Jifornia ional lity UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW LIBRARY SHALL THE PEOPLE OR THE CORPORATIONS RULE? THE PARAMOUNT ISSUE SPEECH OF JAMES V. COFFEY J Hi Chairman of San Francisco Delegation 1876 and 1876 MARCH 7, 1878 ON THE RAILROAD COMMISSION BILLS Twenty-second Session Assembly of the Legislature of California 3 < ms ? <*> s Shall the People or the Corporations Rule? THE PARAMOUNT ISSUE THE RAILROAD DEBATE. (Semi-weekly Record Union, March 12, 1878.) On Tuesday the Assembly reached the general discus- sion of all the railroad bills, which continued through Thursday and Friday, the Hart Bill (Assembly Bill 541) being on its passage, and the Commissioners' bills (As- sembly Bills 225, 226 and 227) being on their engross- ment. Speeches were made during the consideration of the bills on those days: Mr. Coffey's Speech. MR. COFFEY — The rapidly increasing power and in- fluence of corporations has been for years a subject of solicitude to the thoughtful. Particularly have those great lines of railroad, formed by consolidation or combination, excited the apprehen- sions of the patriot, who looks to a provision of defense for the liberties and purity of government in the future. The experience of the country has impressed the lesson that competition may be robbed of its prerogative, while monopoly — the evil genius of trade — seizes hold of the people and plunders their pockets. The railroad era in this country has hardly dawned. We see nothing of enterprise in this department in com- parison with what we shall see. And now, in the infancy of this great system, let the people look to it that they are not mastered or corrupted by its ambitious power. Already it has aspired to control the Legislature and the Courts, and even Congress has bowed to its mandates ; while the dictation of a President of the United States is in no wise out of the range of its possibilities. Such a power having- at its command such vast influences for controlling the action of men, and such extended abilities for personal purchase and legislative corruption, rises be- fore our eyes this day as the overtowering danger of the times. By the simple process of fixing the rates of travel and transportation a whole State and people, out of whose sweat and toil these great lines were constructed, may be made hewers of wood and drawers of water for distant wealthy centers, while Courts and Legislatures may be so manipulated as to perpetuate the wrong. Discrimination in rates against large sections destroys all existing manufacturing enterprises within their limits, while the creation of new ones is prevented by the knowl- edge of the risks to which the condition of the railroad system will expose them. Now the great question is, how can these corporate monsters be chained down to their proper sphere of service to the people? If this Legislature will rise to the height of its great responsi- bility, the matter of providing laws by which these grasp- ing corporations will be shorn of their influence for evil and confined to the legitimate purpose of their institution — namely, the accommodation and service of the people — it will then have accomplished the primary purpose for which it is here assembled. The majority in this body, indeed — I may say nearly all of this body — were elected upon the understanding that some such bill as that now under consideration — "the Commissioners' Bill" — should be passed. If the recent elections in this State demonstrated any one thing, it was that the popular distrust of the ascen- dency of corporate influence in this country is universal and deeply rooted. The people are, perhaps, slow to learn what it behooves them most to know; but once having attained the requisite knowledge, they are as quick to act in their own behalf. They have for years submitted to the encroachments of corporations upon their preroga- tives, blindly deluded by the notion that without the aid of the monopolies it was impossible to advance their own interests. But now that they have seen by experience what their foresight was insufficient to reveal — that they are growing - poorer while the corporations are becoming enormously richer — they have come to a determination that it is time that an adjustment were made and their complete subjugation averted. They have reached this state of mind at by no means too early a stage of the question. Their present attitude deferred a while longer, they would probably find themselves completely at the mercy of their antagonists. And it is not now a safe proposition that they will not be overcome — for while they are by their enemy in danger of being lulled into conceit of their own power and security, that enemy will remain eternally vigilant and alert. The insidious approaches of monopoly to its present point of supremacy shows how necessary it is to remit no endeavor and to relax no energy to bring it into sub- ordination to the popular will. From an infinitely small beginning, with nothing gained except from the grace and credulity of the people, the corporations of the United States have grown to a height and bulk and arrogance that baffle belief. It is almost incredible how monstrous are these creations of our own favor, when we come to examine their history and survey their progress, and beside them perceive how their crea- tors have diminished in size and importance. In this free land, in the last half of the most enlightened and self- sufficient century of the world, we have cultivated a growth that centuries ago in monarchical countries was more dreaded than absolute kings. The people of England, through their parliament, ex- hausted device and ingenuity in legislation to break the power of incorporate bodies, to rid themselves of a tyranny they considered quite as insupportable as any that could be exercised by the individual wearing a crown, indeed more so, because that individual was mortal and deposa- ble, while the corporation was in its nature without dura- tion ; and, once established, it might become next to im- 4 possible to bring it under popular control ; while we in the United States have, it may be said, exhausted device and ingenuity to create, foster, protect and extend in every direction the power, immunities and privileges of corporations. Our English ancestors placed restrictions upon the exercise of corporate functions, bound and hedged them in on all sides, subjecting them to the mandate of the law and the convenience of the people, while we have pursued an almost precisely opposite plan, fettering the people and giving the most unlimited license to corporations. Created for the purpose and under the pretense of more rapidly stimulating production, encour- aging development, and fostering commerce, they have succeeded in partly stifling the first, discouraging the second, and almost paralyzing the last. Brought into being to answer the demands for im- proved facilities of intercourse between distant points, and the settlement of immense tracts of fertile land in the new western country, that production might be ren- dered more adequate to consumption, and that popula- tion and wealth might be more equally distributed, the railway companies have by exorbitant freight tariffs — by unjust discriminations against localities — by partial and excessive rates of fare — by tyrannous regulations control- ling passenger transit — by cliques and combinations to extort and purchase legislation favorable to themselves and procure adjudication to support their pretensions — by and through these means, they have succeeded in amassing and centralizing wealth in the hands of a few — in impoverishing particularly the hardest working and most deserving class — the agricultural element of our pop- ulation — until at last, when submission is no longer possi- ble, when the farmers see their fields yielding harvests unexampled in quality and quantity, yet incapable of profit, by reason of the difficulty of reaching the market owing to the exactions of the transportation companies, an endeavor is made to shorten the growth of this mon- ster that has risen to a stature greater than the Govern- ment itself, and stronger than the law — but, happily, not yet quite beyond the reach of the people. The tide is now beginning to turn. The enthusiasm that gave these giants birth is now yielding to a sober judgment, and the result shall be. if we obey the will of the people, as expressed in our presence here, the cor- porations, Government, and communities will resume their normal relations, where the two first will be sub- servient to the will of the last, as expressed in the Con- stitution and the laws made in pursuance thereof. If there be any meaning in the late elections, in this State, if they indicate any one truth, it is that the people rule and will brook no master but themselves; that they are bound to retain and transmit to posterity the freedom inherited from their forefathers; that no corporation — soulless, yet immortal — shall either virtually or actually dictate the policy, shape the legislation, or inspire the judicial expression of the United States or of any State or Territory. In short, there is a fixed purpose that hereafter all persons, natural and artificial, shall be entirely equal before the law. The paramount issue of the last campaign that gave the Democratic party supremacy in this State was the question now before this body — an issue absorbing all others and reaching into every interest in this State. There is no man, howsoever humble or poor in this world's goods, who can be free from concern upon this question of the ascendency of the railway companies. Every man hitherto in this land has prided himself upon the posses- sion of personal independence, upon sovereignty over him- self, upon perfect liberty to strike out for himself a path- way to fortune, unhampered by any artificial restrictions in favor of his neighbor. No man ought to say, no man can truthfully and intelligently say — "It matters not to me whether these railroad people succeed or fail in their attempt to wrest the law and Government to their own uses." It does matter to every individual — for all are alike concerned in the purity of the foundations of law and justice — all are alike deeply, immeasurably affected by the threatened dominancy of the corporations. Every man in this land is interested in the struggle now going on between the people on the one side and the corpo- rations on the other. It is not, as our opponents would have people believe, a contest against railroads, for no one is so foolish as to depreciate their value, but it is a contest against the audacious usurpations, the monstrous tyranny, the unparalleled robbery of the corporations. The principle involved in this contest is not a narrow or a new one. It is as ancient as civilization, as broad as freedom's soil, as sacred as life itself. It is in another form the principle that gave birth to the American Revolution, and the principle that, if now overborne, will give birth to another revolution. The tyranny with which we are threatened to-day is greater than that which our forefathers rose against and resisted and overcame after a bloody war of seven years. If we do not overcome it now, in a very short time the masses of the people will be reduced to the condition practically of serfs. It is idle to say: This cannot be — it is mere declamation. It is, unfortunately, too true already. The plenitude of power possessed by the railroad companies, often obtained by the grossest means, is brought to bear upon all inter- ests, and thousands of honest men in business are para- lyzed into political inaction by the fear of the Monarchs of the Rail. It is worth all a man's property, wherever he is at all dependent upon the railroads, to open his mouth against the exactions and encroachments of the corporations. And yet all that these magnates have has come from the diminished wealth of the people, who alone are competent to control this giant of their own creation. They are competent to do so now ; but who shall speak of their competency a decade hence? The corporations interested adversely to this bill have strenuously denied the right of the Legislature of this State to interfere with the conduct of their business, and have brought all available talent to bear in support of their position — so we have been deluged with a flood of legal literature enforcing the non-interference theory, deny- ing the right of legislative action, contesting the power of this body to interfere in any manner with the condi- tions upon which these corporations exercise the fran- chise granted them by the State. Notwithstanding all the learning and sophistry brought to bear in support of the contrary position, it has been demonstrated and decided finally by the Court of last resort that the right of the State Legislature to regulate the rates of travel and transportation upon railroads is incontestable and inalienable. All the learned arguments and lengthy dissertations of hired advocates have not been sufficient to shake the popular conviction of such legis- lative prerogative. The corporation interested, being or- ganized under and by virtue of the laws of the State of California, is subject to the conditional reservation of the State's right to alter from time to time or repeal the charter of incorporation. Within the limits of the State of California there cannot be any serious doubt of the right of the Legislature to regulate the charges for transportation of merchandise and passengers over the railroads of the Central Pacific Company, or of any road that begins and ends within the boundaries of the State. Notwithstanding that that company may possess National endowments, it is in its local traffic exclusively subject to the jurisdiction of the State. A gift from the United States cannot oust the State of California from its right- ful jurisdiction. Of course the railway company denies this proposition ; but it shifts its ground as occasion may require. When it seems necessary to elude Federal juris- diction it is as apt to deny it and insist upon State sov- ereignty as it is to deny the latter and assert the former when the necessities of the situation demand such change of base. The railway company is certainly subject to one or the other, and the balance of legal opinion and judicial decision places this road within the province and subjec- tion of State legislation. 8 It is claimed that the State has no more right to inter- fere with the business of a corporation than with the busi- ness of an individual, but this is an obvious fallacy. The railway business is of necessity a monopoly, practically excluding competition and demanding for popular protection some degree of legislative control. In the case of a railroad corporation, which controls the traffic of a State, which people must use, having no alter- native, an entirely different rule must obtain from what governs individual enterprises. While it is undeniably true in principle, and is, indeed, a fundamental maxim of Democracy — that "Government shall not interfere in individual affairs," and while this applies to artificial no less than to natural bodies, there is this qualification of the doctrine, that, where there is a corporation created by the Legislature for public pur- poses, to subserve the interests of the community, it par- takes of such a character as to exclude it from the opera- tion of the non-intervention maxim. This being true, as a general proposition, how much more is it true when the right is expressly reserved, as in this State, by the Constitution to interfere. Every corporation is organized and operates subject to that provision. If it were other- wise we should have a power within the State, created by the State, superior to the State. This is a monstrous doctrine, repugnant to the first principles of reason, which forbid that the mere creature of the law can be superior in power and beyond the control of its creator. No Legislature can surrender any portion of the peo- ple's sovereignty or right of mastery to a creature of its own handiwork. So much has been said upon this subject that it seems to me unnecessary to dwell further upon it. The general principles bearing upon the State's control of railway corporations, and the details of the application of those principles in the present case have been so fully considered that further discussion would seem to be use- less. It is enough to say, that so far as the popular side of this question is concerned, it is no longer open to dis- cussion. The people have decided that the State has a right to interfere; their decision has placed in this house a majority committed to the passage of some such law as the one now under consideration (the bill prepared by the Commission and reported by the Assembly Committee on Corporations). It may not be a perfect law; it is too much to expect that it can be so; but it is a long step in the right direction, and must be taken now or never. The dominant party in this State does not favor oppressive legislation against railroad companies; it is not intended to work a hardship upon them ; but the right of legislative power over these corporations must be asserted and main- tained. The railroads have used the power of the State to advance their interests and enrich themselves, and have used the wealth and advantage thereby gained to bring under subjection to them the State Government. Their conduct had been most overbearing and tyrannical until the people were stirred up to such a sense of their danger that the railroad was forced into the attitude of a suppliant, and made to recognize the fact that it was the servant, not the master, of the people and the State. The assumption that the railroad corporations possess absolute rights of property has, in my judgment, been overcome, and it is here where the whole argument against Governmental interference fails. The railway companies have only qualified property rights, subject in their exercise by express limitation to the regulation of the Legislature, which is by the Constitution of the State (article 4, section 31) invested with the power to alter or repeal corporate charters. In the first Railroad Incor- poration Act they exercised the right of regulating rates of transportation according to what was then considered a fair rule in this part of the country. The Legislature certainly did not exhaust its powers in that Act, and if it had the power at that time, it still possess it. This point is incontrovertible, and the argument that the exer- cise of this reserved power for the reduction of rates to a reasonable standard, is a breach of faith — "an act of 10 repudiation" towards the foreign bondholders — avails noth- ing; for it behooves them to search the title of the security in which they invest, and it is not at all too much to assume that they loaned their money with knowl- edge. At any rate, they are legally chargeable with such knowledge, and have no right to complain against the State of the depreciation of railroad bonds, which is due, after all, not to the action of the State, but to the gross extortions and exactions of the railway companies, which have set in motion the powers of the State. Railway property in this country has but few similari- ties with other property. The railroad company is neces- sarily a monopoly, with privileges the gift of the State, with endowments from the people of the municipalities and counties, and large subsidies from the General Gov- ernment. It cannot be considered wholly as a public in- stitution, nor entirely as a private concern. It partakes of the character of both, and must be treated according to the grave necessities of the community in either cate- gory. To permit it to assume and exert unrestricted powers in the exercise of its public franchise, would be to place the people entirely at its mercy and to endue it with a monstrous capacity erecting it above the State. [Mr. Coffey here alluded to the duty of Democrats and read their party platform.] The right and expediency of such legislation as is pro- posed in the Commissioners' Bill have been demonstrated. This being so, there can be no excuse for further delay in this matter. I would not do these corporations injustice, but my democracy compels me to assert the supremacy of the State, for the benefit of the people, over every mo- nopoly operating within its limits, and to regard a party platform not as a good thing to "step off from,'' or a trap to catch votes, but as something to be sacredly observed in all its requirements, express and implied. It is time that the abandonment of the essential Democratic doctrines should be made unprofitable to those who have 11 practiced it, and that the people prove to them that it is a game in politics that no man can play successfully more than once. The monopolies will give the people the platform provided the people will let them have the candidate. 1 do not propose now or hereafter to aid them in thus deluding and cheating the people, nor do I believe that any party success thus gained can be worth anything. In this State there is no question of superior import- ance to this one of corporate aggression and ascendancy. The presence here of the Chinese, crowding our white workingmen and boys to the wall, and putting to them the desperate alternative of starvation or crime, is largely attributable to the corporations which, lavishly endowed by the Government out of the proceeds of white American labor, use their great means to employ the scum of Asia in preference to our own people. If these monopolies finally triumph, personal liberty cannot survive. Against all endeavors in the Legislature to check the growth of their pretensions they use without scruple their main argument. In such cases, "Coin talks" with an eloquence and effect that render valueless all opposing arguments, no matter how forcible in logic nor how well-grounded in public policy they may be. The power of the corpora- tions, thus exerted on legislation and on the machinery of both parties, has grown too strong for public safety. It permeates everywhere. It reaches every interest in the community. It imperils every man's business and prospects. It throttles the ambition and independence of every citizen who dare assert his birthright of freedom in speech and act. It intimidates. It bribes. It subsi- dizes. It is destroying the honor, the manhood, the virtue of this Republic. It is time it were brought into subjection. All who value the rights of labor ; all who cherish personal liberty and individual independence ; all, in fine, who desire the perpetuation of American repub- licanism, according to its first principles, must unite in opposition to the further advance of the monopolies, and the Democratic party, true to its grand and eternal prin- 12 ciples, must unite this opposition, must defy all the hosts of monopoly, and all their insidious wiles. The country belongs to the people, and they will yet vindicate their right to rule it. University of California SOUTHERN REGIONAL LIBRARY FACILITY 305 De Neve Drive - Parking Lot 17 • Box 951388 LOS ANGELES, CALIFORNIA 90095-1388 Return this material to the library from which it was borrowed. Ljaulord PAM PHLET BINDER nz^Z Syracuse, N. Y. :ZZ^Z Stockton, Calif. iBBiS iiim ional UBRARY FAC,L AA 000 683 720 7 Universit; Southe Libra: