroad has heretofore for years had a traffic agreement with the Central Pacific Railroad by which freight was carried from points on the Union Pacific to points on the Central Pacific at “through rates,” i. e., such rates as were appro- priate to a long haul. Some months ago the Union Pacific completed the Oregon Short Line, a road extending northwest through Idaho to Portland, Oreg., and opened it for business. By taking steamer at Port- land for San Francisco freight was enabled to reach the Pacific coast. This affected the business of the Central Pacific in that class of freight. In revenge they refused to allow the Union Pacific to make any bills of freight to stations on the Central Pacific ; all freight must be billed to the Union Pacific terminus at Ogden, and is there rebilled by the Cen- tral Pacific at its own local and often extortionate rates. It is not pre- tended that such freight costs more to transport than formerly, but it is used as a whip to force the Union Pacific into relinquishing business or making concessions desired by the Central Pacific in Oregon. The Union Pacific is only indirectly the sufferer, the true victim is the ship- per who must pay an extortionate rate in going from the east to any point in Utah, Nevada, or California West of Ogden. TEIE PULLMAN CAR, COMPANY. Legal supervision of these rates is very necessary. A much higher mileage is charged west of the Missouri River than for the same mileage east. Not less than 33 per cent. advance is demanded, and frequently more. The Pullman company provides no local agents or conveniences for the public. All their business is done on their cars, and accommo- dation cannot be secured anywhere until the car reaches that point; then the traveler, sick or well, must take his chance. This company has also up to the present time avoided payment of any taxes to the local authorities, State, territorial, and county, although having a regu- lar amount of rolling stock, whose value is ascertainable, permanently within and seeking the protection of these various jurisdictions. They do this on the plea that all property of the company is taxable in the city where it holds its principal office. This is eminently wrong, and it should be provided by law that such companies shall contribute in taxes to the support of the local governments to whom they appeal for pro- tection and from whose people they draw their business. Upon the questions suggested under numbers 9, 12, 13, 14, and 15 of the circular, I have no opinion to offer. DISCRIMINATIONS AGAINST DRESSED BEEF. Ono more point requires notice. Freight rates should be in all cases based primarily upon actual cost of transportation, in which cost may enter certain factors, such as the almount of material transported, its bulk, and the degree of care or responsibility involved. Rates should Inever be arbitrarily raised or lowered to benefit one class of trade and oppress another. This should be interdicted by law. An illustration is this: The beef shipments from Western points eastward were formerly 160 * INTERSTATE COMMERCE. made exclusively alive. Large stock-yards grew up at many points, and many railroads and individuals became largely interested and accumu- lated vast sums by feeding these cattle at stopping points. Further, the railroads had large sums invested in open cars fit only for transport- ing live cattle. The method of killing the cattle in the Western mar- kets and shipping the dressed beef in refrigerator cars was then in- troduced. It is humane to the animal, healthy to the consumer, wisely economical to the producer. But it was less profitable to the rail- roads and the stock-yard companies. By the former method twenty liv- ing animals went in a car; by the latter method the car held the car- casses of forty. The hides, tallow, &c., constituting the half of the animal's weight, remained in the West at the place of slaughter instead of being carried East and then back again. The cost of carrying the dressed meat, allowing for the heavier and more costly car, was per- haps one-third more to the car than that of carrying the live animals. But disregarding this altogether the railroads fixed the rates at nearly double, the avowed object being to make the dressed beef, when deliv- ered at the East, cost as much as if sent in the old way. This was done to accomplish two objects: First, to discourage the new and improved method, and drive from the market that class of competition ; Second, to secure and retain to the railroads and middlemen the profits derived from the old system. Two parties were to suffer: First, the Western producer, who would get more for his material under the im- proved system, because it was being more economically handled; sec- ond, the Eastern consumer, who could be supplied more cheaply and with better material under the new system than the old. This tyran- nical assumption of power by the railroad is so glaring, and so opposed to the best interests of the community, that it needs but be mentioned to command attention and legal redress. No economic question now before the public is of greater importance than this. GEORGE E LEIGHTON'S STATEMENT. Statement of George E. Leighton, of Saint Louis, Mo. You have probably discovered the fact before this that those who are most competent to speak do not care to do so.. I know the fact that most of our larger shippers, from their ability to make private contracts and secure substantial rebates, prefer the competition which comes from the absence of any regulation whatever to a regulated traffic. But this is largely due to the fact that they do not believe any regulation will be effective, and that a law will only embarrass, not prevent, the favoritism which now exists. My own idea, and it is based upon some considerable experience, is that most of the evils now existing would be removed by requiring fixed and definite classifications, approved by a commission, and fixed, pub- lished rates; that no rate should be changed, either by reduction or ad- vance, without at least thirty days’ public notice; that any advance without such notice should be void ; that any reduction without notice should entitle any shipper within thirty days previous thereto to a de- duction and return of a like proportion; and that any rebate or draw- back allowed should be a misdemeanor for which the company should be answerable by fine of a substantial amount, to be shared by any in- former. - tº INTERSTATE COMMERCE. . 161 This māy seem severe, but no regulation by law is worth anything that is not made effective, and you cannot make it effective unless a violation is visited with a penalty sufficiently severe and certain as to make a violation somewhat hazardous. - In European countries rates and schedules vary but little in years. The only change is that which is brought about by the operation of natural laws. Any change is well considered and deliberate. In this Country it is brought about too frequently by the position of the man- agers in the stock market, the bad temper of the freight agent, or the recklessness of a bankrupt company, to neither of which should the commerce of the country be placed in subjection. - I believe very strongly in the value of a commission, not so much With authority to act by positive interference, as to acquire full and ac- curate and well-digested information which the legislative power could trust fully as the basis of legislative action. It is to be remembered that the evils now existing are quite as much due to reckless reductions as to reckless advance of rates. All depart- ures from the reasonable and just and natural charge are a menace to the safety of sound commercial, manufacturing, or agricultural indus- try. It is a false notion that reckless reductions inure to the popular advantage. Any sharp cut in rates is a direct blow to the whole stock in trade of the country which has been transported at higher rates, and in that class of cases where freight bears a large proportion to value is destructive of all safe business enterprise. ISAAC H. STURGEON'S STATEMENT. Statement by Isaac H. Sturgeon, of Saint Louis, Mo. It seems to me proper in answering the questions propounded by your committee that I should state that from 1855 to 1866 I was the president and general superintendent in constructing and operating one of our leading railroads in the State of Missouri; that I was often appointed without solicitation by ex-President Grant United States commissioner to examine railroads constructed with aid from the National Govern- ment, and that in 1874 the New York and Erie, New York Central, and Pennsylvania Central Railroads, together with many of the leading Western railroads, met through their representatives at Saratoga, N. Y., and appointed three commissioners to represent the three Eastern trunk lines named and Seven commissioners for the Western railroads, and without my knowledge I was selected as the Western commissioner for Saint Louis. The object of the roads in establishing this Eastern and Western commission was to regulate rates and make them uniform, leaving shippers to select the route by which they would ship, and to do away with the system of rebates and drawbacks, &c., the object seem- ing to be to do that which a national commission established by Con- gress might do. But after six months of trial the commission was dis- solved and the effort abandoned. The Commission found their efforts opposed very generally by the general freight and ticket agents of the roads, and the press at that time generally seemed inimical to the effort. But since that time and at the present day there seems quite a una- nimity of sentiment in favor of the Government establishing a national board, with power to enforce that which the roads then voluntarily made 16232 AP 11 § a 162 INTERSTATE COMMERCE. an effort to do. I might say that the managers of the fast freight lines were evidently opposed to the commission, and it seemed to me did all in their power to have the railroads abandon the effort to regu- late rates through a commission. With this preface of explanation I will proceed to answer the interrogatories of the committee as well as I can, but at the same time I would say that there are others that your committee can reach far more able than myself to assist you in forming an opinion as to what should be recommended to Congress. Still, I will submit for your consideration the opinions I have on the questions you propound. . - - > (1) By establishing a national commission, with full powers to fix and regulate rates, inflicting severe penalties for any direct or indirect Violation of the regulations established by the commission. This com- mission should be clothed with ample powers to fix and regulate rates after due investigation, and to compel the observance of the rates, rules, and regulations they may adopt. - (2) I am not familiar enough with the rates now charged upon the different classifications of freights or the passenger rates to speak on this subject. . . - (3) Publicity of rates should by all means be required by law, and changes of rates should be prohibited without at least ten days' notice. The only method of securing uniformity and stability of rates, it seems to me, is to establish the national railway commission by Congress, with power to regulate and fix rates, which shall only be changed by said commission. My experience taught me whilst serving as Western railway commissioner that there was no great necessity for more than two rates during the year, viz, a winter and summer rate. The sum- mer rate to meet Water competition, and the winter rate should be bet- ter than the Summer rate, because, as I understand, it is more expen- sive in Winter to Operate the roads, and there is a greater pressure of business. - - g e - (4) I think a system of maximum and minimum rates should be es- tablished. - (5) The elements of the cost of the road and conditions of business should be considered in fixing the tariffs on interstate traffic. A road built where the physical difficulties to be overcome in its construction were greater than that of another, costing more to construct it, should, as a matter of course, be considered in fixing rates. The pro rata share in such cases should be fixed so as to be just, and I think this can only be done by a commission after they have informed themselves of all the facts bearing upon the question. The cost of construction, and the cost of operating the road after construction, are factors that should be considered in fixing the tariffs. REBATES SEIOULD BE ABOLISHED. (6) No system of rebates or drawbacks should be allowed under any circumstances that I can conceive of. They should be entirely abol- ished. I feel that it is hardly necessary for me to say to you that in their practical working they are demoralizing to both railway officials and shippers, in this way: The clerk of any establishment goes to the different railway offices to ascertain rates. He is told by one road that it will take it for a certain rate. He replies, “I can do better than that.” This may or may not be true, but the statement operates on the fears of the general freight agent of the road, and for fear of losing the business he says, “I can’t give you a less rate, for I am bound by some INTERSTATE COMMERCE. . . 163 te agreement with another road, but I will bill your goods at this rate and allow you a drawback or rebate of so much.” The shipping agent may try all the lines, making a like statement to each, which may or may not be true to any road, and the one whose fears he can most Operate on gets his freights. This system results in giving one shipper an ad- vantage over another, and in so much loss to the less fortunate ship- per as to rates, and besides this injustice, it demoralizes both shipper and freight agents by inducing uncandid statements as to what the shipper can do in rates and what the railroad will do. Fix the rates by a commission and leave shippers to choose their line of railroad to ship by, and it will save the time to shippers of large establishments the expense of a clerk in testing rates, and all shippers will be placed on the same footing, and know that all are treated alike and have the Same rates. (7) My best judgment is that pooling agreements between railroads doing an interstate business should be entirely prohibited by law. (8) Provision should be made by law for securing to shippers the right to select the lines over which their shipments shall be transported. - (9) I can conceive of no method that will secure a uniform rate for the transportation of passengers and freights by all the Corporations engaged in interstate commerce, except by Congress establishing an able board of commissioners, with ample powers. It would, I think, take such a commission quite a length of time to gather all the informa- tion neeeed to enable them to act justly and intelligently in fixing uni- form rates; and if the commission should be established a liberal com- pensation should be allowed, so as to secure the very best talent of the country, and a liberal appropriation should be made for a sufficient clerical force of the best class of men to aid them in their work of inves- tigation, keeping records, correspondence, &c., for the work, if properly done, would be very great and demand the best talent of the country. My judgment is that after the system spoken of becomes well estab- lished the railway managers will be far better satisfied than with the present System, and that it will go far towards allaying the antagonistic feeling now existing in many parts of the country towards the railroads. My experience is that if the farmers and shippers can be made to feel that they are fairly and justly treated there will be no antagonism of the railroads. They are willing to pay rates that will fairly remunerate on a fair cost of the railroads, but will never be reconciled to have their products taxed to pay interest on bonds and dividends on stock uot a dollar of which ever went into the building or betterment of the road. (10) I think it proper that a shade lower rate should be allowed for a long over a short haul, and in any act of Congress that may be passed power should be given to the commission to regulate this matter after full investigation by the commission. (11) I think no concessions should be allowed large shippers, but if, after full investigation by the national commission, healing what can be said pro and Con by shippers and railroads, it should seem proper to make such concessions, they should be made known to the public. (12) I believe it would be wise to require the adoption of a uniform system of accounts. I may say that if the commission is established I deem it essential to facilitate their examinations and investigations. The system should be plain and simple and alike for all, as I think. - ANNUAL REPORTS. (13) I think it is desirable that such coporations make duplicate an- mual reports to Congress and the commission, I think the first thing 164 - INTERSTATE COMMERCE. is to get at the actual cost of the road, not counting as cost any bonds or stock commonly called “watered" bond or stock. Companies may have had to sell bonds very low to get the means to complete and stock their roads. If a bona fide sale, and the proceeds of such sale actually went into the construction of the road, it should properly be reckoned as a part of the cost of the road at the face of the bonds. The gross earnings from all sources should be shown, and the operating expenses of all kinds, and perhaps a separate account for anything ex- pended in the betterment of the road. Such accounts should be item- ized and clearly show how much received from freights or passage, carrying mails, &c., and the amount paid track hands, and all employés, repairs to engines, cars, &c.; in a word every item of expense in oper- ating the road, and also all moneys paid for locomotives, cars, and all additions to the road. - .* IMPROVEMENT OF WATERWAYS ESSENTIAL. (14) In making provision for cheap transportation it is essential that the Government should develop and maintain a system of waterways. Our great rivers are in a sense “inland seas” leading to the oceans, and for many of our heavier freights, that will not bear railway trans- portation, the best and cheapest means of carrying to the ships of the world at our different ports certain products that we desire to send to foreign markets and to bring to us certain kinds of imported goods. They are highways or railroads, if you please, already constructed, need- ing only that we improve them so as to add to the security of life and property upon them and increase their utility for our commerce. THE PANAMA CANAL. Permit me to say in this connection that I feel that the interests of the country demand the construction of a canal to connect the Illinois River with the lakes at Chicago, which would give to the country west of Saint Louis a water route east as well as south by the Mississippi River; and may I submit further for your thought the great and, as it seems to me, overwhelming importance of the earliest possible con- struction of a free ship-canal by Our Government across the Isthmus of Panama, free to the vessels of the United States, with a reasonable charge on foreign tonnage. Let us build and own and control this canal, free from all entangling alliances, as a gift to our maritime ton- mage. I am confident it would be wise, and would do more to enable our country to successfully compete for the commerce of Asia, Aus- tralia, and the islands of the Pacific Ocean than anything else w could do. - . If I read the news aright at this day the European powers are con- sidering the question of making the Suez Canal free; but whether so or not, it is clearly our interest, as it seems, to me to build this canal with the least possible delay so as to accommodate the largest vessels with the fewest possible number of locks and dams, thereby at once giving ac- cess to our vessels to all the West coast of North and South America, the people of the islands of the Pacific Ocean, Australia, and Asia. The construction of this free ship-canal would by cheapening the rates of freights especially give to our country greater advantages than the imagination can Well comprehend. I think it is well understood that the building of our first transcon- timental railway precipitated the building of the Suez Canal as a coun- * . INTERSTATE COMMERCE. e 165 ter-project, which, owing to the high rates of freights maintained over our Pacific roads, causes all commerce for Europe and our own country to take that route, as it is cheaper and more expeditious.' Give us the free ship-canal and we may hope to fully realize the benefits that we ex- pected to accrue to us from the building of our transcontinental rail. ways, but in which we have largely been disappointed. & A COMMISSION RECOMMENDED. (15) Legislation can best be enforced by a commission with ample powers. A commission for this purpose should, by all means, be estab. lished, and I am satisfied that if this commission is established and sustained to the fullest extent for a few years it will in the end result in great good to the country and be sustained not only by the people; but also by the railways. It is a new departure, and the railways may think it their interest to resist the establishment of such a commission, but I am confident that every railway manager and director of all good roads will be glad of its adoption after it is in full working order, for it will be their protection and Will result in a reconciliation of interests between the railroad, the farming, and other shipping interests. My judgment is that the greatest dissatisfaction at this day with the railroads results from the fact that the farming and producing interests believe that they are made to pay rates to pay interest on bonds and stock that were never used in building the roads, but were sold in the market and the proceeds pocketed. They are unwilling that their horses, mules, cattle, sheep, hogs, stock and poultry of all kinds, their Wheat, oats, rye, tobacco, hemp, butter, and eggs, and all they produce by the sweat of their brows, shall be taxed by rates to pay interest on “Watered” bonds and stocks whilst trackmen are ground down to the Very lowest possible point, and all other employés Save presidents and superintendents. These employés may have to endure their wages, but there is a hidden discontent that not unfrequently manifests itself in strikes and unrest and unhappiness. - FAST FREIGHT AND EXPRESS LINES. I would name another matter in connection with the subject under consideration, and it is this: The railroads are built, and you are familiar with the way in which it is done West, and perhaps in other parts of the country; first, to get all the stock subscribed possible; second, they go to New York with this basis and bond the road and sell the bonds at the best price that can be had. Not unfrequently a second mortgage has to be given, and these bonds are sold very low. There comes a time with many roads that they cannot pay interest. The roads are sold out and new parties become their owners and capitalize them anew, and make all they can by sale of bonds and stocks, per- haps, as I said before, not a dollar going into the construction or bet- terment of the road. But in addition to this, and this is the point to which I wished to invite your attention, fast-freight lines are formed and express companies in Which not unfrequently most of the leading officers of the company have stock. Then it becomes their interest to drive all freights they can on to their fast-freight and express-company lines. The stockholders of the roads may get no dividends, but the stockholders in the fast-freight lines and express companies get usually very remunerative dividends. Shippers find that if they send by the regular freight liues they can form no idea when their freights will get ºy 166 INTERSTATE commeRCE. through, and thus a large part of the freight business is driven on to the fast-freight lines and express companies to enrich a corporation formed within the railway company and to the great Wrong and injury of shippers. . - - It will be impossible to reconcile the farming and producing interests to the roads or make employés contented, with their wages reduced to the lowest possible point, as long as they believe that this is done to pay interest on bonds and stocks the proceeds of which never went into the construction or betterment of the roads. Remove this cause, and through a commission fixing just rates to the railways and the people, and all cause of complaint will be removed, and people and employés will become reconciled and contented with the management of the roads; for my conviction is that if they feel they are fairly and justly treated, and that the managers of the roads are doing the fair thing by them and the best that can be done under the circumstances, they will bear uncomplainingly any burthens that they may feel cannot be helped. This harmonious relation I believe can be established by a high board of disinterested commissioners, who will do justice both to the railroads and the people. It seems to me that only the managers of roads who do not wish to conduct their business according to just and legitimate methods can object to the establishment of such a commission as is proposed. - - \ E. C. SIMMONS's STATEMENT. Statement of E. O. Simmons, president Simmons Hardware Company, -- Saint Louis, Mo. - (1) The best method of preventing the practice of extortion and unjust discrimi- Ination by corporations engaged in inter-State commerce. This question is so far-reaching and complex in its nature that it seems almost impossible to give a satisfactory solution of it. The ex- tent of the country is so great and the conditions so varied that a rate which may be an unjust discrimination in one section of the country, or one which would be called an extortion, would be on others hardly prof- itable for the railroads to do business on. These questions are largely solved by the peculiar circumstances surrounding each road; circum- stances of cost for operating roads, circumstances of population, and necessarily the amount of freight carried. In my opinion there can be no intelligent answer given to this ques- tion. It is one that the railroads have themselves been hammering away at for many years, and they seem to be no nearer the solution now than when they started. Any man who could give a correct solu- tion of this problem ought to command a salary higher than that paid now to anybody else in America for his services. It would seem to me to be presumption on my part to answer this question, any further than to say that I believe these things are largely regulated by competition, which is the life of all trade, and which is the controlling element to l:eep down unfavorable and unjust extortion. If there can be a solu- tion to this question, in my mind there is only one, and that is to limit the profits upon the capital of the railroad companies, and have paid into the State or the Government, or both, all the surplus beyond this fixed rate. This may or may not be feasible, and it is a question so deep that scarcely any one has followed it out sufficiently to be able to determine upon it. .* INTERSTATE COMMERCE. - 167 (2) The reasonableness of the rates now charged by such corporations for local and through traffic. - i In my opinion the rates now as a rule are too low on freight generally, and especially the rate on through traffic. For example, take freight of second and third class from the city of New York to the city of Saint Louis or Chicago for, say, 30 or 40 cents per 100 pounds, which seems to me unreasonably low. The local traffic, I think, is more nearly upon the proper basis, and if there can be any overcharges it is more in the local traffic than in the through. But in my judgment, the present- rates of freight are on an average too low, and right here permit me to say that the passenger rates are entirely too high. If these things Were more nearly equal it would seem to me that it would be better for the Country. (3) Whether publicity of rates should be required by law; whether changes of rates without public notice should be prohibited, and the best method of securing uniformity and stability of rates. I do not think that the publication of special rates should be required by law. The present system is about as good as I think it can be ar- ranged; that is to say, the traffic rate from which exceptions are made for special cases. I do not think that changes of Special rates without publication of same should be probibitory by law, for this reason, that there are many times products of a country in great surplus which can only be moved by special concession on the part of the railroad com- panies, and the railroads under the circumstances do better to haul that product and to nourish the country and assist it to become stronger, by making them concessions and enabling them to bring their products to good markets, rather than to hold out for full tariff rates; and for that reason I would oppose the changing of rates being prohibitory without public notice. General or card rates, however, should always be published at least two weeks prior to the time of change. Take, for instance, a recent case that has come under my knowledge: |Utah this last year has produced an enormous amount of Wheat. At the regular rate it is prohibitory to ship it east, and yet, recently a party from Utah has been here with samples, also in Chicago, and by reason of very material concessions made by the railroad companies has been enabled to bring that wheat to Saint Louis and Chicago, and to sell many car-loads at a price that reimburses them moderately for their labor in Utah. Were the change of rates prohibitory, without public notice such cases as this would be impossible, and but for the conces. sion on the part of the railroad company there Would not have been any outlet for this Utah wheat; in fact, they would not know what to do with it. I do not know that any methods can be suggested to secure uniformity and stability of rates. This Very largely depends upon the supply and demand, and also very largely upon the price that the prod- ucts in the various sections of the country bring from year to year. The only method that I know of, by which a uniformity and stability of rates can be accomplished, is the money pooling System, and there are of course many great objections to this. *. * (4) The advisability of establishing a system of maximum and minimum rates for the transportation of inter-State commerce. It seems to me that the question here propounded is of a similar chair- acter, and I would answer No. 4 very much as I did the previous ques- tion, that the railroads have been trying for years to establish a system of maximum and minimum rates and have failed, and have failed for reasons that the elements which enter into this cannot be controlled. 168 INTERSTATE COMMERCE. Maximum and minimum rates are largely depending upon the markets, the products, &c., and as the Government cannot possibly have control of the markets, it would seem to me likewise impossible for them to control maximum and minimum rates. This matter also is very largely regulated by competition, not only by the railroads, but by the water- ways, and some seasons must have of necessity different bearings from What it would have in others. (5) The elements of cost, the conditions of business, and the other factors that should be considered in fixing the tariffs on inter-State traffic. . The elements of cost and conditions of business and other factors that can be considered in fixing the tariffs on inter-State commerce vary so widely in the different States that it seems to me highly impos- sible to harmonize them. They vary in cost of construction, in cost of arrangement, and vary largely in the amount of freight to be transported over the roads, and the simple questions of weather and natural ele- ments and so on, with the cost of operating the roads, have much to do with it. For example, in some sections where snow and rain pre- vail to a remarkable degree, doing enormous damage to the railroads, they are particularly expensive in their effects; whereas in others this is not the case, and this same idea could be followed up to an unlimited extent. In view of this, I would say that these things are proper only for the consideration of the railroads operating, and no one else could form a correct idea as to what would be best for the whole country, for what might be best for one section might be positive death to another. - - (6) Should any system of rebates or drawbacks be allowed? If so, should such transactions be regulated by law and be subject to official inspection and approval? - I would oppose the system of rebates and drawbacks on the general principle that it leads to demoralization and oftentimes dishonesty. If the railroad company desires to make a special rate, I think they should make it in an open and above-board manner, and I see no reason why they should not have the privilege of making special rates for special cases and under special circumstances, any more than a merchant should in selling his goods when he would make special concessions to foreign purchasers as against local ones; but the rebate and drawback system I think quite pernicious. & (7) Should pooling contracts and agreements between railroads doing an inter-State business be permitted, or should they be entirely prohibited by law # If they should be regulated by law, would it be sufficient to require the terms of such agreements to be made public and subject to official approval? I’ooling contracts and agreements between railroads have done very much to reduce the cost of transportation, and have made it possible for interior places, say a thousand miles or more from the sea-coast, to get their goods at a very much less price than they could have been obtained without these pooling contracts. In my judgment, they should not be prohibited by law, but should be regulated, and their terms of agreement should be submitted to officers appointed for that purpose but such officers should not make such terms of agreement public fur- ther than is required for their own protection and integrity. - (8) Should provision be made by law for securing to shippers the right to select the lines and parts of lines over which their shipments shall be transported ? I think that provisions should be made by law for securing to ship- pers the right to select routes or parts of routes over which their ship- ments should be transported. It seems to me that in shipping from one INTERSTATE COMMERCE. 169 given point to another he should have the privilege, as he pays the bill, to elect by which route his shipment should go. But should he not select the route himself in a specific manner, then I would think it Wise to permit the transportation companies to use their own judgment as to the routes over which the shipment should be transported. (9) By what method can a uniform system of rates for the transportation of pas- sengers and freights by all the corporations engaged in inter-State commerce be best secured ? I do not think any method can be formulated by which a uniformity, of passenger and freight rates can be obtained by all the corporations engaged in inter-State commerce. Of course a State can regulate that matter for railroads operating in its own State, but in my judgment no legislation can ever act intelligently and Wisely on this subject for the Whole country. - (10) Should corporations engaged in inter-State commerce be permitted to charge a lower proportioned rate for a long than for a short haul ? Does the public interest require any legislation on the subject 3 X- Corporations engaged in inter-State commerce, I think, should be per- mitted to charge a lower proportioned rate for a long than for a short haul, as it stands to reason that a larger amount of business can be done On a smaller percentage of cost than a small business, just as with a merchant in mercantile pursuits. The question of long and short hauls, the delays, class of freight, handling &c., on short hauls becomes quite a factor in this arrangement. In my judgment, public interest does not require legislation on that subject. (11) Should any concession in rates be allowed to large shippers except such as represent the actual difference in the expense of handling large shipments over small shipments, and should such concessions be made known to the public 3 Concessions on agcount of large shipments are really a dangerous element to permit to enter into inter-State traffic, because they to a large extent promote monopolies, which should always be avoided, and while I believe that considerable latitude should be given to the railroad companies on account of the difference in locations, markets, cost of operation and various other things, I would think it very unwise to permit railroads to make concessions simply on account of large ship- ments. If the large shippers can ship goods cheaper than the small ones, the small ones are virtually driven out of business, and I would call it legislation of a dangerous character which would permit railroads to make concessions simply on account of large shipments. (12) Should corporations engaged in inter-State commerce be required to adopt a uniform system of accounts? -- The system of accounts used by the railroads is so complex, in fact is a science of itself, that I shouid consider it presumption on my part to comment on it at all; it is of such a character that no one can do so, except those familiar with it. I am told by railroad men that many of the brightest minds in America are engaged in perfecting a uniform system of railroad accounts, and it would seem to me any one not en- gaged in this business is so entirely ignorant of it that they would be unable to venture an intelligent opinion. (13) Is it desirable that such corporations should be required to make annual re- ports to the Government ? If so, what information as to their earnings, expenses, and operations should such reports contain? - It would seem to me desirable that all such corporations should be re- Quired to make annual reports to the Government and in most full de- 170 INTERSTATE commerce. tail, giving if possible all information connected with their roads, such as the number of miles operated in each State, the bonded and floating debt, the expenses of operation, the capital stock of the road, the total revenue and an itemized statement of all the various sources from which this revenue is derived, also an estimate of the current value of their road, and such connections and branches, belonging to them, to: gether with the value of all other property, such as rolling stock, ter- \minal facilities, machine shops, round-houses and other property, which it is customary for railroads to own. * g (14) In making provision for securing cheap transportation, is it or is it not im- portant that the Government should develop and maintain a system of waterways 3 I think it quite necessary in making provision for cheap transporta- tion that the Government should develop and maintain a system of water. Ways, because that promotes competition, and as the basis of my replies is that competition is the life of trade, I should like to see at all times as much competition kept in the way of transportation as it is possible. The development and maintenance of good water-Ways by the Government has a salutary effect upon the railroad companies, and I trust it may ever continue. (15) In what manner can legislation for the regulation of inter-State commerce be enforced ? Should a commissson or rather a special tribunal be established to carry out the provisions of any Taw Congress may enact 3 - - It would seem to me wise that transportation committees Or Commis- sions could be profitably and wisely formed by the Government, per- mitting the parties interested to be represented. First the Govern- ment, next the people, then the railroad companies, and they in turn select one or more to act as arbitrators in their own body, and all such differences between railroad companies and Government laws and rules and regulations on this subject should be referred to the arbitrators on this committee. -- J. F. EIANSON'S STATENENT. - Statement of J. F. Hanson, agent Bibb Manufacturing Company, Macon, Ga. To question first, I will say very frankly that it involves so many complicated conditions that few men, if any, are capable of answering it. I have learned by experience that what to Gutsiders appeared gross discriminations, were, under the explanations of reputable railroad man- agers, but the necessary and unavoidable adjustments forced upon them by competition. - h (2) Complaints of unreasonable rates on local freights are very rare in this State. We have a railroad commission with supreme powers. This commission is enforcing rates that are too low to enable our rail- roads to keep up proper condition and pay Small dividends upon cost of construction. Through freights are very low on through traffic to nearly all points, West, North, and East, to which we are shipping goods. We ship from New Hampshire to Texas, and as far. West as Nebraska. To all points beyond the Mississippi River, and south of Missouri, with probably the exception of Little Rock, rates are pretty high. When, however, the fact that railroad development in this last section is of ratuer late date is taken into account, together with the light traffic from this section, it is a question whether the rates could be judiciously INTERSTATE COMMERCE. 17 i lowered or not. Through rates generally are so low that what may be a reasonable rate under the conditions named looks high by comparison. (3) It would seem reasonable to suppose the interest of transporta- tion lines would cause them to make rates sufficiently publie for all general purposes. r (4) As a business proposition, this is the most important contained in your list of inquiries. The question of reasonable rates, as has been amply demonstrated, has been solved by voluntary and natural com- petition. We seem to have reached the point where the question of how to obtain reasonable rates must give place to that of how to main- tain rates sufficiently high for the promotion of our railroad interests, and the fair protection of investors in railroad property. I am clearly of the opinion that we need a limit below which the roads cannot go more than one to mark the limit they are to be permitted to charge. (5) Actual value of property, relative cost of construction and main. tenance, and the volume of business, it would appear, are the proper conditions upon which to determine the question. It would not be right to deprive a railroad company of the advantages of enhanced value over cost, by reason of wise forecast and investment, and judi- cious management upon the part of the roads. Neither should they be held responsible for Outlay to rebuild and re-equip their property, when the expense of the same could not be avoided, as in the case of many Southern roads destroyed during the war. (6) A great deal has been said with reference to rebates and draw- backs, and the advantages that are allowed large shippers over small ones, and the rates for long hauls as against short ones. The same principle that governs the prices of goods sold at wholesale and retail applies to this question. It is not reasonable to suppose that transpor- tation companies will ever ignore the fact that the largest customers are to have some advantages over small ones. If the Government under- takes to say that men who are emergetic and enterprising shall be de- prived of the advantages that always accrue, large success to what encour- agement Will be left to men to win hard-earned and eminent success % Is it right, then, to attempt to secure to drones and sluggards the ad- vantages for which the more worthy struggle long and hard 3 This matter may be safely left with the railroads. Any interference would work results not looked for, and if the tendency of such interference should equalize rates, the final result would be damage to consumers, who are at last the beneficiaries of all conóessions or advantages. - (7) If Government control is ever resorted to, the method of exercis- ing the same will assume this shape. It is the only practicable method as between the railroads of maintaining uniformity, and to the perfec- tion of this system the best efforts of the ablest traffic manager's in the country have been industriously directed. I cannot conceive of a gov- ernment commission operating in any other method than through the pooling plan. While there is much popular clamor against pools, the people who are raising it are singularly inconsistent in demanding that the Government shall institute an absolute pooling system. Any uni- fied control results in this practically if it is to produce any result at all. (8) This should depend upon contract. Roads combine to make a line in many cases, and rates are based upon agreement between two or more lines. The central line cannot always make rates and give shipper choice of Connections. (9) Have embraced this in preceding answers. - (10) It seems unreasonable that a shipper who has one package of freight to ship should expect the same to be taken at the same rate per 172 INTERSTATE COMMERCE. mile for one hundred miles charged the shipper of a thousand pack- ages per hundred miles for a distance of a thousand miles. This is im- practicable, and would result in increasing rates for long distances without corresponding reductions on purely local and small shipments. I cannot see that the public interest can be served by any legislation On this point. * (11) The same rule that applies to purchases of large lots of goods, and the purchases of small lots, should apply to purchases of large freights over purchases of small freights. This is natural—it is busi- ness—and any attempt to reverse the laws of trade upon this point will result in mischief. There is no more reason for making such conces- sions known to the public than for publishing the terms upon which * Messrs. Marshall, Field & Co. or Messrs. J. V. Farwell & Co. buy goods. It is none of the public's business. (12) This had better be left, like that of uniform couplings for cars, to the railroad companies. (13) All corporations in which the public are interested, as investors, should be required to make annual publication of such facts as will enable an intelligent man to form a definite and correct opinion of the condition of the company and the value of its stock and other security. (14) Artificial water routes in the interior would not in this day of steel rails and cheap transportation pay to the public any returns cor- responding to Government outlay in their construction. Private capi- tal will build any line that will pay. The Government should appro- priate money liberally for the improvement of natural water ways, and for putting and keeping the harbors in order." Spending money on small streams when no public benefit accrues is wrong. (15) If Congress does anything, it would of necessity be experimental, and hence great caution should be exercised that the public, as well as the transportation lines, are not damaged rather than benefited. A commission, it would seem, will be the method or means employed to test the value of any legislation that may be adopted. I confess that I am opposed to Government control or interference with the matter. The tendency to govern too much will be strengthened by this action, and it will not be long before a commission will be demanded to regu- late the production and price of goods, labor, &c. Better let them take care of themselves upon the basis that underlies all business. Com- petition will keep prices about right, and if at times and in certain in- stances the rule does not hok! good, the evils that arise are less than those that would in all probability attend any attempt to regulate this vast business by the Federal Government. * In conclusion, 1 beg that you will permit me to say that I do not now nor never have I owned a share of railroad stock or a railroad bond. I have embodied my conclusions from a business standpoint and from considerations of justice and public policy that seem to justify these conclusions. - JOEIN W. GRUBBS'S STATEMENT. Statement of John W. Grubbs, wholesale grocer, Richmond, Ind. Upon a few of the points of inquiry I have pronounced opinions, and very gladly avail myself of the opportunity to give them for what they may be worth. (2) The rates at present in force for local and through freight busi- INTERSTATE COMMERCE. - 173 ness are, I think, as a rule, reasonable, and generally accepted as fair and equitable. * (3) Publicity of rates should by all means be required by law and no change allowed without due notice. Under the present arrangement it not unfrequently happens that favored shippers are notified in ad- vance of contemplated changes of Schedule rates, and are let in under the reduction or enabled to take advantage otherwise of the change, while the customer not so favored may be subject to loss on account of igno- rance of the change. *. %. (4 and 5). On these points I am not sufficiently advised to speak in- telligently. - (6) No system of rebates and drawbacks should be allowed. The whole system, as practiced, is pernicious, unjust, and indefensible. The published schedule of the carrying company should regulate prices. There should be no favoritism allowed except in the case of large ship- pers, and this exception should be as specifically a part of the published rates as any other. When one shipper, through any kind of favoritism, secures a system of rebates, he has an unjust advantage of his neighbor, resulting very often in the demoralization of trade and resulting in no benefit to the recipient. * . The whole system of pooling I regard as an impracticable idea. The workings of such pools up to this date have been expensive, unsatis- factory, and without any good results to the contracting parties or the business public. The origin of pools is to shut out and prevent all com- petition; to fix arbitrary rates without reference to varying conditions. They should not be permitted under any conditions, as their practical Workings are in the interest of monopoly, and give to corporations an undue control of private business. - (8) One of the controlling reasons for forbidding pools arises from the abuse of the control of freights exercised under their working. Every shipper should have the right to designate and control absolutely the shipment of his own goods. The pool system arbitrarily denies this. The experience of this city has been expensive, annoying, and trouble- some. Shipments ordered by the most direct, shortest, and quickest routes have, in violation of express orders, been diverted to other lines, longer, more uncertain, and requiring largely increased time in delivery. When remonstrated with, the reply is that the change was necessary to equalize pool business, thus totally ignoring every interest or consider- ation except the single convenience of the pool. If goods should reach destination in five days by the designated line, and you get them at the end of ten or fifteen days by Some outside line that may have been short on the particular day of shipment, the consignee must pocket his loss and smother his just indignation in the interest of the pool. No one thing connected with the carrying business of the country has been so productive of loss and inconvenience as the pooling system. It needs to be sat down on hard, and every shipper should have secured to him the absolute right to select and designate the lines over which his ship- ment shall be made. - - (10) I think there can be no reasonable objection to the privilege of Contracting at a lower proportionate rate for a long than a short haul. For two reasons. The haul can be made cheaper proportionately, and the whole business of the country is adjusted on the basis of this prin- ciple. I can buy at a less price for large quantities of merchandise than for small quantities. Manufacturers grade their prices by quantities, and trade generally is regulated in this way. There is no reason for restrict. 174 INTERSTATE COMMERCE. ing the carrying business. They can afford a cheaper Late proportion- - ately on 1,000 miles than on 100, and ought not to be restricted in the privilege. * - . - The other questions are out of my range of examination. I have given hastily and crudely my views on the points in which our people have an interest. --- - - *; FRANK W. TRACY's STATEMENT. Statement of Frank W. Tracy, Springfield, Ill., president of the Central Illinois Coal Company. - - In preparing an answer to the circular of the committee I have been guided by my observations as a shipper and a member of the board of directors of a railroad corporation. I believe the interests of the rail- roads and the people are identical, and any legislation which develops the one interest will promote the other. I would suggest, if I may be allowed, that the study by your committee of the railway clearing-house system of England would be helpful to you in your purpose. It has been successful since its conception in keeping rates fairly steady- throughout that country. w - (1) The best method of preventing the practice of extortion and unjust discrimi- nation by corporations engaged in inter-State commerce. If one could answer this question properly it would solve the entire problem before your committee, but in the present crude knowledge of the conditions governing inter-State commerce it is doubtful if it could be answered in such a manner. The “best method” must be evolved from the experiences of the past and future combined. Very many com- plaints of extortion and unjust discrimination are made. But then arises the query, what is extortion and what is unjust discrimination? If every one were agreed as to the answers to these queries there would be no trouble in finding the “best method,” but the answers are as varied as there are different modes of thought in individuals; therefore, it seems to me, there should be some plan suggested which would bring the light of experience and common Sense upon these complaints, whereby these nice and delicate questions constantly arising could be definitely settled. The simplest plan would be a Commission of experienced and practical men, having thorough knowledge of the relations of railroads and shippers to each other, who could have charge of all corporations engaged in inter-State commerce, with authority of law to enforce fair and reasonable rates. Through the experiences of this commission could be evolved the best method for preventing extortion and unjust dis- Crimination. (2) The reasonableness of the rates now charged by such corporations for local and through traffic. The traffic rates established by the Illinois railroad commission are generally believed to be reasonable. (3) Whether publicity of rates should be required by law, whether changes of rates without public notice should be prohibited, and the best method of securing uni- formity and stability of rates. - Uniformity and stability of rates is more to be desired by shippers and railroad corporations than anything else. The rate is not so much a consideration as that it should be uniform and stable, Publicity of INTERSTATE COMMERCE. 175 rates certainly tends to this end, therefore I believe no rates should be changed without due notice to the public. w (4) The advisability of establishing a system of maximum and minimum rates for the transportation of inter-State commerce. . . - - The establishment of maximum and minimum rates is another help towards maintaining uniformity and stability of rates; therefore, in my opinion, they should be established by the commission in consultation With the proper officials of the corporation. (5) The elements of cost, the conditions of business, and the other factors that should be considered in fixing the tariffs on inter-State commerce. There are so many elements entering into the cost of inter-State com. merce that it is very difficult to enumerate. The competition of the natural highways of river, lake, and canal is overshadowing, and as they can certainly carry freight cheaper than railroads, their rates would govern. The cost of terminal facilities, too, makes quite a condition in making rates. Cities like New York and Chicago require very expen- sive terminal facilities, while cities like Indianapolis and Springfield are comparatively inexpensive. So varied are these conditions that no gen- eral rule can be established. - . - (6) Should any system of rebates and drawbacks be allowed ? If so, should such transactions be regulated by law and be subject to official inspection and approval, or should they be entirely prohibited ? - - If rates are to be uniform and stable drawbacks and rebates should not be allowed. They should be entirely prohibited. (7) Should pooling contracts and agreements between railroads doing an inter- State business be permitted, or should they be entirely prohibited by law 8 . If they should be regulated by law, would it be sufficient to require the terms of Such agree- ments to be made public and subject to official approval? I am firmly of the opinion that the best-devised scheme for the main- tenance of uniform and stable rates is the pooling system. Undue com- petition causes violent fluctuations of rates, which more than anything else causes business derangements. If some such system is not inau- gurated, the bankrupt corporation which now pays a debt will fix rates for the solvent corporation running parallel with it, though if such a process is long continued it would soon be in the condition of its competitor. All pools should be under the control of the commis- sion, who should have power to see that fair rates are fixed and main- tained. Under this control, I believe pools would be found to be of great Service to the shipping public. s (8) Should provision be made by law for securing to shippers the right to select the lines over which their shipments shall be transported? - Unquestionably, though there should be provisions in the law prevent- ing shippers from combining against any one corporation, as that Would be “unjust discrimination.” (9) By what method can a uniform system of rates for the transportation of pas- sengers and freights by all corporations engaged in inter-State commerce be best Secured ? - . I would repeat the answer to the first question as the answer to this— that is, through the experience of a commission rules could be evolved which would secure a uniform rate. z (10) Should corporations engaged in inter-State commerce be permitted to charge a lower proportionate rate for a long than for a short haul? Does the public interes require any legislation on that subject 3 - The expense of hauling freight bears but a small proportion to the ex- 176 INTERSTATE COMMERCE. pense of terminal facilities. If, therefore, the expense of terminal facili- ties is spread over 10 miles, the expense would be much heavier than if spread over 100 miles. As the expense to the corporation should gov- ern the fee for hauling freights, certainly the corporation should charge a proportionately greater rate for a short distance, than for a longer one. I think this should be permitted by legislation. - (11) Should any concessions in rates be allowed to large shippers except such as represent the actual difference in the expense of handling large shipments over small shipments, and should such concessions be made known to the public * : If large shippers get only such concessions as represent the differ. ence in expense of handling large shipments over small ones, I believe they should be satisfied. No concealments of any kind should be al- lowed. Public interests could not be properly guarded in secrecy. All transactions must be open to the public. (12) Should corporations engaged in inter-State commerce be required to adopt a uniform system of accounts 3 - - Immaterial, though their reports to the commission should be uni- form. * * *...*- : (13) Is it desirable that such corporations should be required to make annual re- ports to the Government 3 If so, what information as to their earnings, expenses, and operations should such reports contain 3 - Yes; they should contain full reports, such as are now required by the various States. ^. (14) In making provision for Securing cheap transportation, is it or is it not impor- tant that the Government should develop and maintain a system of water routes? The water-ways will govern the rates in the summer; in winter they have but little influence. I believe without the water-ways the rate of freight would be much higher both Summer and winter. (15) In what manner can legislation for the regulation of inter-State commerce be best enforced. Should a commission or other special tribunal be established to carry out the provision of any law Congress may enact 3 . I have advocated a commission throughout, and do not believe a law can be made a success without a commission, who can reduce the amount of friction between the public and corporations, until they understand that the interests of each are identical. If for no other reason than this a commission would be a great public blessing. W. EI. ROBINSON'S STATEMENT. Statement of William H. Robinson, Fairfield, Ill., ea-railroad and ware- house commissioner of Illinois. - Upon the general question as to whether a law of Congress govern- ing inter-State commerce would be beneficial, there would seem to be but little doubt that the time has come When Some law of the kind is nec- essary, not only for the protection of the large producing and shipping interests of the country, but as Well for the protection of corporations engaged in transportation. (1) As to the first inquiry—“The best method of preventing the practice of extortion and unjust discrimination by corporations.” In my judgment the best and only effective method to prevent such wrongs …” INTERSTATE COMMERCE. . - 177 is to provide penalties and forfeitures against the wrong doer, to be en- forced perhaps as a last resort when milder remedies fail, and to be under the control of a Special commission or tribunal selected for that purpose. .* - - . (2) It would seem to be desirable and fair to all shippers that rates should be public and that they should not be changed without public notice being given for a reasonable time. A law to this effect properly enforced with penalties provided for its violation would of itself tend to establish uniformity and stability of rates. By such means both buyers and sellers of articles of commerce could know the rates of trans- portation, and there would be less liability of either party being cheated. I do not mean that rates should be absolutely iron-clad, but should be flexible within certain limits. (4) I am well convinced that one of the best features of the law would be to provide for maximum and minimum rates. The maximum rates would prevent extortion to the shipper; and the minimum rates would lessen, if it did not entirely break up, the vicious practice of “rate cut- ting” that has been so disastrous to railroad property in the last few years. It is conceded that the margin between the maximum and mini- mum rates should be liberal, so that transportation companies could be confined within its limits under all circumstances. - (5) The elements to be considered in fixing the tariffs on inter-State business are so numerous that it would be difficult to name them in detail. In the case of railroads, the actual cost of road bed and equip- ment would of course be among the controlling elements. The volume of business, density of population traversed by the line, cost of terminal facilities, the high or low value of the commodity transported, the hazard of carrying certain articles, the perishable nature of others requiring Quick transportation, as well as many other elements, should be con- sidered in fixing the tariffs. -- (6) Circumstances may possibly arise where the payment of rebates would not be improper, but the system has produced so much evil, and built up individuals and localities to the detriment of others equally deserving, that, if permitted, it shoud be regulated by law and be sub- ject to official approval. - - - -- - - (8) Pooling contracts and agreements between railroads may not in itself be improper, but evil and sometimes oppression grows out of it. I would not say that pooling contracts should be absolutely prohibited by law, but they should be subject to investigation and official ap- proval. * - -> (8) The right of a shipper to select the line or lines of road over which he may ship ought certainly to be recognized. Many reasons might be given in support of this; distance, grade, terminal facilities, character of cars, &c., are often important to the shipper, and there seems to be no just reason why a party should not be permitted to ship over the line of his choice, rather than one arbitrarily selected for him by others. - (9) By what method can a uniform system of rates for the transportation of pas- sengers and freights by all curporations engaged in inter-State commerce be secured? This may be answered in a general way by requiring all corporations, in all cases and for all persons, to charge the same rate for the same service. It is not intended by this to urge that a rate charged for a given number of tons hauled a given distance and between two given points should in all cases and under all circumstances be the rate charged for the same quantity and character of freight hauled the same distance between two other points. Uniformity of rates means uniform 16232 AP—12 178 - INTERSTATE COMMERCE. compensation for like service, and not an iron-clad rate to be governed in all cases by distance alone. ... • (10) That corporations should be permitted to charge a proportionately lower rate for a long than for a short haul is so patent to every one that it requires no argument in support of the proposition. And it is doubt- ful if any good would be accomplished by legislation upon the Subject. Laws governing inter. State commerce to be valuable should be as simple as possible and embrace only such matters as the public interests re- Quire, leaving all other questions to be settled and controlled by the un- written laws of trade and competition. - • (11) Should any concessions in rates be allowed to large shippers except such as represent the actual difference of handling large shipments over small shipments? Why should there be? Is there any good reason why the large shipper should have any more advantage over the small shipper than is actually represented in the difference in the cost of handling large shipments over small ones? Complaints are constantly made that corporations discriminate against the small shippers, and one of the strong reasons for adopting the proposed law is to correct this evil. Large shippers who are fortunate enough to control large capital are entitled to the advantage that legitimately belongs to the movement of freight in large quantities, but to grant them favors beyond that would be to discrimi- nate against the small shipper of limited capital and would be clearly Wrong. (13) It would unquestionably aid the tribunal who may be charged with the enforcement of the law to require corporations to make annual reports to the Government. Such reports should contain the gross earn- ings of inter-State business, the expenses including taxes, cost of road bed and equipments, bonded debt, mileage, terminal facilities, tons of freight transported, number of passengers carried, accidents to passen- gers and employés and causes, what appliances and means are used to prevent accidents, salaries paid to officers and other employés, number of employés, and, in short, a fair exhibit of the property and its earn- ings. * - (15) In what manner can legislation for the regulation of inter-State commerce be enforced ? It is difficult to see how any law of the kind could be made useful or effective without a commission specially selected for its enforcement. It is well known that railway corporations are managed by shrewd bus- iness men and skillful lawyers, at all times watchful of their interests; and if the people are to be benefited by the law its enforcement should be placed in competent hands—in the hands of men Who know some- thing of the magnitude of the questions involved and whose ability and integrity will command the respect of the people and corporations. No man would think of going into the courts to enforce law against a great corporation. The law, to command respect and obedience, must provide machinery for its own enforcement, and no better means can be devised than the selection of a tribunal of able and discreet men with the power of the Government behind them. Any law that may be adopted must necessarily be largely experimental and far from perfect, but if intrusted to an intelligent commission whose business it is to coin- Struct rules for the control of inter-State commerce within the provisions of the law, and who will carefully observe its practical workings, they can suggest changes and amendments that will finally make it is like popular with the people and corporations. The success of the law will depend at last largely upon the character of the men selected to carry INTERSTATE COMMERCE. 179 ū Out its provisions. If men of broad views, sound discretion, and reason- able industry are selected, the law will be beneficial and popular, as similar laws have been in many of the States. +- - I have read the two proposed laws upon the subject of inter-State Commerce, one known as the “Reagan Bill” and the Senate measure known as the “Cullom Bill,” and am of the opinion that the latter is much the better and more practical law. RICHARD P. MORGAN, JR.'s, STATEMENT. Statement of Richard P. Morgan, of Dwight, Ill., ea-railroad commis- sioner of Illinois. - So much has been written and spoken for more than twenty years upon the subject under investigation by your committee, that brief opinions rather than long discussions would seem to serve your com. mittee best in arriving at safe conclusions. I respectfully reply in the order of your inquiry—very briefly. - (1) The best method of preventing the practice of extortion and unjust discrimina- tion by corporations engaged in inter-State commerce. By Congressional control through a commission. (2) The reasonableness of the rates now charged by such corporations for local and through traffic. As a general rule, rates are now unreasonably low for through and for most of the local traffic; of course there are some exceptions. (3) Whether publicity of rates should be required by law; whether changes of rates without public notice should be prohibited and the best method of securing uni- formity and stability of rates ? Rates should be made public, and no change in rates made without reasonable public notice; this would be one of the best elements for se- curing uniformity and stability of rates. - - (4) The advisability of establishing a system of maximum and minimum rates for the transportation of inter-State commerce. The maximum rates would be of necessity too high and the minimum rates too low to exercise satisfactory, if any, control, else they would at times be obstructive and harmful. (5) The elements of cost, the conditions of business, and other factors that should be considered in fixing tariffs on inter-State traffic. - Tariffs should be based mainly on a fair valuation, all things consid- ered, of the cost of reproducing the physical machine, and the cost of maintaining and operating it, and upon the average natural and normal volume of business. . (6) Should any system of rebates and drawbacks be allowed If So, should such transactions be regulated by law and be subject to official inspection or approval, or should they be entirely prohibited? Rebates and drawbacks should be prohibited, and all other methods that lead to secrecy and evasion. & (7) Should pooling contracts and agreements between railroads doing an inter- State business be permitted or should they be entirely prohibited by law % *. Pooling earnings or business should be prohibited by law. 180 . . INTERSTATE COMMERCE. .* (8) Should provision be made by law for securing to shippers the right to select the lines and parts of lines over which their shipments shall pass? If they do not possess that right in respect to any common carrier, coach, steamboat, railroad, or other means of transit, they should be invested with it by act of Congress. - - (9) By what method can a uniform syetem of rates for the transportation of pas- sengers and freights by all corporations engaged in inter-State commerce be best Secured ? - ^. See answer to question number 5. (10) Should corporations engaged in inter-State commerce be permitted to charge a lower proportionate rate for a long than for a short haul? - Yes; under Congressional restrictions, through the commissioners. (11) Should any concession in rates be allowed to large shippers except such as represent the actual difference in the expense of handling large shipments over Small shipments, and should such concessions be made public 3 - Eetween large and small shipments reasonable concessions in rates should be made, and those concessions made public. (12) Should corporations engaged in inter-State commerce be required to adopt a uniform system of accounts? - Yes; that would be a very essential element in the practical working of a commission. - - (13) Is it desirable that such corporations should be required to make annual re- ports to the Government; if so, what information as to their earnings, expenses, and operations should such reports contain? Such reports should be made annually to the Government, of all things connected with the construction, maintenance, and operation of the roads, as the commissioners might from time to time find essential in carrying out the purposes of Congress. (14) In making provision for securing cheap transportation is it or is it not impor- tant that the Government should develop and maintain a system of water routes? The natural system of internal navigation of the country, in all its parts which can be reasonably deemed navigable for transportation purposes, should be thoroughly maintained—the construction of wholly new channels, as canals, and the development of minor water-ways, not naturally navigable for transportation purposes, could not be justified, and, therefore, should not be constructed or improved, except for some very special and Stringent demand. (15) In what manner can legislation for the regulation of inter-State commerce be best enforced ? Should a commission or other special tribunal be established to carry out the provisions of any law Congress may enact 3 - * - It seems quite clear that the time has arrived for Congress, in the interest of the country at large, to extend its authority over the inter- State commerce of our railway system, because under the existing management of that commerce harmful results have already been pro- duced to the people, to the railways, and the capital invested; there is no confidence remaining between the various managements or between the people and those managements, nor can there be any re-established. The whole vast system is afloat, without a rudder, and the most sagacious of its managers are in despair lest all should be overwhelmed. These conditions seem to be serious enough to demand early action by Congress. I firmly believe that a properly constituted commission is the most practical Way of enforcing the Will of Congress in respect to the inter-State commerce of our railway system. INTERSTATE COMMERCE. Y. 181 E. CALLAHAN'S STATEMENT. Statement of Ethelbert Callahan, of Robinson, Ill. While I am not convinced that I can submit anything new or very important, I will endeavor to comply with your request, giving you such Views as I entertain and which have grown out of a general knowledge of the Subject acquired in my practice as a country lawyer, interming- ling largely with that portion of the people whose interests are indi- vidually small, but who are extremely jealous of their rights and sensi- tive to any real or supposed invasion thereof. TEIE NECESSITY ITOR, NATIONAL CONTROL. Your committee is charged with the consideration of one of the grav- est questions of American politics; a question that calls for the wisest statesmanship, and courage sufficient to attack and overthrow old theo- ries of government and rules of construction whenever it shall be dem- onstrated that they obstruct the path of progress. Even constitutional barriers may be required to be removed before the question is fully Solved. It is a question which has long been kept in abeyance on ac- count of an unwillingness to disturb the existing state of things, and on account of the difficulties attending its discussion and proper solu- tion. But now the changed and constantly changing condition of the country and its commerce, and the channels along which that commerce moves will not permit the question to be evaded. While differences exist as to what measures should be adopted by the national legislature, the voice of the people is rapidly approaching unanimity that some step must be taken to place the commerce of the nation under national control. The efforts of the States to regulate a commerce that passes beyond the boundaries of the State have proved ineffectual, and it may as well be conceded at once that a national authority is the only one that can regulate a national commerce. A broader construction of the powers of the National Government under the Constitution prevails now than formerly, both in the courts and in the minds of the people, and it is growing broader still, and will grow until it is universally conceded that every railroad, every canal, every water-way, and every telegraph line that penetrates into or touches two or more States shall be in its entirety under the sole control of the National Government. And this will be the first step of the people towards “preventing the practice of extortion and unjust discrimination by corporations engaged in inter- State Commerce.” - . - The question of the reasonableness of rates to be charged for local and through traffic will then be submitted to and determined by the representatives of the people in Congress, and one law and one rule of construction will exist in every State. In this way alone can reason- able and uniform rates be established and enforced. It is the only way of escape from the diversity of laws, constructions, and authorities of the several States, now struggling with powers which they have created but cannot control. The present system of control by the States leaves the people and the commerce of the people at the mercy of the great cor- porations which have grown up in these later years in spite of all efforts on the part of the Several States to check their growth, and keep them in subordination to the interests of the people. Place every highway and channel of commerce and of commercial intercourse under national control, and I submit that it would break up the system of pooling be- tween competing lines, and leave competition to regulate charges within the limits of “a System of maximum and minimum rates” to be estab- 182 INTERSTATE COMMERCE. lished by law. A minimum rate should be fixed to prevent a strong competing line from destroying a weak competitor by ruinously low rates, and then make up its losses by controlling all the business which would otherwise have been divided between it and the weaker compet- ing line. Publicity of rates should not be required. Each corpora- tion or person engaged in inter-State commerce should have perfect lib- erty to fix and change its rates and charges at pleasure within the lim- its of the maximum and minimum charges fixed by law. This would be “the best method of securing uniformity and stability of rates,” so far as uniformity and stability of rates are attainable without destroy- ing the effects of fair competition. No system of rebates or drawbacks should be allowed. If any such are allowed, they should be regulated by law and subject to official in- spection and revision. All pooling agreements between competing lines should be prohibited by law. The effect of pooling has not been satis- factory to the corporations, and is the fruitful source of unjust discrimi- nations against the commerce of the country. I think the judgment of the country is clearly in favor of the prohibition by law of all pooling agreements. There is nothing inequitable in allowing a lower propor- tionate rate to be charged for a long than for a short haul, but such charges should be so regulated by law that a short haul should never pay more than a haul of greater length. It is certainly very important that the National Government should develop and maintain a system of water-routes. The connection of the great northern lakes with the Mississippi and Ohio Rivers by canal would greatly facilitate the carrying on of commercial business. Im- provements of like character should be made wherever the interests of commerce may, in the judgment of Congress, demand them. But in making such improvements it should never be forgotten that the inter- ests of agriculture are not to be sacrificed. This is sometimes done where it is attempted to improve the navigation of rivers by means of locks and dams. In the level country of the Mississippi Valley large areas of land are usually dependent upon the streams for drainage, and the time is not far distant when the legislatures and courts will be com- pelled to pass upon the question as to whether there is, or can be, in any one the right to obstruct the natural drainage of the country by dams made for any purpose whatever. A national law embracing the subjects mentioned in the circular of your committee would not be more difficult of execution than a State Jaw on the same subject within a State. A national law would be in force over the entire territory occupied by all the persons and corpora- tions engaged in inter-State commerce, and would hold them all within its jurisdiction; and these facts would tend to simplify its operation and render its execution easy. - - For the execution of all laws on this subject a national commission or tribunal should be created, with one or more members located in each of the several departments into which the nation should be divi. ded. The duties and powers of the commission should be fixed by law. The railroads, telegraph companies, and all other corporations and persons engaged in inter-State commerce should be required to make annual reports to the tribunal created to Secure the execution of the law, and that tribunal should report to the Government such facts as should from time to time be required by law to be reported. Other points suggested fall so entirely within the duties of persons who are Skilled in the practical Operation of railroads and other means of trans- lºs commercial commodities that I venture no opinion in respect to them. -ºr - INTERSTATE commERCE. - 183 JAMES MIX's STATEMENT. Statement of James Mia!, of Kankakee, Ill., president Kankakee Ice Com. --" - party. . . - I have been a producer and shipper all my life, and think I know the wants of the producing class and understand, the evils they are laboring under and the oppressions they are subject to by the railroad companies. Undoubtedly you will have abundance of information from railroad officials decrying all attempts to regulate the charges of trans- portation as being a governmental interference with private business. Undoubtedly gentlemen favored with rebates and special rates have told you that there is nothing Wrong in a transportation company giv- ing such rebates. Men apparently honest, but remarkably innocent, will defend the pooling iniquity. But to the great body of farmers, miners, lumbermen, and the retail merchant and country mechanic, who suppy their wants, such things are gall and Wormwood, and the in- terests of these people are the ones which need the protection of the National Government. The railroad companies need no further pro- tection than they now have. A system which has made it possible for a few men to count their fortunes by the hundred millions, all made out of railroads, requires no further fostering care of a paternal govern- ment. The men, the producers, from whom these vast sums have been extorted by combination, excessive rates, and stock composed almost wholly of water, are the people whose voice must be heeded. Trans- portation rates are unnecessarily high in Illinois, and a State commis- sion is powerless to correct the evils. By reason of water transporta- tion the rate on fourth-class freight from Chicago to New York is 15 cents per hundred, being a haul of about 1,000 miles. As large a sum is taken in Illinois for carrying the same freight in the State. 75 to 100 miles. Now the haul in the State of, say, 100 miles does not cost as much as the haul of 1,000 miles. To charge as much for the haul of 100 miles in the state, as is charged for the haul of 1,000 miles out of the State'cannot be defended one moment, and no one with any pretense. of honesty pretends to defend it. Frequently the country merchant is charged from three to five times more from Chicago to his station, situated 50 to 150 miles out of Chicago, than is charged for the same goods from points as far east as Albany, N. Y., Springfield, Mass., and other New England points. A State commission is powerless to inter- fere beyond the state lines. These illustrations show that the charges are too high in the State, and that a national control is the only power that can reach the matter. State lines should have no more weight in settling transportation rates in the nation than county lines in the State. By all means publicity of rates should be required by law, and not subject to fluctuation with- out a notice of change being made for a certain time. I wish to illus- trate the injustice of secret rates. I represented a coal company en- gaged in mining Coal for the Chicago market. A rival company opera- ted a mine at the same place. The coal was hauled over the Illinois Central Railroad, in car-load lots, placed on board the cars, and went in the same train, assurance being given me that my company should have the Same rates as any other company. Each company’s coal was billed to Chicago at $1.36 per ton. The rival company then had a secret, Written contract with the railroad, by which it was to pay 30 per cent, freight on what the coal sold for, which resulted in getting its coal hauled for 75 cents per ton, against $1.36 per fon charged me. What was done in this case may be done in any other case, and it is believed 184 - - INTERSTATE COMMERCTE. it is being practiced daily by the railroads in this State. By a national law such secret contracts should be made a penal offense, and nothing. less than a national law will Correct the evil. I think maximum rates for inter-State commerce should be established by law. Every shipper should know in advance the maximum rate he can be charged, and all shippers should be treated alike. Equality is equity. In regard to minimum rates for freight and passengers, I would make this suggestion: Rate wars are disastrous to the public welfare and should never exist, and are gotten up by strong companies to crush weak ones. I would provide by law that the lowest rate charged by railroads for passengers or freight between any two points should be the absolute rate for the next ensuing year, and a proportionate sum for all intermediate points. Railroads will not cut rates under such a law to any alarming extent. - . It is remarkable that the question is asked whether rebates and draw- backs should ever be allowed ? The very fact that rebates and draw- backs are made secret, that one rate is made to all alike, and by a dark- lantern arrangement a portion is paid back, condemns the principle. If it was not a dishonest transaction it would be done openly. At Kan- kakee two firms were engaged in quarrying stone and burning lime. The quarries were side by side. The price of labor and the price of fuel used in producing lime were identical. One company did a splendid lime business as far south as 200 miles on the Illinois Central Railroad. The other firm lost money on the same quality of lime placed in the same towns and had to go out of business. EIe did not know what was the matter with him. His business died from a bad attack of rebates and drawbacks. As soon as this was accomplished his rival advanced the price of lime, which injuriously affects all consumers. It is well known that the large dealers in breadstuffs and meats in Chicago make large gains by the system. No rebates are ever extended to the farmer who produces the wheat, corn, and pork. Eſe therefore is compelled to sell the great combinations who have these favors extended them. And a kindred iniquity to rebates is the pooling plan. Pooling violates every business principle. Suppose all the grain-buyers in a country town should pool their business and divide the earnings on a basis of per- centage to each firm, whether it handled any grain or not, would any one be found to defend it 3 Pooling is a violation of the common law; and without any statute the grand juries should proceed to indict all men, whether railroad freight agents or other sinners, who are guilty of the offence. It is not only injurious to the public, but it is a rob- bery of stockholders in roads which earn dividends, by taking their earnings and dividing them without their consent and without any con- sideration with the stockholder who has invested his money in a piece of poor property. As long as pooling is permitted, non-paying loads will be built to compel the paying roads to purchase them at a big ad- vance, or give them a part of their earnings In conclusion, permit me to say the laws regulating the railroads in this State are as good as any laws on this subject that I know of, if enforced. They have been sus. . tained by the courts. I’erhaps a national law embodying these provi- sions of the Illinois laws and their principles, so far as applicable, would be a good means to accomplish the end in view. This will require a national board of commissioners. If all the States had a board of com- missioners, the chairman of the respective boards might be created into a national board. By this means the State and national system may be combined, and what is lacking in the one may be supplied in the other, and out of it all justice may be done to the producer, the consumer, and the carrier. - INTERSTATE COMMERCE. 185 J. M. HAMILTON'S STATEMENT. Statement of J. M. Hamilton, Nashville, Tenn. (1) The best method of preventing extortion and discrimination will be to encourage the building of more railroads, so that two or more lines will eventually tap all the commercial centers, and then prohibit all corporations from entering into combinations to fix the rates of transportation. Unrestrained competition will regulate and equalize rates better than the law. & - - (2) Where there are more roads than one and no combinations or “pools,” my information is that, all things considered, the local rates are about as reasonable as the through. (3) Publicity of rates or charges is not necessary. Uniformity and stability of rates would be better secured by unrestrained competition than in any other way. I don’t know of any other way it can be done. (4) I don't think any good would result from establishing maximum and minimum rates. w - (5) The actual cost of the road, the cost of operating, and the amount of business done, as represented by the gross receipts, should be con- sidered in fixing the tariffs. - - . (6) Rebates and drawbacks should be allowed, and they should not be regulated by law nor subject to official inspection or approval. (7) Pooling contracts and combinations of railroads with the view of fixing through and local rates should not be permitted either directly or indirectly, but should be prohibited by law. (8) Provision should be made by law for securing to shippers the right to select the lines over which their shipments shall be trans- ported. º (9) A uniform system of rates for the transportation of passengers and freights cannot be secured either by law or gosple, but it can best be approximated by increasing competition and preventing pools and combinations, and, if such a thing could be done, by prohibiting any One corporation from owning, controlling, or operating more than one through line. - & (10) Railroads should for many pertinent reasons be permitted to charge lower rates for long than for short hauls. I don’t think the pub- lic interest could be benefited by legislation on this point, although there is probably more complaint made on this point than on any other point under consideration. All the corporations can afford a less rate On a long haul than on a short one. I don’t think the public interest requires any legislation on this point. y - (11) Concessions should be allowed to large shipments over small ones, because it is a law of trade that the larger the amount involved in any transaction the lower the rate of per cent. of profit. This rule will hold good in every business transaction ; don’t see that any good would result from publishing the same. (12) I don’t see how a law could be framed requiring corporations to . sº a uniform system of accounts; don’t think any good would result from it. (13) I don't think it would be desirable to require corporations to make annual reports to the Government. I believe that all the corpo- rations are now required by their stockholders to make an annual showing of their business. In this way all the desired information can be obtained. r . (14) It is of the very greatest importance that the Government should, in making provision for securing cheap transportation, use all means 186 INTERSTATE commeRGE. in its power to develop and maintain a system of water routes. The transportation by water is now the only free mode of transportation which is, left to the people. Everything-should be done by the Govern- ment which can be done to make every stream which is now navigable only a part of the year navigable all the year round. This would ef. fectually place the poor man beyond the reach of steamboat and rail- road combinations and rings. It would enable him to throw his little flat-boat on the water and float his products to market almost abso. lutely free of cost at any season of the year. This condition of things Would develop the resources of the lands contiguous to our streams a hundredfold; our farmers would be encouraged to increase the mum- ber of articles produced for market; our miners would be able to com- ply with their contracts with their minerals as they are taken out of the earth, without waiting nine, six, or five months for a rise in the river. Manufactories would spring up all along these water courses, and the prosperity of the country would be greatly increased. I would say by all means maintain a system of free navigation in our numerous water l'OuteS. - (15) With the little reflection that I have been able to give this ques- tion, I don’t think that I am able to give an intelligent answer to it. As a general thing, the established courts of the country are the best tribunals to enforce the laws enacted by the Congress. It is, however, possible that a commission or special tribunal, established for the specific purpose of enforcing these laws, might answer a better purpose. The danger in the latter case would be that the corporations would or might Sooner or later get control of the commission and influence or use them for sinister purposes. - M. O. WOODRUFF/S STATEMENT. Statement of M. C. Woodruff, of Dubuque, Iowa, former railroad commis- Sioner. (1) The best method of preventing extortion and unjust discrimi- nation is by the instrumentality of a national commission, with power to institute suits in the name of the Government for enforcement. . (2) Rates, both through and local, as a rule, are now more than “reasonable.” It is safe to say that the present average charge through- out the country will not yield more than 1 per cent. above interest and operating expenses. . Omitting isolated and exceptional cases, there never was less ground for complaint against rates than now. - (3) Publicity of rates should be required by law, and changes with. out 30 days' notice conspicuously posted should be prohibited, both of which tend to uniformity and stability of rates. Light is a better security against wrong-doing than a brigade of police in the dark. (4) Neither maximum nor minimum rates should be established by law. No congress is capable of justly determining a matter that is so constantly affected by circumstances which no one—not even the rail- way expert—can foresee. If legislation aims to promote the general welfare, can it secure this result by acts unfriendly to a form of un- changeable investment representing about one-seventh of the entire Wealth of the country? A fair maximum rate for a road that earns $30,000 gross per mile per annum would be practical confiscation to another earning $5,000 to $8,000. If a graduated scale of maximum rates, adjusted upon earnings, be prescribed, the law is made to assist Sections and communities best able to pay a high rate, and imposes INTERSTATE COMMERCE. - 187 harder burdens upon those most in need of the fosterin g care of gov- ernment. It is only on local business that the hand of the law rests, yet the inter-State rates, under the more rigorous law of competition, are relatively the lowest. (5) As these “elements,” “conditions,” and “other factors” vary so greatly, it is practically impossible to “fix the tariffs on inter State traffic.” The nearest practicable approach to fixed rates is “reasonable rates,” determinable in groups of kindred cases by the intelligent discretion of a competent commission. (6) Rebates and drawbacks ought-to be strictly prohibited. Indirec- tion and circuity invite and pave the Way to infractions of the law and provoke suspicions that undermine public confidence. The straight way is the honest Way, and in the nature of things must be the best in the long run. . - - - (7) If fixed rates are to be established by law, “pooling contracts” and “agreements between roads” are futile. If a supervision of the business is left in the sound discretion of a commission, pooling agree- ments may rest in the same discretion. (8) Every shipper should have the undisputed right to choose the lines by which his business is to be done. Confidence is a primary element of business, and to deny the right to choose is to breed dis- COIntent. -- (9) The same rules of open competition that apply to the business of individuals is the best promoter of and security for uniform rates, sub- ject, however, to such discretionary supervision as lawful control logic- ally implies and justifies. - . - (10) A lower proportionate rate for a shorter haul should not be pro- hibited, but this rate should in no case be greater than the through Charge. - (11) Concessions of rates to large shippers as against small shippers should not be allowed beyond the difference in cost of hauling, and all such concessions should be as public as any other rate. (12) A uniform system of railway accounts being necessary to any successful system of public control, it should be required by law. To do otherwise is to add complications where simplicity should be the Constant aim. - - - - (13) All railways should be required to make correct annual reports to the Government, such as are now rendered in many of the States. (14) The National Government can devise no method tending so surely to cheapness, uniformity, and expedition of rail transportation as that of a judicious system of water routes. (15) A national commission, sufficiently paid to insure the best talent of the country, is the best system of public management. In this there is enough of elasticity and discretion to allow fair play to the varied and varying, circumstances that will ever appear in any and every busi- ness which includes in its operations the multitude of insurmountable differences that present themselves in a country so varied in resources, in density of population, in character of shipments, and in distance of ultimate markets as Ours. I'inally, a law as Searching, exacting, and rigorous as the national bank law should be enacted in relation to capitalizing railways. Capi- talization beyond actual cost, Which should include permanent better- ments orily when made, ought to be prohibited under the severest penalties. This done and observed, one-half of the present difficulties of the railroad problem would be overcome. Over-capitalization is a swindle upon both investors and the entire public. It exemplifies public dishonesty and precipitates national panics and distress. N 188 - INTERSTATE COMMERCE. THOMAS UPDEGRAFF's STATEMENT. Statement of Thomas Updegraff, of McGregor, Iowa. After careful consideration of the circular of the committee I can vent- ure to say but little. º (1) To the tenth inquiry I have no hesitation in saying that the cheap- ness of the long haul should in no manner be interfered with. ~ (2) To the fourteenth I say emphatically; yes. The history of trans- portation between Chicago and the seaboard, establishes the value of water routes. The water routes from the Atlantic to Chicago should be extended to the Mississippi by means of the EIennepin or other sim- ilar canal at whatever cost; and wherever a water route can be devel- oped which, in proportion to its cost, can offer to railroads one-half of the competition of which such a canal as the Hennepin is capable, it should be opened and maintained by the General Government. The bulk of inter-State commerce runs in a few general directions converg- ing on to a very few lines. If the General Government can by a few water routes give relief here, may not the States, constitutionally, be equal to what is left to be done 7 I have more faith in water routes as cheapness of transportation on inter-State commerce than in all other Suggested means. (3) As to the fifteenth inquiry: For the present, as a tentative project, I would favor a commission. - - J. C. BROEKSMIT'S STATEMENT. Statement of J. C. Broeksmit, of Cedar Rapids, Iowa, auditor of the Bur- lington, Cedar Rapids and Northern Railway Company. Volumes have been written and published upon these knotty ques- tions. The theory of most of them sounds well, but the best way, in my humble opinion, would be to bring some of these theories into practice, and then from time to time improve on them as circumstances and ex- perience may dictate. -- (1) The best method of preventing the practice of extortion and unjust discrimi- nation by corporations engaged in inter-State commerce. Strict adherence to printed and published tariffs, made up under the supervision of , a Government committee, the members of which ap- pointed for each State should hold appointment for life. - (2) The reasonableness of the rates now charged by such corporations for local and through traffic. --- In many instances rates on through traffic do not pay for the expense of hauling, while in Some localities local rates are seemingly unjust, (3) Whether publicity of rates should be required by law; whether changes of rates without public notice should be prohibited, and the best method of securing uniformity and stability of rates. The publicity should be required by law; changes without publicity should be prohibited. The best method is answered under question No. 1. - INTERSTATE COMMERCE. 189 (4) The advisability of establishing a system of maximum and minimum rates for the transportation of inter-State commerce. - * Owing to the diversity of cost in operating railroads a system of max. imum and minimum rates would be advisable. (5) The elements of cost, the conditions of business, and other factors that should be considered in fixing the tariffs on inter-State traffic.’ - - Cost of operating and terminal facilities should be considered. (6) Should any system of rebates and drawbacks be allowed ? If so, should such transactions be regulated by law and be subject to official inspection or approval? Or should they be entirely prohibited? - No system of rebates and drawbacks should ever be allowed. It should be entirely prohibited. - (7) Should pooling contracts and agreements between railroads doing an inter-State business be permitted, or should they be entirely prohibited by law § If they should be regulated by law, would it be sufficient to require the terms of such agreements to be made public and subject to official approval? A paying tariff in equity, established to protect all interested, would make pooling contracts unnecessary, and these should not be tolerated, (8) Should provision be made by law for securing to shippers the right to select the lines and parts of lines over which their shipments shall be transported? No. --> (9) By what method can a uniform system of rates for the transportation of pas- sengers and freights by all the corporations engaged in interstate commerce be best secured ? . By a method of co-operation and consultation. (10) Should corporations engaged in interstate commerce be permitted to charge a lower proportionate rate for a long than a short haul ? Does the public interest re- quire any legislation on that subject 3 They should be permitted to charge lower for longer than short hauls. This could be provided for in the tariff. - (11) Should any concessions in rates be allowed to large shippers except such as represent the actual difference in the expense of handling large shipments over small shipments, and should such concessions be made known to the public 3 Concessions in rates should be allowed to large shippers. All trans- actions relating to transportation should be open and above-board, so that all could avail themselves alike of the opportunities. (12) Should corporations engaged in interstate commerce be required to adopt a uniform system of accounts? T- Uniformity in accounts would be desirable. (13) Is it desirable that such corporations should be required to make annual re- ports to the Government 3 If so, what information as to their earnings, expenses, and operations should such reports contain? Annual reports could be made to the Government, Somewhat the same as are now annually published by the railways for distribution to the stockholders and the press. (14) In making provision for securing cheap transportation, is it or is it not im- portant that the Government should develop and maintain a system of water routes? The developments and maintenance of water routes by the Govern- ment is not important on account of the very slow mode of transporta- tion by these routes and the expensive cost for the Government to de- velop and maintain them. - 190 . INTERSTATE COMMERCE. (15) In what manner can legislation for the regulation of interstate commerce be best enforced ? Should a commission or other special tribunal be established to carry out the provisions of any law Congress may enact 3 By fines. A commission should be established in each State or Ter- ritory where railroads are operated to carry out the provisions of any law Congress may enact. It should be a Government commission. J. D. HAYES’s STATEMENT. Statement of J. D. Hayes, of Detroit, Mich. Having had twenty-five years practical working in the railroading commerce of the country, as manager of the Blue Line, assistant Su- perintendent of the Michigan Central Railroad, and upon the Grand Trunk Railway of Canada, and having made interstate commerce a study for some years past, enables me to speak with some confidence upon the subject. I would have been glad to have had an opportunity to have given information such as might have some practical bearing upon the system as now conducted, as compared with what might and should be done under the supervision of Government commissioners of “interstate commerce” for regulating business under a wise sytem of |United States laws. - .. Labor strikes will in the future have some very complicated ques- tions of responsibility for settlement for the property destroyed at ex- posed points, where property belonging to the citizens of several States and to those of foreign countries may be accumulated by reason of the strike. For example, the State of Michigan chartered the Detroit, Chicago and Canada Grand Trunk Junction Railway Company. That company never intended to operate or equip the road, but built it ex- pressly to lease to the Grand Trunk for nine hundred and ninety-nine years. The ground upon which the buildings are, and where all the business of the Grand Trunk and the Chicago and Grand Trunk Rail- ways is done at Port Huron is upon what was United States Govern- ment military reservation. Neither the city of Port Eſuron nor the State of Michigan ever had any control or jurisdiction upon that ground, and the United States have no force there to give protection to persons or property. Where is the authority or power to come from to put down a labor riot or for the payment of damages for property destroyed other than the inferred liability of the foreign lessees of this local road, do- ing a very extensive interstate and international commerce under the local laws of the State of Michigan?'. The Michigan Central Railroad was originally built by the State, but when sold to the present company they were granted a special charter, with special exemptions from taxation by city, county, or municipal au- thority. Hence they are not entitled to police protection from the city of Detroit or other towns in the State. From the accumulation of in- terstate trade during a strike, a very great destruction of property may occur, nearly the whole being the property of the citizens of the several States and foreign countries. The company would have to call upon the governor of the State first for aid; the State militia would have to be furnished, and some of them transported over the very road which could not be operated on account of the strike. Should the governor not be able to control the disturbance, he in turn would call upon the President of the United States for aid. The President, from his official headquarters at Washington, would issue his proclamation to those la- INTERSTATE COMMERCE. 191 borers engaged in burniag and destroying interstate commerce at De- troit to disperse within a given time. If this is not done the Secretary of War at Washington will call out the United States troops at Detroit, who were all the £ime within sight of the railroad yards, probably eye. witnesses of the disturbance, and could have been upon the ground fully armed and equipped within thirty minutes from first outbreak, but under present regulations could not interfere with the matter until the State authorities fail. Yet there would have been no strike, nor any considera- bie number of men there, had there been no other property there to be handled than what came from the State of Michigan. Suppose the same state of things should occur upon the property in Detroit of the Union Depot Company, which is a local company, owning nothing but the grounds, elevator, and passenger buildings, and which probably could not in any case be held as a railroad company, neither could the railroad company collect a very large sum from the “depot company,” the contracting road, say, being the Wabash, which is in the hands of a receiver, with stock at 24 cents on the dollar. Would a foreign owner of property call upon the “Union Depot Company ” or this virtually bankrupt road, or the State of Michigan, the city of Detroit, or the United States Government, which had troops within ten minutes' march of the disturbance, and could have given ample protection to property, bilt failed to do so? - - In the matter of interstate commerce upon the navigable rivers of the country, the jurisdiction of the several States along the course of navi-' gable rivers should be fully established. Suppose the States of Iowa, Missouri, and Nebraska were to grant the right to construct bridges over the Missouri and Mississippi Rivers within their States which would obstruct navigation. The rights of the citizens of the other States both north and South of those States would be interfered with without their consent. It would clearly be within the power of Congress alone to grant such rights, and the laws of those States giving such rights would be declared unconstitutional and void by the Supreme Court of the United States. Take the Delaware River, with Maryland on one side, New Jersey upon the other. If each of those States held jurisdiction to the center of the river, an obstruction would benefit the ports of Baltimore, Wil- mington, and Jersey City—by being kept closed—while the port of Phil- adelphia, being in the State of Pennsylvania, might have no jurisdic- tion whatever; yet all the people doing business through that port, both in the United States and the outside world, would be interested in having the obstruction removed with the least possible delay. Therefore Congress should have its jurisdiction fully established upon all rivers doing business within the several States upon their borders, such rivers as the Ohio, Mississippi, Missouri, Delaware, and others. I hold that no individual State has any right whatever to legislate upon anything which is an interference with the rights of citizens of any other State or country. And that the United States should have clearly defined laws to regulate all interstate commerce upon the lakes, rivers, canals, and railroads of the country, with commissioners in the large Centers of business to see that such laws are faithfully carried out; and that a sufficient force of United States troops should be kept at points where in the natural course of transit vast amounts of property from the several States unay accumulate and be liable to be destroyed by mob violence, for which the city, or county, or State may have little or no interest whatever, as about 95 per cent. of all such movement of property is interstate commerce. 192 . . . INTERSTATE COMMERCE. & CHARLES H. ALLEN'S STATEMENT. Statement of Charles H. Allen, of New Orleans, La. The point at issue between the people and the railroads resolves itself into the use of arbitrary tariffs. Local tariffs are absolutely arbitrary, and in many instances tyrannical to extortion. When local tariffs are appended to a through bill of lading it assumes the position of an arbi- trary. All connecting lines are compelled in contracting for freight to recognize the existence of an arbitrary. Hence tyrannical extortion is carried on extensively, seriously affecting all interior points. Having had over twenty years' experience in railroad service (in in- terior positions), I am led to suggest in the interest of the outraged in- terior, or customers residing at local stations, the legal destruction of this abominable tyranny by establishing the doctrine of prorating all freights from points of departure to destination throughout the country. Without entering into an argument in eatenso, I assure the committee that an investigation of the merits of the method would happily adjust the present difficulty and establish a better feeling between the people and these great corporations, for at once it would place all local busi- ness on a plane of competition by which, though the distance may be increased, the rate would be decreased. At all commercial points there are diverging lines of railroads which could and would compete with each other for local business, distributing the business at termini, where the local point could be reached under a pro rata contract obtained by competition. This will, I am satisfied, regulate the commerce of the country in a manner more satisfactory than by attempting to establish maximum or minimum rates. This is equitable and just, and would establish a competitive right at all points—applied even to passage as to freight—to the commerce of the river connecting by rail for the in- terior, by a classification on a railroad basis, with an established rate per hundred miles, making our rivers tributary in holding in cheek the gigantic concerns that are now preying on the vitals of commerce and pandering to speculators, who can move freight from the North to the South, East, or West, and, vice versa, cheaper than the producer can move from his interior location to his nearest market. - Give the farmer an outlet other than the termini of the line he lives on, give the interior merchant a choice of markets, with this pro rata tariff, and you at once regulate the railroads and establish good feeling, preventing litigation, and giving equal and exact justice to the com- merce of the country, which originates with the farmer, and is supported by the patronage of his family. Justitia fiat ruit calum. sms-sºmeºmº B. STERN'S STATEMENT. Statement of B. Stern, miller, Milwaukee, Wis. The railroad question should not be judged by local or individual grievances alone, but from the horizontal standpoint—why and how much it affects the development of the country at large. The railroads are the arteries of our commerce and industry. If this essential part of our organism is not well Tegulated the whole country must be co- affected. The bad state of the railroads and simultaneously the great INTERSTATE COMMERCE. 193 depression of our whole industry show this conclusively, and the ques- tion arises whether the suffering of our industry is caused by the rail- roads or the reverse. Investigation will demonstrate the former. } Our present crisis is only the result of the race in railroad construc- tion. The adjustment of the prevailing evils and the prevention of further disastrous effects can be brought about only by the strong reg- ulating power of the General Government. In the years 1879 to 1883 40,000 miles of new road have been built, of which, in 1882 alone, 11,596 miles were constructed. This immense enterprise all at once brought into requisition unusual quantities of iron and Wood. All the factories in these articles were taxed to their utmost capacity, and this induced capital to invest very largely in these industries. A large number of new factories sprung up. Labor came in great demand all over the country. The building of the railroads absorbed a very large laboring force; the iron furnaces, mines, and wood factories needed more laborers. This drew large forces from other industries, and the great demand for labor in general enhanced the scale of wages considerably. By the in- creased earnings the consumption of every article produced and manu- factured became larger ; this stimulated all classes of industry ; all values appreciated and the country enjoyed its great boom. This forced prosperity had to be followed naturally by most serious reaction, for the construction of this great mileage of new, railroads was far beyond the necessities of the country, was premature by a great many years. And now we feel the sad effects of an oversupply of rail- roads and more productive capacity in everything than wanted. A large number of the new railroads acted as pioneers for the settlement and opening for cultivation of large sections of land. When they were built they had to be operated at a large expense with an entirely inadequate population and traffic. Many of the new railroads were merely parallel lines to older ones, and as there was only a fixed amount of traffic ac- Cording to the wants of the respective sections, the new lines had nec- essarily to draw away part of the business from the older lines, and a fierce competition in rates followed. The carrying of the same amount of freight and passengers had to be done at multiplied expense and less Pat G. - - - - - We then hear at once this most unjust term of “competing” and “non-competing” points proclaimed by the railroads. A point depend- ent on only one line was a non-competing point, and had to pay much higher rates than the more favored neighbor ten miles off, which was blessed with two or more lines. The more lines the more chances to get a lower rate, the more facilities to draw trade, industry, and population from its less favored neighbor. And if a city had once secured the position of a railroad center, all the railroads were ready to bestow favored rates On it—make it a leadingcenter to the disadvantage of the less important ones. But this reacted again unfavorably on the railroads themselves, because they weakened the resources of their own territory where they had to meet less competing lines and had not to divide the traffic. TEIE LONG AND SEIORT HATUL TEIEORY. The next move for an excuse for a lower rate, and to draw thereby more traffic, was the theory of longer and shorter haul. The longer haul is less expensive, and therefore a railroad is entitled to the privi- lege granted, for instance, by the State of Wisconsin, of having its trains running through the Whole length of the State haul freight from Dakota to Illinois at comparatively much lower rates than from Wis- 16232 AP 13 & 194 - INTERSTATE COMMERCE. consin to Illinois. But this theory of longer haul is only put into prac- tice where local pressure by large establishments is effected, because facts show that the long-haul theory is not always carried out. A ton of coal is carried from the EIocking Valley coal-field to Chicago at about $1 per ton, all rail, but from Chicago to Watertown, Dak., the freight is about $4 per ton, making the cost of a poor quality of coal for domes. tic purposes to the farmer in Dakota from $7 to $8 per ton, which is worth in Chicago $3 to $3.25. The long-haul theory was not car. ried out, because there was not enough competing lines, and some of the farmers had to sell half of their large crop last fall season to meet alone the cost of fuel for the year. -- tº . Another instance of inconsistency in the long-haul theory : A barrel of flour is now shipped from Milwaukee to Liverpool, England, a dis- tance of 4,000 miles, at 38 cents freight; from Milwaukee to New York, a distance of 1,000 miles, at 25 cents and less. But a barrel of flour shipped to Montgomery, Ala., a distance of 1,200 miles, costs Sl cents per barrel, or more than twice as much as to Liverpool. The same is true as to meats and other articles not raised there. Mont- gomery is so unfortunate as not to be a central railroad point, but even worse than that, is not a competing point; therefore the long-haul theory is not applied. Therefore the cost of living in Montgomery is made so high that its enterprising citizens cannot induce laborers to settle within their midst so as to enable the erection of cotton factories, but the cotton producers are compelled to sell their product at a price which is offered to them in New England, minus freight, and to buy the manufactured goods (from cotton) in New England, with a profit added for a cotton broker, wholesale jobber in New York, and high rate of return freight for the manufactured article. - Is it possible for that section of Our Country to draw population and have equal chances for development with other more favored sections, and is there any good reason in the light of justice or political economy why our fellow citizens in Alabama should not have the same oppor- tunities of attaining prosperity as the citizens of New York or Illinois? Is it prudent to furnish flour and meat at a less price to Liverpool than to Montgomery, and thereby enable England by cheaper labor to beat us in the competition for the World’s supply with cotton fabrics whilst We are the producers of the cotton ourselves? This disadvantage of the Southern States in their price of the necessaries of life by high rates of freight will, to a great extent, account for the want of activity in that section which stands in such sharp contrast to the busy life of the North. CONCESSIONS TO LARGE SEIIIPPER.S. The next great idea of the railroads to create artificial traffic, or rather to rob from each other a large portion, is that the large shipper is entitled to drawbacks against the situaller one. Nothing could be de- vised Which can more disturb commerce than this. A miller in Minne- apolis offers to a railroad line to ship 500 cars of flour and feed to Bos- ton at a reduction of 10 cents per 100 pounds from the ordinary rate. The agent of the railroad is very happy to get this shipment, accepts with thanks and telegraphs to the manager of the road that he suc. ceeded in Securing this big shipment from the grasp of a competing road. - - Let us see the consequences. Other millers in Minneapolis, Minn., or Milwaukee have not such large shipments to offer, and therefore can- not secure the drawback. The consignee in Boston of the 500-car lof: .* INTERSTATE COMMERCE. . 195 is informed of this advantage in freight over others, and he directly offers the flour at 20 cents per barrel and the feed at $2 per ton less than the ruling price. Other millers cannot compete, as they have not the lower rate of ſreight. Their Boston correspondents complain, find that they lose trade, and finally all the dealers in flour and feed, jobbers and retailers, in Boston and vicinity, have to meet the situation, pocket their loss on all their stock on hand and sell at the reduced price rather than lose the trade. The result, therefore, is that a large amount of property, many fold the amount of the 500 cars shipped, has been arti ficially depreciated and other great injury done to the business of many. dealers and manufacturers, because the railroad followed the sublime principle that the large shipper is entitled to lower rates or a drawback against the smaller one. But, like every wrong, also this one, if upheld for a length of time, would finally react to the injury of the railroads themselves, because they would subject themselves to the dictates of the large shippers. But the country at large would suffer the most, because an oligarchy of capitalists would be created which could mo- mopolize all industries, as we see it in fact at present with some. - All these iniquities are simply devices on the part of the railroads to draw the lion’s share from each other because there is not sufficient traffic for all of them. Whole books could be written about the sad consequences of the anarchy in the railroad traffic, which is only the natural outcome of the injudicious race in railroad construction. The defects in the system of railroad charges are too plain, their injury to the railroads and to the people too palpable, that correction of the evil, if possible, should be delayed any longer. The General Government alone, through the aid of wise legislation, is the proper agency to clear the chaos of conflicting interests; but it is only possible to do this by adhering rigidly to one great principle—justice to the railroads and to every part of the country ; no competing points, no distinction between long and short hauls, no drawbacks to the large shippers, and a uniform Scale of rates all Over the country. - A PLAN FOR REGULATION SUGGESTED. The following sketch of a plan is submitted without any claim of its Tracticability, but may serve to lead to other more practicable plans: (1) A department for railroads should be created at Washington, with subcom- missions in each State and Territory. These subcommissions should receive all complaints from railroads and individuals and decide them in accordance with the regulations issued by the department for railroads, final recourse to be found by appeal to the department. # (2) The railroad department at Washington shall fix all rates for freight and pas- sengers. The railroads shall file, under oath, a statement of their mileage and issues of stock and bonds, and semi-annually a statement of their tournage carried, with full specifications of each class of freight, the earnings therefrom, and expenses. (3) The construction of new railroads, shall be subject to the consent of the rail- road department, which shall, before giving consent, investigate whether the pro- jected line will not injure the interests of existing lines, and whether population and property warrant the rentability of the projected line. The building of branch roads should be encouraged whenever the locality promises sufficient traffic, so that every section of the country may receive the benefit of railroad facilities.' - (4) The rates of freight, under proper classification, about as now established by the railroads, and to be amended as experience finds practical, should all be fixed by a uniform scale. The freight-rate sheets of each month during the last ten years of five of the largest trunk roads from Chicago to New York and New York to Chicago shall be computed, and the computed rate shall be the standard for all rates all over the country, in proportion of the air-line distance between any two points and the air-line distance between New York and Chicago, 25 miles air-line distance forming the dividing line of another rate. - * 196 - INTERSTATE COMMERCE. (5) The passenger rate all over the country shall be 3 cents per mile, air-line distance, for first class, a lower rate for second class, and a special rate for immi- rants; with a reasonable rebate for business agents, theaters, &c., under strict regu- ations against abuse; a moderate charge for sleeping-cars to be allowed, but all passes to any person, legislators not excepted, shall be rigidly probibited. . (6) The railroad system of the country shall be divided into Eastern, Southern, Western, and Northwestern sections; the tonnage of all lines and passenger traffic of each section, as far as it relates to so-called common points, shall be pooled and in proportion to the mileage of each line, distributed at the end of six months; the ac- counting and allotment of each line to be carried out under the superintendency of the railroad department, the decision of which shall be final. - (7) The standard for earnings of a l the railroads combined shall be 6 per cent, of the invested capital of all. If, at the end of the first year, it shall be found that the established rates do not realize the average percentage, then the schedule of freight rates shall be correspondingly increased, the langest proportionate increase fall- ing on Class 1, and gradually declining in proportion to Class 5, which five classes shall realize the necessary increase, based on the tonnage carried the preceding year. It shall be within the province of the railroad department to prevent excessive sala- ries being paid to directors and officers of any railroad by virtue of their being an indirect charge to the people. (8) Whenever the earnings of all the railroads combined shall be above 6 per cent. per annum, the schedule of freight rates or passenger rates, or both, according to the judgment of the railroad department, shall be lowered to bring the total within the maximum of 6 per cent. - - - - (9) The average percentage of those railroads which earned during the last decade 6 per cent, and over on their invested capital shall be the basis for the future net earniugs of these railroads for the next five years. After five years the maximum. percentage of the earnings of these railroads shall be determined by the railroad de- partment. For those railroads which earned heretofore less than 5 per cent,; this percentage of net earnings shall be the aim to be attained under the benefits of the creation of the railroad department. * . - - (10) If at the end of any year during the next five years the earnings of any line of that class which earned previously 6 per cent. shows a gain above its average rate of earnings than duriug the first five years of the operation of the railroad department, half of the surplus, or so much less as needed, shall be paid over to the railroad de- partment and by this department distributed in proportion to their deficiency and mileage amongst those railroads which earned less than 5 per cent. (11). The railroad shall be subject to fines, as fixed by the railroad department, in case of non-fulfillment of the regulations, and for this purpose a guarantee fund shall be deposited by the railroads with the railroad department equal to one-half mill per dollar of their invested capital, such guarantee fund to draw a low rate of interest; and additional more effective jurisdiction should be given to the railroad department in case of repeated acts against their regulations. It will be noticed that the rates for passenger traffic, especially for through travel, are pretty high, but it should be observed that the traveling is mostly done by the richer portion of the people. It will not affect the prosperity of this class by paying a larger fare for their journeys, but this increased rate will assist very materially to lighten the rates for the necessaries of life used by laborers and farmers. The roads in the older sections of the country will be considerably benefited by the passenger rate as proposed. But the roads in the later-settled sections will not gain by the pro- posed rates, which may in some instances even be lower than charged heretofore. Aside from this the roads in the far West and South will at first earn less on account of the proposed reduction of freight rates against the ones prevailing. But it is a matter of justice due to the population in these sections of country that this burden of high railroad rates should belightened, and thereby the whole country be benefited. In a very short time the railroadsinthese sections will recover the momentary loss by the greater prosperity of the inhabitants. Greater inducements for new settlers are thereby held out, and there is no doubt that the traffic will be by far more increased than under the present exorbitant tax of the railroad charges. Article 10 may prove a partial compensation for the anticipated loss by the roads in the South and far West, which are mostly feeders to the older roads. It cannot be presumed that a plan as sketched will be perfect. Experience, however, will soon show the defects and how they ought to be remedied, but by the proposed uniformity and stability of rates, by regulating the construction of new roads, a more steady character of our industry and commerce will be obtained. The railroads will be protected against each other, can thereby do their business at less expense, and will be generally pros. perous. There is even no doubt that all the indebtedness of the roads in the form of Stocks and bonds will be eagerly sought for as an investment and their market value enhanced, Capital will readily be found for new roads, because the supervision of the roads by the Government under regulating laws amount almost to a guarantee • INTERSTATE COMMERCE. 197 of a fixed revenue. We will not have any more booms nor excessive depression, will not create so many millionaires, but will have by far less pauperism, discontent, and strikes, build up a greater number of cities and wealthy towns, and secure a larger degree of general prosperity commensurate to the immense resources of this country. We will enjoy the best and cheapest railway system, without any burden to the Government by ownership or the management of its details, as in other countries. { F. C. WILSON'S STATEMENT. Statement of F. C. Wilson, 239 and 241 Lake street, Chicago, manufacturer * of oil-tanks and cans. - THE CLASSIFICATION OF FREIGHT. The greatest evil of the freight question appears to be in the matter of classification, which appears at present to be purely arbitrary and based more upon “What the goods will stand ” than upon the cost of the service. It costs no more to haul a ton of gold than the same Weight of coal. The extra expense is incurred in its care or insurance. So far as weight and space are concerned, iron and silver are about equal. The actual cost of transporting by rail is susceptible of demon. stration to a nicety. The car load should be the lowest rate, as it costs no more to haul fifty cars for fifty different persons than fifty cars for one corporation. Any goods that are of such bulk as to load a car to the minimum weight should be hauled at the same rate for distance, the value to be inserted in the bill of lading, and such additional charge made for insurance as will cover the risk. # it is impossible to make an arbitrary classification that will cover the thousands of forms that merchandise is put into. Some time since we had a quantity of wire shipped from Cleveland to Chicago, rate, 15 cents per hundred. We desired to ship it to Riverside, 12 miles out on the Cbicago, Burlington and Quincy Railroad. The rate was about 25 cents per hundred. ” It was worked into different shape, and desiring to re- ship it to Chicago, the rate was three times first class, I think 75 cents per hundred, amounting to about $7.50 to return it. A team was hired which laid the lot down at our factory for $2. s, - A system which permits such things is not worthy of the name. A general system could be devised for quantities less than car-loads, based upon distance, weight, bulk, and value, (the latter to be determined by the shipper, who could recover no more from the railway company), that could be applied to all classes of goods and give satisfaction to all merchants who are willing to compete upon even terms. I do not say that such a system is practicable in view of the condition of things at the present time, but it would be just, and eventually the people will have it. . - B. F. SMITH'S STATEMENT. - Statement by B. F. Smith, 126 Washington Street, Chicago. I avail myself of this opportunity to express my own views, after an active experience of twenty years in the freight department counected with the New York Central and Hudson River Road, and its numerous 198 INTERSTATE COMMERCE. (ºf connections. I assume your committee will confine its investigation exclusively to the policy pursued and to be pursued by railroads forming connecting lines for transportation of freight and passengers to and from one State to another, and through different States over which Con- gress only can exercise jurisdiction, the object of which legislation is to protect the common interest of shippers and the railroads, without prejudice to either. To accomplish this (assuming the railroad companies have been granted extraordinary privileges and powers by virtue of general laws and charters for their protection), the necessity of special laws for the protection of individual persons doing business over the roads has arisen, and to accomp, sh this, it is suggested that a commission may be appointed with certain powers, for the supervision of the conflicting interests that may arise between shippers and carriers, appertaining to rates to be charged for the transportation of freight and passengers to and from all competing points. - - The tendency in the past few years and at present is to consolidate the railroad interests under the absolute control of a few men, and then with pooling their earnings virtually forms an absolute monopoly, prej- udicial of the common interests of the country and not easily controlled, unless taken in hand in good time. The present surplus of the carry- ing power of the roads, and the limited amount of tonnage to be carried, will not be continued in all time in the future, and cannot be depended upon for protection to shippers; hence the necessity for some proper legislation and rules, which shall operate in a time when there may be a surplus of tonnage compared with the carrying power, which power, being endowed with special privileges by virtue of their charter, to be kept under proper lawful control. - They should not be allowed to pool earnings, but open to similar com- petition, which pervades the general business of the company. Reason- able rates may be established by the railroads for transportation to and from common points, subject to a revision and control of the commis- sion. Ten days' notice should be publicly given by posting in printed bills in their warehouses and offices in case of any change of rates No discriminating rates or rebates should be given any shipper not enjoyed by all on the same class of freight. Car-Joads may be rated at 10 tons, as a basis of car load rates, in comparison with mixed freights of dif. ferent classes for different consignees. A uniform rate per ton per mile, which may be made on different class freights, should be made to small and large shippers alike when in car-loads or in quantity less than full car-loads. The rates on light and bulky goods may be made on a basis of 10 tons in a car, which shall pay an amount equal to 10 tons in a car. All freight offered for shipments should be loaded in its regular turn, for which bills of lading should be given to the shipper designating the route and rate charged to destination. A terminal charge may be allowed of 20 cents a ton, at place of shipment and delivery, which shall be embraced in the regular rate, and added to it when published. The rates made for a short distance in excess of longer distances, may be made under the control and discretion of the Commissioners, but not otherwise. All differences which may arise between shippers and carriers shall be sub- mitted to the commissioners, whose judgment shall be final and bind- ing. All railroads should be required to make their annual report and send to the commissioners. INTERSTATE COMMERCE. 199 A PLEA For THE REGULATION OF FREIGHT RATES BE. TWEEN THE UPPER MISSISSIPPI STATES AND LAKE MICHIGAN, - - . . . Statement received by the committee from the Michigan and Mississippi .* canal commission. It has been announced that “the regulation of the transportation of freights and passengers between the several States by railroads and by water routes in connection or in competition with said railroads” constitutes the object of your inquiry. Therefore, in the interest of a large number of the producers, dealers, and shippers of the Upper Mis- sissippi Valley, your attention is earnestly Solicited to a system of prac. ticable and effectual “regulation ” in that regard, which, it is believed, may be readily applied and enforced at comparatively small cost, if Congress in its wisdom will but so determine. - - The “regulation ” thus referred to is desired to be enforced as to the commerce between the Upper Mississippi States and Lake Michigan, as integral to the commerce between those States and the cities and sea- ports of the Eastern Atlantic coast. This desire has emphasis and con- stantly increasing urgency in the fact that inevitably, it would seem, the trend of the commerce of the States indicated is eastward, and that, too, so largely as to render a lessened freight charge on that commerce a matter of prime importance. Already this desired regulation has full force as to a great part of the extended line (five-sixths thereof) which must be traversed by the trans- Upper Mississippi and Eastern Atlantic traffic. This it has by means of the free all-water competition with the railroads secured through the Great Lakes, the Erie Canak, and the Hudsou. That route has, for the Northwest, its initial points and termini at Chicago and other of the ports on the west shore of Lake Michigan. Practically it has its beginnig and eilding at Chicago, so far as the commerce of the Upper Mississippi States can have concern there with. There the potential power of its “regu. lation ” is asserted or ceases to have further influence. At that point the cereals, the meats, and the dairy products of the great Valley embrac- ing the States in question are ever assured cheap freightage as they seek their Eastern State consumers or are sped on their way to a foreign market. To reach that point onerous or even oppressive freight charges may have been submitted to. Unce there all such compulsion instantly ceases its pressure. Water-route competition there issues its resistless fiat of regulation. From obedience to the decrees of that power there is no escape. Of course, too, and inevitably, that same ever-operative regulation is equally effective as to all west-bound traffic from the East. The machinery, the agricultural implements, the varied manu- factures, the heavy groceries, the oils, salt, anthracite coal, &c., the cost of which to the consumers in the Northwest is so largely affected by the rates of transportation laid upon their bulk and weight, are vastly cheapened to their final purchasers by the beneficent regulation which the great competitive water route so surely enforces. Along every mile of the distance separating the waters of New York Harbor and the westernmost waves of Lake Michigan a controlling power far superior to that of any possible edict of legislation is thus exercised. . The people of the Upper Mississippi Valley appreciate fully the force and the value of the regulation made so effective. Because they are so intelligently appreciative they are not content that the beneficence of • 200 INTERSTATE COMMERCE. ' -- f that power shall have force as to their east-bound products only when Chicago is reached, and cease all its influence on the instant that city is touched, so far as concerns the merchandise from the East of which they are to be the purchasers and consumers. They therefore ask that the initial point and terminus of that benignant and enriching influ- ence shall no longer be found only at the West shore of Lake Michigan. They urge that instead it be removed farther west, that it be made to reach and gladden their own fertile valley. . . " To effect that removal, to extend to the Upper Mississippi the ad. vantages of competition, and therefore of regulation now denied, as far as relates to transportation to and from the East, is the object sought in the construction of the so-called Bennepin Canal, and in the enlarge- ment of the lllinois and Michigan Canal. Each one of these desired works of internal improvement would be, indeed, the complement of the other. The former would be, in fact, but an extension of the latter. The Illinois and Michigan Canal, with its connection with the slack- water navigation of the Illinois River, has already shortened the sepa- ration of the Mississippi from Lake Michigan to the extent of two-thirds of the entire length thereof. To remove the remaining one-third of the obstacle to a completed connecting water route between the great river and the great lake will be to secure to the Northwest the finished Mich- igan and Mississippi Canal. The value of such a completed connec- tion between the two great systems of water-route transportation which enrich the interior of our country—the east and West system of the lakes and the Erie Canal and the north and south system of the Missis- sippi and its tributaries—would be incalculable. But that value would be continuously demonstrated to be more largely in its potential power of regulation as to rates of freight charges than in all others of its many advantages to the East and to the West. The legislatures of Illinois and of Iowa have repeatedly memorialized Congress in favor of the construction, and the control afterwards, by the General Government of the yet missing link—the canal from Hen- nepin to Rock Island—in this desired chain of water-route communi- cation. Five times—in 1864, 1870, 1874, 1882, and 1884, respectively— has Iowa, so voiced the desires of its people. At its last Session the general assembly of New York also, reaffirming an expression of opinion presented to the country by its Senate in a previous year, but which the house had not then time to reach and indorse, emphatically addressed Congress in the same behalf. The action of these representative bodies, one of the East and the others of the West, have had reiterated ap- proval and support on the part of the people. Delegate Conventions, mass meetings, boards of trade and other commercial bodies, municipal councils, the press, and petitions of manufacturers, shippers, farmers, and citizens generally, in New York, Massachusetts, Connecticut, Pennsyl- vania, Ohio, Indiana, Michigan, Wisconsin, Minnesota, Missouri, Ne- braska, Kansas, Iowa, and Illinois, have similarly spoken in earnest ap- peals to the legislative power of the nation. To recall to your committee in detail these several repeated and earnest solicitations for that relief to the commerce of the country which the General Government can alone secure would trespass upon your patience and greatly transcend the proper limitations of this argument. But the fact of these Con- current and repeated prayers from suppliants whose widely-Separated locations do but the more strongly attest the importance of the interests they concurrently represent is one which cannot be too earnestly pressed upon your attention. That fact certainly merits the most considerate thought of Congress, for it may with confidence be affirmed that the ~ INTERSTATE COMMERCE. - - 201 entire bistory of popular discussion and of national legislative action has not furnished its parallel. The unanimity, earnestness, and extent of the popular demand for the construction of the Hennepin Canal as an inseparable part of a completed Michigan and Mississippi Canal, by means of which may be secured a just regulation of freight charges to the people of the Upper Mississippi Valley, stands unique. No other work of internal improvement has ever enlisted anything like the ag- gregated support of the people, East and West. Indeed, it is difficult, in view of the aboufiding evidences of that widespread popular sup- port, to deny force to that suggestion which attributes the delay of Congress to comply with the demand for the completion of that work to influences which are opposed to any such just and ever-operative regulation as a Water route connection between the Upper Mississippi and Lake Michigan will inevitably enforce. To permit so certain and so potential a “regulation” is not within the plans and the purposes of combinations interested in the maintenance of high rates of freight charges. Nevertheless when Congress shall reach an intelligent appre- hension of the actual facts of the situation, the completed Michigan and Mississippi Canal will be as surely decreed and as carefully main- tained, free to the people at the expense of the whole people, at the expense of the nation, as is to-day the canal around the Des Moines Rapids, or that of the Saul Ste. Mary. Canals to overcome natural ob- stacles by which would else be permanently separated important natural water courses have time and again been constructed by the National Governument. An obstacle scarcely more expensive to overcome than that which long separated, for the uses of transportation, the Missis- sippi at Montrose from the Mississippi at Keokuk alone now separates the Mississippi at Rock Island from the waters which at Hennepin flow . from Lake Michigan. A few hundred thousand dollars more, at most, Will suffice to cut through and so practically remove the latter than has actually been expended in making and keeping in order a navigable way around the former. Official figures accessible at the War Depart- ment to all inquirers evidence this fact beyond dispute. So, also, the more recently authorized expenditures by Congress for the Ohio Canal at Louisville and Portland and for the Muscle Shoals Canal on the Ten- nessee River multiply precedent and enforce argument in behalf of the Canal, the construction of which, in the interests of the people of the Upper Mississippi Valley and of the East, still awaits the action of Congress. -- The almost marvelous effects and the vastly enriching results to com- merce and industry attendant upon a just aid from Congress in the re- moval of obstructions to the due connection of great Water routes have been also forcibly illustrated in the case of the Saint Clair Flats. These Originally and long prevented a freely navigable communication between Lakes Huron and Erie. They lay within the jurisdiction of Michigan. That State could not incur the expense necessary to the removal of the impediments to navigation they presented. It would have been as un- just as it Was vain to expect so great a work to be attempted by one State for the benefit, at least equally with itself, of several other States; precisely as it would be neither wise nor in accord with justice to ask that the Michigan and Mississippi Canal shall be constructed by the State of Illinois. Moreover, a work so certainly beneficial to several States could not properly, even if once completed, be left to the control of any one State, with a constant liability to toll exactions, &c., certain to be burdensome to commerce. So Congress decided as to the Saint Clair Flats, So Congress must decide also as to the entire canal route 202 INTERSTATE COMMERCE. * *... from Chicago to Rock Island. It must decree that the General Govern- ment accept the gift of the Illinois and Michigan Canal offered by the State of Illinois, and that it also enlarge that canal and complete its extension by the construction of the Hennepin Canal, so-called. It will do so in the interest of the people, to secure for them a more ex- tended application of the most effective regulation of freight tariffs. known or possible. - The millions of dollars expended upon the Saint Clair Flats under the authority of Congress have secured a continuous saving of millions of dollars to the people, East and West, annually. The completion of that great work really revolutionized grain transportation on the lakes. It eliabled the passage from Chicago to Buffalo of steam-propelled ves- Sels capable not only of carrying cargoes of grain three times as large as those before possible, but also of towing, at the same time, yet other Vessels similarly laden. A single steamboat has thus conveyed and towed 260,000 bushels of wheat at a single passage, whereas a move- ment of 25,000 bushels by a single steamer or sailing vessel had before been a notable and rare accomplishment. The broader channel and deeper water have secured these results, and these have permanently reduced the cost of grain freightage from Chicago to Buffalo to the ex- tent of 6 cents per bushel. In the same ratio and of necessity, the rail. roads running eastward from Chicago have ever since the completion of the improvement at the Saint Clair Flats also reduced their freight rates. Noting these facts, and that of the abolition of tolls on the Erie Canal, Gov. William Bross, of Chicago, stated last January, in an ad- dress to members of Congress, that— • - * - The all-water transit between Chicago and New York, instead of being 17 and 20 and even 25 cents, as a few years ago, now rules at about Sia, cents; sometimes a frac- tion above and occasionally a small fraction below that figure. In summer the aſl-rail freights per Dushel are generally a fraction above those of water, depending upon competition and the demand for export; but in winter the rates range from 12 to 21 cents per bushel. No comment is needed. The same excellent authority, in the same address, also presented the following facts, as by him ascertained on careful inquiry and investiga. tion : Coal was carried at an average charge for the season (the season of 1884) from Erie and Buffalo to Chicago, about 1,000 miles, for 64 cents per ton ; thence to the Missis- sippi River, 200 miles, the charge was $2.00; for the next 100 miles it mounts up to $4.00 per ton from Chicago, and in Western Iowa it runs upward to a much higher figure. * * * Take another example: The freight on a bushel of wheat between Northern Iowa and Chicago, some 400 miles, is and has been for the season 10.8 to 16.8. From points in Nebraska and Southern Minnesota, 16.8 to 21 cents; the highest figure being more than the cost of transporting a bushel of wheat in June last from Chicago to Liverpool, about 4,000 miles—showing, at least, 4,000 miles for the same price in favor of water transit. So oppressive bave been the enormous freight charges for some time past that wheat was sold west of the Missouri River for 30 cents per bushel, and corn for 12, making its value by the ton less than that of coal, so that producers have actually burned it for fuel. It is, therefore, plain that if Congress does not Avant the vast fertile West—the Upper Mississippi Valley—to go back to its primitive des- olation, they must provide cheap Water transit for its cereal and other products. The regulating power of water-route competition and the advantages certain to accrue to the people at large, were the canal from Chicago enlarged and extended to the Mississippi, are well illustrated in the facts stated in the report of the survey of that canal route made by Maj. W. H. H. Benyaurd, U. S. A., to the Secretary of War, as follows: Actual results are shown already, it may be further urged, as due to the direct competition of canal and railroad, in the case of the Illinois and Michigan Canal and the railroads by which it is paralleled. The railroad commissioners of Illinois estab: INTERSTATE COMMERCE. 203 gir lished the freight charge on wheat by rail last season at 11 cents per 100 pounds, or 6.6 cents per bushel, for 100 miles, the distance from La Salle to Chicago; for 130 miles, the distance from Henry, on the Illinois River, to Chicago, 12 cents per 100 pounds, or 7.2 cents per bushel; for 182 miles, the distance from Rock Island to Chi- cago, 13.4 cents per 100 pounds, or 8.2 cents per bushel. It has been freely stated and generally believed that the railroads have regarded these rates of the commis- sioners as too low. Yet wheat was last season taken from Henry and from Peoria, each on the Illinois River, for 3 cents per bushelby rail, while the schedule rates were 7.2 cents per bushel. Thus were the rates of the railroad compelled to fall to a point of equality with those of the canal; while on lines not so placed in competition with that water route, the rates from shipping stations of equal distance from Chicago with those of Peoria, Henry, and La Salle were required to pay the full schedule rate as established by the commissioners. - 3& - • * 35. * % % # The reports of the leading trunk lines, collated by Mr. Joseph Nimmo, jr., in a table illustrating the successive reduction of freight charges on those roads and on the Erie Canal, respectively, furnish striking evidence on this point. (Internal Commerce of the Uuited States for 1880, appendix, page 230.) - Of twelve of the railroads therein enumerated, maintaining an average freight charge of from 1.85 to 3.168 cents per ton per mile, respectively, in 1868, the only ones maintaining for the year 1880 an average freight charge of .88 of a cent per ton & per mile were those having no water-route competition. This is a summary of that exhibit as to the charges for 1880 per ton per mile : IRAILROADS HAVING COMPETITION IN WATER IROUTES. Per ton per mile. Now York Central Railroad . -- - - - - - - - ----------------------------------- $0 00. 88 Pennsylvania Railroad---------------------------------------. . = * * * * * * ~ * 00. 88 New York, Erie, and Western Railroad - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 00. 84 Philadelphia and Erie Railroad ----------------------------------------- 00. 56 Lake Shore and Michigan Southern Railroad---- - - - - - - - - - - - - - - - - - - - - - - - - - O0. 75 Michigan Central Railroad -----------------------. ---------------------- 00. 842 Pittsburgh and Fort Wayne Railroad (for 1879; for 1880 not given). . . . . . . 00. 76 RAILROADS NOT COMPELLED TO MEET WATER-ROUTE COMPETITION. Per ton per mile. Boston and Albany Railroad .................................. ---------- $0 01.20 Chicago, Burlington, and Quincy Railroad (for 1879; for 1880 not given) . 01.023 Chicago and Northwestern Railroad (for 1879; for 1880 not given) . . . . . . . . 01.49 Chicago, Milwaukee and Saint Paul Railroad (for 1879; 1880 not given). 01. 76 Chicago, Rock Island and Pacific Railroad (for 1879; for 1880 not given ... 01.21 Erie Canal rate for 1880-------------------------------------------------. 00. 49 Thus it will be seen that the four leading trunk railroads running to Chicago from the Upper Mississippi Valley States maintained an average of .63 of a cent per ton per mile freight charge in excess of the average freight charge of seven other trunk railroads eastward of Chicago, where tariff rates were, as Mr. Fink" has explained, * The words of Mr. Albert Fink, railroad commissioner, here referred to, were ad- . dressed to Hön. William Windom, chairman of the Senate Committee on “Transpor- tation Routes to the Sea-board,” in a letter to that gentleman in 1878, as follows: “You are aware that when the rates are reduced between Chicago and New York on account of the opening of the canal, this reduction applies not only to Chicago, but to all interior cities (Saint Louis, Indianapolis, Cincinnati) to New York. If that was not the rule, the result would be that the roads running, say, from Saint Louis, Indianapolis, and Cincinnati, to Chicago Would carry the freight to Chicago, from which point low rates would take it to the East, and leave the direct road from the interior points to the sea-board without any business. Hence, whenever the rates are reduced on account of the opening of navigation from Chicago and lake ports, the same reduction is made to all interior cities, not only to New York, where the canal runs, but to Philadelphia and Baltimore. Although the latter cities have no direct water-route communication with the West, yet they receive the benefit, as far as railroad rates are concerned, the sanie as if a canal were running from the lakes direct to these cities, because whenever rates from Chicago to New York are reduced it is necessary to reduce the rates from Chicago to Boston, Philadelphia, and Baltimore; otherwise the business would all go to New York. The reduction of the rates from Chicago and Saint Louis to Baltimore causes a reduction in rates on shipment via Baltimore to Atlantic ports—Norfolk, Wilmington, Port Royal, Savannah, Brunswick, 204 INTERSTATE COMMERCE. constantly under the control of the potentially operative competition of the water routes of the lakes and the Erie Canal. The fact thus cited to attention is a very important one. Its existence is urged as furnishing an argument for the opening up- of an extension of the water route of the lakes to the Upper Mississippi so strong that its force can neither be moderated nor escaped. Assessed upon the entire cereal products of the States from which that extra fright charge is collected, the annual. aggregate would alone reach the sum of $3,482,687, if only the crop yield of the principal cereals of Iowa, Minnesota, Kansas, Nebraska, and one-half of that of Ił- linois and Wisconsin be taken into the account, estimating these products at 2,785,350 tons weight, and the increased cost at $1.25 per ton, average. , - But that added freight charge, thus resulting from the absence of water-route competition from the Upper Mississippi to the lakes at Chicago, is not alone collected on the cereal products of the States enumerated. It is none the less chargeable upon and collected on the exported cattle and hogs, the cured and barrelled meafs, the dairy products, and the imported articles of those several States. A just computa- tion of those charges would give a total of annual loss to the people which would be deemed altogether fabulous and impossible by those who have not given attention to the facts actually involved. - In his annual report to Congress for 1880, Mr. J. Nimmo, jr., of the Bureau of Statistics (page 154), said: The price of all commodities of low value in proportion to weight is in every mar- ket greatly affected by the cost of transportation. Especially is this the case in re- gard to the surplus agricultural products of the Western and Northwestern States. The low rates which prevail for transportation upon the northern water-line, there- fore, exercise an important regulating influence over the price of all the surplus pro- ducts of the West, not only in the markets of the Atlantic sea-board States, but also in foreign countries. It is due chiefly to this fact that during the last ten years the value of domestic exports from the United States has greatly increased, and that since the year ended June 30, 1875, the value of exports from the United States has largely exceeded the value of imports to the United States. In an argument before the Committee on Commerce of the House of Representatives, made in opposition to the “Reagan bill,” in March, 1882, Mr. G. R. Blanchard, the well-known railroad attorney, also said (as see the report thereof, printed by authority of that gentlemen in New York, page 16): - The rail-carrying charges upon the great east-bound traffic to the sea-board for both , consumption and export are, therefore, and must continue to be, limited by natural causes, and cannot be beyond or as much as those which in their absenco would be deemed fair and reasonable, and are always below the rates for like distances, articles, and speed by rail any where in the world. So potent are these facts that it is within the power of and is often the case that the combination or independent action of a few sail-vessels at Chicago can, in their seasons of navigation, procure rates from owners of an equal capacity of ièrie Canal boats from Buffalo to New York, which, added to their own rates to Buffalo and transfer charges, will fix and . have in actual practice, fixed and regulated, the entire eastward through imaximum rail-freight ch arges. for a time upon all kinds of grain and many other articles. # - ić †r #. * * 36. This combined wealth of interior water-ways forms an aggregate of parallel rivalry unknown in other countries, and so restrains not only through but local and interior rates to maxima which have been constantly decreasing for the past ten years, which can never exceed the water prices, risks, and charges, and which afford the people a strong and just security against transportation extortion or abuse. Can any safer limitation or check be legislated than the inflexible limitations nature enforces in its uncontrollable rivalry 3 * * * The application of water results ascertained as I have described are incxorable in their effects upon railroad rates within periods ranging from seven to eight months in each calendar year, and usually all the year in rivalry with Western rivers. * * * In view of all these facts I now say with Mr. Fink: “Compared with this natural powerful regulator of railroad transpor- tation tariffs the efforts of State or Congressional legislation to prevent extortion- ate charges appear to those at all conversant with the subject as perfectly useless.” and Fernandina—and from there into the interior of the Gulf States—Augusta, At- lanta, Macon, Montgomery, Selma, &c. * * * These roads " " " are obliged to follow the reduction made via the Baltimore road, and which were primarily made on account of the existence of the Erie Canal and the opening of navigation. The Same way in regard to the west-bound business, * * * So that it may be said that the rail rates are kept in check by water transportation.” - - - - INTERSTATE COMMERCE. 205 Such expressions of authoritative opinion as to the resistless regu- lation of freight charges inseparable from the maintenance of free water routes of transportation, could be further quoted indefinitely. It is not necessary to so multiply Words for your consideration. It remains only to solicit your attention to the fact that the General Government has done for the South-bound and return commerce of the Upper Mississippi Valley precisely the valuable service now asked for at its hands in the interest of the east and West commerce of the same people. It bas removed obstructions, cut channels through flinty rock, dug out sand-bars, and excavated a canal, the latter at a cost of about $5,000,000. That work has been well performed. It has secured a great boon to the people. It is still being carried on and perfected year by year. As a regulating power in determining freight charges to and from Saint Louis, by the railroads paralleling the great river, the beneficence of that continued work of internal improvement has been great beyond compute. But a regulation as to rates of transportation between the West and the East is surely as needful now, to say the least, as was ever a similar one to the commerce between the North and the South. Unquestionably, indeed, were a comparison needed, as it is not, inexpensive access to their Eastern and so to their foreign markets, by the products of the Upper Mississippi Valley, has come to be an object of more anxious concern than can be the reaching of markets in any other direction. But, the permanent necessity of the people of that Valley is certainly that of a choice of markets—for cheap transportation to the East as to the South. The latter has been fully secured through the beneficence of Congress, the former is yet denied. But why should not the former also be granted, as a result of wise and generous action on the part of the same legislative authority, deter- mining its decrees in the interest of the whole body of the people. Said the report of Maj. W. H. H. Benyaurd, U. S. A. (hereinbefore’ Quoted), in presenting the reasons which urge the construction of the Hennepin Canal : “It is the peculiar misfortune of the Upper Missis- sippi River that it has no share in the vast benefits which accrue to the lake region in the matter of competition and cheap transportation, se- cured through the use of a Water route which has its Western terminus at Chicago and its eastern in New York EIarbor.” How serious is that “peculiar misfortune,” thus cited to the attention of Congress, may be more clearly understood from the statement of Mr. G. R. Blanchard, made in the course of his argument before the EIouse committee herein- before quoted from. He says: The rates being fixed from Chicago in manner I have proven, that city is now recognized as the Western pivotal point on which all others hinge and turn, and all other competing points, whether of railway against water, or railway against rail- way, rail rates are fixed by Certain percentages of difference more or less from Chi- cago as their distances Vary. That “peculiar misfortune” of the people of the Upper Mississippi Valley is, then, one of no slight moment; rather it is that of an oner- ous burden. It is one which constantly presses. It is borne only at the cost of many millions annually, for it is the “misfortune” of en- forced submission to an utter absence of any approach to “regulation” as to east and West rates of freight charges. That absence of just reg- ulation is due to a total deprivation of the influences of the lake and canal competition. Such dispossession would instantly end were the Upper Mississippi accorded an all water connection with Chicago. The construction of the Hennepin Canal would secure that connection. As long ago as June, 1874 (see Report H. R. No. 643, Forty-third Congress, first session), in a letter to the House Committee on Railways and 206 INTERSTATE COMMERCE. Canals, Mr. Charles Randolph, secretary of the Board of Trade of Chi- cago, said as to the importance of such canal construction: - If this waterway were completed it would, in effect, give an unbroken line of transportation by water from the headwaters of the Mississippi to the ocean, either via the Saint Lawrence or the Hudson Rivers. Freights, say on grain, could be re- duced nearly or quite one-half of the general average between all points on the Mis- sissippi River and Lake Michigan. * * * What the Erie Canal is to the regula- tion of freight rates across the State of New York this would be across the State of Illinois, and, indeed, of Wisconsin, too, for all railroads running eastward from the Mississippi River would be brought within the influence” of its competition. - The committee of the House thus written earnestly reported in favor of the construction of the Hennepin Canal as the means to a com- pleted Michigan and Mississippi Canal to connect the great lake route of transportation at Chicago with that of the great river at Rock Island. So also has similarly reported every committee of Congress from that date to this, to whom the proposition for such a canal has been referred. Again, through your committee, Congress is called upon to consider the “peculiar misfortune” of the Upper Mississippi Valley, in its dep- rivation of the eminently righteous regulation of freight charges which has been so conclusively shown to be easy of establishment. In the hope and faith that your honorable body will favor and assist in the early institution of such a regulation, to be secured in the opening up of a free all-water connection between Lake Michigan and the Mississippi, this argument is respectfully submitted to your consideration by - - THE MICEIIGAN AND MISSISSIPPI CANAL COMMISSION, Per EDWARD RUSSELL, Secretary. DAVENPORT, Iowa, July 15, 1885. - . *s N. B.—The commission in behalf of whom this argument has been prepared and submitted is composed of the following-named gentle- men: Franklin Edson, F.B. Thurber, A. B. Miller, L. J. N. Starr, George B. Douglas, New York; J. L. Swits, J. J. Marlette, Schenec- tady, N.Y.; J. H. Foster, Breese Stevens, Madison, Wis.; W. T. Price, Black River Falls, Wis.; William R. Marshall, Saint Paul, Minn.; W. S. King, Minneapolis, Minn.; George H. Eſopkins, Detroit, Mich. ; Pey- ton Ranney, Kalamazoo, Mich. ; Dr. James Beuston, Northfield, Mich.: A. O. Marshall, Joliet, Ill. ; L. B. Ray, Morris, Ill.; W. T. Dowdall, Julius S. Starr, Peoria, Ill.; T. D. Brewster, Peru, Ill. ; H. D. Dement, David T. Littler, Springfield, Ill. ; Ralph Plumb, Streator, Ill. ; L. D. Witing, Tiskilwa, Ill.; William Bross, J. C. Dore, C. B. Farwell, Murry Nelson, Jesse Spalding, L. Z. Leiter, Carter H. Harrison, E. F. Law. rence, C. C. Bonney, Frank Gilbert, Guy Magee, Herman Raster, Mar- tin Russell, Andrew Shuman, Melville E. Stone, Chicago, Ill.; J. W. Green, Edward Russell, Davenport, Iowa; S. M. Clarke, Keokuk, Iowa; John Mahin, Muscatine, Iowa; General R. J. Oglesby, Lincoln, Ill. ; Jason C. Ayers, Joseph Utley, Dixon, Ill. ; James M. Allan, Geneseo, Ill.; Williamson Durley, Hennepin, Ill.; T. J. Robinson, Rock Island, Ill. ; Charles H. Deere, Moline, Ill. - . Officers.-Joseph Utley, president; J. C. Dore, first vice-president; A. B. Miller, second vice-president; Murry Nelson, treasurer; Edward Russell, secretary. - Eacecutive committee.—William Bross, Murry Nelson, J. C. Dore, Pey- ton Ranney, C. B. Farwell, L. B. Ray, A. O. Marshall, Joseph Utley, A. B. Miller, Edward Russell. & *See also on this point the words of Railroad Commissioner Fink, referred to in previous foot-note, INTERSTATE COMMERCE. 207 THE MISSISSIPPI AND MICHIGAN CANAL USUALLY -- CALLED THE HENNEPIN CANAL. - The following memorial was received by the committee from Chi- Cago : We beg most respectfully to solicit your candid and careful atten- tion to the following Synopsis of facts, showing the imperative neces. sity for the early construction of the Hennepin Canal. That it is a national work will more fully appear when it is stated that Western Illi- nois, and Wisconsin, Iowa, Minnesota, and Dakota would, by its con struction, have direct water transit with all the States of the Atlantic sea-board, and with Europe. In short, it would connect, by a canal only 74 miles long, many States through the great waterways of the continent—the lakes with the Mississippi. (See map.) _2~ >> - - - ſº N, s St. Paul. Ž N “y Minneº g º f \ ~$. WISCOX SIN / / * oDa (ºro S&W, f * *. º OY #wa 62 * ---—l I O W A O | Jetroit, (s C - “s. ſ * *g/ %gline. ...º CH!!! Ago. -- ºteao, \s.... ſº G * Hººgºo &: &ºin. O -—-—-* £& § O. § O # I//D. L. IND, . OELIO = as *. § § C) , (S) IM o tº s, Nº. § & seriºnoia Zradianapolis Colwartbus, *AN. Sººns. % \ ) As to the character of the line, the feasibility of its construction, careful estimates of its cost (about $7,000,000), the vast benefits it would confer upon the whole country, and all other important facts in relation to the business it would command, we respectfully call your Special attention to the reports of the Government engineers: H. G. Wright, general-in-chief of Engineers, and W. H. H. Benyaurd, major of Engineers, as embodied in the message of the President of the United States, January 8, 1884, Senate executive document No. 38. We add that such authorities as Mr. Nimmo and Mr. Fink, railway Commissioner, have shown that the reduction of freights by the lakes and Erie Canal benefits all the States of the sea-board way down to Georgia. There is, and can be, no job in it, for it is proposed that it be con- structed by the engineers of the Government, under the direction of the Secretary of War. The entire cost of the canal complete is carefully estimated by Major Benyaurd, United States Army, at less than $7,000,000. The money saved to the people in freights caused by this Canal, if then completed, on the crop of 1880, was estimated at $3,482,667, enough to pay for the canal every two years. But let us be 208 - INTERSTATE COMMERCE. more specific, and take the crop of 1884. Official Government esti. mates for tile crop of wheat in the Upper Mississippi States for 1884, were: . JBushels. Wheat.----------------------------------------------------- .* * * * * --- . 188, 349,000 Corn - - - - - - - - - - - - - - - - - <-- - - - - - - - - - - - - - - - - - - - - - - - * - - - - - - - - - - - - - - - - - - - 837,574,000 Total --------------------------------------------------------- 1,025,923,000 Suppose only one half is to be shipped eastward for consumption - there and export, and we have 502,971,500 bushels; if only 1 cent per bushel were saved to the people by water transit, the amount would be $5,029,615; at 5 cents per bushel, the fabulous sum of $25,148,055 would be left in the pockets of the people. . . - But the mere movement of the two cereals eastward will not furnish half the business of the canal. Barley, oats, animal products, and other articles will swell the amount immensely, while the coal and iron of Indiana, Ohio, and Pennsylvania, groceries and other merchandise, will furnish a vast business from the eastward, certainly enough to leave in the pockets of the people more than the cost of the canal every year. It is evident that this canal is a part, and a most essential part, of the improvement of the Mississippi, on which vast sums are spent every year, making directly available 600 miles of navigation above Rock Island, and, say, 200 miles below; thus giving to the people along that great Waterway of the continent access to the cheaper lake and Erie Canal lines to the sea-board. It would be worth millions to them every year. - . . ~ : s Water transit for freights is proved to be the cheapest possible. As an example, coal was carried at an average charge for the season of 1884, from Erie and Buffalo to Chicago, about 1,000 miles, for 64 cents per ton ; thence to the Mississippi River, 200 miles, the charge. was $2; for the next 100 miles it mounts up to $4 per ton from Chicago; and in Western Iowa and Minnesota, it runs upward to a much higher figure. - - * . Congress, by liberal appropriations, deepened the channel through the Saint Clair Flats so that steamers with several barges could be used This put down the freight charges between Chicago and Buffalo 6 cents per bushel. Following the spirit of the age, the legislature of the State of New York wisely abolished the tolls on the Erie Canal, and this re- duced freights to New York 6 cents more, so that the all-water transit between Chicago and New York, instead of being 17 and 20 and even 25 cents as a few years ago, now rules at about 6 cents, sometimes a fraction above and occasionally a small fraction below that figure. In Summer the all-rail freights per bushel are generally a fraction above that of water, depending upon competition and the demand for export, but in winter the prices range from 12 to 21 cents per bushel. No com- ment is here needed. - - . - Take another example. The freight on a bushel of wheat between Northern Iowa and Chicago, some 400 miles, is and has been for the sea- son of 1884, 10.8 to 16.8. From points in Nebraska and Southern Minne. sota. 16.8 to 21 cents; the highest figure being more than the cost of transporting a bushel of wheat in June, 1884, from Chicago to Liverpool, about 4,500 miles—showing at least 4,000 miles, for the same price, in favor of Water transit. So oppressive have been the enormous freight charges for some time past, that wheat was sold west of the Missouri River for 30 cents per bushel, and corn for 12, making its value by the ton less than that of coal, so that producers have actually burned it for INTERSTATE COMMERCE. 209 fuel. It is therefore plain that if Congress does not want the vast fer- tile West—the Upper Mississippi Valley—to go back to its primitive desolation, they must provide cheaper water transit for its cereal and other products. w … - The water lines from New York by canal and lake now end at Chicago. With the Hennepin Canal they would be extended to Saint Paul. In- stead of the freight on a bushel of wheat between Minnesota and North- ern Iowa and Chicago being from 16 to 21 cents per bushel, Major Benyaurd has shown that by river and canal it would be only 6 cents, This would reduce the cost of the bread on every table of the people of the sea-board States from 12 to 20 per cent. for every day in the year. It would also leave millions of money among the people of the Upper Mississippi States. Again it is asked, is not the Hennepin Canal a most important national work & - X- Nearly every intelligent man and body of men who examine the proj- ect carefully, and without prejudice, cordially indorse the measure. Memorials have been sent to Congress in its favor by the boards of trade of Chicago, Saint Paul, Minneapolis, La Crosse, Duluth, Davenport, Rock Island, Buffalo, Syracuse, and New York. The national board of trade in Washington, and the industrial congress, at its meeting in Chicago in 1884, strongly urged the construction of the canal. The leg- islature of Iowa has indorsed the measure five times. The legislature of Illinois and the State senate of New York have also urged its con- struction. The produce exchange of New York, having some 3,000 members, the largest and probably the most conservative body of com- mercial men in the country, have indorsed it strongly. They say that— Whereas the completion of a waterway from the Mississippi River to Lake Michi- gan by the construction of the Hennepin Canal promises to realize advantages of national importance; and • Whereas there are insuperable obstacles in the way of having such improvement carried out by private enterprise; and - Whereas the building of the Hennepin Canal may justly be regarded as part of the improvement of the Mississippi River, - Resolved, That in the opinion of the New York Produce Exchange the United States Government should undertake to build the Hennepin Canal, and to maintain the same free for all time to come; and, further, -- Resolved, That our Senators and Representatives be requested to join the Repre- ºtives of other States in providing the necessary legislation for carrying out this plan. That this canal will benefit the whole nation there cannot be a par- ticle of doubt. The vast grain-producing States of the Northwest must have cheaper transit, if America is to retain her supremacy in the mar- kets of Europe. Russia, Hindostan, and Australia are striving earn- estly to get the control of that market, and would not its loss to us be a calamity to every State in the Union ? .. . Even the railways themselves, it is believed, would be benefited by this improvement, for it would relieve them from the carriage of heavy products, stimulate passenger travel almost indefinitely, and vastly in- crease the amount of all kinds of merchandise which the people would order by them and consume. It would ward off all hostile legislation and Vindictive granger movements, Sure to assume gigantic proportions if the present enormous freight charges are stubbornly continued. The construction of this canal would, therefore, be a great boon to the rail- ways themselves. While perhaps somewhat a competitor, it womld really be their best, their most enduring friend. Eurich the people of the Vast and immensely productive States of the Tjpper Mississippi Valley, and you benefit and enrich the entire nation. 16232 AP—14 210 COMMERCE. - - INTERSTATE * Geo. D. Baldwin. In fact, connect by the Hennepin Canal the vast waterways of the Mississippi Valley with the Great Lakes, and you complete for this country the most needed—ay, the most important—commercial enter- prise of the age. - **- THE SIGNATURES. E. Nelson Blake, Geo. D. Rumsey, Jno. J. Bryant, W. H. Crocker, W. S. Seaverns, Wm. H. Beebe, Geo.T. Smith, L. G. Holley, W. W. Catlin, Geo. J. Bripe, Geo. H. Wheeler, Geo. G. Barker, James H. Milne, James M. Ball, Jno. C. Hately, Edward Norton, W. D. Gregory, Composing the board of directors of the Chicago Board of Trade. F. A. Howe. Geo. Stewart. Josiah Stiles. Wm. T. Baker. W. E. McHenry. . H. O. Malule. Geo. M. How. J. H. French. J. P. Sherwin. A. A. Kahn. O. W. Clapp. J. H. Horton. D. H. Lincoln. C. A. Whyland. John Girden. G. W. Couch. T. C. Smith. Dan. E. Richardson. . M. A. Seymour. W. M. Egan. J. H. Jones. C. M. Tanrite. E. W. Ferguson. G. T. Bedford. Wm. J. Pope. J. J. McDermid. T. T. Morford. Chas. D. Hamill. C.J. Singer. S. B. Webber. W. Aug. Ray. B. F. Stauffol. . G. R. Nichols. S. H. O'Connor. E. B. Bauman. E. B. Stevens. D. E. Sibley. Geo. W. Sidwell. Jno. Hill, jr. J. C. 1)iffenderfer. A. M. Wright. Cyrus H. Adams. J. H. Dole. - D. L. Seymour. W. W. Hunter. A. Eddy, jr. W. P. Freedman. M. Rosenbaum. J. L. Ward. Jos. M. Watte. C. E. FOSS. H. Rang. H. J. Coon. C. R. Clark. Gallup, Clark & Co. J. C. King. H. C. Teed & Co. George Lunt. Samuel Hice. Wm. Bross, President Tribune Company; H. F., Eames, Prest Commercial Nat'l Joseph Medill, Editor in chief. Geo. P. Upton, Stanley Waterloo, R. W. Patterson, jr., E. Colbert, James B. Run- nion, Geo. Forrester, C. B. Evans, and A. Cowles, all of the Chicago Tribune. W. H. Ryder, D.D. Sam’1 M. Nickerson, Pres’t First Nat’l Bank. L. J. Gage, Vice-Pres’t First Nat’l Bank. |B. Buckingham. John R. Walsh, Pres’t Chicago Nat’l Bank. Bank. John B. Meyer, Cashier same. - Orson Smith, Vice-Pres’t Merchants' Loan and Trust Co. - George Sturges, Pres’t N. W. Nat’l Bank, F. C. Osborne. - - Wm. A. Hammond: Michael Ullrich. Jno. J. Mitchell. J. J. P. Odell, Vice-Pres’t Union Nat’l Bank. - H. H. Nash, Cashier same. . º Andrew Shuman, Editor Chicago Even- Geo. Schneider, Prest Nat’l Bank of Illi- - ing Journal. W. K. Sullivan, Florence McCarthy, and D. OlS. * - Isaac G. Lombard, Pres’t Nat’l Bank of John R. Wilson, Evening Journal. America. A SUGGESTION. Letter received by the chairman from John S. Thompson, 89 Madison º Street, Chicago. s Would it not be advisable to add to your bill relating to railway com. missioners a provision requiring all transportation Companies to adopt a tariff of freights and fares, and thereafter prohibit any increase with- out the consent of the commission r. This would leave railways free to reduce their charges but never to increase without consent. When once reduced they must so remain, unless still further reduced. It seems to me that a provision something like this would settle this perplexing. Question. It would give stability to railway securities and prevent INTERSTATE COMMERCE. . 211 ruinous cuts and competition. It would induce railway companies to exercise great care in fixing such rates as would enable them to pay fixed charges and a fair dividend on their stock. It would give uni- formity in charges and enable producers and buyers to calculate the value of products in the market, by definitely fixing the charges for transportation. – You will readily comprehend my idea, and I will not undertake to argue or elaborate it. FAST FREIGHT LINEs. Letter received from Charles E. Cow, of Quincy, Ill. I desire to call the attention of your committee to a matter in con- nection with railroad management Which may or may not come within the scope of your duties. The subject to which I refer is the system of the alleged fast-freight lines. To keep up this system of freight hauling, the so-called fast freight companies have their agents at all important shipping points, at which points all of the lines are repre- sented—the White, Blue, Star Union, Empire, and so on—which have their agents and offices to support. Salaries, office rent, and expenses of office in the aggregate amount to a large sum when applied to the whole commercial community which must run up into the millions and is, a direct tax on the commerce of the country and an entirely needless expense. This business could as well be done by the railroad companies themselves and thus save to the people of the country this unnecessary tax. I believe the so-called fast freight lines are really owned by the officers of the railroads. I call your attention to this matter that it may have what attention the subject may be entitled to. A SERIOUS EVIL. The following letter received by the chairman from Mr. W. H. Beebe, a commission merchant of Chicago, dated Angust 26, 1885, is supple- mentary to his statement before the committee (see testimony, page 653): “In my testimony before the Senate Committee on Interstate Com- merce I alluded to the injustice of allowing prominent and influential railroad officials to become partners in business houses which come in direct competition with their patrons, and referred to the fact that at one time we were obliged to quit doing any business on the Rock Island road because prominent officials were interested in grain commission houses. I evidently tread on somebody's corns, for I heard from the president of the Rock Island road and found out (indirectly) that it hit somebody here. I am only sorry that I did not carry the matter a little further and give you some more information, and take this means of doing so. To be sure, What I now state to you is partly and largely inference, and you must consider it as such ; but that you may know where to look, I can particularize to a certain extent : “It has been notórious in the trade for some years past that Reynolds Brothers, of Toledo, had an inside on the Wabash road, which rendered it useless for other houses to solicit business on that line of road, and 212 - INTERSTATE COMMERCE. it was stated to me in Toledo a year or so ago that it was because Mr. Hopkins, one of their prominent officials, was a partner in that house. “I have a letter before me from my western traveling-man complain- ing of the discriminations made by the Union Pacific Railroad in favor of the firin of Himebaugh & Merriam, and he states that it is generally believed on the Union Pacific Railroad that the traffic manager and the general freight agent at Omaha are partners with this louse. “What we positively know with regard to these two roads is that it is useless for any outside concern to solicit business as against these two firms mentioned. The other fact that may be considered as posi- .* tively known is that they have rebates and discriminations made in their favor which no other parties can get. Whether this is because the officials of the roads an e interested in these houses or not is a matter of uncertainty, and yet it is so reported. * “I had a talk with Mr. Ripley, general freight agent Chicago, Bur- lington and Quincy, who agreed with me that I was right in advocating the principle that no prominent railroad officials should engage in business where it came in coullpetition with their patrons, and he stated that on their road their officers wer, not allowed to make any invest- ments on lines of their road without the Couseut of the president and a vote of the board of directors, and not allowed to go into any business. “I think that this feature should be embodied in any bill aud should be kept in View by any commission that undertook to regulate railroad matters as between the States.” - TEIE EFFECT OF PUPLICITY. The following letter, received by the clairman) from Mr. Charles A. Chapin, of Milwaukee, dated August 17, 1885, illustrates the advan- tages of publicity in railroad management by showing the effect of the publication of his statement before the committee (see testimony, p. 688) upon the officials to whom he referred : “At the time I testified before your select committee at Chicago, May 15 last, my firm had some $700 of the overcharges which I then spoke of due and unpaid, most of which had been due for upward of a year, and portions for more than two years. One claim of about $125 was in the hands of a general freight agent in Chicago. A part of my testi- mony was published in a Chicago evening paper of that date. Before night he telegraphed for another statement of the account, and in one week from that day our firm received a remittance in full for the amount of that claim. Siuce then other installments have been paid, so that now only about $100 of those old claims remain unpaid. “I have made no additional effort to have them paid, and I attribute the payment to the fact of publicity to the situation and the investiga-. tion of the whole subject by your committee. The railroad officials sud. denly seem to wake up to the injustice they were inflicting on the busi- ness public, and begin to make amends. - “AN INSTANCE OF UNJUST DISCRIMINATION. “I do not have the slightest doubt but that if proper national legis- lation on that subject is entered into that a vast amount of good to the business public Will be the result. Rate-cutting seems to be the great INTERSTATE COMMERCE. . 213 curse in the freight business. I will illustrate: About two weeks ago I was of the opinion that the tariff of July 13 was being cut, and that Chicago shippers—a few—were getting the benefit of such cut. I made a pressure on all the lines here for a reduction, showing them plainly from documents and price-lists that such cuts were being made. They denied the matter in toto and refused to make any concessions to me. It now transpires that several days before I made a request for a reduc- tion an agent, or agents, from Chicago had given shippers in that market a 5-cent cut in freight, and immediately the C[licago shippers tele- graphed to this market and bought some twenty car-loads and sold it on the Čut rate to one of our regular buyers at Troy, N.Y., thereby making a handsome profit and laying the freight down at destination some $7 per car cheaper than we could, And, further, on the very day I was pleading for an equal show in the business with my competitors one of the agents here was receiving and shipping the freight out under the cut referred to. When I put the question to the agent here in its true light, he simply remarked that he had nothing to do with it; that, while the property was being shipped by him, the contract at the cut rate was made at Chicago; and, further, he said they proposed to get all they could for carrying property, and because some other agent of his line cut-the rate it was none of his business. So that, by such dis- crimination, allowing some such undue and unjust advantage over others, one's business must of necessity be badly interfered with, if not ruined. 3, - r CHARLEs E. PERKINS’s STATEMENT. Statement of Charles E. Perkins, president of the Chicago, Burlington - and Quincy Railroad Company. On behalf of the Chicago, Burlington and Quincy Railroad Company, I beg leave to Submit the following reply to your communication of April 10. - - - EIowever widely opinions may differ about the wisdom of permitting railroad construction to be free, I suppose it is safe to assume that such is the settled policy of most of the States of the Union, which is not likely to be changed, and that there need be no discussion of that ques- tion now. I assume, also, that the lºnglish common law doctrines rela- tive to common carriers are uot open to discussion at this time. It might, perhaps, be shown that they are not all philosophically or logic- ally applicable to railroads, that those doctrines are, many of them, relics of an age when transportation was carried on only by horse-power or water craft, which are not fixtures like railroads, and when the whole transportatiou question was very different from the transportation ques- tion since the advent of steam ; but, nevertheless, those old laws or rules for the government of all common carriers are the law of the land to day. With this reference to the ground upon which I do so, I will endeavor to answer the questions suggested in your letter. (1) The best method of preventing the practice of extortion and unjust discrimination by corporations eligiºged in itſ terstate commerce. º An appeal to the courts would seem to be the best and only feasible method of preventing such practice, if, and when, it requires prevention. The Common law will protect individuals against extortion and unjust 214 INTERSTATE COMMERCE. discrimination by common carriers. Very little, if any, extortion or un- just discrimination exists, however, the best evidence of which is that so few cases are taken into court, or otherwise made public. In States where railroad commissions have been established, the reports and rec. ords of such commissions show very few complaints of extortion and \unjust discrimination, and still fewer decisions by the commissions against the railroads. The argument generally used against appealing to the courts is that the expense is too great, and that individual ship. pers of freight frequently suffer extortion and unjust discrimination, rather than go to the trouble and expense of a lawsuit; which, even if true, would seem to show that the amount of money involved is small. But the truth is, the commercial relation of railroads to the public has become confused with the legal relation, in the public mind, and people think they have a right to expect a degree of perfection in the commer- cial or business management of railroads which does not and cannot exist in any business. Legally speaking, it may be true that railroads are bound to treat everybody with absolute, perfect, and exact equality, but, as a matter of business, this must be taken to mean, so far as prac- ticable. The transportation by rail of commodities which are bought and sold, is commerce, and if railroad freight rates must vary as mark- ets and circumstances vary, and if the judgment of men must be trusted to judge when and what variations of markets and circumstances jus: tify variations in rates, then, in so far as men are imperfect, their judg- ments are liable to be so. This is true throughout all business relations, and it is no more true of railroad business than of any other. Mén suffer more or less constantly from little inequalities of treatment by the public or by other individuals, which are not of enough conse- quence to be taken into the courts; and neither the Government nor the courts are absolutely and exactly equal in their treatment of all citizens under all circumstances, because, owing to the imperfections of men, it is impossible to be so. So it is in trade; one merchant will buy his goods more cheaply than another who has less experience or less skill, or less capital at his command. But little inequalities or differ- ences in judgment it seems to be thought should be eliminated entirely from the business of railroads. . - g “The law does not concern itself about trifles.” The law is insufficient if it becomes necessary to invoke its aid to substantially protect every. body against extortion and unjust discrimination by common carriers, although it will not take account of trifling inequalties which of neces- sity occur in the transaction of all business. To discriminate according to the value of the Service, or because of a substantial difference in the conditions or circumstances, is not unjust, but the reverse, and is as proper for a railroad as for a lawyer or a merchant. In practice, rail- road charges are substantially the Salme for the salme Service under like conditions. - - (2) The reasonableness of the rates now charged by such corporations for local and through traffic. - The measure of a reasonable price is the value of the article, which is determined by many and various circumstances, not alone the cost of producing it, nor the necessities of those who desire to use it, although the cost and amount of the supply and the strength and amount of the demand are elements in fixing the price. The tendency of railroads is to equalize prices and to overcome in some degree the advantages pos. Sessed by towns and cities situated on lakes and rivers and the ocean. INTERSTATE COMMERCE. 215 WHY THROUGH RATES ARE LOWER THAN LOCAL RATES. What are called “through rates” are generally lower than local rates, because through business is wholesale business, being larger in amount and carried a longer distaſice, and is therefore cheaper to carry than the traffic of local stations, and also for the additional reason that, be- cause of the wholesale character of the business, the competition among the railroads for the through traffic is, as a rule, more severe, and also because the rates on through business are generally more affected by direct water-route competition than the local rates. The low rates resulting from such competition are sometimes alleged as a reason for the dissätisfaction of shippers at local points, who, look- ing at what they suppose to be the legal, rather than at the commercial, relation of railroads to the public, consider themselves entitled to the same rates, or perhaps lower ones. But it is obviously inexpedient to require railroads to reduce local rates because the combined influences of a large aggregate traffic, and the competition of other railroads, or water routes, or rival markets, which influences are not felt at local points, may make it for their interest to participate in the through business on a very small margin of profit. If all traders were compelled to sell everything on the basis of the lowest margin of profit which they might find it necessary to take on some one thing, the effect would be the same, over a wider field, as the effect of requiring railroads either to give up the through business or reduce their local rates correspond- ingly. It is no more for the interest of the public to make railroads unprofitable than to make business generally unprofitable. . Perhaps the best evidence that the local rates of railroads through- out the country are reasonable is to be found in the prosperity of local points all over the country, and by comparison with railroad charges elsewhere in the world. It has sometimes been assumed that competi- tion does not exist at what are called “local points,” but this is not true. The desire of a given railroad to increase the volume of business, and to promote the prosperity of the country upon which it depends and must always depend for its support, as against sometimes quite far distant regions served by other railroads, tributary to the same or competing markets, constitutes positive and active competition. The rates be- tween local points on the line of a road in northern or central Iowa and the markets of Chicago and Saint Louis, influence the rates between local points on a road in Southern Iowa and those markets, and vice versa. Again, between two railroads, even if they are a considerable distance apart, there is, about half-way, a belt of eountry, the inhabit- ants of which can generally go to either road; and the contest between the railroads to secure the business of that belt influences the prices of transportation not only on that particular traffic, but also on other business which is transacted at the same stations on the respective roads. - - Moreover, railroads are fixtures; they cannot be taken up and carried away, if, by unreasonable charges, they depress the industries of the region through which they pass. Merchants and bankers, stage-coaches and steamboats, are frequently so situated that they may charge, for a considerable time, excessive prices, and when the inevitable punish- ment comes by the loss of business they can take their profits and go to some other market. But railroads have no such refuge ; they must remain in the country where they are whatever happens, and their punishment for excessive charges, while it would be a little slower in coming than that of the individual merchant or stage coach, would be 216 INTERSTATE COMMERCE. far more certain and severe, because their business would be ruined, or other roads would be built as permanent Competitors. . . Nevertheless it is true, and will remain true so long as railroads are conducted on business principles, that trade centers will be able to obtain lower rates of transportation than local points for precisely the same reason that such trade centers are able to obtain many conveni- ences and luxuries which local points do not and cannot enjoy. Those who desire water and gas in their houses, or many and cheap amuse- ments, or the lowest rates of freight, must go to where there are enough other persons who desire the same to make it profitable to supply them. This is not because railroads wish it to be so, but because in the nature of things it must be so. It is manifestly not for the interest of any railroad to arbitrarily drive business away from a local point where it carries all there is to a point where the traffic must be divided with other roads. -- " It has been said that railroads make the trade centers, but such is not the fact. The tendency of railroads is to put different trade centers on an equality by the annihilation of distance, but they no more make centers of population and trade than do the other manufacturers or traders who seek such points for their own profit. Most if not all the cases of alleged unreasonableness in railroad charges will, on careful investiga- tion, be found to be due to a misapprehension or misunderstanding of the facts. The experience of the State commissions shows this to be true. . 3. Whether publicity of rates should be required by law; whether changes of rates without public notice should be prohibited, and the best method of securing uniform- ity and stability of rates? --- To require absolute publicity of rates, and that changes should not be made without public notice, would be a great inconvenience to the business community. Railroads always have a published schedule of rates, just as many manufacturers have; and variations from the pub- lished rates are always downward from the schedule, and in the interest of the shipper. To say that such variations should not be made with- out public notice would be to interfere with business. Practical mer- chants and shippers understand that their business would be seriously interfered with if they were required to wait for public notice to be given of changes in rates, which might be of the greatest immediate importance to them. - , - It is not possible to have uniform and stable rates so long as con- ditions and circumstances are not stable. The prices which may be charged for the carriage from one place to another of merchandise in- volve the consideration of many conditions which change constantly. It is of the utmost importance to the public that the parties interested, the railroads and the shippers, should be free to make and take ad- vantage of varying rates when circumstances make variations lieces- Sary. - - - 4. The advisability of establishing a system of Imaximum and minimum rates for the transportation of interstate commerce. - What has been said in answering the other questions would seem to sufficiently answer this one. No system of maximum aud minimum rates for the transportation of marketable commodities is practicable unless the maximum and minimum are respectively higher and lower than the natural rise and fall of prices, and of course such maximum and minimum limits would be of no effect whatever, INTERSTATE COMMERCE. - 217 5. The elements of cost, the condition of business, and the other factors that should be considered in fixing the tariffs on interstate traffic. TEIE BASIS OF RAILROAD RATES. It is easy to say that value or that cost is the essence of price, but let any one try to put down on paper an exact estimate of all the elements which combine to fix the price of any commodity in the market, and he will at once perceive the impossibility of weighing with accuracy even the elements which can be weighed, to say 11othing of the influence of supply and demand and the different and varying judgments of men, the nature and extent of which are wholly intangible. An attempt to base rates upon the cost Would raise many perplexing questions. Cost on one railroad might be less than cost on another, and might largely exceed cost on a third. . It would be obviously impossible to take the cost of each particular shipment, and we should then be driven to the average cost. It would be equally impossible to ascertain the average cost at any particular time until long afterwards, because it depends so much upon the Weather and the prices of labor and materials, as well as upon the volume of business. It would be necessary, therefore, in any such attempt, to take the ascertained average cost of some previous period, including in cost, of course; interest at some established rate upon the ascertained cost of the construction and equipment of the rail. road. Assuming that, by Some such method, the cost to the railroad of transporting 100 pounds a given distance during some previous period had been ascertained and adopted as the cost for the period under consideration, how could this cost be applied to the traffic # It is clear that a charge per hundred pounds per mile which would be rea- sonable enough on dry goods, boots and shoes, drugs, tea, coffee, and sugar might absolutely prohibit the transportation of the great staples like corn, lumber, coal, and iron. To apply to all commodities alike, therefore, a charge based upon the ascertained average cost to the rail- road company, it is easy to See, Would not facilitate commerce. As a matter of fact, if you leave out the cost of loading and unloading and of insurance, it costs the railroad no more to carry a car-load of gold or of high-priced merchandise than a car of corn; but nobody would think of asking the railroad to make the same charge for both per hundred pounds. The difficulty of basing charges beforehand on the “conditions of business” would be quite as great. Who would be the judge of these conditions of business? The conditions of business change every day and every hour, and charges which might be reasonable to-day might be unreasonable next week or next month. w - The truth is that the price of railroad transportation, like all other prices, adjusts itself. Those who have transportation for sale are brought in constant daily and hourly contact with those who wish to buy ; and the Government, to successfully establish rates of transpor. tation, must constitute itself, throwgh its agents, the general freight department of every railroad in the United States. Then imperfect agents of the Government, with no pecuniary interest at stake, would take the place of imperfect agents of the railroad companies who are now under the strongest pressure to facilitate, foster, and build up trade with the desire to make the roads pay a profit if possible. That railroads do not and cannot fix their own charges is shown by the fact that so many roads have failed to produce any adequate return upon the capital invested, many of them having failed to make any return whatever on the investment, thus showing that the laws of trade which 218 - INTERSTATE COMMERCE. regulate prices generally regulate the prices of railroad transportation. If managers could charge what they pleased all railroads would be 85 $5 ney I made to pay. - - - (6) Should any system of rebates and drawbacks be allowed ? If so, should such transactions be regulated by law and be subject to official inspection or approval 3 Or should they be entirely prohibited : - & THE PAYMENT OF REBATES. Paying rebates and drawbacks is simply one method of meeting the market. It is to the price of railroad transportation What a Commis- sion often is to the price of many other commodities which are bought and sold. A price is established which it is believed can be maintained; but special reasons arise why, temporarily, or upon some particular shipment, it is expedient to reduce this price. To refuse such reduc- tion might involve the loss of business to the shipper and to the rail- roads; but at the same time it might be highly inexpedient to reduce generally the established rate. I am aware that it is alleged that re- bates and drawbacks are sometimes given as a matter of favoritism to build up one individual or one community as against another on the same line of railroad. It is possible that there may be instances of this character in the country ; but they are so few, if they exist at all, as only to prove the rule to be the other way. It would be folly to deny that railroads are sometimes badly managed and sometimes robbed by their managers; that there are evils connected with them which it is desirable to lessen or do away with if we can without incurring others of a more serious character. But the people can have no stronger mo- tive or desire than the owners of the railroads to prevent bad manage- ment of every kind, including the payment of rebates or drawbacks by their officers as a mere matter of favoritism. (7) Should pooling contracts and agreements between railroads doing an interstate business be permitted, or should they be entirely prohibited by law # If they should be regulated by law, would it be sufficient to require the terms of such agreements to be made public, and subject to official approval 7 POOLING AGREEMENTS JUSTIFIABLE. I think no good reason exists why pooling contracts between railroads should be prohibited by law, nor why they should be in any way regu- lated by law, except so far as all contracts are so regulated. A pooling contract is, in effect, a mere agreement between rival railroads that they will not permit their agents, in the contest for business, to cut rates un- reasonably low. Similar agreements are made by inanufacturers and traders in commodities of all kinds all over the world. No such agree- ment can fix the price absolutely, because that is fixed by laws beyond the control of any such combination. It can merely regulate and pre- vent that extreme competition which sometimes occurs in all lines of trade, and which is, in some respects, more difficult of regulation among railroads than in any other branch of business. Much, of the detail of a railroad must necessarily be managed by agents, and cannot be di- rectly under the eye of the owner, or even of the principal manager. Sucli agents must necessarily be trusted with power to meet competi. tion; and their zeal creates a tendency to cut prices, sometimes unneces. sarily. ... • \ Railroads may be said to manufacture a commodity for sale, namely, transportation. Among the elements which enter into the cost of that INTERSTATE COMMERCE. 219 commodity to the railroad is that of interest on the cost of construction and equipment, and also a considerable additional element of fixed operating expenses, that is to say, expenses which are independênt of the volume of business. These fixed elements of cost are expended every day and every hour of the day, whether there is any business or not; and when railroad agents are confronted with the question whether to make a certain sale of their commodity at a very low price or not, they frequently leave out, in estimating the approximate or probable cost, these elements of fixed or constant charges. It is to prevent this ten- dency toward extreme competition that pools are formed ; and, in so far as they do secure uniformity and stability of rates, they are a benefit to the public as well as to the railroads. It is neither the interest of the public that railroads should be unprofitable, nor that they should be singled out for any special protection from each other. They should Stand oil precisely the same ground as that occupied by other commer- cial ventures. - - - (8) Should provision be made by law for securing to shippers the right to select the lines and parts of lines over which their shipments shall be transported ? It is the law that freight shipped on a railroad shall be sent as it is consigned. and a railroad failing to so send it is liable to the shipper for any damage which he may suffer thereby. It is frequently desirable among the railroads to transfer freight from one to another, for the pur- pose of equalizing business in the lºools; and where this is done with- out inconvenience or (lamage to the shipper, there would seem to be no good reason why lie should be allowed to prevent it. If he is damaged, he lias llis remedy now under the law. - - (9) By what method can a uniform system of rates for the transportation of passen- gers and freight by all the corporations engaged ill interstate commerce be best se- cured ? - - - X- - A uniform system of rates for the transportation of passengers and freight by all corporations eugaged in interstate commerce may be said to exist now. Their methods are substantially the same, and the rates are also substantially the same by raili oads which are in competition With one another. It is impossible to have uniform rates except where the circumstances and conditions which influence rates are uniform. DISCRIMINATIONS BECAUSE OF DISTANCE AND QUANTITY. (10) Should corporations engaged in interstate commerce be permitted to charge a lower proportionate rate for a long than for a short haul ? Does the public interest require any legislation on that subject 3 - (11) Should any concessions in rates be allowed to large shippers, except such as represent the actual difference in the expense of handling large-shipments over small shipmueluts, and should such concessions be made klıown to the public 3 . . I take the liberty of answering these questions together. Distance ill transportation is practically the same as quantity. A less rate per mile for 1,000 miles than for 10 miles is substantially the Satue i lying as a less rate per car for a thousand cars than for ten cars. Nebraska and Kansas cannot send corn to the Eastern and European markets at the same rate per mile Ohio and Indiana can afford to pay. Charging a lower rate for a long-haul than for a short haul, or making concessions to large shippers as against small shippers, is really doing business at Wholesale instead of at retail, and the attempt has often been made to show that it is unjust discrimination. All trade is full of in- justice in this Sense. A liman Who buys ally thing in small quantities 220. - INTERSTATE COMMERCE. . . - pays more than one who buys at wholesale. This is not unjust discrimina- tion, but simply a law of trade, and one which, while it may sometimes seem to work hardships to an individual, is, on the whole, beneficial to mankind. The tendency of trade is toward consolidation, because con- solidation means greater economy, which directly benefits the consumer by making prices lower. . - Railroads are traders. They produce transportation for sale. What is expedient in trade generally is expedient in the transportation trade. If railroads can make money by selling transportation at wholesale, as they do to the Post-Office Department, for example, it would seem ex- pi dient that they should do so. Wholesale prices are usually lower than retail prices, partly because the cost of production is less, and partly because of the Willingness of the seller to accept a less margin of profit. One individual is often both a wholesale and a retail dealer. So of railroads. Railroad transportation is a commodity which is bought and sold as much as coal is; and to say that it should never be dealt in ex- cept at retail prices, or, as has been said, that one thousand cars should never be shipped at a less rate per car than one train or one single car, is the same as saying that coal should be sold as cheaply for 1 car- load as by the cargo making 100 car-loads. It is wholly a question of expediency, to be answered only by those directly interested. To do away with wholesale trading would limit distribution and consumption, and would, in the end, hurt the small consumer. The world needs wholesale traders as much as it needs retail traders. Wholesale prices, whether of transportation or other commodities, so far from being an unjust discrimination, are of the greatest benefit, because they encour- age distribution and make possible the carrying of large local stocks, thus enabling the retail traders to do a large business on small capital, which means a small profit on each transaction. (12) Should corporations engaged in interstate commerce be required to adopt a uniform system of accounts - This would seem to be a matter of very little interest to the public. I can see no good reason why railroad corporations should be required to adopt a uniform system of accounts, any more than why corporations and individuals engaged in other branches of business should be re- Quired to do the same thing. - (13) Is it desirable that such corporations should bé required to make annual reports to the Government # If so, what information as to their earnings, expenses, and oper- atious should such reports contain } I am unable to perceive any reason why railroad companies should be required to make annual reports to the Government, any more than any and all other corporations. (14) In making provision for securing cheap transportation, is it not important that the Government should develop and uſaintain a system of water routes? The System of free railroad construction which exists in most of our States has resulted in Securing to the people the cheapest transportation in the world. I see no good reason why the Government should main- tain a system of water routes other than those provided by nature, in order to force the railroads down still more in their charges. If expe- dient for the Government, to engage at all in the trans]) ºrtation busi- ness, why not become the owner of the railroals, as some European Governments how are, or, carrying the experiment still further, imitate the Counſmunists of Paris, and go into business generally 3 INTERSTATE COMMERCE. 221 (15) In what manner can legislation for the regulation of interstate commerce he en- forced ? Should a commission or ollmer special tribunal be established to carry out the provisions of any law Congress may ellact, * I see no reason why disputes arising in the business of transportation should be adjusted by a special tribunal. Railroads are generally owned by persons who are, equally with other owners of property, entitled to that protection which it is the object of Government to secure. To con- stitute special courts to adjudicate railroad questions Would be class legislation, alike dangerous to the railroads and to society. It would invite the active influence of prejudices on both sides, in trying to con- trol the selection and the action of the judges, and would weaken that confidence which, for the good of society, all men should repose in the judicial tribunals of the country. If existing courts are insufficient to settle the disputes which come before them, why not add to or enlarge them, rather than create any of a special character for transportation Questions & - . - Perhaps commissioners to hear complaints and report upon them. but without power to adjudicate questions, would be productive of good. in tending, as has been the case with some State commissions, to make a better understanding between the people and the transportation crim panies, by showing how very little there is in fact to complain about; and it might do no harm to require district attorneys of the United States to prosecute railroads, When such commissioners certify to them that, in their judgment, individuals or communities have been unjustly treated. - TEIE EXPEDIENCY OF FIXING CEIARGES IXY L.A.W. Whether it is expedient to fix railroad charges by law presents very much the same question as whether it is expedient to fix prices gener- ally by that method. The prices of wheat, and iron, and cotton vary constantly, and such variations make it common for one individual to obtain advantage over another. The man who buys, whether for his own consumption or to sell again, just before a rise in price, is better off than he who buys just before a decline. Individuals are sometimes ruined by a sudden fall in the market value or price of that which they have bought, believing the price would advance. It might be argued, with some force, that these variations in prices give advantages to in- dividuals which it is against the best interests of Society to have pos- sessed by anybody; that it would, on the whole, be better if all prices were more stable and uniform, so that certain individuals could not, either by good fortune or good judgment, make money out of the neces- sities of others. But both reason and experience show that an attempt on the part of society to fix prices by law, in order to eliminate at least one element of difference in the conditions of men, must entail greater evils; and the tendency is, and has been, to let trade regulate its own prices. Certain branches of trade in cities are sometimes an exception; but because the inhabitants of a small, compact community, like a city, in the exercise of the local self government which is the strength of our institutions, may wisely and economically combine to procure gas, water, horse-cars, and perhaps other couvelliences, granting special privileges in the streets, which are limited in number and eatent, and limiting prices in consideration of such priyileges, it does not follow that it would be either wise or economical for the State or the General Government to attempt the exercise of a similar function for Society in general. The source of power is too far away to prevent abuse; and 222 . INTERSTATE COMMERCE. the local interests and necessities of different communities and differ- ent parts of the country are not the same. .* The inhabitants of a city can hold their agents directly responsible, and are capable of judging what they want of gas and water and horse- car facilities, and of contracting with responsible persons to provide them. As a rule, the market for such things in a city can be ascertained be- forehand with considerable accuracy, and, practically, those who under- take to supply them are not only guaranteed a certain market, but also certain prices, which prices are usually maintained until it becomes clear that they can be changed without injury to vested interests. - Capital, therefore, is generally ready to embark in such undertakings. The risk is small, compared with the chance of profit. So a city may regulate the fares of hacks and the price of drayage. The capital in- vested is not fixed, and may, if the prices are not remunerative, or if the supply exceeds the demand, be turned in other directions—horses and vehicles can be used in other ways and places. Moreover, while those commodities and conveniences which the inhabitants of cities ob- tain by the exercise of their corporate function are generally sold at re- tail to individual consumers who do not buy to sell again, neverthe- less, where such things do enter into business, as, for example, where gas and water are used in stores and factories, and are thus, in effect, sold again in the prices of goods, they are not only generally sold at wholesale rates, but they constitute so small an element in these prices as to be of little or no consequence. But the transportation by rail of commodities which are bought and sold presents a very different prob- lem. The element of transportation necessarily makes a considerable part of the price to the consumer of many of the great staples, and the prices which can be charged for transportation of commodities like beef, corn, iron, coal, and lumber, and hundreds of other things, must vary as markets vary. - It is expedient, therefore, that shippers and carriers should be left free to make their own bargains; that society should treat railroad transportation as commerce, and let prices alone. It is wholly a ques tion of social expediency, and not a question of moral or legal right. The right to regulate the charges of railroads, both directly by fixing them and indirectly by limiting the construction of new roads, in the absence of special charters to the contrary, is no longer disputed. But to argue that the existence of the right establishes the wisdom or expe- diency of exercising it—of attempting to regulate railroad prices—is like arguing that the right to make usury laws constitutes a reason why it is expedient to do so. Nobody disputes the right, but commercial peo- ple are fast removing such, laws from their statute-books, because ex- perience has shown them to be not only useless buf positively harmful. It is sometimes argued that railroad building is not left to take care of itself according to natural laws, like the building of cotton mills and Woolen mills; hotels and iron furnaces; that, on the contrary, society interferes so far as to exercise the right of eminent domain in their be- half; that this makes society to that extent a partner.in every railroad enterprise; that the individual liberty of land-owners is invaded, and that all of these considerations constitute a reason why, even if it is not expedient to regulate railroad rates by direct enactment of law, it is Wise and proper to regulate construction to the extent, at least, of lim. iting the right of eminent domain to such roads only as society thinks are needed. Unnecessary roads benefit nobody, while they involve loss to some and annoyance to others. INTERSTATE COMMERCE. 223 As a statement of what society has a right to do this is unanswerable, but it does not touch the question of what is expedient, of what is wise, of what society wants to do. If the individual liberty of land-owners is invaded, it is because the paramount interests of Society require railroad building to be encouraged; and there may now and then be cases where the money damages which railroads are obliged to pay, and which are generally pretty ligh, cannot fully compensate the invaded individual, although, as a rule, the reverse is true. But exercising the right of eminent domain for railroads, when it is open to all who wish to embark in such undertakings, is no more an interference with natural laws of commerce than is blasting rocks out of the bottom of a river. Society in both cases removes an obstruction to commerce, but nothing more. It is only when one man or set of men may enjoy the benefits of such ... removal, and another man or set of men may not, that it becomes an interference with the natural laws of trade. So long as the right of eminent domain is given to all alike, or withheld from all alike, railroad building is regulated by the same natural laws which regulate the build- ing of cotton mills and hotels. Society wants cheap transportation, and the most certain Way to obtain it is to put railroads on the same coun- mercial basis that has been found by experience to cheapen everything else, that is, the basis of freedom. If you limit construction it will be more or less necessary for society to interfere directly with the price of transportation, which, on the whole, it is not best to attempt, because reasonable prices can only be produced by natural adjustment; while, on the other hand, if you attempt to fix prices by law, without limiting construction, it will not be regarded as reasonable by private investors; and the tendency will be to drive railroad property into the hands of speculators, and to impair its efficiency and usefulness. Let competition and the fear of competition, direct and indirect, regulate the prices. To accomplish this the right to build must be free; and if the right of emi- nent domain is necessary, that also must be free. If its use is granted to some and not to others, if existing railroads can by any means pre- vent new roads from using it, certain of the influences which should help to make cheap rates are weakened, if not destroyed. The fear of new roads, for example, which, when built, must always remain to share the business, is a powerful inducement to railroads to satisfy their cus. tomers, and the economy of management and operation which that fear teaches is one of the means by which they are enabled to do so. When the right to invoke the power of eminent domain is offered to all who wish to build railroads, society has done all it wisely can do to encourage railroad building and to cheapen transportation, and any direct regu- lation of rates will be found to be unnecessary. On the other hand, if the right to invoke this power is not general, but special, it not only offers opportunities and temptations for the use of improper influences, but because it weakens or destroys the fear of rivals it also tends to make necessary an attempt at direct regulation of prices on existing roads, with all the evil consequences sure to follow. TEIE RAILIROADS CANNOT CONT ROL THEIR RATIES. A careful examination of all the facts will, I believe, convince your committee that, whatever may be the legal relation of railroads to the public, their owners and managers have no more actual power over the rates which can be clarged and collected than the merchant or manu- facturer has over his charges, and that their regulation by law is no more 224 INTERSTATE COMMERCE. necessary. Every merchant or manufacturer may, in one sense, fix his own price, but practically it is fixed for him by what he can get and continue to get. To prosper he must attract, and not drive away, busi- ness. Various trade associations meet regularly to arrange the prices of what they trade in, of iron, agricultural machinery, and hundreds of articles of necessity to somebody, often agreeing to limit production, which railroads in operation cannot do. But these associations have, after all; very little actual power over prices, and if the influences which regulate railroads are not always precisely the same, they are equally powerful. A railroad is absolutely dependent on the single market where it is for the sale of what it produces, and to depress trade or in- vite the building of new roads by excessive charges would injure it permanently. It can take no chances, and experience shows that the tendency of railroads is to make rates unnecessarily low, even at the local points. If the e is a doubt, it is almost invariably resolved in favor of the public. - w A considerable part of the public feeling against railroads, for it seems proper to call it that, is, without doubt, due to the misconception of what the use of the right of eminent domain means. It has been looked upon as a special privilege rather than as simply the removal of an obstruction from the channels of counmerce, of which all who desire can take advantage; and, besides this, there has been the impression that the natural laws of trade, or, in other words, the laws of supply and demand, do not operate upon railroads. But another cause of ex- isting prejudice is the impression, which is more or less general, that railroad investments have been exceptionally profitable. Profits made by speculators on the stock exchanges are often credited by the people to the supposed ability of railroad managers to make all the money they want out of the people who use the roads. Certainly nothing could be further from the truth than such a belief as this, to prove which it is only necessary to show, what is true, that a considerable part of the profit which inures to gamblers in Wall street is made by-dealing in the stock and bonds of railroads which have never earned even a mod- erate rate of interest on the cost of their construction. The great fort- unes which it is fashionable to ascribe to high rates of transportation, have been, to a considerable extent, made out of other speculators, and out of the foolish lambs who have risked their savings with the hope of making money rapidly by speculation. Notwithstanding the truth of this statement, however, there have been enough really profitable roads—roads which have shared in the growth of the country and the increasing value of land, largely due to their existence—to give color to the other opinion, and also to tempt capital constantly into new roads, just as in mining one success will sometimes tempt more money into poor or valueless mines than comes out of the good ones. Another fallacy due to the speculation in railroad securities and mistaken notions about railroad charges is the prevailing belief that watering the stock of a railroad corporation increases the price of trans- portation to the public, as if railroad managers had only to make an occasional calculation of the amount of revenue they wish to produce to pay dividends on watered capital, and adjust their tariffs accordingly If this were true, of course all railroads would be profitable ventures, but, unfortunately for their owners, the facts do not sustain so fanciful a theory. If railroad corporations could base their charges on the cost of their property, so that the question of reasonableness could be determined by that measure, the question of cost might be of some con- f INTERSTATE COMMERCE. - 225 sequence to the public. But if investors have no such guarantee, if, in practice, a railroad over the Alleghany Mountains is not able to charge and collect any higher prices for transportation than a railroad in the valley of the Mohawk, then the question of what a road has really cost, or the amount of stock and bonds issued to represent it, is of no more consequence to society than the cost of hotels and cotton mills, or the manner in which their ownership is represented. No increase or decrease of the number of shares into which the property is divided can affect the earning power of a railroad, a hotel, or a cotton mill, a fact so obvious that it would seem unnecessary to state it, if we did not know how common it is to find intelligent persons who believe otherwise. But leaders of public opinion have been known to take ground, not only against the watering of stock, which can hurt nobody excepting those who buy it, but also against issuing new stock to represent real increase of value. If watered stock is sold above its value by false pretenses, the courts will pursue those who are guilty, just as all crime is, or should be, punished, but it is no part of government to attempt to fix values, . to say how much an individual or a corporation may call his Or its property worth, or to protect investors against their own blindness and folly. And if a railroad really increases in value by the growth of business, or economy of management, certainly those who own the road are as much the owners of the increase as are the owners of land or property of any other kind which has increased in value. To argue, therefore, that railroads should not be permitted to represent any actual increase in value by additional shares is to argue in favor of unjust discrimination by law against this class of investments. Men invest their money in hazardous enterprises only upon the condition that, as an offset to the possibility of loss, they shall have the possibility of profit; and any serious attempt on the part of the public to make a rule for railroad investments different from that which governs other business will necessarily prevent prudent persons from selling other property and building railroads. - w - THE WISDOM OF LEGISLATION DOUBTED. . In conclusion, it may not be out of place to suggest that, considering the development of the whole country, the low rates which everywhere prevail, and the facility with which persons and property are now trans- ported, the Wisdom of any legislation which may look to changing the conditions which have produced results on the whole so beneficial may well be doubted. The problem is working itself out more rapidly than could have been thought possible twenty years ago; and the cause for wonder is not that railroads, in common with human affairs generally, are as yet imperfect, but that they have been able to make as much progress as they have made in cheapness and efficiency. *. The real Railroad Question is not how to get cheaper transportation, because it is now very cheap, and can only become more so through the operation of the laws of supply and demand, but it is, rather, how to continue to get railroads built by private capital; and perhaps the real danger is that a mistaken public opinion and policy of government, . added to the Ordinary risks of business, may, by rendering railroad property unattractive, tend to drive it out of the hands of investors, first into the control of the speculators, and ultimately into that of the Government. Among the evils of Government ownership and control would undoubtedly be higher charges and increased taxation. 16232 AP 15 226 INTERSTATE COMMERCE. THE SOUTHWESTERN RAILWAY ASSOCIATION. Statement submitted by J. W. Midgley, commissioner of the Southwestern Railway Association, the Pacific Coast Association, and the Colorado- Utah Association.* There are in the West several associations of railroads, commonly known as pools. Of these, the Southwestern Railway Association is the largest and the oldest. It commenced in September, 1876, and, there- fore, antedated the Trunk Line Association five or six months. The other Western compacts have been modeled largely after the South- western, hence a sketch of the latter would be fairiy descriptive of all. It is, of course, understood that the Word “pool,” as applied to rail- way compacts, is a misnomer. The term properly designates a game, the winner of which takes all the contributions; whereas a railroad pool is a device to insure the distribution among all the parties there to of a specified tonnage or the revenue accruing therefrom. It is the best method yet devised to secure the maintenance of equal and reasonable rates. - . The Southwestern Association includes all freight traffic carried over any portion of the roads parties to it, between any point on or east of the Mississippi and the cities of Saint Joseph, Atchison, Leavenworth, and Kansas City, or the junction points immediately south and west of the last-named city. The roads belonging to the association are: the Chicago and Alton ; Chicago, Burlington and Quincy; Chicago, Rock Island and Pacific; Hannibal and Saint Joseph ; Kansas City, Saint Joseph and Council Bluffs; Missouri Pacific, and Wabash, Saint Louis and Pacific. Its affairs are directed by a board, consisting of the managing officer of each of the roads above named. Provision is made for the appointment of a commissioner, who is intrusted with the en- forcement of the agreement. * - - THE PURPOSE OF THESE ASSOCIATIONS. Aside from what may seem to be the selfish object of securing to each road its fixed percentage of tonnage, the interests of the public are con- served by the maintenance of reasonable rates, which are intended to be alike to all. Before the Southwestern Association was formed the several roads extending from Chicago and from Saint Louis and other Mississippi River poiuts to Kansas City, Leavenworth, Atchison, and Saint Joseph indulged in frequent struggles for the competitive traffic, the inevitable result of which was that the published tariff Was disre- garded, and special or contract rates became the rule. Thus, while the tariff from Chicago to Kansas City on the first four classes was 90, 70, 50, and 30 cents per 100 pounds, respectively, large shippers had con- tracts at one-half the rates above named, while a few secured contracts * The roads comprising these associations are: .. Southwestern Railway Association.—Chicago and Alton ; Chicago, Burlington and Quincy; Chicago, Rock Island and Pacific; Hannibal and Saint Joseph ; Kansas City, Saint Joseph and Council Bluffs; Missouri Pacific ; Wabash, Saint Louis alld Pacific. Colorado-Utah Association.—Chicago and Alton; Chicago, IBurlington and Quincy; Chicago, Milwaukee and Saint Paul; Chicago and Northwestern ; Chicago, Rock Island and Pacific ; Chicago, Saint Paul, Minneapolis and Omaha ; Hannibal and Saint Jo- seph ; Missouri Pacific ; Waljash, Saint Louis and Pacific. - Pacific Coast Association.— Chicago and Alton ; Chicago, Burlington and Quincy; Chicago, Milwaukee, and Saint Paul; Cuicago anti Northwestern ; Chicago, Ročk Island and Pacific; Missouri Pacific ; Wabash, Saint Louis and Pacific, º INTERSTATE COMMERCE. 227 at even less than the rates last described. For example, a merchant might think he had done well to secure a first-class rate of 45 cents per cwt. from Chicago to Kansas City, and 30 cents from Saint Louis, until he learned, incidentally, that his rival in the same trade had obtained rates 10 cents per cwt. lower from Chicago and Saint Louis. Such experiences were of frequent occurrence so long as each road Was at liberty to bid for the business without restraint from any general au- thority. º Primarily, however, it will be admitted that the compacts, of which the Southwestern is an example, originated with the idea of self preser- vation. There was little or no profit in the business at the rates which were current when each road was a law unto itself as to the manner in which the traffic should be conducted. Under such circumstances none but the unwary paid tariff rates. The alert shippers—and the large ones came under that head—were shrewd enough to work one road against another, exciting their jealousies and suspicions, until those having freight to forward were able to name the price at which it Should be carried. g Simple agreements to maintain rates had utterly failed, because of the lack of confidence among railway men as to the good faith of their rivals or associates. It remained, therefore, to promote honesty in op- erations by removing from freight agents the incentive to dishonesty. During the strifes which had prevailed no road had obtained all the freight to and from common points. At no time had any road been ex- ciuded from sharing in the competitive business. The remedy proposed contemplated that each road should be accorded such a percentage of the business as it was fair to presume it could secure, if agreed rates were maintained by all routes. That percentage might be considerably less than the officers of the road felt they were entitled to receive. Yet such proportion, at tariff rates, would yield better net results than would the larger volume at nominal or fighting figures. - On that basis the pools which have been formed Staud, and in case the managers cannot agree as to the percentages which shall govern resort is laad to arbitration. The period during which these are made to run is seldom less than one year, the object being to impart to the compact the element of permanency. Furthermore, it is believed that When the roads realize that they cannot by any devious practice exceed the allotments which have been agreed upon, it must occur to them that it would be foolish to throw away revenue by cutting the established rates. They are absolutely sure of a fixed percentage of the gross rev- enue to be derived from the competitive business included in the pool. That result they cannot improve upon ; hence it is to their interest to Quietly accept the conditions marked out and observe the agreement strictly. The Southwestern Association, during its formative period, partook largely of the character of a deliberative body. It held monthly ses. Sions, at which rules were formulated and measures adopted for the better conduct of the pool. The general freight agents met in separate Session, and agreed as to the changes in rates and classification to be recommended to the managers. Those recominendations the managers approved, amended, or rejected, as seemed to them expedient. In such Way the organization assumed shape, whereupon meetings became less frequent, and the rates on the principal commodities continued un- Changed. Shippers became accustomed to them, and requests for Changes therein are couparatively rare. In the latter instance discre- tion rests with the commissioner to act for the association; and lest the authority thus exercised may be misunderstood, it should be explained. 228 INTERSTATE COMMERCE. THE NECESSITY FOR SPECIAL RATES. The necessity for special action arises in a variety of ways. Compe- tition in various forms is not removed by a confederation of roads. There is too much navigable water in this country to permit of the rail- roads becoming extortionate; and too many sections are able to supply the wants of a community to admit of any combination monopolizing the transportation to a given territory, T3etween Saint Louis and Kan- sas City steamboats ply with more or less regularity on the Missouri River. These bid for the coarser articles, in the carriage of which time is not an important consideration. Take, for example, a cargo of nails. Twenty car loads are brought by river from Wheeling, and are stored at East Saint Louis, awaiting favorable rates of transportation to Kansas City. The boats will forward them at 10 cents per keg. The roads are offered them at an advance of 5 cents per 100 pounds. The Tate named is, perhaps, 3 cents per 100 pounds less than the current rate on like shipments between the same points; but is any shipper injured if the commissioner, in the interest of the association, authorizes the reduction in order to secure the shipment? If he does not, the freight will be lost to the roads, in which event neither the regular shippers nor the roads are benefited. Hence, in such case, he should have authority to make the reduction, and secure the business. He does it in the general in- terest, for, in consideration of his granting the special rate, the right is conveyed to designate the route by which the freight shall be carried. If each road were at liberty to do as it close, they would all strive for the business against the boats, and the outcome would be a decline in rates until neither the boats nor the roads would profit by the transac- tion. By acting through the association such demoralization is avoided, 85 $- 2. because the commissioner represents all the roads; and, as he can have .no preference, the freight thus secured is used as an equalizer to even the percentages of the members. - TEIROUGHEI RATES BETWEEN COMMON POINTS IEQUALIZED. The through rates to and from common points are equalized, i. e., are made the same via the several gateways or cities. To illustrate: Pittsburgh is a center from which articles that are manufactured are distributed throughout the West. Rates of transportation from Pitts- burgh to Saint Louis are largely affected by what the Ohio River boats charge. In order, therefore, to secure uniformity in the through rates, it is agreed that the roads on which the business originates in the Ohio Valley shall make, to any point on the Mississippi Tiver north of Saint jīouis, whatever rate they believe is current from Pittsburgh to Saint Louis. This they can do via Chicago or either one of the gateways to the Mississippi. Then, as the rates are arbitrary and alike from all points on the Mississippi River to all points on the Missouri River south of and including Omaha, the through rate is thereby made the same via the several routes. So, also, on eastbound business. The rate on corn 1Tom Kansas City to Saint Louis is 15 cents per 100 pounds; thence to TNew York it is 23 cents, while from Chicago it is 16 per cent. less, that is, 20 cents. Now, in order to enable the shipper to forward his grain ºria Saint Louis, Hannibal, or Chicago at pleasure, the rate on such business is made 3 cents higher from Kansas City to Chicago than to Saint Louis, thus making a through rate of 43 cents per 100 pounds by whatever route the business may be carried. If these conditions are maintained, manifestly there can be no discrimination against any ship- INTERSTATE COMMERCE. 220 per. In fact, such complaints arise because all the business is not pooled. Usually parties who call for “protection,” as it is termed, against less than tariff obtained by their competitors refer to rates secured by outside or non-pooled lines. Thus, the complaints which pro- ceeded from Chicago so loudly early this year because of the discrimina- tion in grain rates against this city grew out of the fact that, while the business forwarded from Saint Louis, Peoria, and Chicago to the East was comprised in separate pools from those cities, there were a number of intermediate gateways through which grain could be and was carried, and, when so forwarded, it was not amenable to any restrictions or pool. ing obligations. Those conditions impelled the shipping public to de- mand that all or else none be pooled. If none is pooled, then the coin- test for the business degenerates into a scramble, during which favor- •itism is shown a few large dealers, while the others fare indifferently. Ordinarily shippers profess to care ºut little what rates are charged, provided they are alike to all ; but the temptation to work for a better rate than any one else has is not always overcome. - THE BUSINESS OF THE SOUTHWESTERN Association. - The greater portion of the business carried by the Southwestern As- Sociation is what may be termed local, i. e., it originates at or is des- fined to Saint Louis, or other Mississippi River points, or Chicago, as the case may be. Next in magnitude is the business which originates at or is destined to the Middle States, i.e., the territory east of Chicago and west of and including Buffalo, Pittsburgh, and Parkersburg, while the amount of traffic which originates in the territory known as the At- . lantic seaboard is much smaller than is generally supposed. Of the aggregate tonnage carried westward by the Southwestern lines during the year 1884, 11.8 per cent, originated east of Buffalo, Pittsburgh, and Parkersburg; 28.3 per cent. originated in the Middle States; 46.8 per cent. Originated at Chicago and Mississippi River points, aud 13.1 per cent, originated at interior points between Chicago aud the Mississippi River. The total amount carried for the year was, westward, 1,269,599 tons, and eastward, 1,738,817 tons. Of the westbound tonnage, the largest item was 586,372 tons of lumber, while of the eastward move- ment 71.8 per cent. Consisted of grain and 17.2 per cent. of live stock. PROPORTIONS OF INTER-STATE TRAFFIC. Inquiry will perhaps be made as to bow much business carried by rail is inter-State. If interrogatories were addressed to the several roads participating in the transportation, with the view of compiling such data, a confused report would be made. For example, take the case of 20 tons of sugar shipped from Boston to Kansas City. It passes, let us say, by the Fitchburg road and the Hoosac Tunnel, thence via the Troy and Boston Railroad to a connection with the New York, West Shore and Buffalo Railroad, thence via the Grand Trunk Railway to Chicago, thence via the Chicago, Burlington and Quincy Railroad to Quincy, and thence via the Hannibal and Saint Joseph Railroad to Kan- sas City. Six roads would participate in the transportation between Boston and Kansas City. Yet, if required to render a statement of their inter-State commerce, each road would report the 20 tons; that is to say, this particular shipment would be reported six times, to the confusion of whatever officer would attempt to make a showing of the actual volume of inter-State commerce. A report by roads would therefore be of little avail as a correct index of the movement. 230 INTERSTATE COMMERCE. PooDING AGREEMENTS NOT MAINTAINED. Notwithstanding it is to the immediate interest of a road when it be- comes party to a pool to adhere strictly to the agreement, such is the weakness of human nature, under the blandishments of shippers, that few are the number who firmly resist. Soon the breach of faith is dis- covered, whereupon confidence is destroyed, and with difficulty are the others restrained from making reprisals. If the violations are repeated protective measures are adopted, and the agreed rates cease to be re- garded. This has been the mortifying experience of all compacts, thus compelling the admission that mo means have yet been devised whereby an absolute maintenance of established rates can be assured. Self inter- est has failed to effect it; hence compulsory legislation could not be relied on to accomplish it. Yet, despite their imperfections, the fact remains that the pools which have been wisely ordered bawe approx- imated the desired results, whereas all other forms of regulation have failed. - Paradoxical though it may seem, the strength of a pool constitutes its weakness, inasmuch as it invites attack. If the parties to it con- tinue to work harmoniously and achieve good results, combinations are formed to share in the profits. Circuitous routes are opened, to be closed for a consideration. New lines are projected, none of which would be undertaken were the business included in the compact known to be unprofitable. Hence the prosperity of a pool often contributes to its injury. - - TEIE DIVERSION OF FEEIGEIT. The remaining pooling feature to be considered is the exercise of the power to divert tonnage. Although it is a matter of surprise how nearly the percentages of traffic which should be accorded the several lines can be approximated by agreement or by arbitration, yet, in order to insure to each road its fixed allotment of the tonnage pooled, it is necessary that the commissioner should have authority to divert freight from one road to another to equalize the percentage of the road which is short. This authority, unless discreetly exercised, provokes irrita- tion on the part of the public. Shippers insist upon the right to have their business carried as they may elect; and they are disposed to re- sent arbitrary interferences with their wishes in that respect. To over- come these objections on their part, it is agreed that if a shipper insists upon receiving his goods at the depot of the route via which they have been consigned, then the road to which they have been diverted sha]], on arrival of the goods at destination, transfer them to the depot which they would have entered had no diversion been made. Each compact also has under its control a large class of freight which it can route at discretion, and this is available with which to equalize. For example, the associated roads, through their commissioner, arrange with connect- ing lines for through rates and divisions, the proportion of which accru- ing to the roads may be less than their local rates from such receiving point. This lesser proportion they accept in consideration of the ex- pressly stipulated right to route business thus received among the sev- eral associated roads as the commissioner shall, from time to time, direct. They thus undertake to become forwarders, in addition to their char- tered obligation as common carriers, in consideration of the right to transport the business in question at convenience. Pools may, by those unacquainted with them, be criticized unſavora- bly, but it is noticeable that, notwithstanding their imperfections and INTERSTATE COMMERCE. 231 the failures which have marked their history, whenever the railways, after a period of severe strife and dire disaster, come together with the view of adjusting their differences and maintaining agreed rates in the future, resort is invariably had to the pooling system as the only means whereby the desired ends can be attained. Eience it is that they have become “too numerous to mention” separately, and reference by title can only be made to the larger compacts now in existence in the West. OTELER, WESTERN POOLS- Closely allied to the Southwestern Association in the form of its gov- ernment is the Western Freight Association, which comprises all roads operating between Chicago, Milwaukee and Saint Louis on the east, and Omaha and Council Bluffs on the West. - Operating immediately north thereof is the Northwestern Traffic As- sociation, which comprises all roads engaged in the transportation of freight between Chicago and Milwaukee, on the one hand, and Saint Paul, Minneapolis and Minnesota Transfer on the other. Smaller than either of those above named, is the Colorado-Utah As- sociation, which includes all roads east of the Missouri River and west of Chicago and Saint Louis (excepting the Saint Louis and San Fran- cisco Railway), that carry business destined to or originating in Colo- rado and Utah. . g - - In line with the last-named association, but distinct therefrom, is the Colorado Railway Association, which comprises the roads west of the Missouri River engaged in the transportation of freight traffic to and from competitive points in Colorado. . Then there is the Pacific Coast Association, which includes all roads -east of the Missouri River and Saint Paul, and west of Chicago, Mil- Waukee and Saint Louis (excepting the Saint Louis and San Francisco Tailway), which carry business destined to or from points on the Pacific coast, including Oregon, Washington Territory, and British Columbia. Immediately west of this compact, and fitting into it, is the Trans- continental Association, which includes all roads west of Saint Paul, Omaha, and Kansas City, and a north and south line drawn through the two last-named cities on the east, and the Pacific coast on the west. All the compacts named, in the main are governed by rules like those adopted for the guidance of the Southwestern Railway Association. A COMPLAINT FROM SPRINGFIELD, ILL. Statement submitted by merchants of Springfield, Ill. We, the undersigned merchants and shippers of Springfield, Ill., ask. that legislation by Congress may be had to remedy complaints. Inow being made against carrying companies, and in connection there with offer the following thoughts. We believe that all rates from the sea- board should be based upon the distance. That a higher rate should not be charged in proportion on local freights than is charged on through rates. For instance the rates through are as follows, in cents per hundred pounds: First | Second | Third | Fourth s......; class. class. class. ... Special. New York to Springfield. -----...---- 68 57 44 36 27% Chicago to Springfield.----------------------...--. 51 40 31 25 20 232 INTERSTATE COMMERCE. The distance from New York to Springfield is over 1,000 miles; from Chicago the distance is 185 miles. We believe that this discrimination against cities in this State might be remedied with profit to the carry- ing companies by increasing this through rate to all points in the State proportionately to the distance from the seaboard. The rates having been once established, and public notice having been given to the ship- pers, they should never be suddenly changed, and then only after notice— say, often days. We believe that a maximum and a minimum rate might be established with no very great disadvantage to small ship- pers. We feel that no one should ask that rates should be established so low as to yield no profit to the carrier, as when in times like the pres- ent nothing can be gained to the community in harshly depressing one branch of trade. Drawbacks and rebates of every kind lead to false statements many times, and, we think, are thoroughly demoralizing as a remedy. We believe after it is once acknowledged that rates shall be charged in proportion to distance, that rates may be made less for full cars only beyond the price charged for less quantity; that an honest commission can protect the rights of shippers in every other particular. Discrimination in rates to different points in this State would then be impossible, and each city would be placed in a just and equitable posi- tion with neighboring cities, and pooling of issues and division of profits would then be unnecessary. - ... • Allow us to offer a table containing the rate charged Springfield and other points, which is only possible under the pooling system: First; Second | . Third | Fourth - From New York to— class. class. class. ' class. Special. - - Cents. Cents. Cents Cents Cents. Chicago ---------------------------------------- - - - 35 , 26 22 || j6 15 Springfield ---------------------------------------- 68 57 44 36 273 Peoria and Pekin.--------, -----------------------. 45 34 28 20 17 Bloomington -------------------------------------. 45 34 28 20 17 Alton ------------------------------- z - - - - - - - - - - - - * 47 36 . 30 22 19 Joliet --------------------------------------------. 35 26 22 16 15 [Signed by Thayer & Capps (woolen mills), C. A. Gehrmann, C. W. Helmle, Smith & Hay, John O. Rames, and F. Reisch & Bros., and dated August 15, 1885.] A COMPLAINT FROM DANVILLE, ILLIN OIS. Letter from D. Gregg, of Danville, Illinois, miller and dealer in grain. Allow me to call your attention to the fact that we have a local steal or pool in this place by wbich we are taxed 6 cents above our legitimate rate east. The pool is formed by the Wabash, Chicago and Eastern Illi- nois, and Indiana, Bloomington and Western Railroads. They divide this steal, as we term it, because it is nothing more or less. On what is called the Fiuk pool we are entitled to a Chicago eastern rate, but for over two years we are taxed 6 cents per hundred pounds on all eastern shipments, and you can form an opinion how millers and grain shippers can compete with other towns of less importance than we are, who have a Chicago rate. Our State laws do not reach this discrimination, and we can only look to your committee for redress. If you want ſurther ev- idence of discriminations, would refer you to our Business Mens' Asso- INTERSTATE COMMERCE. 233 ciation here. You are aware that Danville is a town of no mean pre- tensions. It has a reputation for energy and thrift unsurpassed by few in the State of Illinois, and that we are represented by live men in the House and Senate of the United States, and that in order that their rep- utation be maintained this little steal needs ventilation and correction at the earliest date possible, as this territory needs all that is due them. Danville Township is paying interest on a debt of one quarter of a milliou dollars given these same railroads, and this is the way they are paying us back. We are at a loss to know why the great Central part of the State of Illinois is compelled to pay tribute to Chicago, Indianapolis, and Toledo, and it is for you to see that it is not so. CEHEAP TRANSPORTATION. Statement by Joseph Utley, of Diaon, Illinois, former canal commissioner -of Illinois. For centuries the best, the wiseSt, and the greatest statesmen have spent anxious days and sleepless nights in devising means by which they could facilitate commerce and cheapen transportation. No country in the wide world has more natural advantages to secure these desired ends than the Valley of the Mississippi. Its fertile soil and diversified climate, its teeming millions of intelligent and industrious people, and its natural advantages cannot be surpassed. In fact, the Great En- gineer of the universe has plainly marked out the lines for commerce, and left but little for the hand of man to do in their improvement. The people begin to realize the vast importance of securing cheaper trans- portation, and Čonsequently urge upon Congress the necessity of making such improvements in our natural water-ways as will insure cheaper transportation to the seaboard and the markets of the World for our vast surplus of wheat and corn and provisions. The West and North- west are now meeting with sharp competition for our cereals in Europe, as is amply demonstrated by the present low prices for our products. Let us for one moment inquire into the causes for this depression in prices. . - . Within the past year Germany has completed a ship.canal from the Baltic to the North Sea, saving 500 miles of difficult and dangerous Inavigation to the Atlantic ports, and reducing the cost of transporting wheat from the interior 5 or 6 cents per bushel. Within the last month the German Bundesrath have unanimously approved a bill for the con- struction of a ship-canal from one of the southern bays of the Baltic Sea to the river Elba and the North Sea, at a cost of 156,000,000 marks. Russia has just completed a ship-canal to connect with the Caspiau Railway, and her engineers have finished the surveys for the improve- ment of the river Volga from the Caspian Sea up that river to a pass in the highlands, and a canal through that pass to the river Don, and down that river to the Black Sea, and out to the ocean. It is esti- mated that this improvement alone will reduce the cost of freight on wheat from the great wheat fields about the Caspian Sea to Atlantic ports fully 7 cents per bushel. Prévious to the construction of the Suez Canal the East Indies exported to Europe less than 400,000 bushels of wheat annually. In 1882 they sent to the same country over 33,000,000 bushels. Now, in my judgment, the Congress of the United States ought to adopt such plans for the improvement of our natural Water- ways and the construction of inexpensive canals as will result in a large 234 INTERSTATE COMMERCE. reduction of freight charges and enable us to meet the competition of other countries in the markets of the World. - - An appropriation of a portion of the surplus revenues for this object, after paying the necessary expenses of the Government, would in a brief space of time accomplish all this without adding one penny to our present taxes. On the other hand, if we neglect to improve the oppor. tunities within our reach and allow other nations to supplant us in the markets of Europe, we can safely predict that the balance of trade will be against us and commercical prostration and financial derangement will surely follow. - - - It is true that the country is covered over with a network of railroads, and I would not for One moment underwałue their usefulness in Clevel- oping the resources of the country; but these roads are in the hands of private corporations and cannot be relied upon to transport our prod- ucts at reasonable rates. The lately invented pooling arrangements made by the leading railway managers enable their pool commissioners by one stroke of the pen to take millions from the producers of the West and the consumers of the East. Hence the necessity of some controlling power. And what, allow me to ask, will be so effectual, so lasting, and so cheap as improved rivers and artificial canals? A brief statement of facts will prove beyond dispute that railways cannot compete in the carrying of freight with navigable rivers and properly constructed canals. The New York State engineer’s report for 1880 (the last report on this head) states that the average actual cost of transporting freight on the New York Central, the great four- track railroad, was #o of a cent per ton per mile, and that, too, without one penny for capital invested, and the average charge was # of one cent per ton per mile. During the past autumn the charge for trans- portating wheat from Buffalo to New York via the Erie Canal and Hud- son River was but #3 of one cent per ton per mile. Allow me to briefly mention a project of vital importance to the whole country, and closely allied to the improvement of our Western rivers. 1 mean the Lake Michigan and Mississippi River Canal, commonly known as the Eſennepin Canal. By the construction of this short canal from the Illinois River at Hennepin to Rock Island on the Mississippi, and but 64 miles in length, we complete an unbroken chain of free water-way for the transportation of freight, absolutely in the hands of the people, from the bay of New York, up the Hudson River, and through the Erie Canal and great lakes to Chicago; thence down the present Illinois and Michigan Canal to Hennepin, and across to Rock Island on the Mississippi, having, with its branches, more than 15,000 miles of steamboat navigation. The importance of constructing this short canal, costing but a trifle over $6,000,000, completing an un- broken Water route thirough the very heart of our country, from the Atlantic to the Gulf of Mexico and the savannas of the South, and up the Missouri to the base of the Rocky Mountains, on the region of eter- nal Snow cannot be overestimated. The construction of this canal will reduce the cost of transportation fully one-half from the great North. west to the seaboard and the markets of Europe. I will give one more illustration of the influence of water-routes on railroad charges. The railway commissioners of the State of Illinois have fixed the maximum rates on Wheat in car-load lots per 130 miles at 7 ºf cents per bushel (and it is believed they all strictly adhere to these rates, except the Rock Island road where it comes in competition with the lllinois and Michigan Canal and the Illinois River). The charge from Henry to Chicago, 130 miles, via the Illinois and Michigan Canal, INTERSTATE COMMERCE. 235 including State tolls, is 3 cents per bushel on wheat. The Peoria branch of the Rock Island road charges canal rates from Henry to Chicago (3 cents per bushel); and from Tiskilwa, 126 miles from Chicago, and on the main line of the same road, but away from the canal, they charge 7# cents per bushel. The improvement of our Western rivers and the construction of this short canal connecting the two great Water systems of the continent will greatly promote commerce among the States and so reduce the cost of transporting the products of the country as will enable the smallest farmer to make his home attractive and beautify this whole wonderful Northwest. SAFETY COUPLERS. Statement by Judge Thomas Russell, chairman of the Massachusetts rail- 'road commission. I take the liberty of addressing you upon a subject which was not brought to my attention when I testified before the Committee on Inter- State Commerce. Indeed, the matter of safety couplers was not be- fore your committee, but it is a question pertaining to the regulation of inter-State commerce by Congress, and it is one that concerns the safety and the lives of many. It is estimated that every year more than a thousand men are injured in the United States, including more than two hundred killed, by accidents resulting from the coupling or uncoupling of cars. This number would be greatly reduced if the old link and pin could be superseded by any good safety coupler. No one doubts, I believe, that this is a fit subject for Congressional action. The very statutes which have been wisely passed by several States recognize the fact that their jurisdiction is limited either by law or by the laws of traffic. No State presumes absolutely to forbid the entrance of cars united by any form of coupler into its territory under all circumstances. Theoretically, Congress can only legislate to advantage-in regard to through traffic. And whatever may be accomplished by the harmoni- ous legislation of the several States, it is evident that it must be liable to great imperfectioli, when we consider the number of jurisdictions through which traffic is conducted and the widely different opinions and the variety of interests that tend to produce discord where har- mony is so desirable. y JPractically, too, Congressional action regulating inter State traffic will control local traffic. Self-interest and common sense will, either by State legislation or by voluntary action, make the coupler of the whole country the coupler of every part. No freight car will be constructed which cannot be lawfully sent through the Whole land. I recognize the difficulty that must delay for a long time the universal adoption of safety couplers. But this seems to be a reason not for postponing but for hastening initial action. It is time to begin. Much difficulty and delay will vanish when Congress shows itself to be in earnest in dealing with this matter. The chief objection to legislation seems to be distrust in any tribunal that can be selected to decide the merits of different devices. It will be said that those best qualified as experts are committed by their prejudices and interests, or by the preju- dices and interests of their employers, so that they cannot judge fairly. But competent and fair men can be found. Such a man as N. M. For- ney, of New York, would command universal respect, both for his skill 236 INTERSTATE COMMERCE. as an expert and for his integrity as a man. There must be three such men in the United States. Besides, important as it is to secure the best device, it is more important to have uniformity than to have the abso- lutely best. v - - There would be reason for congratulation if the first result of agita- tion for Congressional action upon inter. State commerce should be, not in the interest of shippers, important as those interests are, but for the protection of the lives and limbs of the men by whom that vast traffic is conducted. - - TEIE TRANSPORTATION OF SLEEPING CARS. The committee has received complaints from two companies running excursion and private sleeping cars, to the effect that certain railroads have refused to transport their cars because of contracts with a certain sleeping car company, giving the latter the exclusive privilege of run- ning cars of that description over their lines. W. H. Shuey, superintendent of the Worcester Excursion Car Com- pany, of Worcester, Mass., says: - # “A certain sleeping-car company, holding contracts with railroad com- panies whose lines cover thousands of miles, has entered the field in di- rect competition with us in the business of leasing private cars for the special and exclusive use of the lessee and his party. In this competi- tion I think we have nothing to fear, as the demand for private cars will naturally increase with the increased supply, and we will undoubt- edly gain some business at the cost of our competitor's advertising ac- count. But this same sleeping-car company has endeavored to make contracts with the railroad companies by the conditions of which they (the railroad companies) agree to probibit the haulage of the sleeping, parlor, or private cars of any other company over their lines, thus giv- ing the contractors the exclusive privilege of offering its cars for haul- age. In one instance a contract of this kind has been signed, it is claimed, for fifteen years, and the Superintendents and passenger agents of the railroad company have been notified that they must not accept our cars for transportation. - - - “I have failed to secure grounds for a test case with this company, owing to the fact that it has hauled every car of ours offered them, even since the existence of the so-called iron-clad contract, notwith- standing the orders to the contrary issued to its agents. In each case, however, the application has been made in time, to the general office, and on some pretext or other, usually “by consent of the sleeping-car company,” orders have been issued to accept our cars for transportation. The effect, however, of the publication of the orders shutting us out has been, even now, a serious injury to our business, and I have been com- pelled in several cases to agree to release our lessees in case the transpor. tation of our cars should be prevented by the interference of any sleep- ing car company’s contract. I think the only sure method of preventing a continuance of this difficulty would be to secure such legislation as will make null any such ‘exclusive privilege’ contract as I have alluded to. “As our business is almost exclusively interstate in its nature, it is apparent that if the bill regulating interstate traffic was so framed that it would include the compulsory haulage of our cars, which could be designated as “private or special cars containing passengers and personal luggage,’ then, after its passage, we would be in a position INTERSTATE COMMERCE. 237 to advertise that all railroads in the United States of proper gauge would haul our cars. Our business is that of leasing, to dramatic companies, pleasure parties, or business men, private or Special cars, fully equipped and provided with servants, in much the same manner in which a yacht or furnished house with servants is leased. It de- volves upon the lessee to make transportation arrangements with the railroad companies, and in consequence of the rapid development of our business during a very few years the railroad companies gener- ally have adopted a nearly uniform private-car tariff’’ A. F. Higgs, of New York, president of the Monarch Parlor Sleeping Car Company, writes as follows: - “I desire to call attention to a feature of passenger traffic which has come up of late, and which I believe should be considered by your com- mittee as unjust and unconstitutional. This company, for instance, has running arrangements with the Chicago and Eastern Illinois and the Evansville and Terre Haute Railroads, the latter having running arrange. ments with its Southern connection, the Louisville and Nashville Rail- road. The latter, however, has an exclusive contract with Mr. Pullman to run his sleeping cars, and no others, over the said ſlouisville and Nashville Railroad. I come to Henderson with my Monarch sleeper with a load of people bound to New Orleans. The Louisville and Nash- vible says, “We would like to take your people and your car, but our contract with the Pullman Company shuts you out, and you must trans- fer your passengers to a Pullman car and take your car back to Oh, cago.” I contend that no contract has a right to debar me, coming fron’. another State and road, from going over the Louisville and Nashville, if I and my passengers tender the price of passage. Now, this applies all over the country where the Pullman people have contracts, and no interstate commerce bill will be complete which does not provide for abolishing this monopoly.” * THE TRUNK LINE CONTRACT. The committee has received from Mr. Fink an official copy of the “contract between the trunk lines for the establishment and mainte- nance of tariffs on competitive freight and passenger traffic,” entered into November 6, 1885, and reading as follows: - Contract made this 6th day of November, 1885, by and between the Grand Trunk Railway Company, of Canada ; the New York Central and EIudson. Itive, I’ailroad Company; the New York, West Shore and Buffalo Railway ; ille Delaware, Lackawanna, and JFest- ern Itailroad Company; the New York, Lake Erie and Western Ifailroad Company, the Pennsylvania Railroad Company ; the Baltimore and Ohio Railroad Company. [The western termini of the roads of these parties, berein referred to, are understood to be as follows: Toronto, Suspension Bridge, Niagara Falls, Tonawanda, Black Rock, Buffalo, East Buffalo, Buffalo Junction, Dunkirk, Salamanca, Erie, Pitts- burgh, Bellaire, Wheeling, Parkersburg.] *- Whereas past experience has fully established the fact that the joint action of com- peting railroad companies in establishing and adhering to uniform rates of transpor- tation for like services to the public is necessary in order to avoid the evils of unjust discrimination and fluctuating rates, so injurious to commercial as well as to the rail- road interests : - Therefore, the parties above named enter into the following contract for the pur- pose of jointly establishing tariffs over their respective roads on competitive traffic, both passenger and freight (hereafter more particularly specified), and of publishing said tariffs and strictly maintaining the same. - g *GIOSISIWWOO GILWJSAIGILNI 89.3 ‘oſlje.In Junº.15 ſittu I (W) 'Talfi:0.10(I poſſ - ſoods KIUm] oiouſ od Kh;tu 81; ‘ssuſo prlooos put 1s.Ig ‘opſ] triº lošuosstid oAI) I loduo'O (£) ‘ptio Koſi putt; soutſ Nuna'] or(ſ) Jo III IIII.10, 11.101so AA oil’) on Soy, ſo pleogt;08 otlº III.O.IJ qujyo.II pil not -180AA (2) - ‘.10).jt:0.10ſ poſſ 100tls KIIIlſ o,iouſ oſſ Kutti St: ‘o Hju.I.) 11:aul posso.1p print Moons oatſ p (it: Tr(510.J. plop prinoſt-181:GI (1) –0) ÅIdd tº 10t.[] (loo Hſtſ) Iobun poliſm?] tigetuſ puru pouşIIqūlso od on Slji Itº ot.I., "XT 'LMW . 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Aq KIJuſoſ u0Xiu otl IIurts lon.Intoo spriq Jo osodand ot!) no ÁIIbo ol K.It'ssooou Solmsgouſ IIW ‘I SITOI.L.IV * INTERSTATE COMMERCE. - 239 DIVISION OF TRAFFIC. ART. X. In order to secure the maintenance of agreed tariffs by removing the no- tive for their violation, openly or secretly, it is further agreed that the following divisions of traffic shall be made between the trunk lines: (1) East-bound dead freight traffic. - (2) lºast-bound live stock and dressed meat traffic. (3) West-bound freight traffic. (4) Passenger traffic, east-bound and west-bound, first and second class. (5) Immigrant traffic. And such other divisions as may hereafter be agreed upon. - Alt'T. XI. Soparate contracts shall be made covering each division, based upon the principle that suitable provisions shall be made in each contract for each line's secur- ing and carrying its allotted percentage, and that only such compensation, if any, shall be allowed for carrying excess of freight or passengers as will promote this re- sult. Settlement of balances which may accrue under said contracts shall be made monthly. - t - ART. XII. In order to secure the prompt payment of such balances, the contracts for division of traffic shall provide for deposits of a sufficient amount of money to the credit of a trustee, or trustees, upon which the monthly draſts for settlement of bal- ances shall be made. ART. XIII. Other railroad companies not parties to this contract, but whose co-op. eration is deemed necessary or desirable, may also become parties to said divisions, by consent of the trunk lines directly interested. - DIVISION OF TRAFFIC BETWEEN CONNIECTING ROADS. ART. XIV. The trunk lines recognize as a necessity that their western connecting roads, to promote their own interest as well as that of the trunk lines, shall arrange for a fair division between themselves of traffic originating west of the western ter. mini of the trunk lino roads and destinctl to said termitli or east, thereof, and for a division of the west-lound traffic originating at or east of the westein termini of the trunk lines, and also that their eastern connections shall arrange for divisions of traſ- fic originating east of the eastern termini of the trunk-ling roads, and destined to their western termini or west thereof. The trunk lines will, therefore, jointly request their affiliated roads to at once enter into contracts for such livisions from all points at which the traffic has heretofore been divided, and from such additional points as may be deemed necessary. They further agree that they will givo such ağl to said affiliated roads as may be necessary to carry out said contracts, ART. XV. The disposition to be made of the traffic of the aſſiliated roads, so far as it affects the interests of the trunk lines, shall bo subject to the approval of the trunk lines, acting jointly, and shall not be in conflict with the inſent and spirit of this con- tract, viz: the mutual protection of the trunk lines and their affiliated roads. ART. XVI. In case any connecting road at a point where a division of traffic may be deemed necessary, re! uses to become a party to such division, aud it should be come 11ecessary in order to protect the parties to such division, the trunk lines will act jointly in determining the relations of such counceting road to the trunk lines. ART. XVII. It being one of the objects of this agreement to reduce the expenses of the companies partics hereto, the trunk lines further agree that they will limit the fast freight or co-operativo lines to the lowest possible number consistent with the proper conduct of their business; and all soliciting and advertising agencies shall lyſ: reduced to such number as may be deemed necessary for the convenience of the pub- lic and proper conduct of the traffic, ; and so far as practical) lo all offices outside of the regular station offices of the respective companies parties here to shall be made joint offices. AkT. XVIII. The trunk lines hereby further agree that after January 1, 1886, they will not, in reference to any passenger traffic covered by this agreement, pay or be parties to the payment of commissions to any agent of any other railroad company for Belling tickets or Securing passengor business Över their respective roads, and that they will not permit any of their agents to receive commissions for such purposes; and all Systems of paying Commissions for sale of passenger tickets or securing passenger traffic shall, so soon as practicable, be absolutely abolished. - ART. XIX. This contract shall go into effect the 7th day of November, 1885, and continue in full force and offect until 1)ecember 31, 1886, and from year to year there- after. It may be terminated on the 31st day of December of any year by any party #." giving thre emonths' prior notice, in writing, of their desire to withdraw the e- 'ODOl. 240 INTERSTATE COMMERCE. In witness of this contract the parties hereto have severally caused to be affixed the signature of their president or chief executive officer. In presence of: º [SEAL.T GRAND TRUNK RAILWAY COMPANY OF CANADA. - Per J. HICKSON, - * General Manager. R. WRIGEIT, - . [SEAL.] THE NEw York CENTRAL AND HUDSON RIVER RAILROAD COMPANY. By CHAUNCEY M. DEPEW, I’resident. FI. C. DUVAL. [SEAL.] TITE NEW York, LAKE ERIE AND WESTERN RAILROAD COMPANY. By JOHN KING, JPresident. - Attest : sº - A. R. MACDONOUGEI, Secretary. zº" [SEAL.T THE DELAWARE, LACKAWANNA AND WESTERN RAILROAD COMPANY. By SAM. SLOAN, President. Attest : FIRED. F. CHAMBIERS, - - Secretary. HORACE IRUSSELL, THE. HOUSTON, • A8 Jęeceivers of the property covered by the first mortgage of the New York, West Shore and Buffalo I?ailway Company. Attest: - - J. D. LAYING. [SEAL.] THE PENNSYLVANIA RAILROAD CoMPANY. I3y G. B. ROBERTS, sº - President Attest : JNO. C. SIMS, Jr., Secretary. The Baltimore and Ohio Railroad Company, subject to the reservation that it will bo bound by the provisions hereof so far as relates to passenger traffic only in case it is a member of the Trunk Line Passenger Division. ſ SEAL. I - º By ROBERT GARRETT, President. Attest : W. H. IJAMs, Secretary. The above is a correct copy of the contract between the Trunk Lines named therein. ALBIXRT FINK, Commissioner. TEIE TRUNK LINE ORGANIZATION AND RULES. The following is an official copy of the “Trunk Line Organization and IRules,” as furnished by Mr. I’ink: TRUNK LINE ORGANIZATION. Whereas, on this sixth day of November, 1885, a contract has been critered into, for the purposes fully stated therein, between the following parties: the Grand Trunk Railway Company of Canada, the New York Central and Hudson River lòailroad Company, the New York, West Shore and Buffalo Railway, the Delaware, Lacka- wanna and Western Railroad Company, the New York, Lake Erie and Western JRailroad Company, the Pennsylvania Railroad Company, the Baltimore and Ohio Railroad Company: Now, therefore, in order to successfully carry out the provisions of said contract, the following organization and general rules are heroby agreed to and adopted: INTERSTATE COMMERCE, - 241 TRUNK LINE PRESIDENTS’ COMMITTEE. SECTION 1. The presidents or chief executive officers of the companies shall consti- til to a committee, to be known as the trunk line presidents’ committee, which com- mittee shall decide upon all measures necessary, to carry out the purpose of the con- tract above referred to and authorize the same to be put into effect. The committee shall elect a chairman from its own members. SEC. 2. Meetings of the presidents' committee may be lield at stated times to be agreed upon, or may be called by the chairmala whenever he deems it necessary, or upon the request of any member. -- SEC. 3. All joint measures referred to in section 1, upon which the presidents' com- mittee, after full consideration, cannot agree, shall be finally decided by arbitration, in the manner more particularly specifieſl hereafter. - TRUNIK LIN ſº IXECUTIVE COMMITTEE, SEC. 4. The presidents’ committee shall appoint an executive committee, to be ealled the trunk line executive committee, and to consist of a vice-president of each company, which committee shall be charged with carrying out in detail the instruc- tions of the presidents' committee. + & SEC. 5. The presidents' committee shall also appoint a commissioner, who shall act as secretary of said committee, and as chairman of the trunk line executive commit- tee, and who shall, under the direction of said committees, carry out ally measures agreed upon or decided by arbitration, acting as their executive officer. SEC, 6, The trunk line executive committee shall meet at Stated times to be agreed upon, or upon the request of any member, or whenever deemed necessary by the chairman. . . - - SEC. 7. In case the trunk line executive committee is not unanimous upon any question, it shall be the duty of the commissioner to endeavor to secure an agreement; but failing to do so, the question at issue shall be forthwith submitted to the presi- dents' committee for their action, and they failing to agree, to arbitration, as speci- fied above. The presidents’ committee may direct that certain questions of difference which do not require their special attention shall be arbitrated in the executive, freight, or passenger committees, and the rules of these committees may specify cases that shall go to arbit ation in said committees without being referred to the presi- dents' committee. , - SEC. 8. Should a ... y question arise in the trunk line executive committee which re- . (paires an immediate decision, and upon which the members of the committee cannot agree, the commissioner shall, at the request of two-thirds of the members of the com- mittee, make a temporary decision, subject to the final action of the presidents' com- mittee, or arbitration, as above provided. IFRIEIGEIT AND PASSENGER COMMITTEES. SEC. 9. The trunk line executive committee shall appoint two subcommittees, one for the freight department, to be called the freight committee. consisting of the traffic managers or general freight agents, and one for the passenger department, to be called the passenger committee, consisting of the traffic managers or general passenger agents of the respective companies, and to them shall be intrusted the transaction of such business as is delegated to those officers in their respective departments in the service of their companies. . SEC, 10. The trunk line executive committee shall appoint a commissioner for the freight department, and a commissioner for the passenger department, each of wholm shall act as chairman at the meetings of their respective committees, with the same duties in said committees as those of the commissioner in the executive committee, as specified above. - - SEC. 11. In case of failure to agree in said freight and passenger committees, the questions at issue shall be referred to the executive committee, to be acted upon as hereinbefore provided. - * SPIECIAL COMMITTICES. SEC. 12. The freight and passenger committees may appoint subcommittees ſor special purposes as may be deemed liecessary to facilitate the transaction of business. A.UTHORITY OF COMMITTEES. SEC. 13. The members of the executive committee arid of the freight and passenger committees are authorized to act with full authority upon all questions which come under the jurisdiction of the office they hold in the service of their companies. No officer or agent of any company shall be a member of said committees who has not 16332 AP—16 • * * 242 INTERSTATE COMMERCE. full authority to act upon all questions that legitimately come before said commit- tees. In case any company has no vice-president in charge of the traffic department, such company shall appoint an officer on the trunk line executive committee, fully authorized to deal with both freight and passenger matters in meetings of said com- mittee; the intention being that all business that comes within the sphere of action of each committee shall be promptly and finally acted upon under its rules. SEC, 14. The object for which meetings of the several committees are called shall be communicated to the members of the committees at the time the call is made ; but this shall not prevent the consideration, with the consent of all the members, of other business at such meetings, upon which action may be required. º SEC. 15. Should aily road be unable to be represented at any meeting of the execu- tive, freight, or passenger committees, and should it be necessary to take immediate action upon the subject-matter under consideration, the chairman of such comunittee. shall be authorized by the roads not represented, to act for said roads, such action to be binding until revoked at a subsequent meeting, when the roads may be represented; it being the intention of this provision to avoid delay that might arise from the non- attendance of members. SEC. 16. Each of the committees above named shall establish its rules of proced- ure, as well as regulations by which its business shall be governed, not in conflict with the general organization. The rules of the trunk line executive committee are to be subject to the approval of the presidents' committee, and those of the freight and passenger committees to the approval of the trunk line executive columittee. SEC. 17. In all questions of order and procedure in said committees not specially provided for in the rules, the vote of a luajority of the members of the committee shall govern, and in case of a tie vote the decision of the chairman shall be final; but all questions on which there may be disagreement in respect of measures neces- sary to promptly and efficiently carry out the purpose and object of the contract, if not finally decided by the presidents’ committee, shall be decided by arbitration. SEC. 18. A secretary of the trunk line executive committee, as well as secretaries for the freight and passenger committees, shall be appointed by the chairmen, with the approval of the respective committees, whose duty it shall be to keep records of the procegdings of the various committees and to perform such other services as may be assigned to them. : - SEC. 19. Copies of the proceediugs of meetings shall be furnished to the meulers of the committees, respectively, after the adjournment of each meeting, and they shall carefully examine the same and notify the chairman promptly of any correction. or change therein that may be required. Unless such liotice is received within a week after the receipt of the proceedings, it shall be presumed that they are ap- proved. - SEC. 20. The commissioner shall also appoint such other officers and clerks as may be deemed necessary by the executive committee, to carry out the work contem- plated under the contract. g EXPENSES OF ORGANIZATION. SEC. 21. The expenses of the organization shall be borne by the parties to the con- tract in proportion to the gross revenue derived from the business covered thereby, as nearly as this can be ascertained. * SEC. 22. The commissioner shall have supervision of the expenses of the organiza- tion, under the direction of the trunk line executive committee, and said commit- tee shall audit the accounts monthly, or cause them to be audited through a sub- committee. & . SEC. 23. A deposit of $15,000 shall be made with the commissioner, as a working fund to defray the current expenses of the organization. The amount to be deposited by each trunk line shall be assessed on the basis stated in section 21. AREITRATION. SEC. 24. A permanent arbitrator (or board of arbitration) shall be appointed by the trunk line presidents’ committee, to whom shall be submitted for final decision all questions arising under the contract upon which the parties thereto cannot agree. It shall be the duty of said arbitrator to devote his whole time to the duties of his office, to attend the meetings of the various committees, as far as practicable, and to keep himself informed as to the facts bearing on all questions which are likely to arise and upon which he may be called to adjudicate. - SEC. 25. Before, any question is submitted to arbitration, a meeting of the inter- ested parties shall he held for the purpose of endeavoring to agree upon the question at issue, af, which the arbitrator shall be present. If no agreement can be reached, And the arguments and facts laid before the meeting are thought to be sufficient, by INTERSTATE COMMERCE. - 243 the interested parties as well as by the arbitrator, to form a basis for decision, said decision shall be rendered by the arbitrator upon such facts, as soon as practicable, without further hearing. - SEC. 26. But if it is thought necessary to have additional facts and arguments sub- mitted, in order to enable the arbitrator to reach correct conclusions, then such addi- tional facts and arguments shall be laid before the arbitrator within ten days from the date of said meeting, except in cases where their preparation may require addi- tional time, when such additional time shall be determined by the arbitrator. SEC. 27. Within a week from the submission of such arguments and facts, a decision shall be rendered by the arbitrator. - SEC. 28. If said decision is not satisfactory to any one of the interested parties, and it can be shown to the satisfaction of the arbitrator, within five days aſter the decision is made, that facts which should have had a material bearing upon his decision were either not fully considered or were not submitted at the first hearing, the case shall be immediately reopened. The grounds upon which such reopening is granted by the arbitrator shall be fully stated by him and communicated to the interested parties, with the arguments of the dissenting party or parties, within fifteen days after the original decision is made, and a hearing shall be had within ten days thereafter. At such rehearing parties shall be permitted to submit only arguments and facts per- tinent to the question raised by the dissenting party or parties, and upon which the rehearing was granted; and the arbitrator shall then either reaffirm or modify his previous decision, and this shall be final. - SEC, 29. Nothing in the above rules shall prevent the settlement of any question upon which the trunk line executive or the freight or passenger committees cannot agree, by a decision of the chairmen of the respective committees, when submitted to them by agreement of the parties interested; provided the questions at issue can be acted upon under the authority conferred on the respective committees. . . RELATIONS WITH AFITILIATED ROADS. SEC. 30. To facilitate the transaction of business between the trunk lines and their affiliated roads, the chief managing officers of said affiliated roads and the members of the trunk line executive committee shall constitute a committee to be called the joint committee. It shall be its duty to establish all through tariffs and classifica- tions, to agree upon divisions of through rates and through fares, and to make such rules and regulations affecting the tariffs as may be deemed necessary to secure uni- formity and stability. - SEC. 31. The chairman of the trunk line executive committee shall act as chairman of the joint committee, With the same duties as under the organization of the trunk line executive committee; but said joint committee 111ay make such additional organi- zation as may be deemed desirable to carry out the object for which it is established. SEC. 32. The joint committee shall appoint the following sub-committees: An east- bound classification committee, cotton rate committee, tobacco rate committee, and such other committees as may be considered necessary to facilitate the transaction of business. SEC. 33. The trunk line executive committee shall act as the standing committee of the joint committee. SEC. 34. If the joint committee cannot agree upon joint tariffs or upon any rules or regulations affecting said tariffs, or upon the division of rates and fares with com- .mon connections of two or more trunk lines, the trunk line executive committee shall decide the question under its rules, after hearing the arguments of the various par- ties interested. * SEC. 35. If any affiliated road is not represented at any meeting of the joint com- mittee, the trunk line or trunk [ines over which said road has traffic arrangements shall represent the said affiliated road. In case any affiliated road has traffic arrange- ments with several trunk lines, who may not be able to agree, then the trunk line executive committee as a whole shall take action under its rules upon the question at issue. * . SEC. 36. The joint committee may be called together at the request of three mem- bers of the trunk line executive committee, or at the request of the chief managing officers of three of the affiliated roads, or by the chairman. GIENERAL RUILES. It being recognized that the successful carrying out of the contract depends upon the good faith of the parties thereto, and that it therefore becomes the duty of each trunk line not only to conform to the intent and spirit of the contract, so far as its own road is concerned, but also to take the responsibility for the acts of its affiliated road 3, the following general rules based upon this principle are hereby adopted, subject 10 Such amendments and additions as experience may suggest. 244 - INTERSTATE COMMERCE. SEC, 37. In case a violation of the established tariffs or the rules governing the same counes to the knowledge of any trunk line, notice shall at once be given to the commissioner, who shall communicate the charges to the trunk line over whose road the traffic upon which the alleged violation is made has been forwarded, or is to be forward, d, and said trunk line shall at once make the nécessary investigation of the acis of its own agents or the agents of its connecting or fast freight lines for which it has assumed the responsibility, and finding the charge correct, it shall immediately take measures to remove the cause of complaint and report the facts and any action taken through the commissioner to the trunk line executive committee, which, if necessary, shall at once be called together to take joint action in conformity with the Contract. - X- - SEC. 38. Should a violation of the established tariffs or the rules governing the same come to the knowledge of any of the affiliated roads, the same shall be reported to the trunk line or trunk lines with which it has traffic arrangements, and said trunk line shall proceed as provided in section 37. - SEC. 39. If the cause of complaint is not removed within a week from the time the complaint is made, or if any trunk line neglects or refuses to take prompt and proper action in the matter, as provided in section 37, it shall be the duty of the com- missioner to at once call a meeting of the executive committee to take such action in the matter as may be deemed necessary to enforce the provisions of the contract. SEC. 40. Pending the action of the executive committee, the complaining party shall not meet any alleged reductions in rates or take any separate action whatsoever in violation of the contract; but all action necessary to protect, the trunk lines and their affiliated roads shall be taken jointly, and under the instructions of the execu- tive committee. wº . SEC. 41. The trunk line executive committee is authorized, under the direction of the presidents' committee, to enter into agreements with competing roads, not parties to the contract, for the establishment of joint tariffs, and the maintenance of the same. . - SEC. 42. None of the affiliated, roads shall enter into traffic arrangements with roads whose tariffs affect the tariffs established under the contract, except upon the condi- tion that such roads shall maintain the said tariffs or enter into agreements for the establishment and maintenance of special tariffs on coln petitive traffic. In case no such agreements can be made, such joint action shall be taken by the trunk lines as may be necessary for their protection. - . - * . SEC. 43. None of the trunk lines nor their affiliated roads shall make reductions in the established tariffs on the plea that some competing road not party to the contract has made reductions affecting said tariffs, but the case shall be reported through the commissioner to the executive committee for joint action. The above is a correct copy of the organization and rules adopted by the trunk lines named on page 1. [This refers to page 1 of the copy of the trunk-line contract submitted by Mr. Fink.] - - * ALBERT FINK, . Commission 629°. Schedule of rates on grain from Chicago to New York (in cents per 100 pounds) via all-rail and via lake-and-canal, respectively. Grain. ... - ... • Grain. Date. Lako ma Date. Lake and .ra i Cºillºl t canal All-rail. a. crage All-rail. a. erage per year. - - - per year. 1864. * - 1865. & Mar. 28 to Apr. 3.--...----. $1 00 ||Y Jan. 1 to Apr. 21.... . . . . . $1 60 |). Apr. 4 to Apr. 11. --------. 90 Apr. 22 to May 14. . . . . . . . . - 1 00 Apr. 12 to Apl'. 13. - - - - - - - - - . 80 May 15 to Scpt. 5 ... . . . . . . 70 Apr. 14 to July 10---...----. 75 Scpt. 6 to Sept. 10. . . . . . . . . 62 July 11 to July 21. - . . . . . . . . 80 Sept. 11 to Sept. 26. . . . . . . . . * 70 July 22 to July 27 . . . . .`----- 85 | Sept. 27 to Oct. 9. . . . . . . . . 773, . July 28 to Sept. 6. -- . . . . . . . § |$$0 46.4 || 98%. 19 to 98%. 19.-------. #;" |}$0 43.3 Sept. 7 to Sept. 9... . . . . . . . ão || 50 40.4 || 6′. in ſo jºi. 33.I. 95 Sept. 10 to Nov. 11... . . . . . . . r 95 Oct., 27 to Nov. 1. . . . . . . . 1 05 Nov. 12 to Nov. 15. . . . . . . . . . 1 00 Nov. 2 to Nov. 6. . . . . . . . . 1 15 Nov. 16 to Nov. 27. . . . . . sº * * * 1 15 Nov. 7 to Nov. 8. -- . . . . . . I 20 Nov. 28 to Dec. 12 . . . . . . . . . J 25 Nov. 9 to Dec. 31. . . . . . . . . I 30 J Lec. 13 to Dec. 23. . . . . . . . . 1 38 & Dec. 24 to Dec. 31.--...----. l 60 J INTERSTATE COMMERCE. 245 ° W Schedule of rates on grain from Chicago to New York, &c.—Continued. Grain. Grain. Date. Lake *d Date. Lake ind ë CaL13t - * Cºlna All rail a...e All rail. a.e. . | per year. per year. 1866. - - 1874. - - Jan. 1 to Jan. 8. --------- $1 30 Jan. 1 to Feb. 2 ........ $0 6 Jan. 9 to Feb. 25. --...----- 80 Feb. 3 to Apr. 14 - - - . . . . . 55 - JFeb. 26 to May 10.... ------ 70 Apr. 15 to May 5 . . . . . . . . 40 $0 22, 9 May 11 to June 6. --...----. 55 May 6 to Dec. 10 - - - - - - - . 45 º 7 to § 4---------- 60 Dec. 11 to Dec. 31 - - - - - - - - 40 July 5 to Sept. 17. --------. * 65 Sept. 18 to Sept. 26.--------. - # |} $0 47.8 1875. Sept. 27 to Qct. 9, --------. 85 - - Oćt. 10 to Oct. 14..... ----. 90 Jan. 1 to Sept. 30 . . . . . . . . 40 Oct. 15 to Nov. 4. ... ------ 1 00 Oct. 1 to Oct. 11 - - - . . . . . 30 18.8 Nov. 5 to Dec. 7..... ----- 1 05 Oct. 12 to Nov. 30 - - -...--. 40 & Dec. 8 to Dec. 31. --------- 90 |J Dec. 1 to Dec. 31..... --. 45 - - 1867. 1876. Jan. 1 to Feb. 6.......... $0 90 . - Feb. 7 to Mar. 3. ... - - - - -. 80 # #}; 3: ; ) *:::::::::::::::::::::::: § Apr. 13 to Apr. 25. ------. 35 15.9 ar. 22 to Apr. 14-------- sº fº - Apr. 26 to May 4.- ... --. 22; & Apr. 15 to June 7. ----..... 50 36.9 May 5 to Dec. 17 . . . 20 June 8 to June 20 tº tº ſº tº $ tº º tºº & & 7 r išč 18 to iſſec. 31 e sº gº tº e = * = 30 June 21 to Sept. 1.--------. . 70 & tº ºf sº, as sº s tº e s sº º Sept. 2 to Sept. 22. . . . . . . . . 75 1877. Sept. 23 to Dec. 31. . . . . . . . . . 85 Jan. 1 ------------------. 30 * t 1868. Jan. *: §: 1 -------. 35 18.2 * Apr. 2 to Scpt. 3 - - - - - - -. 30 e Jan. 1 to § 31. --------- 85 } Sept. 4 to Oct. 16. - ... -- 35 - Sept. 1 to Sept. 3.--------- 60 || Oct. 17 to Dec. 31. . . . . . . . 40 Sept. 7 to Sept. 13. -...----. 65 36.0 Sept. 14 to Dec. 6.... -----. TO 1878. Dec. 7 to Dec. 31. --...------ 75 Jan. 1 to Mar. 10 . . . . . . . . 0 40 1869, Mar. 11 to Mar. 31 . . . . . . . . 30 . Jan. 1 to Jan. 24... --...----. 75 § **.*. # * * * * * * * * ; 15.1 Jan. 25 to Mar. 10----...--. 70 ; 37.2 || “..."; . . 1......... 25 e 'Mar. 11 to lec. 31.......... 50 Aug. 17 to No. 24 ....I. 30 1870. Nov. 25 to Dec. 31. . . . . . . . . 35 --- Jan. 1 to Jan. 21. --------- 50 1879. . ! ... — # *::::::::::::::::::::: ; Jan. 1 to Mar. 23. --...--.. § || IM . 22 to Ma & 23.I.III..- 45 Mar. 24 to June 8.-------- 20 *::::9 lay :---------. 8) ! June 9 to June 22 - - - - - - -. 15 | May 23 to Aug. 28. --------. 40 28, 4. June 23 to Aug. 3.--...... .20 Aug. 29 to Aug. 30.--...----. 45 Aug. 4 to Aug. 24. -------- 25 19. () Aug. 31 to Oct. 30. --...----- 50 Aug. 25 to Oct. 12. -- . . . . . . 30 Oct. 31 to Nov. 21. --...----- 55 Oct. 13 to Nov. 5 35 Nov. 22 to Dec. 31. --...----- 60 J Koº. 10 to Dec. 31.........] ſo 1871. 1880 - # , º żº: | || Jan. 1 to Feb. 29......... 40 A. tº 7 #. * 25.I.I.I.I. 45 Mar. 1 to Apr. 13. * * * * * * - sº 35 20. 2 pr. 7 to June 25- - - - - - - - - - Apr. 14 to Nov. 21. . . . . . . . . 30 e June 26 to July 9. --...----. 40 Nov. 22 to Dec. 31 35 || July 10 to Aug. 10. --...---- 45 || > 33.5 • * * tº º Aº e º sm is a se as tº e §: # to * 20. --------. 50 1881. ept. 21 to Oct. 1. --...----- 55 Oct. 2 to Oct. 24. --...----- 60 J. Łº #: ; Oct. 25 to Dec. 31.--...----. 65 || Žiš. #......... ; 1872. #. 18 {3} tune 7- - - - - - - - - ; | une 8 to Júne 14. . . . . . . . . *) #: ;º. #::::::::: 9: June 15 to Sept. 25. --...---- 15 to 20 |} 18:8 #. . . . . ......... 50 Sept. 26 to Oct. 9......... i; ; ; y 8. 20 - - - - - - - - - r Oct. 10 to Oct. 31. . . . . . . . . 12; to 15 §%; ; :::::::: # 40. 3 || Nov. 1 to Dec 20 2p e ... O ş 2p * * * * * * * * * * * - * - e * * * * = & º ºs º as º - - Sept. 9 to Sept. 15 * * * * * * * * * 55 Dec. 9 to Dec. 31 * * * * * * * * * 12% to 20 Sept. 16 to Oct. 13 . . . . . . . . . 60 1882. Oct. 14 to Dec. 31. --...----. 65 Jan. 1 to Mar. 12 e - 20 1878. Mar. 31 to Nov. 30. -- - - - - - - 25 ! 13.0 Jan. 1 to Apr. 13 . . . . . . . . . '65 Dec. 1 to Dec. 31. . . . . . . . . 30 Apr. 14 to May 19 -------.. 60 - 1883. *...* tº: 4. 31.6 || Jan. 1 to Apr. 18........ . 30 Sept. 5 to Nov. 19 . . . . . . . . . 50 Apr. 19 to Nov. 25 25 14. 0 Nov. 20 to Dec. 7 . . . . . . . . . 55 §§ 26 toilet, 3i......... 80 * Dec. 8 to Doc. 31 . . . . . . . . . 60 • 20 UO DeC. §l- - - - - - - - - 246 INTERSTATE COMMERCE. Statement showing total receipts and eacports of flour and grain at the five Atlantic cities (New York, Philadelphia, Baltimore, Bostom, and Mort low; also percentages of each city of total receipts and eaſports. real) during the years named be- RECEIPTS. ºr a : É Percentages of each city of total receipts. #3 . § 63 -* d e Years. 3 :::: INew York. º Š • "c. Hºg - # 3 | . § º: § §3.9 | Eä # # # c + -t-. Nº ºn. & - , E. P. Cº. Ç H Canal. Rail. Coast. | Total. P+ pº ſº > JBushels 1860 ------...----------- 85,427, 151 |..... -- i.--.....]. ------. 63.5 7.3 11.2 10.4 7. 6 1865 ---, --------------- 93,753, 650 |. . . . . . . . . . . . . . . . . . . . . . . . 57.5 8. 6 11.4 14.3 § 2 1866 ------------------- 97, 522, 166 ---...----|--------|-------. 61.2 7.7 8. 6 11. 6 10. 4) 1807 ------------------- 87, 112,779 |---...---|-------...--...---. 55. 3 8. 8 13. 1 J2. 5 || 1 (). 3 1868------------------- 106,769, 295 |........]. --.....]..... --. 57. 9 11.7 1]. (; 1d. 0 7.8 1869 ------------------. 118, 268,926 . . . . . . . . . . . . . . ..]. -- . . . . . 55. 0 12. 3 11. 7 10. 0 || 11. () 1870 ------------------. 124, 461, 841 27, 9 25, 9 2.4 50.2 12. 3 11. 1 10. 5 9. 9 1871 ------------------- 158, 805, 433 33. 1 21. W 1.6 56, 4 12, 7 11. 0 9.6 || 10.3 1872 ------------------- 170,234,499 || 29, 7 || 22.4 1. 3 || 53.4 14, 2 | 12. 1 || 10. 0 | 10.3 1878 ------------------- 174, 525, 321 - 24, 5 27.5 0.8 52. S 14, 3 11.2 10.8 11.4 1874------------------- 192,452,353 || 24.6 30. 0 1.2 55.8 12, S 12.9 9.3 9. 2 1875 ------------------- 179, 875, 321 |, 21. 1 30, 1 1. 1 52. 3 } 5, 7 12. 2 10. 2 9. 6 1870 ------------------- 209,082,401 15.6 28. 2 2. () 45.8 I7. 4. 16.9 10. 9 9. O 1877 ------------------- 205, 420, 366 23.5 24. 8 2. 0 50.3 || 12.5 16.9 11. 3 9. O 1878. -----------------. 293, 576, 061 21.76 29. 07 1. 23 52. (6 | 15. 49 | 16. 04 9, 29 7. 12 1879 ------------------. 332,485,424 17. I5 30. G6 1.25 49.06 || 14.25 | 20. 09 9, S6 6.74 1880 ------------------. 341, 349, 702 | 20.33 27. 95 1.23 49, 51 14.43 17, 76 10. 88 7.42 1881 ------------------. 267, 009, 167 || 14, 31 || 36.91 1. 17 | 52.39 || 10. 69 | 16. 25 | 13, 41 || 7.26 188% ----------------... 211,074, 646 || 15.23 || 37.79 1. 18 54.20 9. 21 13.76 14.96 || 7.87 1883 ------------------. 244, 125, 630 || 17.2 33. 1 1. 6 51. 9 9. 2 14.9 16.2 7.8 1884 ------------------- 225,750,979 | 16.9 33.6 1. l 51. 6 9, 2 14.8 16.4 8. 0 IEXPORTS. &– 5 - Ž É Percentages of each city of total exports. +: : * C dº * * GD & Years. fºg; # º 3 wº ": *::::3 P+ rc & 5 gº! # cº º o ce •r-3 * . O -> --> -- : :::::: it: t; 2: o +s --> Q , a PA cº O Ç E- 2. R+ ſº ſº > IBushels. - 1873----------------------------------- 87,407,846 62. 10 5. 50 10, 35 2.45 19. 60 1874----------------------------------- 104,994, 100 62.94 G. 36 11.96 3. 03 15. 71 1875. ---------------------------------- 90,313, 244 56. 12 9.80 J2, 63 4.42 17. (J3 1876----------------------------------- 125,771,730 44.13 17. 50 I9. 69 4.80 13, 88 1877----------------------------------- 124, 582, 116 50. 10 10. 82 20. TA 4. 79 13. 55 1878----------------------------------- 212,497,231 50.74 J4. 06 18, 69 6. 09 10. 42 1879----------------------------------- 249, 942, 748 49. T5 12.93 22, 26 6. 31 8. 75 1880----------------------------------- 265, 383, 823 50.95 12. 01 19. 20 7.71 10. 13 1881----------------------------------- 182,488, 004 52.80 S. 99 18. T7 9. 39 10. (5 1882. ---------------------------------- 124,063, 242 57. 01 6, 12 16.95 8, 18 11. 74 1888----------------------------------. 150, 585,254 48. 8 7.8 18. 2 14.4 10.8 1884----------------------------------- 128,001, 203 50. 5 6.9 18. T 12. 6 11.3 NoTE.—The above statement was compiled from annual reports of the New York Produce Ex- change, with the exception that the percentages of New York via canal, rail, and coast, respectively, of the total receipts for the years 1870 to 1875, inclusive, were prepared from statement on page 198 of the Railroad Gazette of April 19, 1878, and the receipts and exports for 1884 from the New York Pro- duce Exchange Weekly of January 2, 9, and 16, 1885. - INTERSTATE COMMERCE. - 24? Statement showing the tariff rates on grain from Chicago to New York (in cents per hundred pounds), via all rail, and average rate via lake and canal, during the year ending December 31, 1884. Grain. Date. Lake and canal All rail. average for f year. January 1 to January 4------------ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 30 January 5 to January 13 -------------------------------------------------- 20 January 14 to March 13--------------------------------------------------. ... • 30 March 14 to March 20. ---------------------------------------------------. 20 11.7 March 21 to June 23.----------------------------------- .* * * * * * * * * * * * * * * * * * 15 || º - June 24 to July 20 -------------------------------------------------------- 20 July 21 to December 31--------------------------------------------------. 25 Tariff rates (all rail) from New York to Chicago (in cents per hundred pounds). • . First Second | Third | Fourth e Date. class. j j| clas. Special. 7 5 January 1 to December 31, 1884. ----------------------------- 60 45 35 25 Statement showing average quotations of océan Tates (reduced to cents per 100 pounds) on grain from seaboard cities named below to Liverpool by steamers, and to Cork, for orders by sailing vessels during the year 1884. Compiled from New York Produce Exchange re- ports. Average quotations reduced to cents per 100 pounds. - * ~ * r - To Cork for orders by & To Liverpool by steamers. sailing vessels. 23 º 6 P-4 P-4 43 -* g5 - 5 || 3 5 & 3 §s 5 3 3. Period. ..}- .3 .# g +: E 5 P+ .3 3 # | #3 | # | # Šá &# = | #3 5 24 Bºa, PQ £3 = }; : 5 2. *ā. ; 3 E F. a gº gº. a g _2: g | 8 # | } | 3 | ## | 5 | # ź ſ: | H . H F. ºr R H | Pri R Cents. Cents. Cents. Cents. Cents. Cents. Cents, Oents. Cents. First six months of 1884. -- 8.2 9.2 10. 3 12. 2 7. 0 22. 19, 8 15. 7 16. 3 Second six months of 1884. 15. 3 || 16.2 15. 7 || 15. 7 || 13. 0 || 31.5 || 23.7 20.3 || 22 0 Frutire year of 1884. --...--. 11. 7 11. 7 13. () 3. 8 11.2 24.5 21.8 17.8 19. 2 Statement showing the differences in cents per 100 pounds in the average quotations of ocean rates on grain at Philadelphia, Baltimore, Boston, and Montreal, as compared with New York. The differences above New York rates, are marked +, and those below New York are marked —. - . - To Cork for OT- - To Liverpool by steamers. ders by sail- ing vessels. IPeri d. - r; § tº '. #3 '# É ©ITO º 8 5 5 É'à || 3 3. : JS +: R 43 5,3 :- 33 +3.3 | "…; 3 33 $º | #3 || 3 - P+,- £3 £3 > H : 3 P+,-, ſº ſº #5 Q- CA 8 3 g E 㺠F. 3. O s C g 9 'º' g O É Pr; É | #. É Pr; É - Oents. | Oents. Cents. Oents. Oents. Oents. Oents. . First six months of 1884-------------------- +1. 0 || +2.1 +4.0 — 1. 2 | +14. 5 —4. 1 —3.5 Second six months of 1884.----------------- +0.9 +0.4 +0.4 —2. 3 | +16.2 —3.4 —1.7 Entire year Of 1884 • * * * * * * * * * * * * * * * * * * * * * * * * : * * * * * * * * +1. 3 +2. l —0. 5 +12. –4. 0 * 2. 6 I’age. Agriculture, } Relations to commerce of Report.-------------------- ------------------ 25 Alabama, Railroad laws of Report ------------------------------------------. ---- 83 Allen, Charles H., - Statement of 4ppendiº------------------------------------------------- 192 Anti-Monopoly League, g Statement of Appendiº------------------------------------------------- 105 • Apthorp, Henry, 2. Views of 4ppendia----------------------------------------------------- 55 Arizona, Railroad laws of Report.----------------------------------------------- 85 Arkansas, Railroad laws of Report.----------------------------------------------- 85 Arnold, Alexander A., *Answers to circular of committee. Appendic----------------------------. 118 Baker, R. W., - - Statement of 4ppendia. ------------------------------------------------ 103 Beebe, W. H., & Statement of Appendia. ------------------------- !---------------------- 211 Boise, R. P., e - s - Statement of 4ppendia. ------------------------------------------------ 114 Bond, Frank S., e Answers to circular of committee. Appendia.---------------------------. 77 Bragg, W. L., - & Answers to circular of committee. Appendia.----...---------------------- 50 Brocksmit, J. C., º Answers to circular of committee. Appendia...---------...----------...----. i88 Burlington Board of Trade, Answers to circulars of committee. Appendia.--------...----------------. 94 California, - Railroad laws of Report ----------------------. - - - - - - - - - - - - - - - - - - - - - - - - 86 Callahan, Ethelbert, Statement of Appendix. ------------------------------------------------ 181 Carr, S. C., & Answers to circular of committee. Appendia. -----...--------------...----. 125 Chapin, Charles A., * * Statement of 4ppendix. ------------------------------------------------ 212 Circular of Committee, º 4ppendi" -------------------------------------------------------------- 1 249 250 e INDEX. - Page Classification, Uniformity in. Report ---------------------------------, ---------------- 187 Colorado, Railroad laws of Report:----------------------------------------------- 91 Committee, - Circular of 4ppendiº.-------------------------------------------------- 1 Common Carriers, Legal status of Report ------------------------------------------------- 39 Congress, * Powers of Report --------------------------------------------- tº sº e º me as sº sº s 28 Connecticut, Railroad laws of Report ----------------------------------------------- 93 Connecticut Railroad Commission, Answers to circular of committee. Appendia.---------------------------- 56 Cooley, T. M., Views of Appendia:----. . w - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 8 Concessions to large Shippers, System of Report ------------------------------------------------------ 190 Cotton, Tabular statements relative to. Report.--------------------------------- 21 Coulter, S. T., & Statement of Appendia.------------------------------ * * * * * * * * * sº sº ºne tº a me s m = ± 116 Couplers, Statement of Mr. Russell relative to. Appendia; -- - - - - - - - - - - - - - - - - - - - - - - ... 235 Cox, Charles E., -- Statement of Appendiº.------------------------------------------------ 211 Dakota, g - Railroad laws of Report.----------------------------------------------- 95 Delaware, * Railroad laws of Report------------------------------------------...----- 97 Department of Railroads, Establishment of Appendia.--------------------------------- .* * * * * * * * * * * 100 Discriminating Rates, - Limitations on. Report ------------------------------------------- 182, 188, 101 England, - & Railroad legislation in. Report ------------------------------------------ 54 Erie Canal, Traffic on. Report ------------------------------------------------------ 170 Fink, Albert, º, Statement of Appendia. ------------------------------------------------ 237 Plorida, s * g Railroad laws of Report.---------------------------------------------- 98 Poye, Charles H., Answers to circular of committee. Appendia. ---------------------------- 53 Freight Rates, * Legislation impracticable for. Report ---------------------------------- 194 Principles for establishing. Report -------------------------. ------------ 182 George, Milton, Answers to circular of committee. Appendia.--------------...------------ 117 INDEX. 251 T’age Georgia, - } Railroad commission of Appendia. -------------------------------------- 99 Railroad laws of Report.----------------------------------------------- 78 Grand Trunk Railway, * Business of 4ppendix: -------------------------------------------------- 37 Giller, E. A., Answers to circular of committee. Appendia:... --------------------------- 120 Gillis, D., Statement of Appendia. ----------------------------------------• * * * * * * * * 125 Gregg, D., Statement of 4ppendia.---------------------------------------- * * * * * * * * * * 232 Grubbs, John W., Answers to circular of committee. Appendia.----------------------------- 172 Haines, H. S., gº Statement of Appendia. -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 126 Hamilton, J. M., * Answers to circular of committee. Appendix. ---------------------------- 185 Hanson, J. F., Answers to circular of committee. Appendia;----------------------------- 170 Hayes, J. D., g * Statement of Appendia.------------------------------------------------. 190 Hennepin Canal, Construction of Report ------------------------------------------------ 173 Memorial in favor of Appendix: ----------------------------------------- 207 Higgs, A. F., * Statement of 4ppendia. ------------------------------------------------ 237 Idaho, Railroad laws of Report.----------------------------------------------- 98 Illinois, - & -- Railroad laws of Report ----------------------------------------------- 71 Indiana, Railroad laws of Report -----------------------------. * = º º º sº º sº tº dº º sº º is sº sº tº 98 Interstate Commerce, Amount of State traffic compared with. Report ------------------------- , 137 Definition of Report. ---------------------------------------- - - - - - - - - - - 32 Difficulties of regulating, by Government. I&eport. ----...----. ------------ 43 Modes of regulating. Report -------------------------------------------. 52 Necessity for national regulation of Report - - - - - - - - - - - - - - - - - - - - - -------- 175 Powers of Congress to regulate. Report - - - - - - - - - - - - - sº sº tº s = º sº º sº tº us sº * * * * * * s = 28 Relations to agriculture. Report ---------------------------------------- 25 Tabular statements of Report ------------------------------------------ 14 Iowa, w Railroad laws of Report ----------------------------------------------- 98 Jewelers, Statement of 4ppendiº------------------------------------------------- - 104 Eansas, Railroad laws of Report.----------------------------------------------- 102 Ransas Railroad Commissioners, Views of Appendix. ----------------------------------------- ----------- 2 ECentucky, Railroad laws of Report.----------------------------------------------- 107 252 INDEX. I’age. Kentucky Railroad Commission, e Views of 4ppendia ------------------------------------------------- - - - 14 ECernan, John D., Views of Appendiº----------------------------------------------------- 15 Leighton, George E., Statement of Appendia.------------------------------------- --------- 160 Long and Short Hauls, Rates on. Report ------------------------------------------------------- 195 Louisiana, Railroad laws of Report.----------------------------------------------- 107 Luce, Cyrus G., * Answers to circular of committee. Appendix: --------------------------- - - 110 Lyman, J. D. Answers to circular of committee. Appendia. ----------------------------- 120 Maine, Railroad laws of Report ---------------------------------------------- 107 Maine Railroad Commissioners, Views of Appendia.-------------------------------------------------- '... 53 Maryland, * * Railroad laws of Report.----------------------------------------------- 109 Massachusetts, - Railroad laws of Report.----------------------------------------------- 66 Maxwell, Sidney D., Views of 4ppendiº----------------------------------------------------- 74 Michigan, Railroad laws of Appendix: --------------------------------------------- 34 Railroad laws of Report.------------...--------------------------------- 109 Railroad traffic in. Appendia.------------------------------------------- 37,39 Railroads of Appendiº ------------------------------------------------- 32 Michigan and Mississippi Canal, Memorial in favor of Appendia. ----------------------------------------- 207 Michigan and Mississippi Canal Commission, Statement of Appendia.------------------------------------ - - - - - - - - - - - - 199 Michigan Railroad Commissioners, - Views of Appendia.------------------------------------- '- - - - - - - - - - - - - - - 32 Midgley, J. W., Statement of Appendia. ------------------------.----------------------- 226 Minnesota, Railroad laws of Report------------------------------------------------ 109 IMississippi, - Railroad laws of Report------------------------------------------------ 111 Mississippi River, Improvement of Report.---------------------------------------------- 173 Missouri, Railroad laws of Report.--------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - , 112 TMissouri Railroad Commission, Views of Appendia.---------------------------------------------------- 47 Mix, James, & g Statement of Appendix ------------------------------------------------ 183 Monarch Parlor Sleeping-Car Company, Statement of Appendiz.------------------------------------ tº gº tº gº º gº tº gº & º & 237 INDEX. * 253 Page. Montana, Railroad laws of Jiéport------------------------------------------------ 113 Morgan, Richard P., t Answers to circular of committee. Appendia.---------------------. ------ 179 Neal, J. L., - Answers to circular of committee. Appendia. ---------------------------- 121 INebraska, Railroad laws of Report------------------------------------------------ 113 Nelson, W. H., . Statement of 4ppendiº ------------------------------------------------ 111 Nevada, Railroad laws of Report -------------------------------. --------------- 115 New Hampshire, Railroad laws of Report ----------------------------------------------- 116 New Jersey, Railroad laws of Report---------------------------------------- - - - - - - - - 118 New Mexico, Railroad laws of Report.-----------...----------------------------------- 118 New York, Railroad laws of Report------------------------------------------------ 74 New York Stock and Petroleum Exchange, Answers to circular of committee. Appendia. ... -- - - - - - - - - - - - - - - - - - - - - - - - - 102 North Carolina, - - Railroad laws of Report ----------------------------------------------- 118 Norton, Miles, - - Answers to circular of committee. Appendia.----------------------------. 122 Ohio, - Railroad laws of Report.-----...----------------------------------------- 119 Ohio Railroad Commissioner, Views of Appendia. ---------------------------------------------------- 55 Oregon, Railroad laws of Report --------------------------------------------- 2 - 119 Pennsylvania, * te Railroad laws of Report ---------------------------------------------. 122 Peoria Board of Trade, Answers to circular of committee. Appendic. - - - - - - - - - - - - - - - - - - - - - - - - - - - - 103 Perkins, Charles E., - Statement of 4ppendia ------------------------------------------------ 213 Pittsburgh Chamber of Commerce, Answers to circular of committee. Appendia. -----------...--------. . . . . . . 75 Pooling, - System of Report.---------------------------------------------------. 200 Pratt, George C., - g Views of Appendia.------------------------. --------------------------- 47 Publicity of Rates, Advantages of Report --------------------------...--------. 198,201, 202,205, 206 Railroad Commissions, Of England. Report ----------------------------------------------. ---- 54 Of States. Report -------------------------------------------- * * * * * * * * - - 64 º 254 INDEX. Railroads, Alabama laws for. Report------, ---------------------------. - - - - - - - - - - - - Arizona laws for. Report ------. ------ • - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- Arkansas laws for. Report ... -- - - - -------------------------------------* * * California laws for. Report -----------...--------------" * * * * * * * * * * * * * * * * * - Colorado laws for. Report ---------------------------------------------- Complaints against. Report... ------------------------------------------- Connecticut laws for. Report ------------------------------------------- Dakota laws for. Report ----------------------------------------------- Delaware laws for. Report -----. - .* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * English system of Report.------------------------------------------ -- Florida laws for. Report ------------------------------------------------ Georgia laws for. Report -------------------------------- - - - - - - - - - - - - - - - Idaho laws for. Report ------------------------------------------------- Illinois laws for. Report -----------------------, ----------------------- Indiana laws for. Report ----------------------------------------------- Introduction of Report -----------------------------------------------. Iowa laws for. Itéport ------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kansas laws for. Report --------------------------------------, -------- ICentucky laws for. Report -----------------------------------------"- - - , Legal status of Report.----. -------------------------------------------- Louisiana laws for. I’eport.--------------------------------------------- Magnitude of service by. Report---------------------------------------. Maine laws for. Report.------------------------------------------------ Management of Report ------------------------------------------------ Maryland laws for. Iroport -------------------------------------------- - Massachusetts laws for. Report----------------------------------------- Michigan laws for. Report------------------------ * - G - - - - - - - as e * * * * * * * * * * * * Minnesota laws for. Report. -------------------------------------------- Mississippi laws for. Report. -------------------------------------------- Missouri laws for. Report. ----...----. ----------------------------------- Modes of regulating. I'éport -------------------------------------------- Montana laws for. Report ---------------------------------------------- Nebraska laws for. Report ------------, ----. ---------------------------- Nevada laws for. Report------------------------------------------------ New Hampshire laws for. Report -----------...-------------------------- New Jersey laws for. Iteport - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ------------ New Mexico laws for. Iteport ------------------------------------------- New York laws for. Report ------------------------------. ----------- _- - - North Carolina laws for. Report ---------------------------------------- Ohio laws for. Report ------------------------------------------------- Oregon laws for. Report ------------------------------------------------ Overbuilding of Report---------------------------------- ... & sº s º º - - - sº sº ºn m = - - Overcapitalization of Report. ----------------- -- - - - - - - - - - - - - - - - - - - - - - - - - Pennsylvania laws for. Report------------------------------------------ Progress in construction of Report. --- - - - - - - - - - - - - - - - - - - - -------------- Protection of stockholders of Report. ------------------------------- ** * * * * Relations to public and Government. Itéport.-----...----- - - - - - - - - - - - - - - - - - Rhode Island laws for. Report ------------------------------...---...----. South Carolina laws for. Report ------. -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Tennessee laws for. Report.-----------------------. ---------------------- Texas laws for. Report -------------------------------------------------- Utah laws for. Report --------------------------------------------------. Vermont laws for. Report ----------------------------------------------- Virginia laws for. Iłęport ------------------------------------------------ Washington Territory laws for. Report. ---------------------------...----. West Virginia laws for. Report ----------------------...----------------- Wisconsin laws for. Report - - - - - - - - - - --. • * * * * * * * * * * * * * * * * * * * = s. sº am - ºs ºr me tº as ºn º Wyoming laws for. Report -------------------------... • - - - - - - - - - - - - - - - - - - - Randolph, Charles, Views of 4ppendiº----------------------------------------------------- Raoul, W. G., - Statement of 4ppendiº. ------------------------------------------------ Rhode Island, w Railroad laws of Report -----................. • - - - - - - - - - - - - - - - - - - - - - - - - 147 INDEX. Richmond Grain and Cotton Exchange, Answers to circular of committee. Appendiz. ---------------------------- Ridgely, Charles, - - Views of Appendia.----------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - • * * * * * * * * * * * * * Robbins, Daniel C., - - - Appendia.----------------------------------------------------------- ---- Robinson, William H., - - Answers to circular of committee. Appendia.----------------------------- Rose, A. J., - - Answers to circular of committee. Appendia.----------------------------- Russell, Thomas, - Statement of Appendia. ------------------------------------------------ San Francisco Chamber of Commerce, - Answers to circulars of committee. Appendia.---------------------------- Seymour, Horatio, Letter from. Appendia.------------------------------------ -------------- Shuey, W. H., a - Statement of Appendia. ------------------------------------------------ . Simmons, E. C., Answers to circular of committee. Appendia.-------. -s tº tº tº e º 'º - - - - - º ºs e º - - - - Smith, B. F., Statement of Appendia ------------------------------------------------ South Carolina, - - Railroad laws of Report ------------------------------------------------ Southwestern Railway Association, Statement of Appendia. ------------ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Springfield, Illinois, Statement of merchants of Appendia. ----------------------------------- State and Interstate Traffic, Comparative amounts of ----------------------------------------- - - - - - - - Statements by— Allen, Charles H. Appendix: ---------------...------ - - - - - - - - - - - - - - - - - - - - - - - Anti-Monopoly League. Appendia.-------------------------------...-- ----- Apthorp, Henry. Appendia. --------------------------------------------- Arnold, Alexander A. Appendia, Baker, R. W. 4ppendix: ------------------------------------------------ Beebe, W. H. Appendia.------------------------------------------ º a sm. “ - * * Boise, R. P. Appendiº -------------. ------------------------------------ Bond, Frank S. Appendia.---------------------------------------------- Bragg, W. L. Appendia.------------------------------------------------ Broeksmit, J. C. Appendia. ---------------------------------- - - - - - - - - - - - - Burlington Board of Trade. Appendia. ...----------------------------. ----- Callahan, Ethelbert. Appendia.----------------------------- Carr, S.C. Appendiº --------------------------------------------------. Chapin, Charles A. Appendia ------------------------------------------- Connecticut Railroad Commission. Appendia. -----------------------, - Cooley, T. M. Appendia, º Coulter, S.T. 4ppendiº.------------------------------------------------ Cox, Charles E. Appendix: ---...----...----. . Fink, Albert. Appendiº ------------------------------------------------- Foye, Charles H. Appendia.--------------------------------------------- George, Milton. Appendia. ...-----. * * * * * * * * * s m 'm nº sº º sº e < * * * * * * * * * * * * * * * * * * * * * - Giller, E. A. Appendia. Gillis, D. Appendia.---------------------------------------------------- Gregg, D. Appendia.--------------------------( - - - - - - - - - - - - - - - - - - - - - - - - - - - Grubbs, John W. 4ppendia.--------------------------------------------- * * * * * * * * * * * * * * * * * * * * * * * * * * * * - - - e s ∈ sº * * * * * * * sº sº tº tº ºr - - * * * * * * * * * * * * * * * * * sº & eº as as sº e º as s sº as * * * * * * * * * -, * * * * s e s is sº - - - 166 231 137 256 INDEX. - - * - - Page Statements by—Continued. we - Haines, H. S. Appendia.-------------------------------------------- --. -- 126 Hamilton, J. M. Appendir ------------------------------------ s sº us ºs º we e º us is sº - 185 Hanson, J. F. Appendia -----------. ------------------------------------- 170 Hayes, J. D. Appendia.---------------------. - - - - - - - - - - - - - - - - - - - - - - - - - - - - 190 Higgs, A. F. Appendix------------------------------. ,- - - - - - - - - - - ------- 237 Jewelers. Appendix. -----. ------------- • * * * * * * * * * * • * * * * * * ºx º sº. º º º 'º º ſº º sº º ºs º ºs º ºs 104 Ransas Railroad Commissioners. Appendia. ------------------------- - - - - - 2. Kentucky Railroad Commission. Appendia - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 14 ICerman, John D. - Appendia; - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 15 Leighton, George E. z/ppendic -------------------. - - - - - - - - - - - - - - - - - - - - - - 160 Luce, Cyrus G. Appendix. ------------- ... • * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 110 Lyman, J. D. Appendic ------------------------------------------------ -12.3 Maine Railroad Commissioners. Appendic. - - - - - - - - - - - -------------------- 53. Maxwell, Sidney D. Appendix: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 74 Michigan and Mississippi Canal Commission. Appendia;-- - - - - - - - - - - - - - - - 199 Michigan Railroad Commissioners. Appendix: - - - - - - - - - - - - - - - - - - - - - - - - - - - 32 Midgley, J. W. Appendix: --------------------------. -- sº sº sº tº * * • * ~ * ~ * ~ - - - - 226 Missouri Railroad Commissioner. Appendix-------------------------. ---- 47 Mix, James. Appendia.---------------------- --------------------- * = * * * * * 183 Monarch Parlor Sleeping-Car Company. Appendia. ---------------------- 237 Morgan, Richard P. Appendia. -----------------------------------------. 179 Neal, J. L. Appendia. ----------------------------------------------- ---- 121 Nelson, W. H. Appendia. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 111 New York/Stock and Petroleum Exchange. Appendix: - - - - - - - - - - - - - - - - - - - - 102 Norton, Miles. Appendia.------------------------- - - - - - - - - - - - - - --------- 122 Ohio Railroad Countnissioner. Appendia. ---------------------------...----. 55 Peoria Board of Trade. Appendix: --------------------------------------- 103 Perkins, Charles E. Appendia. --------------------------------- • * * se m is de e º sº 213 Pittsburgh Chamber of Commerce. Appendia. -- - - - - - - - - - - - - - - - - - - - - - - - - - - 75 Pratt, George C. Appendia. ------------------------- , sº º e º ºs ºs º is tº e º ºs tº tº as tº º' s sº - 47 Randolph, Charles. Appendia ------------------------------------------- 57 Raoul, W. G. Appendiº-------------------------------------- , sº * * * * * * * * * * 147 Richmond Grain and Cotton Exchange. Appendia; - - - - - - - - - - * * * * * * * * * * * * * 9S Ridgely, Charles. Appendix: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --------------- (52 Robbins, Daniel C. Appendia ------------------------------------------- 101 Robinson, William H. Appendia.----------------------------------------- 176 Rose, A. J. Appendia.------. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 119 Russell, Thomas. Appendia.----------------------------------. * * * * * * * * * * 235 San Francisco Chamber of Commerce. Appendia. ----------- - - - - - - - - - - - - - - 06 Seymour, Horatio. Appendia.----------------------. ----------- - - - - - - - - - 46 Shuey, W. H. Appendia. ------------------------------- - - - - - - - - - - - - - - - - - - 236 Simmons, E. C. Appendia. ---------------------------------, ---- e º º ºs º º ºs º ºs 166 Smith, B. F. Appendix: --------- ... -------------------------- -------------- 197 South Western Railway Association. Appendia; - - - - - - - - - - - - - - - - - - - - - - - - - - 226 Springfield, Ill., merchants. Appéndia; - - - - - - - - - - - - - - = * * * * * * * - - - - - - - - '- - - - - 2:31 Stern, B. Appendia. ----------------------------------. - - - - - - - - - - - - - - - - - - 192 Sturgeon, Isaac H. Appendix: - - - - - - - - - ---------. , * * * * * * * * * * * * * * * * * r * * * - - - 161 Sturgis, Thomas. Appendia.----------------------------------. ---------. 157 Thompson, John S. Appendix: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 210 Toledo Produce Exchange. Appendix. ----------------------. -------. ---- 69 Tracy, Frank W. Appendia. --------------------------------------------- 174 Traders and Travellers' Union. Appendia. -----...---------...----. ---------. 101 Trusler, Miltou. Appendia. -----------------------. ----- ----------------- 124 Updegraff, Thomas. Appendia. ---------------------------. ---- ---------- 188 Utley, Joseph. Appendic. . . ---- - - - - - - - - - - - • sº gº & e ºs ºs º gº º ºs sº º' - e = * * * * * * * * * * * * * * * 233 Wilson, F. C. Appendia ------------------------------------------------- 197 Wilson, William. Appendiº -------------------------------------------- - 126 Woodman, J. J. Appendia ---------------------------------------------- .108 Woodruff, George M. Appendix: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 56 Woodruff, M. C. Appendix: - - - - - - - - - - - - - - - - - -------------------------* - - - - 186 Worcester Excursion-Car Company. Appendia. -----. ---...----...--- - - - - - - - 236 Wright, George B. Appendia.------------------------------------------ ‘. . 84 States, - Railroad Commissions of Report---------------------------------------. 64 Stern, B., g - Statement of. Appendia, - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 192 INDEX. 257 - - Page. . Sturgeon, Isaac H., - Statement. Appendia.----------------------------------- use as e s = n e s is e s = • * * 161 Sturgis, Thomas, - - - Statement of Appendi" ------------------------------------------------ 157 Tennessee, * Railroad laws of Report----------------------------------------------- 127 Texas, - - Railroad laws of Report ----------------------------------------------- 131 Thompson, John S., - Statement of 4ppendiº ----------------------------------------- - - - - - - - 210 Toledo Produce Exchange, `, * Answers to circular of committee. Appendia. ---------------------------- 72 Tracy, Frank W., ~ Answers to circular of committee. Appendia. ---------------------------- 174 Traders and Travellers' Union, Answers to circular of committee. Appendia. ---------------------------. 101 Trunk Lines, s Freight agreement of Appendia; ---------...----. ------------ .* ~ * * * * * s. ---- 237 Organization and rules of Appendia. ------------------------------------ 240 Trusler, Milton, Answers to circular of committee. Appendia.---------------------------- 124 United States, * - r Railroad legislation in. Report.----------------------------------------- 63 TJpdegraff, Thomas, Answers to circular of committee. Appendix ----------------------------- 188 TJtah, * - Railroad laws of Report ----------------------------------------------- 132 Utley, Joseph, + Y _* & Statement of Appendia:... --. • - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 233 Vermont, - • * * * Railroad laws of Report ----------------------------------------------- 132 Virginia, Railroad laws of Report ----------------------------------------------- 132 Washington Territory, . Railroad laws of Report ----------------------------------------------- 134 Water Routes, - Effect on railway charges of Report -----------------------------------. 167 West Virginia, - Railroad laws of Report ----------------------------------------------- 134 Wilson, F. C., • . Statement of 4ppendi" ------------------------------------------------ 197 Wilson, William, - Statement of. Appendix: ------------------------------------------------ 126 Wisconsin, - Railroad laws of Report ----------------------------------------------- 135 Witnesses. (See STATEMENTs.) Woodman, J. J., Answers to circular of committee. Appendix----------------------------- 108 258 INDEX. g Page. Woodruff, George M., Answers to circular of committee. Appendia.---------------------------- 56 Woodruff, M. C., * --- Answers to circular of committee. Appendia. ---------------------------- 186 Worcester Excursion-Car Company, Statement of 4ppendia. ------------------------------------------------ 236 Wright, George B., Answers to circular of committee. Appendix: ----- - - - - - - - - - - - - - - - - - -Te - - - - 84 Wyoming, wº, Railroad laws of Report -------------------------------------- tº º ºs º ºs º sº tº as 137 O E- | | 3 9015 01265.751 —) i i t i. 9 t ! f * ~ * > * ~~~~ * -- _*- ~~P" º-7-3 -* s ~#sºr * ENGIN. - TRANS. Ll BRARY 312 UNDERGRADUATE LIBRARY 764-7494 OVERDUE FINE - 25¢ PER DAY DATE DUE . . . --A. ----º-º-º-º-º: * * * * *** * * §sºns. Sºº, rºº-ºº: - sº *.. º º º: a 3 J. ºf f. §§§ tº . Fº Yº... ºf , º' º º º: : Fº : ; sº º #: * § ; º º : : § ; w§ § g - .2. i tº i -gº º i º º # SA dº *- .º º º : º lºssº... G & 5 *** * * & Fº * * ... . . ." º º . a nº..." ºn , g º º a º Aº º . C. § ## º º - ſº ºr * : * sºlº Yºº º *". e = . . . .” º º-ºººººººº-ºº: §. Strº. ººººº..." ºr ºl - . . . . . ." * * * - - - - º gº º Fº z gº º > . . . - º - - º º º sº º ºs -