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REPORT 
 
 OF 
 
 Committee on Railroads 
 
 OF THE SENATE, 
 
 NINETEENTH GENERAL ASSEMBLY, 
 
 IOWA, 
 
 AS PER RESOLUTION OF SENATE NO. 4. 
 
 PUBLISHED BY OR DEE OF THE SENATE. 
 
 HENRY W. ROTHERT, Lee County, Chairman. 
 
 DES MOINES: 
 
 F. M. MILLS, STATE PRINTER. 
 
 1882. 
 
RE POBT/: ■;::■•;,::::■.;■;,. 
 
 OF 
 
 Committee on Railroads 
 
 OF THE SENATE, 
 
 NINETEENTH GENERAL ASSEMBLY, 
 
 IOWA, 
 
 AS PER RESOLUTION OF SENATE NO. 4. 
 
 PUBLISHED BY OR D Eli OF THE SENATE. 
 
 HENRY W. ROTHERT, Lee County, Chairman, 
 
 DES MOINES: 
 
 F. M. MILLS, STATE PRINTER. 
 
 1882. 
 

 
REPORT. 
 
 To the Honorable Senate of the Nineteenth General Assemhly of 
 
 Iowa: 
 
 Senatok Rotiiert, from the Committee on Railwaj's, submitted 
 the following report: 
 
 Mr. Presidknt: Your Committee on Railways to whom was re- 
 ferred Senate Resolution No. Four; to-wit, 
 
 '■'■Resolved, That the Raih'oad Committee of the Senate are in- 
 structed hereby to inquire: 
 
 "1st. If competing railroad corporations are in the habit of agree- 
 ing that one road shall take all the freight, or the greater portion there- 
 of, to and from, or to or from, any one point or territory in tlie State, 
 Avliile the other companies with their railroad lines there located 
 refuse to take freight, in order to carry out such an agreement. 
 
 "2d. That said committee make such inquiry concerning sliip- 
 ments at Cedar Rapids, Dubuque, Ottuniwa, or any point where 
 there are competing raih'oad lines, which to said committee shall 
 seem proper, and to ascertain all about such agreements, if any ex- 
 ist; and said committee shall have the right to subpcpua and com- 
 pel the attendance of witnesses, and shall have an}' statement which 
 any citizen may desire to make on said subject by written statement 
 in affidavit form or by being personally present. 
 
 "3d. That said committee shall make any other inquiries which 
 to them shall seem needed, concerning the working of the Railroad 
 Comissioner law, and shall report fully and specifically to the Sen- 
 ate on the subject of this resolution on or before the loth day of 
 February, 1882, and, further, whether in the judgment of said com- 
 mittee any legislation is needed to provide against the abuses sug- 
 gested in the resolution, if such exist, and to report a bill to correct 
 the same, if practicable"; beg leave to report that they have had 
 the same under consideration, and have instructed me to return the 
 same to the Senate with the following report: 
 
 Your committee have given the subject-matter of the resolution 
 as careful investigation as was practicable in the brief time which 
 it was possible to give to the work, and have to say in answer to the 
 
 66726> 
 
4 REPORT OF COMMITTEE ON RAILROADS. fE6. 
 
 iirst matter of inquiry, that we are imable to learn of any agree- 
 ment on the part of any railroad to refuse to take freight offered, 
 that it might go over another line. The committee are satisfied 
 that such agreements are neither liabitual nor frequent. One case 
 of that kind in the northeast part of the State came to the knowl- 
 edge of the Railway Commissioners a 3'ear or two since, but upon 
 the suggestion of the Commissioners the agreement was promptly 
 abrogated by the parties in interest. 
 
 Your committee wish to state, however, that pooling arrange- 
 ments exist at many if not all of the important comj^eting points in 
 the State, in regard to inter-State transportion whereby competition 
 between the railways there existing for such traiisportation is prac- 
 tically prevented. While this is true, it is also true that the rates 
 of transportation between such points and large commercial centers 
 outside the State are less than between such centers and non-com- 
 peting points on such railways nearer to such centers. 
 
 Your committee has inquired into the practical working of the 
 Railroad Commissioners' law and lind that it is working well and 
 for the benefit of the State at large. While decisions of the Com- 
 missioners have not the legal force and effect of those of a court with 
 full yjower to enforce its decrees, yet the aid of the Board is fre- 
 quently requested by citizens of the State, and their decisions have 
 been uniformly respected and obeyed by the railwaj^ companies 
 with but two exceptions. In these two cases the railways were in 
 the hands of federal authorities. 'So State legislation seems to be 
 required to make the present commissioner law more effective to 
 correct any existing abuse. 
 
 The pooling arrangements to which reference has been made, can 
 not be controlled by State legislation, as they relate to inter-State 
 traffic. 
 
 The committee acknowledge themselves indebted to the Board of 
 Itailroad Commissioners for much valuable information in re^jard to 
 the matters involved in the resolution. 
 
 For more specific information with reference to above report and 
 answers to interrogatories, your committee annex the following cor- 
 respondence had in relation thereto. 
 
 Respectfully submitted, for the committee, 
 
 Henry W. Rothert, Chairman. 
 
1882.] REPORT OF COMMITTEE ON RAILROADS, 5 
 
 KooMS OF Senate CoMMrrrEE on Railway, ) 
 Des Moines, Jan. 26, 1882. \ 
 
 To the flonoralAe Board of Railroad Commissioners of Iowa: 
 
 Gentlemen — By action of the Railwaj' Coininittee of the Senate, I 
 have been instructed to refer enclosed resolution, passed by the Senate, 
 to your Honorable Board, with the request to give said committee in 
 writingall the information said Board may have as to the several points 
 embodied in said resolutions. The committee would be pleased 
 also t(5 receive such personal information as any individual member 
 of your Honorable Board may be able to give for the enlightenment 
 and consideration of said committee. 
 
 Kespectfully submitted, 
 
 Henry W. Rothert, 
 Chairman of Committee. 
 
 report of the railroad commissioners on the senate resolution. 
 
 Hon. Henry W. Rothert^ Chairman of the Railroad Commit- 
 tee of the Senate of the State of Iowa — Your letter of January 
 26, with resolution of Senator Hutchison, which was referred by 
 your committee to this Board, was duly received. 
 
 In reply to the resolution, the Board of Railroad Commissioners 
 would respectfully state that they have received no complaints cov- 
 ering the matter stated in the first enquir}^ but that they decided a 
 case which they think involves the same general principles which is 
 reported in full in their Third Annual Report for the year 1880, (a 
 copy of the report we send yon with this.) It is the case oi Sam- 
 uel lilhurn V. The Chicago., Rock Island dh Pacific Railroad 
 Company., beginning at page 77, and ending at page 108. The 
 case was fully ai'gned by able attorneys, and the de(;ision mainly 
 written by Judge McDill. In this connection we think it would be 
 worthy of careful examination. 
 
 The Board have written to the various railroad companies that 
 are running to all the competing points in the State, asking whether 
 they are in " the habit of agreeing that- one road sliall take all the 
 freight to or from any point or territory in the State, while the 
 other roads with their railroad lines there located, refuse to take 
 freight in order to carry out such agreement." When the answers 
 are received they will be forwarded to you. 
 
Q REPORT OF COMMITTEE ON RAILROADS. [E6. 
 
 The field of enquiry has become so wide from complaints filed 
 that the Board has comparatively little time to look np grievances to 
 which their attention is not specially called. 
 
 Section 1297 of the Code of 1873 provides that parallel railroads 
 shall not pool their earnings; this, however, the Board understands 
 does not apply to inter-State traffic, and that under the holdings of 
 the Supreme Court of the United States, that no State legislation 
 could have any effect. A section might be added that it should be 
 unlawful for any railroad companies doing business in this State to 
 apportion at competing points the business of any section or terri- 
 tory in the State in such manner as to deprive the shipper of his 
 choice of route to market. 
 
 The Board sends with this letters received from tlie General Man- 
 ager of the Chicago, Burlington i!*c Quincy I'oad; the General Man- 
 ager of the Chicago, Milwaukee tfe St. Paul Bail way; the General 
 Superintendent of the Burlington, Cedar Rapids & Northern Rail- 
 way Company; the General Manager of the Chicago & Northwestern 
 Railway Compan3";the President of the Chicago, Rock Island & Pa- 
 cific Railway; and the Second Vice-President of the Wabash, St. 
 Louis & Pacific Railway Company. Tliey all deny the specific 
 charge in the resolution; the Second Yice-President of the AVabash 
 road admits the pooling at competitive points, and we are informed 
 that all the other roads make the same arrangements that he admits 
 his company makes. 
 
 The Board would respectfully refer the committee for valuable 
 suirsestions in regard to the Commissioners' law, to the letter of 
 Charles Francis Adams, Jr., published on pages 73 to 78, in their 
 Second Annual Report, a copy of which is sent you with this. 
 
 The second inquiry of the Committee asks information "concern- 
 ing shipments at Cedar Rapids, Dubuque, Ottumwa, or any other 
 point, and to ascertain all about such agreements, if any exist," etc. 
 The Board are a little at sea as to the scope of this inquiry, the phrase, 
 "such agreements" seeming to litnit the inquiry to territorial divis- 
 ions as to which answer is fully made in the reply to question one. 
 
 Having been informed by the Chairman of the Senate Commit- 
 tee, Hon. H. W. Rothert, that all arrangements of wliatever kind, 
 touching the subject of transportation as it affects the shipper, are 
 
18S2.] REPORT OF COMMITTEE ON RAILROADS. 7 
 
 sought for imder the resolution of inquiry, it is thought j)roper to 
 mention such as are found to exist. 
 
 Beginning with tlie Chicago, Burlington & Quincy Road, it has 
 an arrangement at Ottuniwa, and indeed at all other competing 
 points on its Iowa lines. These arrangements, as a rule, are upon a 
 minimuin charge, and the terms of the agreement are to divide the 
 earnings on the basis of an agreed ratio. This in some cases is as 
 50 to 50 perhaps, or 60 to 40, or 70 to 30, or 75 to 25, or any other 
 proportion — the ratio being ascertained hj the relative gross re- 
 ceipts in some cases, and tonnage in others, on the business of both 
 for a stated antecedent time, say of three, or six, or twelve months. 
 
 The Chicago & ISTorthwestern has also such pooling arrangements 
 with other lines at competing points, but no division of territory or 
 of the volume of freight. At Cedar Rapids, for instance, the par- 
 ties to the arrangement are the Chicago & Northwestern, the Chi- 
 cago, Milwaukee &, St. Paul, and the Burlington, Cedar Rapids & 
 Xorthern, and the division of the gross receipts on an agreed ratio. 
 It also has a like arrangement at Sioux City, Council Bluffs, Des 
 Moines and other points of competition. 
 
 The Illinois Central has a similar arrangement at Dubuque, 
 Charles City, Mona, Lyle and other points. In this arrangement 
 the division is made on such a basis as this, for instance: A tixed 
 percentage of the gross receipts of each company is reserved to each 
 absolutely, and the remainder of each is divided on the basis agreed 
 npon; the net balance being sometimes payable by the one, and 
 sometimes by the other. The arrangement is understood to exist at 
 all points of competition. 
 
 Like arrangements have been made by the Chicago, Milwaukee 
 and St. Paul at all competing points, the terms in some cases cover- 
 ing the surplus gross earnings over a hxed reserve to each; and in 
 others of an agreed proportion of the gross receipts. In a few cases 
 these arrangements are as to all kinds of freight, and in others ap- 
 ply only to certain specified articles. 
 
 The same is true as to the Burlington, Cedar Rapids & Northern 
 at Cedar Rapids and other competing points, and doubtless so as to 
 all roads which transport on inter-State contracts. 
 
 It may be added that most, if not all, these engagements are be- 
 lieved to be applicable to inter-State business only, though it is pos- 
 
8 REPORT OF COMMITTEE ON RAILROADS. [E6. 
 
 sible that they may, in here and tliere an instance, apply to local busi- 
 ness between competing points. 
 
 The Board is not aware of any other kind of arrangements existing 
 between the railways operating in Iowa. 
 
 Peter A. Det, 
 
 M. C. WOODKUFF, 
 
 A. R. Akderson, 
 
 Co mm iss io n ers. 
 
 The above report w^as made in writing to the Senate Committee 
 on Railways, and the Commissioners on invitation being present 
 "with the committee, the latter made a request that the Commis- 
 sioners elucidate the subject of pooling in further detail — asking 
 that the pool arrangement be particularly explained in its practical 
 application. Replying, the Commissioners said: 
 
 On investigation we find that all of what are known as trunk lines, 
 or lines extending into other States, have these pooling agreements 
 at points of competition; as, for instance, at Burlington, Keokuk, 
 Ottumwa, Albia, Eddyville, Council Bluffs, Des Moines, Grinnell, 
 Iowa City, Davenport, Clinton, Cedar Rapids, Marshalltown, Sioux 
 City, Fort Dodge, Webster City, Iowa Falls, Cedar Falls, Waterloo, 
 Dubuque, McGregor, Charles City, Britt, Mona, Sheldon, etc. These 
 and several other points are stations wdiere competing lines intersect, 
 each seeking to get all the business it can. The pool contract has 
 no effect to limit the volume of business of the two, three, four or 
 more lines; each struggles to obtain all it can get; each preferring 
 in final settlement of pool receipts to pay balances to competitors, 
 rather than receiv^e such balances. By the pool, agreement is made 
 by all the parties to it upon a minimum charge for the various 
 classes of freight. Take the case of Cedar Rapids, for instance: 
 Here the Chicago & Northwestern, the Chicago, Milwaukee & St. 
 Paul, and the Burlington, Cedar Rapids <k, Korthern companies are 
 in competition. Each struggles for all the business it can get, each 
 preferring to secure the larger proportion, and at settlement to pay 
 rather than receive a balance. The pool is for a division of the gross 
 receipts; the C. & "N". W., for instance, taking 44 per cent, the C, M. 
 & St. P., 32, and the B., C. R. & N., 24. At Dubuque, the Illinois 
 Central and the Chicago, Milwaukee & St. Paul Railways meet in 
 
1882.] REPORT OF COMMITTEE ON RAILROADS. 9 
 
 competition. In this instance the terras of the pool are not for a di- 
 vision of the gross earnings, but each reserves say 60 per cent of its 
 gross earnings, and tlie remaining 40 per cent of Loth is placed to 
 to the credit of pool account and division made share by share alike. 
 At other competing stations a reserve of a given percentage of 
 gross earnings is made by each company, say 60 per cent by one 
 and 55 by another — these proportions supposably representing the 
 cost of handling and moving — and the balance over from both being 
 divided on agreed terms, say 45 per cent to one and 55 to the other- 
 All these arrangements are based upon the facilities, business, and 
 earnings of the competing lines, ascertained by comparing past ton- 
 nage, or receipts, or both. From these facts it will be seen that the 
 object of the pool agreement is to avoid cutting of rates in competi- 
 tion, and serious disturbance in business, occasioned by constantly 
 fluctuating rates. To tliis end they agree npon a minimum rate. 
 
 As a rule this rate is alleged to be a low one. Certain it is, the 
 pool rate is lower than at non-competing stations with a shorter 
 mileage; as, for instance, the rate on the Chicago, Milwaukee & St. 
 Paul from Sheldon (a competing station) to Milwaukee or Chicago, 
 on 4tli class merchandise, is 50 cents per 100 lbs., while the same 
 rate is charged from half a dozen non-competing stations at various 
 lesser distances up to 60 miles. 
 
 In defense of this system railway companies assert that it is done 
 for the two-fold purpose of protecting themselves from the certain 
 losses following unchecked competition, and of protecting shippers 
 and patrons at all non-competing points. Tiiis reasoning may be 
 stated thus: The railway carrier is entitled to a fair compensation 
 for the service rendered. To be fair it must be reasonably profit- 
 able. If under the impulse of competition at junction points the 
 cutting of rates is reduced below a profit, the loss must be made up 
 at places where no competition exists. Otherwise not only the rev- 
 enues of the company are lost, but the property itself is going in the 
 direction of bankruptcy. If the pool agreement be not maintained 
 in good faith, the cutting of rates goes lower and lower, until the 
 price has fallen to a mere nominal sum, as in the case of the period- 
 ical rate wars between Chicago and the sea-board for the past year or 
 two. In proportion as the "cut" rate under competition goes below 
 
10 REPORT OF COMMITTEE ON RAILROADS. [E6. 
 
 the paying point, in that proportion tlie loss must be made good 
 upon non-competing points. If this be not done the road-bed, cars, 
 locomotives and operating facilities are worn out, and the line must 
 grow more and more valueless, until it is finally swallowed up in 
 bankruptcy. A railway cannot be maintained by a non-])aying busi- 
 ness. If it be said that a maximum rate be fixed by law for all the 
 roads at all stations, non competing as well as competing, the an- 
 swer is that this does not prohibit competition, or cutting of rates t 
 a losing figure. If one road cuts the rate, the other must come 
 down to it, or it must give up business at that point. Now, if one 
 of two or more competing roads is stronger and richer than the others, 
 by reason of its more fortunate location and great business, it must 
 follow that the weaker of these competitors will be driven to tlie 
 wall. This done, what are the people at all non-competing stations 
 on its line to do? Such is the reasoning of the railways in defense 
 of the pool system, as by it they are able to maintain a miriimum 
 rate at stations common to two or more roads, \vhereas by the open 
 comj)etition, or "cutting" system, they must assess what they thus 
 lose upon intermediate points. 
 
 Competition, to be eftectual, must first be fiee, and the competi- 
 tors practically equal in respect of strength, facilities, and tributary 
 business. If any of these conditions are wanting, the inequality 
 makes successful competition in the long run impracticable if not 
 impossible. Secondly, the competitors must have lines substantially 
 parallel, and when this is the case the business of the tributary 
 territorj^ is divided between the two or more lines. By thus divid- 
 ing the business between two or more lines which could be done 
 by any one of them, paying rates must be greater on both in order 
 to meet operating expenses and interest on the two or more lines 
 instead of one. A third difficulty in the way of successful compe- 
 tition lies in the fact that all stations must have the parallel or com- 
 peting lines, otherwise the competition is but partial and discrimina- 
 tive. 
 
 [At this point the Commissioners were cited to the fact that the 
 rate between Sioux City and Chicago was but little if any more 
 than the rate between Chicao^o and Fort Dodge — over a hundred 
 miles less distance. The explanation and answer of the Commis- 
 sioners was as follows:] 
 
1882.1 KEPORT OF COMMITTEE ON RAILROADS. H 
 
 The Illinois Central line runs through Fort Dodge and connects 
 Sioux Cit}' and Chicago. At both terminal points this line has 
 .powerful competitors in the Chicago, Milwaukee & St. Paul, and 
 the Chicago & Northwestern. The latter does a business in Iowa 
 which in volume and earnings is about double that of the Illinois 
 Central. The practical question for the Illinois Central is, shall it 
 have its fair share of the business at Sioux City? If it ought and 
 must have it, its rates must be as low as the lowest competitor's. If 
 it surrenders its proper share its road from Sioux City to the next 
 station eastward is rendered practically worthless, the thousands 'of 
 dollars invested in it being thrown away. If so much of its line 
 be thus abandoned because b}^ refusing to compete it has been shut 
 out of business, the entire line is seriously crippled as a through 
 route into the territories to the west of Sioux City. Thus that road 
 is forced to accept one of two alternatives: Compete at such rates as 
 it can get, and tlius divert all through business from that route to 
 other more wisel}^ managed routes, or quit business at that point, 
 or, it must agree upon a minimum rate under a pooling agreement. 
 This low pool rate is not a voluntary but a forced oqe; the rates at 
 non-competing points being free and unforced are held to be fair 
 and reasonable under all circumstances. While there is no sound 
 reason in abstract equity why a less charge is made for a longer 
 distance — all other conditions being alike — the practical question 
 arises, what else can be done? If legislation shall be able to answer 
 this question successfully it will have done what has not yet any- 
 where been demonstrated. 
 
 [Here another case was put to the Commissioners. It was stated 
 that Fort Dodge merchants desired to build up a jobbing or whole- 
 sale trade, but that it was impossible because nothing below the 
 Sioux City rate from Chicago could be obtained. To this, answer 
 was made as follows :] 
 
 Fort Dodge is a station over a hundred miles less in distance fi'om 
 Chicago than Sioux City. Its competition, if any, is with a class "B" 
 road, and is therefore not very sharp, while at Sioux City it meets 
 two of the strongest competing lines in the State. While the rates 
 between Fort Dodge and Chicago are as high, perhaps, as to Sioux 
 City, they are less than to many, if not all, the stations between Fort 
 Dodge and Sioux City. The Fort Dodge rate is also as low or 
 
12 REPORT OF COMMITTEE ON RAILROADS. [E6. 
 
 lower thfin to several stations east of it — a sliorter distance. In this 
 way a general balancing is readied. What is wanted at Fort 
 Dodge, nnder the case as put, is a better rate than it now has, 
 and it already has a better rate than other stations having a shorter 
 haul. And this aifords a key to the whole question as expressed by 
 tlie Senate Committee's resolution of inquiry; to-wit, Each station 
 in the State would like a little lower rate than the next neighbor. 
 
 To sum up, it is a very intricate and difficult problem to solve. 
 The Commissioners find that the railways do their business much as 
 other business is done, and are governed by the same motives, in- 
 terests, and rules. It is very probable that abuses exist, but how 
 are they to be njet and overcome is the question. Up to this time 
 legislation has been unequal to the task. That correction will some 
 time be reached is certain, but how does not yet appear. 
 
 To show the greatest difficulty of all, it must be understood that 
 these pool arrangements are on intei'-State business, the Commis- 
 sioners knowing of none on business wholly within tlie State, Hence 
 the Iowa legislature is without jurisdiction, its power extending 
 only to contracts within the State limits. Besides, as between 
 eighty and eighty-five per cent of the traffic is of inter-State character, 
 and as the low or oniniinum jjool rate at all pool points is on through 
 or inter-State traffic, and as all these pool stations combined proba- 
 bly include a very large proportion of tlie whole traffic, the difficul- 
 ties at the very threshold of the case seem to be beyond the range 
 of local regulation. 
 
 DISCRIMINATION. 
 
 As this inquiry has raised one form of the general subject of dis- 
 crimination, the Commissioners cannot better meet it than by calling 
 the committee's attention to their discussion of it on pages 179, 180, 
 and 181 of their report for 180, as follows: 
 
 Section 13 of the Commissioner law wisely prohibits unjust discrimination. 
 This, in the nature of the business, is absolutely necessary. The classification of 
 articles carried is in most cases discriminatory in its character and governed by the 
 value, The frei^fht tariffs are governed less by the cost of carriage in most articles 
 than the amount they will bear and not prevent production or use. The more 
 valuable goods always pay first-class rates, and this is not a question of risk or 
 cost of carriage. This principle is carried still further, and, we think, properly, in 
 the rates at competing points. A road at competitive points, if it secures any 
 
1882.] REPORT OF COMMITTEE ON RAILROADS. 13 
 
 business, must get it at a rate lower than would be fixed did not competition deter- 
 rame it. The shipper at a non-competitive point believes that he is greatly injured 
 if his rates are higher, and yet it is not true that if the business of the competitive 
 points furnishes any profit to the carrier, he can by that much less afford to carry 
 his freight at intermediate points. If he was compelled to carry all his business at 
 the rate of the competitive point, he would of necessity be compelled to abandon it 
 and confine himself to his local business. The local would necessarily be higher 
 by the amount of profit that might accrue from competitive points. It was a fa- 
 vorite theory of the Commissioners, and only abandoned after a careful study of its 
 effect, that the State should pass some law prohibiting the roads from charging 
 higher rates for a shorter than a longer distance. Coupled with this was the idea 
 that some such enactment might prevent the fluctuating and ruinous rates at com- 
 peting points, and place part of the burden of operating and maintaining the 
 roads on the through traffic. One of the oldest railway managers in the West, in 
 reviewing this subject, says: 
 
 " Nobody deplores foolish and reckless competition like that carried on from 
 Missouri River points in the Southwest, more than the thoughtful railway man- 
 ager, and if a law applicable to all the States could be enacted that would prohibit 
 such ruinously low rates, and punish severely the parties making them, I feel sure 
 that the railway managers would welcome it. But if the Iowa roads are prohibited 
 from making any higher charge than their proportion of a through rate from New 
 York to California — rates varying from time to time to meet the requirements of 
 commerce, and sometimes made without the knowledge or consent of the managers 
 of the Iowa lines — they must either do all their business at rates that will yield 
 insufficient revenue to pay interest and dividends, or maintain high rates on local 
 and allow through business to be mainly carried through States where no such 
 prohibition exists. A loss of the through business, so long as it yields any net 
 revenue, lessens the ability of the railway companies to reduce local transportation. 
 It is evident that any profit derived from competitive business must be a benefit to 
 local shippers, because it lessens local charges." 
 
 It may be a question whether the State has the power to fix this limit, and 
 whether it might not be considered a regulation of inter-State commerce. The 
 Supreme Court of the United States, in deciding the Pennsylvania case, says: 
 
 " If the power to fix tolls upon inter-State commerce is allowed, it would be in 
 the power of the Eastern States to exclude entirely the products of the West from 
 the sea-board by fixing a local rate that would prevent any through business being 
 carried." 
 
 Should the States of Iowa, Missouri, and Illinois order that the local and through 
 rates be the same, it might effectually prevent Kansas and Nebraska products 
 reaching an Eastern market. Again, the same court held that "The State may, 
 at its discretion, tax its own internal commerce, so that inter-State intercourse, 
 commerce, or trade be not embarrassed or restricted." Whether a tax on gross 
 receipts of a railroad is constitutional, has been affirmed by the Supreme Court of 
 the United States, Judges Miller, Field, and Hunt dissenting. Judge Miller, in 
 writing the dissenting opinion, uses this language: 
 
 " I lay down the broad proposition that by no device or evasion, by no form of 
 statutory words, can a State compel citizens of another State to pay to it a tax, 
 contribution, or toll, for the privilege of having their goods transported through 
 that State by the ordinary channels of commerce. The inter-State commerce of 
 to-day far exceeds in value that which is foreign, and it is of immense importance, 
 and it should not be shackled by restrictions imposed by any State." 
 
X4 REPORT OF COMMITTEE ON RAILROADS. [E6. 
 
 In l)otli their former reports this Board has endeavored to give 
 proniiiience to the idea that people situated as we are, almost in the 
 center of the continent, and dependent mainly on all rail transjDorta- 
 tion to the sea-board for our bulky surplus products whose final 
 market was Liverpool or London, could not afford to give too inucli 
 prominence to short rates; that our interest is in the long haul, and 
 if this is reduced to the minimum we can afford to pay a reasonable 
 profit on our short hauls. Our fears have been that legislative in- 
 terference in the States east of us might in some way affect unfa- 
 vorably the through business. 
 
 Peter A. Dey, 
 
 M. C. Woodruff, 
 A. R. Anderson, 
 Railroad Comm issioiiers. 
 
 railroad committee of the senate. 
 
 Henry W. Rothert, Lee county (chairman). 
 
 E. J. Hartshorn, Palo Alto county. 
 
 E. D. Nichols, Guthrie county. 
 
 A. Hebard, Montgomery county. 
 
 J. K. Graves, Dubuque county. 
 
 J. 0. Schrader, Johnson county. 
 
 Delos Arnold, Marshall county. 
 
 A. N. Poyneer, Tama county. 
 
 H. A. Baker, Winneshiek county. 
 
 T. E. Clark, Page county. 
 
 J. L. Kamrar, Hamilton county. 
 
 J. W. Henderson, Limi county. 
 
 G. S. Robinson, Buena Yista county. 
 
 Chicago, Burijngton & Quincy Railhoad Co., ) 
 
 T. J. Potter, General Manager, >• 
 
 Chicago, February 3, 1882. ^ ) 
 
 E. G. Morgan, Esq., Secretary Board E. E. Corners, Des Moines, Iowa: 
 
 Dear Sir — Yours of the 1st inst. to C. E. Perkins, President, is referred to this 
 office for reply. 
 
 You ask, " Whether your company is in the habit of agreeing- with other roads 
 at Burlington, Fairfield. Ottumwa, Albia, Knoxville, Ues Moines, Indianola, Gris- 
 wold, Carson, Humeston, Shenandoah, Malvern, Clarinda, or Council Bluffs, that 
 one road shall take all the freight or the greater portion thereof, to or from any 
 one point or territory in the State, while the other companies with their railroad 
 lines there located refuse to take freight in order to carry out such agreement?" 
 
 I would say we are not in the habit of making any such agreement at the points 
 named, but give the parties the privilege of shipping upon any line they choose to 
 patronize. Yours truly, 
 
 T. J. PCT-ER. 
 
1882.1 REPORT OF COMMITTEE ON RAILROADS. 15 
 
 Chicago, Milwaukee and St. Paul Railway, ) 
 
 General Manager's Office, >• 
 
 Milwaukee, February 3, 1882. ) 
 
 E. G. Morgan, Esq., Secretary Commissioners, Des Moines: 
 
 Dear Sir— I have received your favor of first inst., asking whether this com- 
 pany is in the habit of ag-reeing with other roads at various points in Iowa that 
 one road shall take all the business, and the other refuse to take it, in order to carry 
 out such agreement. 
 
 This company has no agreement with any other road of the nature described, 
 neither has it ever made any such agreement. On the contrary, it aims to carry its 
 full share of the business to and from all common or competing points in Iowa. 
 Yours truly, 
 
 S. S. Merrill, General Manager. 
 
 Milwaukee, Cedar Rapids & Northern ) 
 
 Railway Company, >• 
 
 Cedar Rapids, Iowa, February 3, 1882. ) 
 
 E. G. Morgan, Esq, Secretary Railroad Commissioners, Des Moines, Iowa: 
 
 Dear Sir — I am in receipt of yours of February first, in regard to inquiry of the 
 Railway Committee of the Senate, and in reply would say, that we have no arrange- 
 ment at either of the points named, in regard to either taking all the business or 
 most of it by our line, neither of allowing most of the business to go by any other 
 line, but we work actively for all the business we can get at agreed rates, which 
 would naturally go over our road. 
 Trusting this information is sufficient, and answers the inquiry fully, I am. 
 Yours truly, 
 
 C. J. IvES, General Superintendent. 
 
 Chicago & Northwestern Railway Company, ^ 
 Office op Second Vice-Presdent and General Manager, >- 
 
 Chicago, January 6, 1882. ) 
 
 E. G. Morgan, Esq., Secretary Railroad Commission : 
 
 Dear Sir — On my return to-day to the city, I am in receipt of yours of Febniary 
 1st, inquiring whether the Chicago & Northwestern Rail-vay Company '' is in the 
 habit of agreeing with other roads at Clinton, Cedar Rapids, Marshalltown, 
 Grand .Junction, Jefferson, Council Bluffs, and Sioux City, that one road shall 
 take all the freight, or the greatest portion thereof, to and from any one point or 
 territory in the State, while the other companies with their railroad lines there 
 located, refuse to take freight in order to carry out such agreement." 
 
 In answer to the foregoing inquiry, permit me to say the C. & N. W. R. R. Co. 
 has no agreement or understanding with other railroad companies whereby it will 
 refuse to take any or all freights offered for transportation, in order that any other 
 transportation company may carry such freights. 
 Very truly, 
 
 Marvin Hughitt. 
 
15 REPORT OF COMMITTEE ON RAILROADS. [E6. 
 
 Chicago, Rock Island & Pacific Railway, 
 Office op the President, 
 
 Chicago, February, 1882. 
 
 E. G. Morgan, Esq., Sec'i/ B\l R. R. Commissioners of Iowa: 
 
 Dear Sir — In reply to the inquiry by the Railroad Committee of the Senate, 
 "whether your Company (Rock island) is in the habit of agreeing with other 
 roads at Davenport, West Liberty, Columbus Junction, Iowa City, Fairfield, Grin- 
 nell, Keokuk, Ottumwa, Knoxville. Des Moines, Indianola, Griswold, Carson, or 
 Council Bluffs, that one road shaU take all the freight or the greatest portion thereof 
 to or from any one point or territoiy in the State, while the other companies, with 
 their railroad lines there located, refuse to take freight in order to carry out such 
 agreement, I answer: this company are not in the habit of making such agree- 
 ments, and that no such agreement exists on the part of this company to the best 
 of my knowledge and belief. Respectfully yours, 
 
 Hugh Riddle, President. 
 
 Wabash, St. Louis & Pacific Railavay Company, 
 Office of Second Vice-President, 
 
 Saint Louis, February 6, 1882. 
 
 E. G. Morgan, Esq., Secretary Railroad Commissioners, Des Moines, Iowa: 
 
 Dear Sir— Your letter of February 1st to Col. Haw, Third Vice-President, has 
 been handed to me for reply, and I wish to say that we have no agreement or un- 
 derstanding with any neighboring road which debars us from doing our share of 
 the business. 
 
 It has been found necessary, in order to avoid undue competition, to agree fairly 
 upon rates to points reached by either road, and also to agree on a fair division of 
 the business. In other words: We have an arrangement with some of our neigh- 
 bors in Iowa, Avhereby the business of certain stations is pooled, and, whichever 
 road carries more than its percentage, pays over the difference to the road which is 
 in aiTcars in its earnings. 
 
 Each road has business located on its track; each road has grain houses, stock 
 j'ards, etc., at or near the junction points, and owned and operated by people who 
 are anxious to do business for any person who is engaged in the shipping business. 
 
 Your inquiry leads me to think that misrepresentations have been made to the 
 Senate Committee. I need only add that I can assure you there is no arrangement, 
 so far as I know, which renders it necessary for either of the roads to decline taking 
 business. Yours truly, Ira C. Gault, Second Vice-President. 
 
 Illinois Central Railroad Company, ) 
 Chicago, February 10, 1882. ) 
 
 E. G. Morgan, Esq., Secretary Railroad Commissioners, Des Moines, Iowa: 
 
 Dear Sir — 1 beg to acknowledge receipt of your favor of the 1st inst. received 
 during ray absence East. 
 
 This company has no agreement with any other roads at Dubuque, Delaware, 
 Independence, Waterloo, Cedar Falls, Charles City, Ackley, Webster City, Fort 
 Dodge, Lemars or Sioux City, that one road shall take all the freight or the great- 
 est portion thereof to or from any other point or territory in the State. 
 
 This company and the Chicago, Milwaukee & St. Paul Railroad Company did 
 endeavor to induce shipments of freight from that point by the shortest line to its 
 point of destination. This was done principally to meet the requirements of the 
 shippei-s in the matter of the supply of cars that could run through to destination 
 without change, thus ensuring prompt movement of business. We consider this 
 arrangement for shipment by the shortest route the best for the shippers as well as 
 the most desirable for the road. It is, however, entirely optional with the shipper 
 or consignee to select his own route. 
 
 Yours truly, W. K. Ackerman, President. 
 
S5»5BS« 
 
I 
 
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