William Larrabee

The cause of the railroad manager has never been without time-servers. Not to speak of those newspaper editors who, for some consideration or another, defend every policy and every practice inaugurated or approved by railroad authorities, there has always been a school of literati who felt it their duty to enlighten, from a railroad standpoint, their fellow-men by book or pamphlet upon the transportation question, to correct what they supposed to be false impressions, and to round up with an apology or defense for the railroad manager, who is invariably represented by them as the most abused and at the same time most patriotic and most progressive man of the age.

The benefits derived from the railroad are great. It has been an important factor in the development of our country's resources and the advancement of our civilization. Its value is fully appreciated, but there is no reason why the men who have utilized the inventions of Stephenson and others, and have grown rich by doing so, should be eulogized any more than those who are ministering to the wants of the public by the use of the Hoe printing press, McCormick's reaper, Whitney's cotton gin, or any of the thousands of other modern inventions.

These authors doubtless are prompted by various motives. Some have been educated in the railroad school and are therefore blind to railroad evils. Others naturally worship plutocrats, because they hold the opinion that capital is entitled to a larger reward than brains and muscle, for the reason that the latter is more plentiful than the former.

But there is a third class of railroad authors, who, there is reason to believe, enter the literary arena in defense of railroad evils not solely for the love they bear the cause, but as the paid advocates of a class of men who feel that their cause is in need of a strong defense at the bar of public sentiment. It would be difficult to account in any other way for the extravagant statements and one-sided arguments made by this class of writers. Yet railroad literature has not confined itself to the retrospective field. Its scope has grown with the significance of its contributors. In more than one instance have men at the head of large railroad corporations, influenced by temporary interest, become the authors of documents containing assertions and prophecies highly pathetic at the time, but subsequently shown to be so replete with falsehoods and absurdities that few railroad managers would to-day be willing to father them. Thus Alexander Mitchell, the late president of the Chicago, Milwaukee and St. Paul Railroad Company, addressed on the 28th of April, 1874, shortly after the passage of the Wisconsin Granger Law, a letter to Governor Taylor, containing the following passages:

"That it [the Wisconsin law] has effectually destroyed all future railroad enterprises, no one who is acquainted with its effect in money centers will for a moment doubt.... The whole amount received on the investment [Chicago, Milwaukee and St. Paul Railroad] for interest and cash and stock dividends, amounts to only six per cent. per annum of the actual cost of the property. I submit to your Excellency, and through you to the people of the State, whether this is more than a fair and reasonable return for the capital invested in these improvements. Is it not far below such reasonable amount? The best and most careful economists admit that no less than ten per cent. per annum should be allowed on such investments.... The directors of this company have at all times had a due regard to the interests of the public, and a desire to furnish transportation at the lowest possible figures, and, although not receiving a fair and reasonable return on their investments, they have for the last four years prior to 1873 steadily reduced their rates of freight and passengers from year to year, as will be seen from the following tables, showing the charge for freight per mile, and the average per mile for passengers for each year, from 1868 to 1873 inclusive:

	Charges per ton per mile—cents.		Average passenger rate per mile—cents.
1864			.04
1868	.03	40-100	.03	86-100
1869	.03	10-100	.03	92-100
1870	.02	82-109	.03	85-100
1871	.02	54-100	.03	75-100
1872	.02	43-100	.03	54-100
1873	.02	50-100	.03	42-100

"The law in question proposes to reduce our passenger rates twenty-five per cent. and our freight rates about the same, thus deducting from our present tariff about twenty-five per cent. of our gross earnings.... This act, as we have seen, proposes to take from us twenty-five per cent. of our passenger and freight earnings, and the additional tax of one per cent. of our gross earnings, all of which is equivalent to taking from us twenty-six per cent. of our gross earnings. Therefore, deducting this amount, equal to twenty-six per cent. of our entire gross earnings, from thirty-three per cent., our average net earnings on business, would leave us only seven per cent. of our gross earnings as the entire net earnings of the road, out of which must be paid the interest on the bonds and the dividends to our stockholders. It is therefore manifest that this law will take from us over three-fourths of the net income received under our present tariff.... The board of directors have caused this act to be carefully examined and considered by their own counsel, and by some of the most eminent jurists in the land, and after such examination they are unanimous in their opinion that it is unconstitutional and void.... The board of directors are trustees of this property, and are bound faithfully to discharge their trust, and to the best of their ability to protect it from spoliation and ruin. They have sought the advice of able counsel, and, after mature consideration, believe it their duty to disregard so much of said law as attempts arbitrarily to fix rates of compensation for freight and passengers.... Being fully conscious that the enforcement of this law will ruin the property of the company, and feeling assured of the correctness of the opinions of the eminent counsel who have examined the question, the directors feel compelled to disregard the provisions of the law so far as it fixes a tariff of rates for the company, until the courts have finally passed upon the question of its validity."

The letter was at the time regarded by railroad men as a very strong document, and the railroad journals were filled with lengthy editorials in praise of the soundness of the doctrines and arguments which it contained. The disinterested of the enlightened portion of the community even then realized that the "eminent jurists" whom the company had consulted were hired attorneys and greatly biased in their views as to the constitutional rights of corporations, and that President Mitchell on his part had painted by far too dark a picture of the situation. It is now quite generally admitted that many of Mr. Mitchell's statements were as false as his counsel's interpretation of the Constitution and the law was erroneous. From the assertions made in this letter one is led to infer that the then stock-and bondholders of the Milwaukee road had paid in full every dollar of the capitalized value of the road, and that they derived from their investment an income of only about six per cent. on the money actually invested by them. The cost of the entire Chicago and Milwaukee system in Wisconsin was stated in the letter as being $38,000 per mile. It is not likely that this line of road ever cost to exceed $25,000 a mile, or that those who then owned the road paid much more than two-thirds of its actual cost for it. The road, as the letter itself admits, was bought at sheriff's sale, and no mercy whatever was shown to the farmers who had mortgaged their farms to aid the railroad company in raising funds for the construction of its line.

The letter contains other misstatements equally grave. Mr. A. B. Stickney, the president of the Chicago, St. Paul and Kansas City Railroad, in his recent excellent work, "The Railway Problem," reviews Mr. Mitchell's letter as follows:

"Mr. Mitchell states the average rate per mile in 1873 for passengers at 3.42 cents. It was well understood that this was an average rate received from those passengers who paid anything, and that, had the average rate been obtained by using as a divisor the total number of paying passengers plus the number of those who rode free the average would have been much below three cents, the price fixed by the law, and consequently, if the company would collect the legal rate from all alike and abolish the free list, its revenues from the passenger business would be increased rather than decreased. If the same test is applied to the freight rates it becomes equally evident that this statute did not reduce the rates in Wisconsin below the average rate of 2.50 cents per ton per mile, which, according to Mr. Mitchell's statement, was the average for the year 1873. For proof, it may be stated that the law classified freight into four general classes, to be designated as first, second, third and fourth classes, and into seven special classes, to be designated as D, E, F, G, H, I and J. The rates on the four general classes were made the same as were 'charged for carrying freights in said four general classes on said railroads on the first day of June, 1873,' and the rate per ton per mile was fixed at certain rates for the first twenty-five miles, a less for the second twenty-five miles, and a fixed rate per mile after, as follows:

	1st 25 Miles.	2nd 25 Miles.	All Over 50 Miles.
D	4-4/5 cents.	3-1/5 cents.	1-3/5 cents.
E	Same as class above.
F	4cents.	2cents.	1cent.
G	3-1/5 cents.	2cents.	1cent.
H	4cents.	2-4/5 cents.	1-3/5 cents.
I	4-2/5 cents.	2-2/5 cents.	1-1/5 cents.
J	3-1/5 cents.	2-2/5 cents.	1cent.

"When it is considered, in connection with these figures, that the four general classes were left by the legislature under the same tariffs as had been enforced by the companies, and, as a rule, first class is three times the rate of class D, and third and fourth class materially higher, the evidence seems conclusive that the rates fixed by law would produce an average materially higher than the average of the whole year, stated by Mr. Mitchell at 2-1/2 cents. It seems also probable that, had the rates fixed by this law been applied to the whole business of the line, the interstate as well as the State traffic, it would still have produced a larger average. The latter of course is the proper test. There are little inaccuracies in the material facts as stated by Mr. Mitchell which were pointed out at once. For example: In his tabulated statement of passenger earnings per mile, averaging the gross earnings from transportation of passengers who paid any fare, and omitting the large number who went free, the rate is stated at 3 42-100 cents per mile; then he says: 'The law in question proposes to reduce our passenger rate twenty-five per cent.,' which would have reduced the rate to 2.57 cents per mile, while, the rate fixed by the law complained of was three cents per mile. Then Mr. Mitchell proceeds: 'And our freight rates about the same; thus deducting from our present tariff about twenty-five per cent. of our gross earnings.' It was immediately pointed out that the law only applied to strictly State business; that is, to traffic that originated and ended in the State of Wisconsin. All other traffic was interstate commerce, and could not be controlled by State legislation. The volume of business which would be affected by the law would therefore be comparatively small—estimated at not over ten per cent., of the total traffic of the line. Hence, if the rates fixed by the law were twenty-five per cent. less than the rates the company had been in the habit of collecting (which was denied), it could not possibly have 'deducted from its present tariff' more than two and one-half per cent., instead of twenty-five per cent. as stated by Mr. Mitchell.

"It was claimed that the facts were, that the Chicago, Milwaukee and St. Paul Company, in its efforts to bankrupt the Lake Superior and Mississippi Company, had many of its interstate rates so low that it had resulted in loss, and that its other rates had been made unreasonably high in order to recoup this loss, and that the State of Wisconsin was compelled to pay a part of the expense of the transportation of favored sections of the State of Minnesota."

All through the Granger contests the railways have weakened the force of their arguments by their misrepresentation of facts and by their extravagant predictions of ruin. The companies were continually proclaiming: 'If this or that is done, it will ruin us; it will ruin the State,' when, in fact, a road cannot be mentioned that has suffered from State legislation. Nineteen years ago no railroad manager could have written what Mr. Stickney writes to-day, and few railroad managers would write to-day what Mr. Mitchell wrote then. And yet, such is the change which public sentiment is undergoing upon these questions, that the utterances of many of our present railroad authors will appear as absurd a few years hence as Mr. Mitchell's letter of nineteen years ago appears to us now.

Many railroad attorneys have since been guilty of resorting to the sophistry employed by President Mitchell in that strange letter which he addressed to the Governor of Wisconsin. Even so distinguished a gentleman as Hon. James W. McDill, now a member of the Interstate Commerce Commission, made in 1888, as a member of a railroad lobby, the following remarkable statements before the Railroad Committee of the General Assembly of Iowa, in a speech opposing a proposed reduction of the passenger rate of first-class roads from three to two cents per mile:

"The proposition, if confined to the first-class roads of Iowa, proposes a one-third reduction of their revenues from passenger business.... We have earned in Iowa by first-class roads annually about $13,000,000, and a reduction of one cent, or from a rate of three cents to two, will reduce their revenues about $5,000,000 a year.... Thus it is seen that it is proposed to take from the revenues of a part of the railroads of Iowa, annually, almost as much as all the railroads of Iowa have paid for taxes in nine years ($6,549,505.84)."

Mr. McDill was a member of the Iowa Railroad Commission for several years. He may, therefore, be presumed to have known that the State of Iowa could not, and did not propose to, regulate interstate traffic, and that the thirteen million dollars railroad revenue to which he referred was derived both from interstate and State traffic; that the latter was only about one-fourth of the former, and that therefore the proposed reduction on the basis of schedule rates would have cut down the net revenue of the roads only about one million instead of five million dollars. But Mr. McDill himself states that the average rate earned by all the railroads of the United States was, for the year 1886, only 2.181 cents per passenger per mile. It certainly was not over 2-1/2 cents per mile for the first-class roads of Iowa. Thus the proposed reduction, instead of being one cent per mile, as stated by Mr. McDill, was only one-half cent per mile; and it only applied to the local business of the first-class roads. In other words, the bill under consideration, had it been enacted into law, would have caused a reduction of 20 per cent. on about 25 per cent. of the total revenue from passenger business of the first-class roads, or of five per cent. on their total income from passenger traffic in the State of Iowa. It will be noticed that Mr. McDill in his calculation made no allowance whatever for the increase of business which would have followed such a reduction. The gain from this source would probably have greatly exceeded the loss due to this small reduction in the fare. In the same address Mr. McDill made many other equally fallacious statements.

One of the most devoted advocates of the interests of railroad managers is Marshall M. Kirkman. He is the author of a number of books and pamphlets upon railway subjects, among them a pamphlet entitled "The Relation of the Railroads of the United States to the People and the Commercial and Financial Interests of the Country."

Mr. Kirkman introduces his subject with the following rather remarkable statement:

"I shall show that while the railways of the United States are designated as monopolies, they are not so in fact. Accused of disregarding the interests of the community, I will show that they are abnormally sensitive to their obligations in this direction. While legislatures claim the right to fix rates, I shall show that the abnormal conditions under which the railway system has grown up and its chaotic nature render the exercise of such a privilege impossible. I will show that while it is assumed that rates may be fixed arbitrarily, they must, on the contrary, be based on natural causes, the competition of carriers, their necessities and the rivalries of conflicting markets and trade centers; conditions manifestly impossible to determine or regulate in advance, and therefore beyond the control of legislation.... While a division of business (by pooling) is thought to be contrary to the interests of the people, I shall show that it is the legitimate fruit of indiscriminate railway building and offers the only escape from the conditions such practice engenders. I shall show that, while it is assumed that rates may be based progressively or otherwise on distance, the enforcement of such a principle would restrict the source of supply, and, in so far as this was the case, render great markets or centers of industry impossible."

Speaking of the importance of the railroad, Mr. Kirkman says: "Superseding every other form of inland conveyance, it determines the location of business centers, and vitalizes by its presence, or blasts by its absence." He contends that rigid and scrutinizing supervision should be exercised by the Government over the location of railroads, and that only such lines should be permitted to be built as afford reasonable grounds for profitable enterprise. "It should be," he says, "an axiom in our day that a government that permits or encourages the construction of two railways where one would suffice is, to the extent that it does this, a public nuisance." Mr. Kirkman here makes it the duty of the Government to arbitrarily meddle with railroad affairs. He would give the Government the power to determine when and where an additional railroad is needed, and to prohibit the construction of any new road that has not the Government sanction. The interests of a thousand towns might suffer for want of adequate transportation facilities, individuals and communities might be anxious to build their own lines for the development of local resources, but all railroad enterprise is doomed to a standstill until a conservative governmental commission has been entirely satisfied that a prospected road will pay and not deprive existing roads of any part of their revenue. There can be no doubt that if such a policy were ever adopted in America, few roads would be built without having first passed the ordeal of a legal injunction, and many a prospected road, though greatly needed, would remain unbuilt because its promoters would be discouraged by the delay and cost of litigation.

But while this author is perfectly willing to trust the Government with the great responsibility of prohibiting the construction of proposed roads, he is not willing to have it exercise the power to determine what are reasonable rates. He tries to sustain his objection by the following argument: "The fixing of rates upon a railroad is as delicate a process as that of determining the pulse of a sick man. They cannot be determined abstractly, or in advance of the wants of business, but must be adjusted from hour to hour to conform to its fluctuations. Five thousand men find active employment in the United States in connection with the important duty of making rates. Each case requires particular investigation and involves, in many instances, prolonged study and research. The duty requires men of marked experience and capacity. They and men like them are the silent, unseen power that moves great enterprises of every nation. In the case of railroads we may enumerate those having official positions, but the experts from whom the official heads derive information and assistance cannot be classified. They comprise a vast army of experienced and able men familiar with railway traffic and quick to respond to its requirements. Such a body of men could not be organized by a government, or, if organized, would rapidly deteriorate under conditions so unfavorable for their support and development. Whatever authority exercises the duty of fixing rates must take up the subject in the same methodical way and, acting through skilled agents, pursue its inquiries and determine its results with the same experience, minute care and conscientious regard for the technical requirements of business that the railway companies observe. No government can possess the facilities for perfecting so vast and intricate an organization and at the same time render it responsive to the public good. The labor is too great and the responsibility too remote. It could not move with sufficient quickness to respond to the actual requirements of trade, and too many restrictions would necessarily govern its actions. For these and other equally important reasons governments must always be satisfied to restrict their offices in this direction."

Speaking of the men who are commonly termed railroad magnates, Mr. Kirkman says: "They alone possess the needed administrative ability that the situation demands. They not only provide largely the capital, but they discover the fields wherein it may be used most advantageously. They are the advance guard of all great enterprises, the natural leaders of men. They are an integral part of the country, a necessary and valuable element, without which its natural resources would avail little." This is a very strong statement in the face of the fact that but very few of the class of men to whom Mr. Kirkman refers ever built a line of road. They have usually found it more profitable to "gobble" roads already built than to construct new lines.

According to this author the public have no reason to complain of railroads; on the contrary, the latter have always been the victims of public persecution, and "every species of folly, every conceivable device of malice, the impossible requirements of ignorance, the selfish cunning of personal interests, the ravings of demagogues, the disappointments, envies, prejudices and jealousies of mankind have each in turn and in unison sought to injure the railway interest."

But probably the most extravagant passage in the whole treatise is the one referring to special rates, which he calls "the foundation and buttress of business," without which it could not be carried on. He expresses the opinion that without the continued and intelligent use of such rates "our cities would soon be as destitute of manufactories as one of the bridle paths of Afghanistan," and then continues: "The special rate of carriers is like the delicate fluid that anoints and lubricates the joints of the human body. It is an essential oil. Without it the wheels of commerce would cease and we should quickly revert to the period when the stage-coach and the overland teamster fixed the limits of commerce and the stature of cities."

The most recent and probably the most radical of Mr. Kirkman's books is "Railway Rates and Government Control." It would lead us too far from our subject to enter into a discussion of Mr. Kirkman's errors; in fact, it might prove an endless task. Suffice it to say that in discussing his subject he revels in such phrases as: "Subject too vast to be comprehended." "Acts of agrarian legislation and foolish manifestations of disappointment and hate." "The rabble will avail itself of every excuse to pass laws that would, under other circumstances, be called robberies." "Ignorance and demagogism." "Government interference, the panacea of cranks and schemers." "Only understood by the few." "These people are as sincere as they are ignorant." "Governments have no commercial sense." "Those who condemn them are not so dishonest as ignorant, and not so malicious as foolish." "Silly people." "Justice and common honesty are systematically denied [the railroads]." "Legal means of plundering them." "The intelligence and facilities of Government are but one step above the barbarian." "Those who use railroads should pay for them," etc., etc.

Mr. Kirkman's argument is in substance: Rate-making is a difficult subject. The people are too ignorant to understand it. Those who carry on the Government are for the most part fools and demagogues, and are utterly unfit to do justice to such a task. Railroad men are wise and just, and neither the people nor the Government should meddle with the railroad business. In order to place a true estimate upon Mr. Kirkman's utterances, one should remember that he is a railroad employe as well as the patentee and vendor of a number of railroad account forms which are extensively used by railroad companies.

The Chicago Tribune, in reviewing this last literary production of Mr. Kirkman, says:

"The great fault of Mr. Kirkman's statements is that they are often so general in character as to be both true and false at the same time.... He does not seem to comprehend the nature of the railroad, or to perceive the danger of allowing a railroad to exercise its powers uncontrolled. He denies the State's right to interfere with any discriminations which a railway corporation chooses to adopt. He would allow railways to fix whatever charges they please for long hauls and short hauls.... Mr. Kirkman does not adduce a single fact in support of these remarkable views. He simply says: 'Railroads cannot, if they would, maintain any inequitable local tariff.' This is not argument, it is simply assertion. Every one who has learned the alphabet of this question knows that railways have been exceedingly unjust wherever competition or the law did not restrict their powers. If this were the proper place for it we would give the author instances of this injustice by the hundred, and almost any book on the subject refers to such cases by the thousand.... When confronted with the facts substantiating such charges the author answers the argument by exclaiming: 'But how absurd! But how untrue! Our commercial morals are equal to the highest in the world....' Scarcely an assertion can be taken without qualification. The author fairly revels in half-truths.... The book may have its merits, but they are too modest to reveal themselves."

It is a failing of mankind to take for truth without further investigation any assertion that has often been reiterated. Most people are prone to believe that an assertion made by a thousand hearsay witnesses is true, overlooking the possibility of their drawing from a common false source. But it is surprising that an author like Prof. Arthur T. Hadley should fall into such an error. In his otherwise excellent work, "Railroad Transportation, Its History and Its Laws," Mr. Hadley bases a number of his deductions upon false premises advanced by railroad managers, and arrives at conclusions which appear strange when their source is considered. In the chapter on railroad legislation Professor Hadley says: "But a more powerful force than the authority of the courts was working against the Granger system of regulation. The laws of trade could not be violated with impunity. The effects were most sharply felt in Wisconsin. The law reducing railroad rates to the basis which competitive points enjoyed left nothing to pay fixed charges. In the second year of its operation, no Wisconsin road paid a dividend; only four paid interest on their bonds. Railroad construction had come to a standstill. Even the facilities of existing roads could not be kept up. Foreign capital refused to invest in Wisconsin; the development of the State was sharply checked; the very men who had most favored the law found themselves heavy losers.... By the time the Supreme Court published the Granger decisions, the fight had been settled, not by constitutional limitations, but by industrial ones."

These statements are either utterly untrue or greatly misleading. Mr. Hadley ought to know that the railroad companies in the Granger States never complied with the letter, much less with the spirit of the law. Whenever they made an apparent effort to live up to it they only did so to make it odious. Rates were never reduced by the legislature to the basis previously enjoyed by competitive points, but merely to the average charge which had obtained before the passage of the law. As a rule the railroad revenues increased. If any companies failed to earn enough to pay fixed charges it was simply because they were determined not to do so. A non-payment of dividends did not injure the managers, but simply other stockholders of the road. A permanent establishment of the principle of non-discrimination, on the other hand, would have benefited stockholders, while prejudicing the speculative interest which managers had in the roads. Railroad construction came, after the financial panic of 1873, to a practical standstill throughout the United States; and if the Granger States did not get their share of the very small total increase during the five years following the panic, it was due solely to a conspiracy on the part of the railroad managers to misrepresent and pervert the legislation of these States. The laws, as has already been stated, were finally repealed, not because the people had tired of them or regarded them unwise or unjust, but because it was hoped that the commissioner system would prove more efficient. It was offered as a compromise measure and was accepted as such by the railroad managers, who, in their eagerness to rid themselves of the restrictions imposed by the Granger laws, gave every assurance of complete submission to the requirements of the proposed legislation.

Mr. Hadley even goes so far as to defend railroad pools. "Unluckily," he says, "we place these combinations outside of the protection of the law, and by giving them this precarious and almost illegal character we tempt them to seek present gain, even at the sacrifice of their own future interests. We regard them, and we let them regard themselves, as a means of momentary profit and speculation, instead of recognizing them as responsible public agencies of lasting influence and importance." We can partially account for this author's defense of pooling when we are informed that he accepts it as an axiom that "combination does not produce arbitrary results any more than competition produces beneficent ones." Referring to railroad profits, Mr. Hadley says: "The statement that corporations make too much money is scarcely borne out by the facts. The average return of the railroads of this country is only four per cent., the bondholders receiving an average of four and a half per cent., the stockholders of two and a half per cent. True, much of the stock is water, not representing any capital actually expended; but, even making allowance for this, it is hardly probable that the roads are earning more than five per cent. on the total investment. This assumes an average cost of $45,000 per mile, implying that about half of the stock and one-sixth of the bonds are water." Mr. Hadley would probably have come much nearer the truth if he had assumed three-fourths of the stock and one-fourth of the bonds to be water. Even Mr. Poor, who certainly cannot be accused by railroad men of being inimical to their interests, places the average cost of the railroads of this country no higher than at $30,000 per mile; and this estimate, it should be remembered, includes the value of the large donations made to railroad companies by the public. With a full understanding of all the circumstances, Mr. Poor said of railroad investments several years ago that if the water were taken out of them no class of investments in this country would pay as well. In the face of this statement Mr. Hadley would do well to revise his figures.

We find, however, in Prof. Hadley's book also eminently sound views, like the following: "If the object of a railroad manager is simply to pay as large a dividend as possible for the current year, he can best do it by squeezing his local tariff, of which he is sure, and securing through traffic at the expense of other roads by specially low rates; that is, by a policy of heavy discrimination. But the permanent effect of such a policy is to destroy the local trade, which gives a road its best and surest custom, and to build up a trade which can go by another route whenever it pleases. The permanent effect of such a policy is ruinous to the railroad as well as the local shipper." And he continues: "By securing publicity of management you do much to prevent the permanent interests of the railroads from being sacrificed to temporary ones. By protecting the permanent interests of the public you enlist the stockholders and the best class of railroad managers on the side of sound policy."

Edward Atkinson, in an essay entitled "The Railway, the Farmer and the Public," endeavors to prove that the farmers have no cause for complaining against the railroad, because rates of transportation have been greatly reduced during the past twenty years. Speaking of the reductions made in freight rates in the State of New York, he says: "Had the rate of 1870 been charged on the tariff of 1883 the sum would have been at 1.7016 cents on 9,286,216,628 tons, carried one mile, $158,014,262; the actual charge was $83,464,919, making a difference of $74,549,343 saved on one year's traffic on the lines reported in New York." It either did not occur to Mr. Atkinson, or, if it did occur to him, he failed to mention it, that these freight reductions were forced upon the railroads chiefly by water competition, and that if the railroad companies had not saved these seventy-four million dollars for the people, the canal lines, always subject to competition, would have saved a large part of it. With equal propriety might it be said that the railroads, by meeting canal competition, saved for themselves in the year mentioned a goodly share of their gross earnings. Such reasoning is absurd, and it is high time that the bubble of an argument so often used by railroad advocates be pricked. As Mr. Atkinson has introduced the farmer, let us apply his rule to him. There was a time when the farmer sold his corn for a dollar a bushel. To-day he sells it for thirty cents. He therefore saves to the people of this country, on 2,000,000,000 bushels, the enormous sum of $1,400,000,000. There is scarcely an industry in existence to which this argument does not apply with equal force. Mr. Atkinson virtually admits that railroads charge all the traffic will bear when he says: "The charge which can be put upon the wheat of Dakota or Iowa for moving it to market is fixed by the price at which East Indian wheat can be sold in Market Lane." He is opposed to the Interstate Commerce Law, which he regards as "obnoxious measures of national interference and futile attempts to control this great work." He would rely chiefly upon the publicity of accounts made by railway officers, as secured by the private publication of Poor's Railway Manual, for all needed regulation, but concedes the establishment of a figurehead commission, concluding his remarks upon the subject as follows: "A commission which may bring public opinion to bear upon railway corporations may well be established, and there the work of the legislator may well cease." When we consider the powerful agencies employed by railroads to create public sentiment in their favor we can well understand the inefficiency of such a milk-and-water method of control.

One of the most radical books ever published at the instigation of railroad managers appeared in 1888, under the title "The People and the Railways." Its author is Appleton Morgan, who attempts to "allay the animosity towards the railway interests" as shown in Mr. James F. Hudson's book, "The Railways and the Republic." The means which Mr. Morgan chooses are not well calculated to accomplish his purpose, for the masses of the people prefer in such a controversy arguments to ridicule and sarcasm, weapons of literary warfare to which this author resorts altogether too freely. Mr. Morgan's opinion as to the benefits of centralized wealth and trade combinations differs greatly from that held by the great majority of the American people. He says: "The fact, the truth is, that (however it may be in other countries) the accumulation of wealth and centralization of commerce in great combinations has never, in the United States, been a source of oppression or of poverty to the non-capitalist or wage-worker." There is scarcely an evil in railroad management which Mr. Morgan does not defend. Pools, construction companies, rebates, discriminations and over-capitalization all find favor in Mr. Morgan's eye. "Rebates and discriminations," he says, "are neither peculiar to railways nor dangerous to the 'Republic.' They are as necessary and as harmless to the farmer as is the chromo which the seamstress or the shop girl gets with her quarter-pound of tea from the small tea merchant, and no more dangerous to the latter than are the aforesaid chromos to the small recipients." Pools and combinations receive an unusually large share of Mr. Morgan's attention. A few selections from his effusions in their favor may be given here, viz.:

"These pools are the legitimate and necessary results of the rechartering over and over again of railway companies to transact business between the same points by paralleling each other. So long as the people in their legislatures will thus charter parallel lines serving identical points—thus dividing territory they once granted entire—it is not exactly clear how they can complain if the lines built (by money invested, if not on the good faith of the people, at least in reliance upon an undivided business) combine to save themselves from bankruptcy." And again: "Against the inequality of their own rates and the hardship of the long and short haul (in other words, against the discrimination of nature and of physical laws) no less than against the peril of bankruptcy and the consequent speculative tendency of their stocks (after which may come the wrecking, the watering, and the vast individual fortunes), the railways of this republic have endeavored, by establishment of pool commissions, to defend both the public and themselves.... The honest administration of railways for all interests, the payment of their fixed charges, the solvency of their securities, the faithful and valuable performance of their duties as carriers, can be conserved in but one way—by living tariffs, such as the pools once guaranteed."

In the following passage this author denies to the State the right to regulate rates: "Granting that they [the railroads] must carry freights for the public in such a way as not to injure either the public or the freight in the carrying, most emphatically (it seems to me) it does not follow that they must add to the value of the freights they carry by charging only such rates as the public or the owners of the freight insist on."

But Mr. Morgan's indignation rises to the highest pitch in his discussion of the Interstate Commerce Act. He fears that it will cause the downfall of our liberties and sees in the background the Venetian Bridge of Sighs and the French Bastille. He asks: "Why should for any public reasons—for any reason of public safety—the Interstate Commerce Law have come to stay?" He then berates the act as follows: "To begin with, the present act abounds in punishments for and prohibitions against an industry chartered by the people, but nowhere extends to that industry a morsel of approval or protection. It bristles with penalties, legal, equitable, penal, and as for contempt, against railway companies, but nowhere alludes to any possible case in which a railway company might, by accident, be in the right, and the patron, customer, passenger or shipper in the wrong.... The constitutions of civilized nations, for the last few centuries at least, have provided that not even guilt should be punished except by due process of law, and have uniformly refused to set even that due process in motion except upon a complaint of grievance. But the Interstate Commerce Law denies the one and does away with the necessity for the other. That statute provides that the commission it creates shall proceed 'in such manner and by such means as it shall deem proper,' or 'on its own motion,' and that 'no complaint shall at any time be dismissed because of the absence of direct damage to the complainant.' Even the Venetian council often provided for a certain and described hole in the wall through which the anonymous bringers of charges should thrust their accusations. Even the court of star chamber was known to dismiss inquisitions when it found that no wrong had been done. But the statute of interstate commerce appears to issue lettres de cachet against anything in the shape of a railway company—to scatter them broadcast, and to invite any one who happens to have leisure to fill them out, by inserting the name of a railway company. It says to the bystander: 'Drop us a postal card, or mention to any of our commissioners, or to a mutual friend, the name of any railway company of which you may have heard, and so give us jurisdiction to inquire if that company may have by chance omitted to dot an i or cross a t in its ledgers, or whether any one of its hundreds of thousands of agents—in the rush of a day's business, or in a shipper's hurry to catch a train—may have named a rate not on the schedule then being prepared at headquarters, or charged a sixpence less than some other agent 250 miles down the line may have accepted a week ago for what might turn out to be a fraction more mileage service in the same general direction. No particular form is necessary. Drop in to luncheon with our commission any day between twelve and one, and mention the name of a railway company. The railway company may have done you no damage, nor grieved you in any way; just mention the railroad, and we will take jurisdiction of its private (or quasi-public) affairs. Or, if you don't happen to have time to mention it, we will take jurisdiction anyhow, 'of our own motion,' of any railway company whose name we find in the Official Gazette. It really does not matter which; any one will do." This is a fair example of the literature on the Interstate Commerce Law paid for by railroad men.

Mr. Stickney, although a railroad president, takes an entirely different view of the situation. He considers the law inadequate to bring about the reforms needed. He says: "This enormous business is now in the control of several hundred petty chieftains, who are practically independent sovereigns, exercising functions and prerogatives in defiance of the laws, and practically denying their amenability to the laws of the country. If the Government would seek to bring them to terms and compel them to recognize and obey the laws, it must use the means necessary to accomplish the end. It must have executive officers sufficient in number as well as armed with an adequate power and dignity to command their respect.... The power conferred upon them [the Interstate Commerce Commission] to enforce their judicial orders is the power 'to scold.' The penalties of the law which the courts are in power to impose are certainly severe, but the law has been operated for about four years without any convictions, and yet no well-informed person is ignorant of the fact that the law has not been obeyed. The president of a large system is said to have remarked that 'if all who had offended against the law were convicted there would not be jails enough in the United States to hold them.' It is evident that the Government has not provided adequate machinery for enforcing the law."

Mr. Stickney is correct in his statement that adequate machinery for enforcement of the law has not been provided, but he does not give sufficient credit to the law or the commission. While much work remains to be done, much progress has been made.

He is of the opinion that the public welfare would be furthered if the National Government assumed the sole control of railroads. He gives his reasons for the change which he proposes, as follows:

In reply to this it may be said that it will be an unfortunate day for the States when they surrender the power to control their home affairs. Differences between State and interstate rates could easily be adjusted by the National and State commissions and by the courts. It certainly ought not to be difficult for such tribunals to see that a rate which is made higher or lower, as it may be for State or interstate traffic, is wrong.

Mr. Stickney has fallen into the error common to railroad men in believing that lower rates of transportation will not prevail in the future. There are many reasons why it is probable that they will be lower. Present rates are highly profitable on well located lines. Labor-saving inventions will increase, and roads will be built and operated more cheaply. Lines will be located with lower grades, lighter curvature and more directness. Business will increase largely, and the ratio of expenses will decrease. Steel will be improved in quality and will be substituted for iron. A heavier rail and more permanent roadway will be used. Rates of interest will rule lower, and there will be much more economy in superintending. Extravagant salaries to favorites will be reduced, and sinecures and parasites will be cut off from the payrolls. Lower wages are inevitable as our population becomes more dense.

A very interesting and instructive author upon railroad subjects is Charles Francis Adams, Jr., ex-president of the Union Pacific Railroad and formerly a member of the Board of Railroad Commissioners of the State of Massachusetts. After twenty years' constant association with railroad men, Mr. Adams should certainly know the character of his quondam colleagues. In his book, "Railroads, Their Origin and Problems," he says of them: "Lawlessness and violence among themselves [i. e., the various railroad systems], the continual effort of each member to protect itself and to secure the advantage over others, have, as they usually do, bred a general spirit of distrust, bad faith and cunning, until railroad officials have become hardly better than a race of horse-jockeys on a large scale. There are notable exceptions to this statement, but, taken as a whole, the tone among them is indisputably low. There is none of that steady confidence in each other, that easy good faith, that esprit du corps, upon which alone system and order can rest. On the contrary, the leading idea in the mind of the active railroad agent is that some one is always cheating him, or that he is never getting his share in something. If he enters into an agreement, his life is passed in watching the other parties to it, lest by some cunning device they keep it in form and break it in spirit. Peace is with him always a condition of semi-warfare, while honor for its own sake and good faith apart from self-interest are, in a business point of view, symptoms of youth and a defective education." And again, in an address delivered before the Commercial Club of Boston in December, 1888, Mr. Adams expressed his opinion concerning the average railroad manager of to-day as follows: "That the general railroad situation of the country is at present unsatisfactory is apparent. Stockholders are complaining; directors are bewildered; bankers are frightened. Yet that the Interstate Commerce Act is in the main responsible for all these results, remains to be proved. In my opinion, the difficulty is far more deep-seated and radical. In plain words, it does not lie in any act of legislation, State or National; and it does lie in the covetousness, want of good faith and low moral tone of those in whose hands the management of the railroad system now is; in a word, in the absence among men of any high standard of commercial honor. These are strong words, and yet, as the result of a personal experience stretching over nearly twenty years, I make bold to say they are not so strong as the occasion would justify. The railroad system of this country, especially of the regions west of Chicago, is to-day managed on principles which—unless a change of heart occurs, and that soon—must inevitably lead to financial disaster of the most serious kind. There is among the lines composing that system an utter disregard of those fundamental ideas of truth, fair play and fair dealing which lies at the foundation, not only of the Christian faith, but of civilization itself. With them there is but one rule—that, many years ago, put by Wordsworth into the mouth of Rob Roy:

As regards the causes of the Granger movement, Mr. Adams says, in the work above mentioned: "That it [the Granger episode] did not originate without cause has already been pointed out. It is quite safe to go further, and to say that the movement was a necessary one, and through its results has made a solution of the railroad problem possible in this country. At the time that movement took shape the railroad corporations were in fact rapidly assuming a position which could not be tolerated. Corporations, owning and operating the highways of commerce, claimed for themselves a species of immunity from the control of the law-making power. When laws were passed with a view to their regulation they received them in a way which was at once arrogant and singularly injudicious. The officers entrusted with the execution of those laws they contemptuously ignored. Sheltering themselves behind the Dartmouth College decision, they practically undertook to set even public opinion at defiance. Indeed, there can be no doubt that those representing these corporations had at this juncture not only become fully educated up to the idea that the gross inequalities and ruinous discriminations to which in their business they were accustomed were necessary incidents to it which afforded no just ground of complaint to any one, but they also thought that any attempt to rectify them was a gross outrage on the elementary principles both of common sense and of constitutional law. In other words, they had thoroughly got it into their heads that they, as common carriers, were in no way bound to afford equal facilities to all, and, indeed, that it was in the last degree absurd and unreasonable to expect them to do so. The Granger method was probably as good a method of approaching men in this frame of mind as could have been devised."

Speaking of the educational value of railroad competition, Mr. Adams says: "Undoubtedly the fierce struggles between rival corporations which marked the history of railroad development, both here and in England, were very prominent factors in the work of forcing the systems of the two countries up to their present degree of efficiency. Railroad competition has been a great educator for railroad men. It has not only taught them how much they could do, but also how very cheaply they could do it. Under the strong stimulus of rivalry they have done not only what they declared were impossibilities, but what they really believed to be such."

Mr. Adams has, from his long association with railroad managers, imbibed one heresy which is in strange discord with the general soundness of his opinions. He holds that the railroad system was left to develop upon a false basis, inasmuch as the American people relied for protecting the community from abuses upon general laws authorizing the freest possible railroad construction everywhere and by any one. It can therefore not be surprising that Mr. Adams is an advocate of the legalized pool. He is of the opinion that secret combinations among railroads, inasmuch as they always have existed, always will exist as long as the railroad system continues as it now is. Hence he proposes to legalize a practice which the law cannot prevent, and by so doing to enable the railroads to confederate themselves in a manner which shall be at once both public and responsible. The reply might be made that there are many other conspiracies which the law cannot always prevent, but that this is no reason why conspiracies should be legalized. If pools and other railroad abuses had, since the beginning of the railroad era, been treated as crimes and misdemeanors, and punished as such by the imposition of heavy fines, few people would to-day be ready to offer apologies for them. If the time shall ever come when pools must be legalized it will be time for railroad control equivalent to Government ownership.

Among the more recent writers upon railroad subjects is W. D. Dabney, late chairman of the Committee on Railways and Internal Navigation in the Legislature of Virginia. Mr. Dabney favors State control, and is, on the whole, friendly to the Interstate Commerce Act. He sees danger in the pool, but inclines to the belief that the public benefit derived from the pooling system outweighs the danger of public detriment from its existence. The following is his chief argument for a legalized pool: "Perhaps, so long as railroad companies continue to enjoy an absolute monopoly of transportation over their own lines, so that free competition is restricted in its operation to a comparatively few favored points, it may be worthy of serious consideration whether it would not be better to legalize than to prohibit pooling, taking care to put the whole matter under strict public supervision and control. The companies would then be left comparatively free to bring their local rates into something like harmony with the long-distance rates, and should they fail to do so where the needs of the local community and their revenues make it proper to be done, then it is the function of public regulation to compel it to be done."

Of the Interstate Commerce Act Mr. Dabney says: "The legislation recently enacted by Congress for the regulation of commerce by railway is the result of more careful and intelligent deliberation perhaps than any other measure of similar character, and it is not unlikely that the legislation of many of the States will sooner or later be conformed to it."

He speaks at some length of the drift toward railroad centralization. A few extracts from this passage may be here given: "That the tendency towards the unification and consolidation of different and competitive lines has been decidedly increased by the anti-pooling and the long and short haul sections of the Interstate Commerce Law can hardly be doubted.... The modern device of the 'trust' as a means of unifying industrial interests and eliminating competition had not yet been applied in the field of railroad transportation.... The scheme of trust here briefly outlined would probably require for its successful operation the concurrence of the entire stockholding interest of each company embraced in it; and herein, it seems likely, will be found the chief difficulty in perfecting such a scheme. Should it ever be perfected, a far more stringent public supervision and control of the railroad transportation of the country will be demanded."

Another author, Charles Whitney Baker, associate editor of the Engineering News, suggests in his book, "Monopolies and the People," a plan for the reorganization of our railroad system, to remedy the evils of monopoly which are at present connected with railroad management. The following quotation from his work outlines the system proposed: "Let the Government acquire the title of the franchise, permanent way and real estate of all the railway lines in the country. Let a few corporations be organized under Government auspices, and let each, by the terms of its charter, receive a perpetual lease of all the railway lines built, or to be built, within a given territory. Let the territory of each of these corporations be so large, and so planned with regard to its neighbors, that there shall be, so far as possible, no competition between them. For instance, one corporation would operate all the lines south of the Ohio and east of the Mississippi River; another all lines east of the Hudson and of Lake Champlain, etc. Let the terms of rental of these lines be about 3-1/4 per cent. on the road's actual 'present cost' (the sum of money it would cost to rebuild it entirely at present prices of material and labor), less a due allowance for depreciation. The corporations would be obliged to keep the property in as good condition as when received, and would own absolutely all their rolling-stock, machinery, etc." The proposed reform measures, it must be admitted, are very good in theory, but their practical application is unfortunately entirely out of the question under our system of government.

Mr. John M. Bonham is the author of a recent work entitled "Railway Secrecy and Trusts." This writer, upon the whole, takes advanced ground in dealing with the question of railroad reform. He deems the present interstate legislation inadequate to correct all the graver railroad evils, expressing his views upon this subject as follows:

Concerning the changes needed to make Government regulation in the United States more effective, he says:

A few grave misstatements of historical facts greatly mar Mr. Bonham's book. He makes, for instance, the following statement:

It was left to Mr. Bonham to discover that legislation ever made railroad management impossible in Iowa. The General Assembly of Iowa passed at two different times railroad laws that were greatly obnoxious to railroad managers. In 1874 it passed a maximum tariff act which, at the urgent solicitation of the railroad forces, was repealed four years later; and in 1888 it passed an act containing the principles of the Interstate Commerce Act and in addition authorizing the Board of Railroad Commissioners to fix prima facie rates. Strange as it may seem to Mr. Bonham and other people inclined to believe without investigation the statements of railroad men, the earnings of the Iowa roads greatly increased immediately after the enactment of the so-called Granger laws in 1874, as the following table will show:

When the Granger law was repealed in 1878, the railroads were earning $1,000 per mile more than they were earning when the law was enacted. The present railroad law, which was passed in 1888, and has also been the subject of extreme criticism on the part of railroad organs, has had the same beneficial effect. The law, owing to the obstacles thrown in its way by the railroad managers, did not become operative until 1889. From July 1st, 1889, to June 30th, 1892, the gross railroad earnings of the Iowa roads, which for three years had been at a standstill, increased and were over $7,000,000 more in 1892 than they had been any year previous to 1889, as will be seen from the table below:

The net earnings per mile of the Iowa roads were $1,421.91 in the year 1888-89, and $1,821.37 the year following. The total net earnings of all Iowa roads during the year ending June 30th, 1891, were $14,463,106, against $11,861,310 during the year ending June 30th, 1889, and were still greater for the year ending June 30, 1892. No further vindication of the Iowa law is necessary. These figures show plainly that the lowering and equalizing of the rates not only increased the roads' business and income, but also their net earnings. And it must be remembered that the reports showing these facts were made by the railroad companies and were certainly not made with any intention of prejudicing the cause of the railroad manager.

James F. Hudson, the author of "The Railways and the Republic," is a very exhaustive and instructive writer upon the subject of railroad abuses. His material is well selected, and the subject ably presented. To the assertion of railroad managers, that railroad regulation injuriously affects the value of railroad property, he makes the following reply:

Concerning the inconsistency presented by the plea of railroad managers for a legalized pool, Mr. Hudson says:

Mr. Hudson maintains that if the pool were legalized it would only be a means of swelling railroad earnings. He says:

The question whether the common law does not protect the public sufficiently is well answered by Mr. Hudson as follows:

But the remedy which Mr. Hudson proposes for the correction of railroad evils is one of doubtful efficacy. It is this:

While it is admitted that the opening of the railroads to the free use of competing carriers is not necessarily impractical from a technical point of view, it cannot be admitted that the proposed remedy would cure the evil. There would certainly be nothing to hinder carrying companies forming a trust which might prove more dangerous to the interests of shippers than are to-day the combinations of the railroad companies.

Mr. Hudson devotes a chapter to the railroad power in politics, and shows how corporations, through their wealth, have secured the greatest and most responsible offices in the executive, legislative and judiciary departments of the Government. Speaking of their influence in the Supreme Court of the United States, he says:

"The assertion that Jay Gould paid $100,000 to the Republican campaign fund in 1880, in return for which Judge Stanley Mathews was nominated to the Supreme Bench, is denied as a political slander; but the fact remains that this brilliant advocate of the railway theories of law has been placed in the high tribunal, and that his presence there together with Justice Field, long a judicial advocate of the corporations, is expected to protect the railways in future against such constructions of law as the Granger decisions."